ODI Case Exercise
Daniel Garrison, CEO of Optical Distortion, Inc (ODI), asked Roland Olson, marketing VP of ODI, to develop a marketing plan for the firm’s new (and only) product—a contact lens for chickens. A surprising idea? Mr. Garrison explained:
Like so many other great discoveries, our product concept was discovered by accident. A chicken farmer had a flock of chickens with severe cataract problem. He separated the afflicted birds from the rest of the flock and subsequently observed that the afflicted birds seemed to eat less and were much easier to handle. So dramatic was the difference that a poultry medical specialist was asked if the affliction could be spread to ...view middle of the document...
Also, once a pecking order is established, replacing a dead bird disturbs the social order.
For nearly 50 years, the main means of combating cannibalism has been debeaking. Debeaking does not interfere with the pecking order, but it reduces the efficiency of the beak as a weapon. The operation is simple: Using a hot knife and an anvil the beak is cut off and the wound cauterized. The operation subjects the chickens to considerable trauma and results in a temporary weight loss and temporary loss of egg production—about one egg per chicken. Debeaking does, however, reduce cannibalism.
Garrison believed the ODI contact lens was the first product to confront the cause of cannibalization rather than its effects. A bird wearing ODI lenses had its depth perception reduced to about 12 inches and its visual acuity greatly reduced. The ability to recognize the comb of another bird was greatly reduced. Further, in order to feed, all chickens had to walk with their heads lowered. Thus the primary cues for pecking were removed, no pecking order emerged, and cannibalism was reduced 50% over debeaking. Also, because their heads were kept low, chickens “wasted” less of their feed.
Olson had big plans but was aware of ODI’s limited assets. He was considering two price points. A minimum price was $.08 per pair. This price represented an incremental cost for the farmer (the labor costs of debeaking and of inserting the contact lenses were essentially the same), but Olson was certain that the farmer would obtain benefits much greater than $.08 per chicken due to reduce cannibalization, less trauma, and greater feeding efficiency. Olson believed the benefits would justify the higher price of $.20 per pair, but he wasn’t sure farmers could be convinced of those benefits without considerable experience with the lenses. Nevertheless, he was hesitant to...