Vistakon: 1 Day Acuvue Disposable Contact Lenses
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Evan Burnell
Anne Deiss
Nathan Huber
915176619
915091824
915193493
Executive Summary
Vistakon operates within the disposable lens market. In this market, Vistakon is
among the leading manufacturers due to its revolutionary disposable Acuvue contact lens.
Seeking to improve upon prior success, Vistakon has developed the 1 Day Acuvue. The
objective of this product is to maintain and expand market leadership through innovation.
Now faced with a national launch decision, Vistakon should launch 1 Day Acuvue.
As Vistakon prepares to launch 1 Day, they are concerned with how to price the
product and acquire customers. Vistakon is relying on Eye Care Professionals to convey
the price of 1 Day as reasonable. Without the correct message from ECPs, consumers are
unlikely to have an interest in the product. Vistakon is also unsure exactly who to target,
as the vision correction industry has a myriad of segments. With products such as Acuvue
and Surevue already on the market, Vistakon also must be confident that 1 Day will add
value to the firm.
1 Day Acuvue needs a strategy for choosing a price, training ECPs to understand
the full benefits of 1 Day, and targeting customers. We recommend that Vistakon price 1
Day as it did in the Western Regional Launch. This price is better than Vistakon’s
original suggested retail price of $0.83 per lens because the Western Regional Launch
was successful. We also recommend that Vistakon devote more resources to training
ECPs. The Western Regional Launch reveals the importance of the ECP’s positive
delivery of 1 Day’s price. Additionally, Vistakon should use consumer pull ads to target
contact lens drop-outs and people who only wear glasses. These targeted consumers visit
their ECP less frequently than contact wearers. The 1 Day ads aim to convince them to
visit their ECP and try 1 Day lenses.
Based on the potential methods for 1 Day to gain consumers, we recommend the
above strategy because it is cost-effective and will support the ECP business model. It is
imperative that ECPs understand the mutual benefit they and their customer receive from
1 Day. By providing them with the proper training, Vistakon can ensure that their product
is recommended to consumers. The consumer pull strategy is expensive and places too
much responsibility on the consumer instead of the ECP. Also, 1 Day should not further
decrease their prices because they would leave money on the table. This strategy
maximizes brand propagation and profits while maintaining a relationship with the ECPs.
The firm is concerned with rejecting the complacency found in other big firms. 1 Day
certainly represents a risk, but is worth undertaking as Vistakon strives to further develop
their brand.
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Case Analysis
Life as a Big Company
Vistakon is in the top 3 manufacturers in the contact lens industry and looks to
remain there through innovation. Complacency is a major concern for large firms (p.1)
and Vistakon views 1 Day as an answer to complacency as well as an opportunity to
expand its brand. However, Vistakon is still hesitant as it considers a national launch.
Before confidently taking 1 Day to market, Vistakon must conclude how it wants to price
and also find their target consumer.
Pricing
Vistakon struggled with determining a price for 1 Day Acuvue. Initially 1 Day
entered the test market with prices of $0.83 per lens (p. 11). However, Vistakon learned
from the test market that “the primary deterrent to purchase and continued use of 1 Day
Acuvue was cost” (p. 12). Keeping this in mind, Vistakon must lower their prices without
leaving profit on the table. In the Western Launch, 1 Day was priced at $0.65 per lens if a
customer ordered four or more boxes and $0.80 if they ordered fewer (p. 12). Vistakon
should be pleased with the margins this creates because the firm has a technological
advantage and can produce each lens for $0.13. These prices were more appealing and
encouraged customers to buy in bulk. Despite the fact that 1 Day costs more than Acuvue
and Surevue, it has sufficient benefits to consumers that warrant this price.
Relationship with Eye Care Professionals
Vistakon relies on Eye Care Professionals to convey their price in a manner that
fits with the goals of their various products. With 1 Day, this task entails even greater
importance, as cost is the leading deterrent to consumers who may purchase the product
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(p. 12). Through their interaction with customers, ECPs hold a great influence on what
consumers of vision correction products purchase. The importance of how ECPs present
a product is underscored by comparing the Test Market to the Western Regional Launch.
