ODI Case Study

California accounted for approx. 12.6 % of the nations chickens. .
             Next, ODI needs to determine if marketing their new product to the selected target market and segmentation will be profitable. .
             Business Analysis:.
             California has 12.6% (A) market share of Chickens totaling approx. 46,000,000.
             According to government surveys, California will have approx. 57,500,000 (B) by 1975.
             (A) 46,000,000/363,000,000 (Chickens on CA farms/Total Chickens in U.S.).
             (B) 457,000,000 * 12.6% (Est. total # of chickens in U.S. in 1975 *CA market share).
             Variables Costs (per pair):.
             New World Manufacturing .0320.
             Injection Molds (12,000/15,000000) .0008.
             Box Costs .10.
             .14.
             .18 .4200 .
             Total Variable Costs .4528 .
             Fixed Costs:.
             Payment to New World $ 25,000.
             Regional Office & Warehouse 196,000.
             *Salesmen @ $40,000 each 200,000.
             *Technical Representatives @ $35,000 each 35,000.
             Advertising (est.) 5,000.
             Trade Shows (est.) 10,000 .
             Head Quarter expense 184,000 .
             Total Fixed Costs 655,000.
             .
             *Exhibit 2: CA currently has 521 chicken farms.
             ODI estimates 1 salesman needed for 80 farms; if ODI starts with 5 salesmen then.
             it is anticipated that 400 farms could be covered. I believe that this would be a good .
             starting point for ODI. .
             Break Even Analysis:.
             Unit: No profits could be recognized until 18,865,207 (C) pairs of contact lenses are sold .
             (approx. 75,200 boxes).
             Sales: ODI would need to generate over $1,509,216.59 (D) in gross sales to recognize a .
             profit.
             (C) 655,000/.08-.04528 (fixed costs/selling price-variable costs) .
             (D) 655,000/(1-.04528/.08) (fixed costs/1-per unit variable cost/per unit sales price).
             Market Share needed for ODI to Break Even:.
             33% (BE units for ODI/CA market in 1975).
             Obtaining 33% of the California market share will mainly depend on how well the farmers respond to this new and unusual idea of putting contact lenses in their chickens.