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Optical Distortion

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Optical DistortionTeam members :Anurag

Mehra

GunreetMihika Mrinal

Kaur Thind

Yadav Thakur C John GS

Pradyoth Rohit

Agarwal

Sharanya

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Objective

To become a multi-product, multimarket company which can provide effective service anywhere in the country

3/14

Problem

Achieving growth objectives without placing excess stress on limited managerial and financial resources

4/14

Company overview

Optical distortion Inc.- Produces one product, the ODI lenses for chicken

ODI lenses- Invented by Robert D. Garrison and Ronald Olson in 1965Was issued a US patent in December, 1969 Obtained a long-term license from New World Plastic for exclusive use of hydrophilic polymer for non- human applications Two full-time employees- Daniel Garrisson (CEO) and Ronald Olson(VP of marketing)

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Industry Overview

In 1921, the largest farm in the US had 2000 chickens; In 1974, the largest farm had 2,500,000. Birds were confined in groups of 3-4 in multi-tiered cages

80% of the 440,000,000 laying chickens in 3% of the farms- 25% in 3 states, 36% in another 9 statesTwo counties in southern California housed 21,000,000 chickens

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Industry

Small Farms No. of Birds Operated

Medium Farms

Large Farms over 50,000 Small manufacturing firm Sold through large grocery chains

Distribution channel

10,000 or fewer 10,000 to 50,000 By family Professionally, owned by farmers Sold eggs Sold to large locally through corporate small grocery purchaser stores

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Cannibalism

Pecking order among chickens established through fighting and pecking Recognition of comb on head preserves pecking order Submissive birds pecked if head is held high, or for entering territory of a dominant bird

Controlled by debeaking- reduces mortality from 25% to 9%Alternative- ODI Lenses

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Advantages & Disadvantages of DebeakingAdvantages Reduced the efficiency of the beak as a weapon Reduced mortality 25% to 9% Disadvantages Chickens were subjected to trauma Temporary weight loss and retardation of egg production for at least a week If the beak was cut too short, it would result in permanent regression. If left too long, then it would grow back

No expenses apart from labor costs

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ODI Lenses

ODI lenses- Used to obscure the vision of chickens; leads to reduction in both cannibalism(from 25% to 4.5%) and savings on food( $800/10000 chicken/year) Tinted red- affects ability to act out aggression Patent protected- manufactured by injection molding soft hydrophilic polymer

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SWOT AnalysisFirst mover Patent holder Not viable for smaller farms Lack of skilled manpowerStrengths Weaknesses

Minimises cannibalismSaves on chicken feed No Competition

High priceCannot be re-used

Big potential marketMedium and Large farms major part of the market

Opportunities

Threats

Idea can be easily stolen Threat of entry of large agricultural firms

Licenses technology cant be used by others

Protest from animal rights organisations

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Benefits to farmer/chicken

Savings on Cannibalism Savings on egg loss due to trauma Savings on food/year Net benefit of ODI Net benefit of Debeaking

$ 0.54 $0.09 $0.08 $0.70 $0.38

Benefit of ODI over Debeaking

$0.316

ODI Saves 83.16% more money than debeaking

Mathematical analysis

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Break even analysis

Selling price $0.08 Total cost/pair Total cost Margin fixed$0.046

$0.16$0.126 7,608,350

$0.19 $0.034$955,000 $0.156 6,140,690

$0.300.266 3,596,716

Break even volume

20,979,790

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Why use ODI?No trauma nor weight loss in chicken Guaranteed results- you cant go wrong with ODIMake more money!! 83% more savings than debeaking- save $4440 more per 10000 chicken Save on chicken feed

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Save on loss of egg production

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Suggestions

Price a pair of lenses at $0.16 (50-50 split in benefits)penetrative pricingVisit large farms and install lenses in a relatively small number of chickens

In 6 months, the benefits of ODI lenses would be apparentOnce large farms adopt ODI, others will follow

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Marketing approach

Segment farms according to size- Small, medium and large Target medium and large farms, i.e those with more than 10,000 chicken Concentrate on California market initially; North Carolina and Georgia should be targeted next Advertise in leading poultry magazines; participate in trade shows Expand aggressively

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