Essay About Grocery Chainssupplypurchase Pullets And Farm Size

Optical Distortion Inc Case Study
ODI Case Write UpBackground: Optical Distortion, Inc. is the developer and manufacturer of the contact lens for chicken. The lens could reduce chicken mortality, trauma and promote feeding efficiency. Ronald Olson, marketing vice president, needs to develop a marketing plan to grow the company into a multiproduct, multimarket company that can provide effective service throughout the country and to gain 50% penetration among the farms producing 10,000 or more chicken in five years.Analysis (the 3Cs): Company Analysis: ODI invented the chicken lens that has important economic benefits for the farmers in 1965.  In late 1960s, ODI solved the retention problem of the lens and made its products more valuable. In face of the new entrants, ODI obtained patent and license protection to hold off competition for at least three years. Moreover, the company entered into a contract with New Plastic World, the patent owner of the contact lens polymer, for mutually exclusive purchase of nonhuman markets. At the same time, Daniel Garrison, the president and chief executive of the company, purchased 25% of stock of ODI and he raised $200,000 in the VC markets for the company. Competitor Analysis: Cannibalism among chickens results in mortality and reduction in egg production. In order to combat cannibalism, debeaking has been a traditional method adopted by farmers. A comparison of debeaking and ODI lenses is listed below: DebeakingLensesEffectsMortalityReduce mortality to 9%Reduce mortality to 4.5%TraumaConsiderable trauma (significant weight loss, reduced egg production, disrupted pecking order)No major traumaProblemsPermanent trauma from over cut; repeat operation required from under cut Non reusableCustomer Analysis: ODI’s customers are farmers from various-sized chicken farms-small, medium and large. These farmers are familiar with using debeaking to combat cannibalism. However, they have little or no prior experiences with the lenses. Even if the benefits from ODI lenses are greater than debeaking, the farmers need to see the benefits in real life before they are fully convinced. In order to maximize its efforts with limited resources, ODI should target mid to large sized farms in California, North Carolina and Georgia. The detailed segmentation is elaborated below: Strategy Development: Segmentation: Geographically, 80% of the whole chicken population is housed on 3% of the chicken farms with 10,000 or more chickens. Specifically, California, North Carolina, and Georgia accounted for 25% of the nation’s chickens; nine additional sates in the South and Northeast accounted for an additional 36% of the chicken’s population (Exhibit 2). Based on the farm size, potential customers can be placed in the three segments in the table below.SegmentSmall farmsMedium farmsLarge farmsSize10,000 or fewer birds10,000-50,000 birdsOver 50,000 birdsCharacteristicsOperationsFamily operatedProfessionally operatedMore than 100 employeesSalesLocal sellingB2B sellingComplex negotiations with grocery chainsSupplyPurchase pullets once or twice a yearPurchase pullets two to three times a yearPurchase pullets at least four times a yearOthersNumber is declining 25% a yearAnnual cash flow over $375,000Annual cash flow of $12 million; The frequency of pullet purchase is interesting because that also indicate the count of revenue stream ODI can potentially generate from each size of farms. ODI definitely wants more frequent sales in order to support business expanse and R&D cost. The larger sized farms have the stable sales channel, financial capability and growth potential to adopt this new product. Based on the geographical and size analysis, it is evident that ODI should target on farms with 50,000 or more chickens in California, North Carolina and Georgia that encompass almost a quarter of the nations chicken.