ODI Contact Lens’ Marketing Strategy Essay Example

successful use by early adopters is key; Risk (of Adoption)- As with any new product there is an inherent risk of product allure. In a low margin industry such as chicken farming, the investment in risky technology is much lower. The free trial is key to reducing the risk of future investment; Divisibility (Limited Trial) - It is possible, and in fact, desirable to try this product on a limited basis. The Pacific region is the logical choice, since ODD already has an office there and has conducted tests in the region.

Three pricing strategies may be employed;

1. Penetration with no Free Trial,
2. Skimming with no Free Trial and
3.  Skimming with Free Trial. For Penetration with no Free Trial strategy? In order to break even at a low price of cents per pair, the company must achieve quarterly sales of 3,092,000 units, sold to at least 1 57 farms add-on cost to a farmer (in addition to labor cost).

With perceived value being virtually zero, the penetration of 23% of the market is highly unlikely. For Skimming with no Free Trial the skimming price can be set to capture the economic value entirely.

This price (less shipping and handling costs) is around ICC. The quarterly sales, in this case, must be 759,750 units to at least 39 farms (see Appendix 1). This amount corresponds to a 6% penetration of the total market within year. With low perceived value, this is extremely hard to achieve in a low margin industry. For Skimming with Free Trial option ODD must introduce a batch of lenses to farms in each segment (distributed proportionally to the farm? S size). The

lenses must be given on a three-month free trial with the option to purchase at a higher price (ICC ? C) or keep the lenses. This strategy must be accompanied by extensive educational and informational campaign with a salesperson being present at the farm at least several times a month. As the number of followers grows, ODD will be able to continue trial and lower the price of lenses. Using the initial investment of $200,000, ODD can distribute 5,442,671 units for free trial. In order to recover its cost within a year, the number of adaptors at the price of ICC must be around 79% (annually).

This percentage can be spread through the year. This corresponds to 8% of the market. Combined with on site support and an informational campaign, this penetration is attainable. This only pertains to the percentage of lenses bought from the initial distribution. It does not include the additional lenses purchased either it sakes into consideration the imitator effect of other farmers. Using Bass Diffusion Model analysis shows that with the average coefficient of innovation of 0. 001 and the average coefficient of imitation 0. 38 and with only 10% of initial adapters (based on number of units purchased from initial distribution), the profits are expected to come in the second year (see Appendix 1). Since the product is in the introduction phase of the Product Life Cycle, an extensive promotion to raise product awareness with emphasis on economical benefits and product ease of use is required. This promotion must focus on the information and education of the farmers. The company must concentrate its efforts on a limited distribution in Pacific

region.

ODD should adopt a free trial approach followed by skimming pricing. The number of adaptors after a trial is critical to the ODD? S success. The initial investment of $200,000 should be used to acquire 5,442,671 pairs of lenses which should be distributed proportionally (see Appendix to the farmers. The free trial should last for 3 months. There must be a considerable personal involvement of a salesperson concerning the progress of the farmer? S trials. This is necessary to envoy all the potential value of the product to the farmer.

The awareness advertisement must be made in the industry publications, supplicated with the results of the trials. At the end of a trial, the farmer will be given an option to buy the units for ICC a pair. The free trial will be discontinued. The initial distribution of the product will be limited due to the ODD budget constraint and inadequate sales force. The initial distribution should focus on the Pacific region since the company has done tests there and has a physical presence. Therefore, one regional office should be considered.