Consumer receptivity to 1 Day was much improved in the Western market, in large part
because fewer ECPs told consumers that 1 Day is an expensive product (p. 13). Sales of
Vistakon products hinge on how well ECPs pitch the product (p. 7). Consumers may
reach the conclusion that 1 Day is expensive, but if ECPs do not portray the product as
such it is likely to be more successful.
Among the benefits of 1 Day is that 80% of consumers view it as a more
comfortable lens than current available lenses (p. 10). With 25% of contact dropouts
being people who took issue with discomfort (p. 3), Vistakon should expect increased
retention for 1 Day consumers. Additionally, only 5% of people discontinue wearing
contacts because of the cost (p. 3). This further reveals how critical the ECP’s pitch to
consumers is, as consumers who are willing to get past the initial price will likely stay
with the lens. ECPs maintain an interest, both financially and ethically, in the products
they sell and already have appreciation for Vistakon’s respected customer service system
(p. 8). If Vistakon can leverage their relationship with ECPs to increase their confidence
in 1 Day, the end result will bear significant mutual benefit.
Cannibalization
One of Vistakon’s concerns is the cannibalization that might occur upon the
introduction of 1 Day. Currently, Vistakon sells 1 Week Acuvue and 2 Week Surevue.
Vistakon’s Cannibalization Rate after introducing 1 Day in the West Coast Launch is
42% (p.13). The test market also underscored an important potential stream of additional
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income. Also revealed through the test market was that having ECPs pitch 1 Day leads to
increased consumer interest in Acuvue and Surevue (p. 13). Vistakon instructs ECPs to
first pitch 1 Day through the incentive of a 5-Day Free Trial and then Acuvue or Surevue
if the free trial incentive did not lead to the purchase of 1 Day (Ex. 16). Doing so adds
value to the Vistakon firm as a whole. Results from the Western Regional Launch show
that the strategy of ECPs first presenting 1 Day and then pitching Acuvue or Surevue in a
secondary manner generated an incremental increase of 47% in Acuvue and Surevue
sales (Ex. C). Unlike its competitors, Vistakon does not need to worry about
cannibalizing their solution business. Not having to worry about this increased firm-wide
cannibalization makes the introduction of 1 Day even more appealing.
When considering the launch of a new product it is imperative to compare its
lifetime value to previously established products. The lifetime value of 1 Day should be
compared to Acuvue and Surevue. When using a 2-year lifetime value, 1 Day Acuvue
generates a total value of $492. This lifetime value compares positively to Acuvue, which
posts a $382 value per customer, and Surevue, a $53 value (Ex. A). It cements the 1 Day
lens as a valuable asset to the company. The lifetime value also affirms that the
cannibalization rate will not negatively impact Vistakon.
Targeting
One of Vistakon’s main uncertainties with the 1 Day Acuvue launch is which
consumer segments they will target. Vistakon plans to focus on contact lens wearers who
are occasional users, have medical issues with conventional contacts, find contacts
uncomfortable or would prefer a more disposable lens (Ex. 15). During the clinical trial,
the 1 Day lens was shown to reduce ocular complications in comparison with traditional
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replacement lenses (p.10). This suggests that 1 Day might appeal to consumers who have
been subject to ocular complications in the past. There is also extensive data supporting
the idea that Vistakon should target consumers who exclusively wear glasses. In the
Western Launch, 18% of 1 Day users were contact lens dropouts and 12% had never
worn contacts (Ex. 19). This shows that Vistakon has an opportunity to access the 117
million consumers who exclusively wear eyeglasses (Ex. 2).
To reach these consumers, Vistakon plans to implement its 2-step customer
acquisition strategy. Many consumers take the recommendation of their ECP, so the
majority of the strategy should be to train ECPs on the benefits of 1 Day. Vistakon has
also used consumer pull marketing in the past. Eyeglass wearers, who made up 80% of
the eye-care market, visit ECPs less frequently than contact wearers, the consumer pull
approach helps draw them into the ECP office. Once in the office, the ECP has the
opportunity to recommend the 1 Day lens (Ex. 2). Vistakon should also use traditional
advertising because 35% of 1 Day consumers first learned about 1 Day from an
advertisement (p. 12). While ECPs, at 60%, made up the majority of where information is
learned, advertisements targeted to consumers are still a significant factor (p. 12).
