This document outlines a class on marketing strategy. It introduces a case study on Optical Distortion Inc. (ODI), a company that developed contact lenses for chickens to partially blind them and reduce cannibalism. Traditional solutions like debeaking caused trauma and higher costs. ODI lenses provided advantages by further reducing mortality while increasing egg production and lowering feed costs. The document discusses ODI's customers as large, concentrated chicken farms and competitors as minimal due to patents. It proposes segmenting and targeting large farms in California. The document also covers pricing, promotion, product and place considerations for ODI and outlines their expansion strategy in subsequent years.

1. MARK4210, 2014 Spring, L1/L2
[Class #2]
Overview of Marketing
Strategy
MARK4210: Strategic Marketing
2014 Spring, Section L1/L2

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MARK4210, 2014 Spring, L1/L2
Agenda
 Context
 Case Example of Marketing Strategy – Optical
Distortion, Inc. (ODI)
 Case Analysis Methodology

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MARK4210, 2014 Spring, L1/L2
Strategic Marketing Decisions
 Where to compete – i.e., definition of the market
 How to compete – i.e., means for competing
 When to compete – i.e., timing of market
movements, planning
Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

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MARK4210, 2014 Spring, L1/L2
Failings in Strategic Marketing
 Too much emphasis on “where” to compete and not
enough on “how” to compete
 Too little focus on uniqueness and adaptability in
strategy
 Inadequate emphasis on “when” to compete
 Lack of objectivity and/or inherent bias
Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

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MARK4210, 2014 Spring, L1/L2
Addressing Failings of Strategic
Marketing
 Develop attainable goals and objectives
 Involve key operating personnel
 Avoid becoming engrossed in current problems
 Avoid formality in strategy formulation – make it
practical
 Do not separate marketing strategy from the rest of
management process
Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

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MARK4210, 2014 Spring, L1/L2
Situation Analysis
(Customer, Competitor, Company)
Market Selection
(Segmentation, Targeting, Positioning)
Marketing Mix Formulation
(Product, Price, Place, Promotion)
Quantitative Analysis
Consumer Behavior
Simulation Game
-- PharmaSim
Elements of
Marketing Strategy
Fundamentals Application
Course Roadmap

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Marketing Strategy Case Example –
Optical Distortion, Inc. (ODI)

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MARK4210, 2014 Spring, L1/L2
Chicken Sociology
 Social structure: “Pecking order”
 Dominant versus submissive chickens – submissive
chickens get pecked:
• If they hold their heads high
• If they enter the territory of a dominant bird
 Associated costs
• Death
• Less feeding time and hence poorer egg production
• Replacement of dead chickens
• Upset pecking order
 Cannibalism was greater for more productive flocks

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Traditional Solution
 Debeaking – using a hot knife and anvil to cut and
cauterize the beak

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Traditional Solution
 Debeaking reduces mortality from 25% to 9%
 Costs associated with debeaking
• Trauma (weight loss, reduced egg production)
• Higher feed trough levels (at least 3/8” deep)
• Labor costs ($2.50/hr x 3 people) - 220 birds per hour

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MARK4210, 2014 Spring, L1/L2
Optical Distortion, Inc. (ODI)
 Solution
• Contact lenses for chicken
• Unlike contact lenses for humans that improve eyesight,
the ODI lens was made to partially blind the chickens
 How it works
• Blurred vision makes it harder to waste feed
• Birds had to walk with their heads low
• Peck order disturbed, hence reducing cannibalization

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Company
 Product invented in 1965
 ODI corporation founded in 1966
 Product difficulties solved by 1969, patent awarded
 In 1973, ODI licensed production of lenses to New
World Plastics (cost =$0.032 / pair)
 Limited financial and management resources

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MARK4210, 2014 Spring, L1/L2
Company
 What are the advantages of ODI lenses over
debeaking?
• Further reduce chicken mortality
• Reduce egg production loss due to trauma caused by
debeaking
• Reduce feeding cost

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MARK4210, 2014 Spring, L1/L2
Customers
 Facts
• 1974 Chicken census: 300,000 farms, 440 million birds
• 80% of these housed on 3% of farms
 Characteristics???
• Large base
• Highly concentrated

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MARK4210, 2014 Spring, L1/L2
Competition
 Who are the competitors???
• Debeaking is considered as indirect competition.
• Patent and license protection should hold off the entry of
other competitors for at least three years.

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Segmentation (STP)
 What are the possible ways to segment the
customers???
• Geography
• California
• South Central
• Southern Atlantic
• Farm Size
• Small (<10,000 birds): Family operated, sells eggs locally
• Medium (10,000-50,000 birds): Professionally run, farmer
owned, sells eggs to middlemen
• Large (>50,000 birds): “Corporation”

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Targeting (STP)
 Who should ODI target?
By size (small, medium, large)???
• Large farms
• Potential savings bigger for large farms
• More economical use of ODI’s sales and technical
personnel
• Managers of larger farms may be less conservative
• Can easily test the lens on a segment of their chicken

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MARK4210, 2014 Spring, L1/L2
Targeting (STP)
 Who should ODI target?
By geography (California, No. Carolina, Georgia)
• California area
• ODI has been doing their testing in California
• High concentration (13% of all US chicken population)
• Less conservative

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4P’s
 Pricing
• What pricing strategy?
• Skimming vs. penetration?
 Promotion
• What promotional method to use?
• How much should you allocate to each method?
 Product
• How to improve the product?
 Place
• Where should regional office & warehouse be located?

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What Happened?
 1975 Limited testing in California
 1976 Expand distribution in California and began
limited testing in the Southern Atlantic or South
Central areas
 1977 Large scale distribution in California
 1978 Expand into entire Southern US
 1979 Go national
 Mid-80s Achieve national roll-out

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Reinforcement: Case Analysis
Methodology

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How to Read a Case
 Skim through the case and identify the key issue
 With the question in mind, re-read the case carefully
and highlight relevant information
 Think about what analyses the information might be
used for and what other information you might need

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How to Structure a Case Analysis
Problem
Identification
Analyses/
Framework
Alternative
Generation
Criteria
Identifi-
cation
Decision
Making
• What is the
main issue/
problem to be
solved?
• Organize/ link
information
• 5Cs, SWOT,
etc.
• What are the
possible
solution
options, or
courses of
action?
• What factors
are important
in selecting
the best
option?
• Pros/cons of
each option?
• Evaluate the
alternatives
based on the
identified
criteria and
choose the
“best” option

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Hints
 Try to see the big picture as you read the case
• Do not get hung up on complicated terminology
• Avoid theory fitting and think intuitively
 Not all information there is useful, and not all useful
information is there
 Make reasonable assumptions when necessary, and
state these assumptions clearly
 The goal is not to find the “right” answer, but to learn
the approach to thinking and problem solving