Marketing Strategy Case of Optical Lenses for Poultry

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

2
Agenda
 Context
 Case Example of Marketing Strategy – Optical
Distortion, Inc. (ODI)
 Case Analysis Methodology

3
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

4
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

5
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

6
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

7
Marketing Strategy Case Example –
Optical Distortion, Inc. (ODI)

8
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

9
Traditional Solution
 Debeaking – using a hot knife and anvil to cut and
cauterize the beak

10
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

11
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

12
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

13
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

14
Customers
 Facts
• 1974 Chicken census: 300,000 farms, 440 million birds
• 80% of these housed on 3% of farms
 Characteristics???
• Large base
• Highly concentrated

15
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.

16
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”

17
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

18
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

19
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?

20
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

21
Reinforcement: Case Analysis
Methodology

22
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

23
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

24
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

Marketing Strategy Case of Optical Lenses for Poultry

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Marketing Strategy Case of Optical Lenses for Poultry