Recommendations
In light of the above information, we have several recommendations for
Vistakon’s 1 Day marketing strategy. First, they should keep the prices for 1 Day as were
used in the Western Launch. Vistakon should also focus on raising ECP awareness of the
benefits of 1 Day. Finally, we recommend that Vistakon primarily target contact dropouts
and glasses wearers because they are an untapped segment that has expressed interest in a
1 Day lens. We recommend that Vistakon proceed with the national launch.
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Exhibit A
Lifetime Value of the Customer Analysis
Dropout Rate= 10.6 % of population (Ex. 2)
Vistakon Market Share = 18.9% (Ex. 13)
Vistakon Dropout Rate = 10.6% x 18.9% = 2%
1 Day Acuvue Frequencies (Ex. 21)
Vistakon Market Share (Table A) = 18.9%
Acuvue Share = 14.8% = 78% of Vistakon
Surevue Share = 4.1% = 22% of Vistakon
1 DAY ACUVUE
1-2 days
3-4 days
5-6 days
7 days
ACUVUE 1
WEEK
1 week
156
$0.67
364
$0.52
572
$0.52
728
$0.52
104
$2.37
52
$2.37
$189.23
$185.44
$374.67
21.0%
$297.96
$292.00
$589.96
28.4%
$378.61
$371.04
$749.65
25.9%
$246.48
$241.55
$123.24
$120.78
Frequency
$104.52
$102.43
$206.95
24.7%
$488.03
78%
$244.02
22%
Weighted
Average
$51.12
$78.68
$167.55
$194.16
# Lenses per year
Profit per Lens
YEAR
1
2
TOTAL
Weighted Total
$491.51
SUREVUE
2 WEEKS
2 weeks
$382.18
$52.93
$382.18
$52.93
The LTVC is used to compare the potential long-term benefits of 1 Day Acuvue with
Acuvue and Surevue. We analyzed the weighted average in order to present an accurate
representation of what the average customers would spend on 1 Day Acuvue in 2 years. 1
Day Acuvue provides a greater profit than Acuvue and Surevue do, so 1 Day Acuvue is
worth the production costs to Vistakon.
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Exhibit B
Effect of Cannibalization
Total Soft Lens Wearers (Ex. 2) = 21 million
Acuvue
Surevue
TOTAL
Market Share
(Table A)
14.8%
4.1%
18.9%
Consumers
3,108,000
861,000
3,969,000
Cannibalization
(p. 13)
42%
42%
42%
Cannibalized
Consumers
361,620
1,305,360
1,666,980
Cannibalization is a huge concern for Vistakon to determine the effect that 1 Day Acuvue
will have on their existing products. If the cannibalization rate is too high, this could have
a negative effect on profits. This table shows how many consumers would be
cannibalized nationwide when 1 Day Acuvue hits the market. The total number of
cannibalized consumers can be used to project Vistakon’s total profit from 1 Day, which
is critical information in deciding whether Vistakon should take 1 Day Acuvue
Nationwide.
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Exhibit C
Value Added to Acuvue and Surevue because of 1 Day Acuvue
Take Trial
60%
Purchase 1
Day
40%
Purchase Another
Vistakon Product
53%
Increase in Vistakon
Products Besides 1 Day
31.8%
Don’t Take
Trial
40%
Purchase 1
Day
0
Purchase Another
Vistakon Product
38%
Increase in Vistakon
Products Besides 1 Day
15.2%
TOTAL
47%
With the introduction of 1 Day, Vistakon’s strategy is for ECPs to first attempt to
sell 1 Day to their patients and then push Acuvue and Surevue to consumers who were
uninterested in 1 Day. The strategy is outlined in Exhibit 16. The discussion of the
Western Regional Launch at the top of page 13 provides the information that this table
uses to determine how much incremental value the new pitching strategy adds to Acuvue
and Surevue.
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