odi case analysis

Group-3 Srikanth KumarSourabh Thadani

Nikhil GuptaTushar Gupta

Varun JoshiSrivathsan Rangarajan

Optical Distortion, Inc. (A)

Market Plan for ODI’s Contact Lens for Chickens

1. Existing Situation (during late fall 1974)

Porter’s five force analysis:

Existing Competition: As this a new product and the company acquired the patent

for next 3 years, there will not be any threat until 1977 at the least

Bargaining power of Supplier: Is low as the contract with supplier (to buy polymer

for making soft plastic) New World Plastics is under terms of license,

Bargaining power of Buyer: Is high as it involves a cost of switching.

Threat of New entrants: The product can be easily replicated by the manufacturers

of Human Contact lenses, who may be willing to diversify; they may collaborate with

other players having deep pockets to beat the ODI,

Threat of Substitutes: Debeaking method is in practice for past 50 years. Moreover,

farmers are yet to get completely convinced about the reliability of new technology

that it leads to less mortality rate

1 | P a g e




SWOT analysis:

Is performed based on the above analysis

Strengths: Monopoly for next 3 years because of patent rights, ability to reduce

cannibalism without traumatization, low bargaining power of supplier

Weakness: New technology takes timer for farms to rely and start adopting.

Switching cost associated with it, no capability of recycling

Opportunities: Entire Chicken farm market

Threats: New entrants will come into this market by easily replicating the technology

2. Specific Objectives

To become a multiproduct, multimarket company for withstanding the future

competition by providing effective service anywhere in the country

To gain 50% penetration among the chicken farms producing 10,000 or more

chickens within five years

Aggressive marketing across the nation within two to three years for making the most

of market potential and thereby revolutionizing the business of animal behaviour by

providing innovative products based on intense R & D

2 | P a g e




3. Identification of Problem

To realize the Marketing plan with limit assets for gaining a significant market share and

surviving the competition through new & innovative products

Instilling faith among chicken farms about this product by explaining cost-benefit

analysis - branding

To target right geographies & segments

Optimal pricing strategy enough to attract customers, increase market share as well as

achieve margins enough to finance the R & D operations and cost of sales

Building brand equity by effectively serving the customers through multi product

solutions and increasing customer base through penetration in multi markets

4. Cost/Savings benefit to the farmer Vs. Debeaking (all figures in dollars)

debeaked ODI savings

mortality .216 .108 .108 (Exhibit-2)

feed 7.04 6.837 .203

labor .034 .033 .001

egg laying .099 --- .099

.411

Cost of lens -.08

Total savings per bird .331

3 | P a g e




5. Determine the variable costs per pair of lens

manufacturing cost .032

injection 12000/15 million .0008

box Cost .00168

• Plastic box .10

• filling cost .14

• order processing .18

• total .42

Divide by no. of lenses i.e. 250

______

Total variable cost .03448

6. Determine the fixed costs

payment to new world $25,000

office and warehouse 196,000 ( Exhibit-1)

headquarters expense 184,000

(Assuming 20 million pair)

salesmen 280,000 ( Exhibit-3)

technical representatives 70,000

advertising and promotional 100,000

trade shows 100,000

total fixed costs $ 955,000

4 | P a g e




7. Pricing alternatives & Break Even Analysis:

Assuming that the HQ cost is fixed for the volume of 20million pair of lenses,

FC per unit = 955,000/20,000,000=0.04775

If we use

price for pair of lenses $.24 $.08 $.30

variable costs .03448 .03448 .03448

fixed costs .04775 .04775 .04775

profits for ODI (per pair) $.1577 $(-.00223) $.2178

Subsequently, the break even units associated with those three price ranges would be:

4646750 & 3785927 for $0.24 and $0.30 respectively

8. Evaluation of Alternatives

As the initial capacity is used for targeting 40 million lenses, alternative 1 seems to be

achievable by the ODI firm ($0.24). Since, there are no competitors for ODI they can

use this pricing for their advantage until next 3 years and use the remaining earnings

for investing in R&D. Later they think of reducing it in the wake of new entrants

coming into this market.

9. Recommendations

For a successful market penetration, ODI have to convince the farms about the

risk they can afford to in using the contact lens and benefits which they can

through target promotions & education campaigns using the salesmen,

newsletters & trade shows

5 | P a g e




ODI needs to target farms having capacity of chickens more than 50,000

(62.08% of total market share of the farms having more than 20000 chickens)

for achieving break-even and therefore have to proceed with a B2B marketing

strategy by building good sales network across different geographies

It is not just lenses but ODI should sell its entire product (guarantee, fixing of

lens, packing, delivery, technical & financial assistance) to the farms for

deriving maximum response

As ODI Head Quarters are located in California, it should roll out its product

for the first time in this place and gradually expand to the more profitable

areas in its neighbourhood (South Atlantic & West South Central) for saving

distribution cost

10. Exhibit-1

6 | P a g e




11. Exhibit-2

7 | P a g e




12. Exhibit-3

8 | P a g e

odi case analysis

Documents