Odi Company Case Solution

ODI (A).

Problem and recommendations:

ODI has developed a completely new product – contact lenses for chickens, which has the potential to revolutionize the poultry industry by modifying animals’ behavior, thus, replacing traditional debeaking practices and saving the farmers annually 25 cents per bird. In pricing the product the Company faces the objective of balancing the need to have a high contribution margin (to cover high fixed costs, including R&D and marketing expenses) with a necessity to achieve a 50% (from zero) target market penetration in 5 years, which is an aggressive goal. We believe the price of 16 cents per pair would allow the company to balance the two aforementioned goals. The break-even quantity at that level is 8.4mn of pairs, which is reasonable given 30mn chicken population in California – one of the target market.

Company, Competitors, Customers:

Company: SWOT analysis[pic 1]

Competitors: the major competitors are the farms’ internal employees or debeaking services firms. The debeaking operations/service was essentially a commodity, as it consisted of a non-sophisticated labor operation and paid hourly, with the pricing floor influenced by the US government’s minimum wage requirements. Therefore, we do not view existing competition as a significant threat. However, a potential competition in the animal lenses market could pose significant threats to the Company. There are three groups of potential competitors (described above).[pic 2]

Customers: chicken farms are the major customers of the product. The product is compelling (see 4P Product section). However, farmers initially will be less willing to adopt the product because of its novelty and, potentially, price, being “breed of men who might react very unfavorably if they get the idea that they have been taken”. Farmers differ in size (number of chickens), which, in turn, influences their willingness to pay and desire to adopt advanced technologies. There was a recent trend of declining number of smaller farms, and industry consolidation, which is positive for the Company as it increases the number of sophisticated farms, willing to pay for and adopt new technologies such as ODI lenses.

Segmentation, Targeting, Positioning

Segmentation: we believe the most effective way to segment farms is by size because it dictates farms’ willingness to adopt and pay for new technologies, as well as determines ODI’s distribution mode (direct sales for large accounts vs through agri retailers/distributors for small farms). Geographical segmentation is also useful as it would allow to dedicate scarce resources to the most promising (sizeable, the highest number of chickens per fram), thus, potentially profitable US regions.