VISTAKON – 1 DAY ACUVUE DISPOSABLE CONTACT LENSES

R. BALACHANDHIRAN – 110090670

ASSIGNMENT QUESTIONS – Case #2: “Vistakon: 1 Day Acuvue Disposable Contact

Lenses”
Your thorough analysis should include (but not be restricted to) the following questions:
1. Conduct a detailed SWOT Analysis on Vistakon.
2. What are the firm’s objectives?
3. What is your recommendation for a target market? Should there be more than one and if so,
what should they be?
4. How would you position the product?
5. With the above questions in mind, develop a marketing mix profile.
6. If you were developing an advertising campaign, what message would you try to impart to
your target market(s)?

WHO:
Name: Bernard Walsh, Gary Kunkle
Position:
Walsh: former Vistakon CEO, Current Chairman of Vistakon Parent company, Johnson
&Johnson.
Kunkle: present CEO of Vistakon.
WHAT (issues): A national launch decision must be made, however, based on the test markets
and the western regional results, there were concerns regarding the product positioning, pricing,
promotion, advertising, and trade support. Also, both former and present CEOs of Vistakon,
are concerned that the company can become either too cautious or too bold as they have been
successful in the past years. It should be also clear what customer acquisition strategy should
be used to be effective.

1. SWOT analysis is an important factor that helps to analyze the internal environment of
the business.
Strengths:
Vistakon 1 Day Acuvue Disposable Contact Lenses is one of the world's most premium, well
known and most famous brands. They highly focus on innovation. They have many stable
customers and maintain good channels of cooperation with dealers.
Weakness:
The price of new product is high. Products are easily imitated by competitors
Opportunity:
People are paying more and more attention to health problems; therefore, people tend to buy
such products that are more beneficial to their health. Open the international market
Threats:
Other companies have launched similar products, which are easy to compete with each other.
The profitability at this stage depends heavily on expensive advertising effects.

Strength Weakness Opportunities Threats

• Good brand • No presence • Multiple • Changing
Name in the competitors demographics
• Innovation Japanese • Declining & priorities of
• Production Market birth rate western
of own raw • Second to • The women-
materials P&G in technology women
• Experienced market entry was started going
in the • Low accessible to to work
personal care international everyone • Increased
category presence • Government demand
• Good • using old regulations • New
distribution methods of • Imitation of technologies
channel manufacturing strategies • New product
• strong in the existing
history of market
innovation • Existing
product in
new
marketing

2. The Firm’s Objectives:

They want to increase market share in similar products and increase the number of
customers. They also want to increase profits and reduce advertising costs.
• One goal of the business is to reach no garbage dump status. (Business, aboutus, 2017).
• Another thing that Business is working on is to improve its product packaging in such a
method that it would help it to minimize those complications and would likewise guarantee
the shipment of high quality of its products to its clients.
• Meet international standards of the environment.
• Construct a relationship based on trust with its consumers, organisation partners,
employees, and government.
 3. The first target market is patients who experienced medical problems with conventional
daily wear lenses (e.g., heavy deposits on lens or a dry eye condition) or who pursued
active lifestyles (e.g., athletes, frequent travellers). A second target population were
contact lens “dropouts” or ex-users of conventional daily wear lenses. The third target
group was existing conventional daily wear users who might be attracted by the
convenience of disposability and become interested in upgrading their existing reusable
lens wear.

4. As the company is targeting the segment which is economically strong and would select
a product based on quality rather than price and in the matter of contact lenses these
customers will highly adopt the product which will give them high quality eye
protection and support. Hence, keeping in mind the importance of eye care for the
customer the company has launched their product with their marketing slogan of “care
for your eyes”. This statement will create high impact on the minds of health-conscious
customers and make them agree to use disposable contact lenses.

5. The Value proposition of 1Day Acuvue:

In summary, we propose the value proposition of the product that "1 day Acuvue produces high
"quality" comfortable. and convenient disposable soft contact lenses for customers who are
active, part time contact lens users. 1Day Acuvue offers flexibility in use relative to the
conventional contact lenses and eyeglasses, and quality relative to Bausch & Lomb and Ciba
Vision products.

Pricing:
From Exhibit 21 of the case, we can calculate the previous annual cost to the customers and
the equivalent 1 Day. Acuvue lens price to show the different magnitude of economics based
on days of use in a week. (see Exhibit 3) Vistakon can consider multi tier pricing to exploit
such opportunities. However, from the ECP's standpoint, based on the Western launch pricing
strategy we find that they can potentially gain more contribution by selling disposables rather
than 1Day Acuvue. This shows that ECP is not fully incentivized to sell 1Day Acuvue over
disposables.
Recommendation
The following are the different options available for the 1Day Acuvue:
Penetration / Low Price This option puts them at risk for prisoners dilemma and cannibalization
of current product lines with less profitability. Therefore, this is not a sensible option. In
addition, lowering the price might potentially reflect as low product quality.
Skimming / Premium Price The test market suggests that this needs to be carefully considered
as price is the largest barrier to customers purchasing the product. However, premium pricing
will reduce cannibalization by occupying a distinct price performance segment.
Based on our assessment, we recommend the following pricing strategy:
 (1) Charging 10% premium over previous cost per lens to consumers
(2) Price discriminating based on purchase volume (=volume discount)
(3) Improving the gross margin of ECP by lowering price

Vistakon should opt for the premium price strategy, launching 1Day Acuvue at a higher retail
price and running short term price promotions if needed to assess demand. This is the most
sensible option in minimizing cannibalization of other products and maximizing profit. Volume
discounting is beneficial to Vistakon by encouraging quantity order placement. This in turn
will lower production and overhead costs with efficiency in handling fewer orders of larger
quantities vs. high quantity of orders of low volume. While the new set of pricing to the ECPs
provides similar gross profit to Vistakon, the increased margin to ECPs will encourage them to
promote and push 1Day Acuvue to customers vs. other disposables and thus increase sales of
1Day Acuvue. (See Exhibit 4)

6. Launching strategy: Advertising and Promotion

Acquisition cost and LTV Based on the Western regional launch, Vistakon spent approximately
$77 per new customer, with LTV of the customer at $655 net of acquisition costs. (See Exhibit
5) While the company's push and pull strategy worked significantly well, generating sales for
Surevue and Acuvue, the direct mail generated poor performance despite the price tag of
$0.6million.
Recommendation
We recommend that the company extend its promotional strategy used in the western regional
launch to the national launch by spending $12.8 million for advertising (=$1.6mil x 2 x 4
regions), while continuing to offer $50 rebate and 5-day free trial. The price reduction to ECPs
recommended earlier will strengthen the "push" strategy by increasing their gross margin.
Distribution
A 1% change in ECP coverage (390 ECP) contributes to 5.4% increase in the number of new
customers (approximately 45,000), which in turn generates an incremental net contribution of
$20.75 million. Based on the experience from the Western regional launch, we recommend that
Vistakon increase their sales force nationwide to cover more ECPs and acquire more new
customers. In doing so, the company needs to compare the geographical dispersion of ECP
with the cost of hiring local sales representatives.