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ODI: Key Learning
Comprehensive Pricing Approach
Price Ceiling (Demand Factors, Consumer Reservation Prices)
• Competition
• Risk
• Preemption
• Market Penetration
Final Pricing
Decision
Price Range
• Corporate objectives
• Liquidity
• Skimming
Price Floor (Cost Factors, Direct Variable Costs)
Ganesh Iyer
1
Adoption Factors for a Radically New Technology

Relative advantage: Is there tangible incremental benefits
versus existing option?
» Cost savings over debeaking

Complexity: How difficult the new technology is to understand
and operate/
» Is ODI lens a really out of the box idea especially for small farmers?

Observability of benefits: Is the benefit easily observable and
understood?
» How much time the contact lens takes to show result?
» Program oral flea.

Risk:
» Financial risk, social risk.
Ganesh Iyer
2
ODI: Pricing Options
New Product Pricing Strategies
Market Skimming Pricing
Setting a high price for new products to
maximize revenue from the target segment
Market Penetration Pricing
Setting a low price to attract a large number
of buyers before any competitor enters
Ganesh Iyer
3
Skimming vs. Penetration

Is the firm liquid?...can a startup afford to go after large market
share?

Are there enough high valuation consumers?

Status item

Likelihood of competitive entry

Consumer Waiting
Ganesh Iyer
4
ODI
Postscript

While the market potential was 440 mn chicken in 1974, chicken
farmers were not easily persuaded to adopt the innovation in the
1970s.

Two problems arose with the first introduction in the 1970s
» Eye irritation
» Unacceptably low retention rates. Lenses tended to pop out.

After a decade the problems were solved and re-launched in 1988 by
Animalens Inc.

Animalens discovered that the red color is enough (no need for vision
distortion)
» Current market size is est. $38 mn.
Ganesh Iyer
5