Market and Geographic Segmentation

Market and geographic segmentation:

Two market segments for ODI were identified based on the size of the chicken farms data from exhibit 3 (ODI case HBS). As shown in figure 1, in the market of flock size larger than 20k, the market penetration of farms with flock size 50k or over is ~50% more than that with flock size 20k - 49k (58.8% vs 41.2%). Also, the savings for targeting farms with flock size 50k or over is $1,140,000.

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Figure 1. Market segmentation based on number of farms

Furthermore, we segmented the market based on number of chickens in each geographic area with flock size 50k or over. As show in the pie chart figure 2, California has the most percentage of chicken number (CA, 26.1%), followed by Southern Atlantic (SA, 19.0%) and West South Central (WSC, 14.1%)

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Figure 2. Pie chart representation of percentage of chickens in farms with flock size 50k or over per geographic area

Targeting:

ODI should target the farms with flock size 50k or over due to their large growth opportunities (avg. +66.5% during 1964-1969, ODI case Exhibit 4), higher market share (~50% higher over farms with flock size 20k - 49k), and large saving on sales force cost ($1,140,000 savings) (Fig. 1). ODI should also start the business with a focus in specific three geographic areas: CA, SA and WSC (Fig. 2). Since ODI is a start-up and has limited capital (200k from VC), a priority list was generated and the overall market share of target markets would drive the rollout sequence. As shown in figure 3, ODI should enter CA market region first, followed by SA and WSC. Moreover, at the beginning of the business, starting the target market region closed to ODI’s West Coast Regional office could strategically save the distribution and related expense.

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Figure 3. Target segments priority list

Positioning:

For large chicken farm owners (with flock size ≥50k) who want to scale-up their chicken farms, save on cost, and maximum profits, ODI developed and offered innovative chicken contact lens which could impair chickens’ eye sight, and decrease their appetite and aggression, hence, reducing cannibalization and mortality. Compared to the old debeaking technology to combat cannibalism which causes trauma on chickens and requires more human labor, ODI chicken contact lens technology can provides a solution for large chicken farm owners to leverage for scale-up and maximize profits with the following benefits: (1) significantly decrease cannibalization by 50% (4.5% with ODI vs 9% with deabeaking); (2) eliminate trauma consequences which will increase egg production (no loss with ODI vs $0.1 loss per bird with debeaking) ; (3) reduce labor; (4) reduce food cost.