Optical Distortion Inc.

Questions for Discussion

1. What characteristics of the ODI contact lens are likely to make it appealing or
unappealing to different types of chicken farmers? [If desired, this question can be
rephrased to include a specific reference to literature on diffusion of innovations.]
The most important characteristic of ODI that makes it appealing to farmers is the
reduced cannibalization and pecking among the animals, which in turn has a positive
impact on productivity of the farm. Another benefit is the removal of the traumatic
experience of debeaking for the chickens by a more humane method of lenses.
2. In what geographic areas should ODI focus its efforts?
ODI should focus on the geographic areas of California and South Atlantic states
(Florida, Georgia, Carolinas). Because of the small scale of startup capital maybe they
should focus for the beginning on California alone.
3. On what market segments (in addition to geographic) should ODI focus its effort?
They should focus on larger farms primarily and then on medium ones. The reason
for this is that it is much easier to make bigger farms try out new innovations, their
labor force should understand the process more quickly and of course the savings on
the product are far greater with greater number of chickens.
4. What pricing policy should ODI adopt?
First benefits and savings for the farmers need to be calculated;
The lower mortality saving from 9% to 4,5%
Old price without lenses was 2.61 per chicken, and new is to be calculated
0,91:X=0,955:2.61 and new price is 2,49$.
Savings here are 2.61-2.49=0.12=12
Feed savings feet depth reduced: 156/2 [Savings for feet per day] X 1/20,000
[savings per chicken] X 158/2000 [savings/lb]* X 365 days=11.25
There is 2000 in a metric ton
So the savings are 11.25
Savings on egg production
Because of the less trauma there is a increase in production of one egg per chicken. If
we divide income per one carton by 12(a dozen) we will get savings increase for one
egg more 0.53/12=0,04445=4,5
Total savings are 27,75

With these savings we get a price ceiling and proceed to the calculation of the price
floor which are the variable costs.
Variable costs: The variable costs are 3.2 cents for manufacturing. Packaging
variable are 0.17 cents. The injection molds cost $12,000 for 15 million pieces and
are 0,0008$ or 0,08 cents. Total variable costs are 3.45 cents.
Management does not want to go under 8 cents anyway so they are already over the
price floor
5. What level of marketing efforts should ODI be considering? In particular, what
information, incentives, and technical assistance will be required to induce (a) trial
and (b) repurchase?
6. What's a realistic goal for ODI by 1978?