ODI Case Study

19 Pages 4707 Words

cent of the US chicken farms. 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 wil...