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Company
Vistakon is a well-established, overwhelming market leader in the disposable contact lens industry, based on strong brand equity and channels of distribution. Additionally, as a subsidiary of Johnson and Johnson, Vistakon has considerable resources at its disposal. ... With a major portion of its sales ($250 million) coming from these products, Vistakon faces significant risk in launching 1 Day Acuvue. ...
In launching their new product, Vistakon needs to predict two scenarios: competitors "defensive" and "offensive" actions against the launch of 1-Day Acuvue. ...
Target segment
By promoting the three product lines of Surevue, Acuvue and 1-Day Acuvue, Vistakon is able to appeal to three different customer segments. Specifically for 1-Day Acuvue, we recommend Vistakon target the "part time users" noted above who have high income and are therefore relatively price insensitive, who have active lifestyles, and frequently travel on business. ... This will allow Vistakon to limit cannibalization of its other products through differentiation in target customers and pricing, while avoiding a price war that may potentially induce competitors to reduce prices on their existing product lines. ...
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. ...
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 1-Day Acuvue at a higher retail price and running short-term price promotions if needed to assess demand.
Approximate Word count = 1307
Approximate Pages = 5.2
(250 words per page double spaced)
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