Marketing Management

1. OPTICAL DISTORTION, INC. CASE Alessandro Monda Andrea Cirillo Emanuele Gasparini Ignazio Di Biase Pietro Migliori UlugbekKurbanov

2. AGENDA

3. Company’s Background

4. Poultryindustry

5. Cannibalism Cannibalistic behavior performed by poultry is the pecking, tearing and consuming of skin, tissues or organs of flock mates. If a submissive bird raises its peak, it was pecked by its superiors until the head was lowered Geneticfactor can lead the chickenstobedominant or submissive Insufficient access to resources, including feed, water, perch or nesting space

6. Cannibalism http://www.youtube.com/watch?v=u6yxlc8fuLw http://www.youtube.com/watch?v=Jpoki4wBwtA&feature=PlayList&p=D0ABD6CEE319C313&playnext_from=PL&playnext=1&index=7

7. SolutionstoCannibalism

8. Debeaking

9. SolutiontoCannibalism

10. Benefitsforfarmers

13. Lackofpersonnel and facilities

14. LackofadequateR&D

15. No specialmachinery

16. Big riskofchickens’ deathiflenses are notwellinstalled

18. ExclusiveTechnology

19. Reliablesupplier (NWP)

20. Minimizingcannibalism

21. Reducing trauma foranimals

22. ReducingfeedcostSTRENGHTS

24. Technology can beeasilystolen or copied

26. Big market

27. Possible fast technologicaladvancement due tosimilaritieswithhumancontactlens

28. Varietyofsuppliers

29. Growing market forlargefarmsOPPORTUNITIES

30. Porter’s FiveForcesFramework

31. Product FEATURES “If we pull it off, we will have revolutionized the business of animal behavior in much the same way as IBM revolutionized the processing of data”, R. Olson, ODI marketing vice president.

34. Each salesperson covers maximum 80 farms

35. One technical representative for each five salesperson

37. GeographicalSegmentation (cont’d) South Atlantic has 28.5% of whole chicken population while Pacific region, including California, possesses 16.3%. 80% of the whole chicken population is housed on 3% of the biggest farms in California, North Carolina and Georgia

38. GeographicalSegmentation (cont’d) US has been divided into 9 macro areas by flock size to show the priority areas for investing.

39. Segmentevaluation Largefarms Medium farms Smallfarms

40. Targeting (Geographical) Targeting (Geographical) After studying Geographical Segmentation, it is evident that ODI should invest in South Atlantic and Pacific regions. Specifically, ODI should focus on farms with 50,000 or more chickens in California, Georgia and South Carolina (that house ¼ of the nation’s chickens).

41. Targeting (Farm size) Targeting (farm size) Farms with less than 10,000 chickens

42. Targeting (Farm size) (cont’d) Targeting (farm size) Farms with more than 10,000 chickens

43. Positioning ODI is the only producer of contact lenses for non-human purposes but it still has to introduce its product in the market on a large scale. POSITIONING ODI is not differentiating its product at the moment Target positioning: 50% penetration of farms with at least 10,000 birds within 5 years

44. Savingsforfarmers

45. PricingPolicy $ 0,08 Minimum price Thiswas the minimum price on whichGarrison & Olsonagreed. Withsuch price the savings per birdwillbe $ 0,34. $ 0,28 Optimal price $ 0,36 Maximum price Considering the benefitsrelatedto the useof the lenses, ODI couldcharge a price up to $ 0,36: indeed, farmerswouldgetsavings per birdequalto $ 0,06.

46. Pricing Policy (cont’d) The actualvaluewilllikelybegreaterthan the perceivedvalueof the lensessincechicken farm ownerswilllikelybe more price sensitive to ODI’s lensesthantodebeaking: therefore, a price of $ 0,36 willnotbesustainable. Most farm ownerswillbehesitanttoadopt the lensprocessbecauseitisunfamiliar and not the industry standard. Ownersmayalsooverestimate the switchincostsinvolvedgiven the lackof data on the processcurrently in the market. Moreover, ownersmaybeconcernedthat ODI willabuseitstemporarymonopolyoverfarmersaftertheyhaveinvested in switching, a threatthatdoesnotexistwithdebeakingservices. To compensate fortheserisks, ODI willhavetocharge a lower price than $ 0,36.

47. SkimmingVsPenetration $ 0,28 ODI should price itslenses at $ 0,28 per pair, whichwillleave a $ 0,14 saving per birdtofarmers. Itshouldengage in price skimmingbyentering the market with a relatively high price and reducingthat price whenitspatentruns out in threeyears. ODI shouldpursue price skimmingoverpenetrationpricingbecausepricing high willmaximizeshort-termcontributionallowing ODI toinvest in R&D and scale operations. Investing in R&Dwillbecriticalfor ODI toprotectitselffromlow-costentrantswhentheirpatentexpires. Furthermore, the debeakingservicescompanies (the largest source ofcompetition in the short-term) are limited in theirabilityto reduce prices due to minimum wage.

48. Break Even Point Analysis Fixed costs = $ 85,000 Variable costs per pair= $0.0337 Low price per pair A= $0.08 High price per pair B= $0.36 ODI price per pair C=$0.28 FC A C B $85000 0.26 mln 0.34 mln 1.83 mln Q

49. Thankstoeveryone