Optical Distortion, Inc
Optical Distortion, Inc. was the first American firm that manufactured the first non-human ODI contact lens for the first time for agricultural chicken farmers. The technological innovation is aimed to target the chicken farm businesses that have traditionally used the Debeaking or Beak Trimming procedure for removal of beaks, which could lead to health issues in chickens and also adversely impact egg production capacity. ODI contact lens would be manufactured using hydrophilic polymer substance and the finished product would be patent protected with certain appealing features to become a productive and cost-effective solution to poultry industry in USA. It should be highlighted that the three American states known as Georgia, California and North Carolina had been contributing a phenomenal 25 – 30% chicken production across USA in 1970s. Therefore, ODI had immense opportunity to become a monopolist in American poultry industry because of its alternate innovative solution. In addition, the American chicken industry comprises of small, medium and large farmers; therefore, the appropriate target market for ODI contact lens was medium-to-large farms because they would welcome a substitute product to avoid cannibalistic behavior in chickens and achieve reduction in feed consumption. ODI contact lens would be a success because of its core characteristics such as increase in egg production, cost minimization in running a chicken farm house and reduction in management issues that arise due to use of debeaking procedure. ODI contact lens innovation would be initially adopted by some large farmers whose experimentation results typically lead to decision-making about abandoning old approaches. For this purpose, the ODI marketers have to meticulously design their educational literature to increase awareness about contact lens use and its benefits. The analysis should be supported with quantitative evidences for operational efficiencies and cost benefits for chicken farmers because otherwise their rejection of idea would throw innovative project in shutdown position.
As far as the segmentation is concerned, the chicken industry of USA has large clusters in California, Georgia and North Carolina as mentioned previously. Therefore, the first market to initiate ODI contact lens launch should ideally be California, which has eight densely populated cities including Los Angeles, San Francisco, Sacramento, Oakland, San Diego, Long Beach, San Jose and Fresno. ODI will then have the opportunity to take its innovative product to the other two states to capture 20 – 25% U.S poultry market. The expansion in remaining U.S. states will be on the basis of its established market share; therefore, the initial success in three states is crucial for growth of Optical Distortion, Inc. For instance, ODI’s project budget will also determine if it has ample financial resources to market contact lens in only California or in all aforementioned states simultaneously. It should be argued that the conversion of large farmers will enable ODI to expand in USA because the medium farmers typically follow approaches of large farm houses. The small markets are not a preferred target market because they don’t face any chicken proximity issues in their farms; hence, the probability of cannibalistic behavior is low. Secondly, it is difficult to attract smaller farms because a significant number of owners may lack adequate education to understand the nature of innovative product. Third, the cost advantages are more evident for large farm houses because of their scale operations.
As far as the pricing policy is concerned, ODI should first provide a sufficient time to test the scope of contact lens after which the company should sell to large farmers by using price skimming strategy and thus charging a reasonable premium. Indeed, the price skimming is for the reason that the contact lens is an innovation and the purpose is to facilitate farmers in achieving high production of eggs at low costs. The increase in use of ODI contact lens will also reduce production costs of lens; hence, the price benefit will be provided to farmers in the long run. This pricing approach will also serve as a differentiation tactic to position the ODI lens as an innovation instead of a mere cost-saving product. Use of penetration or competitive pricing could result in low interest of large farmers who have adequate education and financial resources to acquire this product. However, the value-based pricing could also be used an effective strategy for first few years. Another basis for abovementioned pricing strategy is the price inelastic demand for the lenses as there are no close innovative substitutes for ODI and there will be less impact of price change on quantity demand of large farmers who will successfully adopt this product.
However, it should be noted that the marketing efforts ODI should be considering have to be focused on particular group of large farmers in California by adopting direct marketing and personal selling methods. Even, these bigger customers would personally experiment the product credibility and evidences regarding productivity benefits and cost-efficiency. Hence, the marketing efforts will last for 2 – 4 months, which means the marketing strategy has to be customized after obtaining deep insights about chosen large farmers. ODI could make profits if it achieves scale production of contact lens because the use of hydrophilic polymer in injecting moulds is an expensive method. Hence, the increased marketing effort (i.e., higher fixed costs) will result in increased sales in the first few years until ODI lens market reaches maturity level. The goal for ODI by 1978 is to penetrate in three states of California, Georgia and North Carolina.