This document provides an overview of Optical Distortion Inc.'s plans to address cannibalism in the poultry industry by developing contact lenses for chickens. It discusses cannibalism issues in chickens and debeaking as a common solution. It then outlines ODI's lens technology, market analysis, pricing strategy, and break-even point analysis. ODI plans to enter key markets, target large farms, and initially price lenses at $0.28 per pair through a skimming strategy to maximize profits and fund R&D before competition emerges once their patent expires in 3 years.

1. OPTICAL DISTORTION, INC. CASEAlessandro MondaAndrea CirilloEmanuele GaspariniIgnazio Di BiasePietro MiglioriUlugbekKurbanov

2. AGENDA

3. Company’s Background

4. Poultryindustry

5. CannibalismCannibalistic 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 loweredGeneticfactor can lead the chickenstobedominant or submissiveInsufficient access to resources, including feed, water, perch or nesting space

6. Cannibalismhttp://www.youtube.com/watch?v=u6yxlc8fuLwhttp://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

11. An insight on furtherdevelopmentstoday…“ Prevention of cannibalism is much easier than treatment. “ The first step in a cannibalism control program is to give the birds the best care possible:Adequate feed; Carefully managed lighting (Reducedlighting and Photostimulation programs they are delayed when birds are physically mature, to produce early onset of lay);Environmental enrichment;Safe housing: since chickens are attracted by blood, it is important to keep dominant chickens separated from one another to prevent injuries;Considertherapeuticbeaktrimming (to reduce trauma effect);

12. New technologies using lasers and infrared beams are currently under research and producers should be prepared to adopt these new methods if they become available!SWOT AnalysisAs Daniel Garrison explained, “No farmer is going to spend time looking into the eyes of his chickens to make sure the lenses are still there and the eyes are not bloodshot.”High price

13. Lackofpersonnel and facilities

14. LackofadequateR&D

15. No specialmachinery

16. Big riskofchickens’ deathiflenses are notwellinstalled

17. No planforrecyclingoldlensesWEAKNESSESPatent (3 years)

18. ExclusiveTechnology

19. Reliablesupplier (NWP)

20. Minimizingcannibalism

21. Reducing trauma foranimals

22. ReducingfeedcostSTRENGHTS

23. SWOT AnalysisProtestsfromanimalprotectors

24. Technology can beeasilystolen or copied

25. No distributors can beinvolvedTHREATSNo competition

26. Big market

27. Possible fast technologicaladvancement due tosimilaritieswithhumancontactlens

28. Varietyofsuppliers

29. Growing market forlargefarmsOPPORTUNITIES

30. Porter’s FiveForcesFramework

31. ProductFEATURES“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.

32. PromotionMonthly advertising through 8 poultry industry leading publications and participation in trade showsPromotion on a national basis up to 2-3 yearsUse of personal selling to each farmer involving specialized technicians

33. ODI cannot count on much Word of Mouth in the short term since the technology hasn’t been implemented yet PlacementChoice to enter market region by region starting from California

34. Each salesperson covers maximum 80 farms

35. One technical representative for each five salesperson

36. Technicians are involved in distribution since the product is hard to apply without technical helpSegmentationDaniel Garrison, CEO, divided the US Chicken farms into the following various sized groups.

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. SegmentevaluationLargefarmsMedium farmsSmallfarms

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. PositioningODI 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.POSITIONINGODI is not differentiating its product at the momentTarget 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$ 0,28ODI 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 AnalysisFixed costs = $ 85,000Variable costs per pair= $0.0337Low price per pair A= $0.08High price per pair B= $0.36ODI price per pair C=$0.28FCACB$850000.26 mln0.34 mln1.83 mlnQ

49. Thankstoeveryone