Vistakon Essay

Introduction In 1993 Vistakon developed a revolutionary product offering- 1 Day Acuvue lens, effectively introducing a new category in the vision correction market. Following the regional launch in 1994, Vistakon set out to work on alleviating barriers to product and maximizing efficiency of its customer acquisition efforts. The main business problem for Vistakon is to expand the market for the newly created category and sustain long-term leadership in the contact lens market.

Competitive advantages and sustainability Vistakon had three major sources of competitive advantages that helped the company sustain its growth. First, without sacrificing flexibility, it was a part of a large organization with enormous resources, readily available for product development and marketing initiatives. Second, Vistakon extensively used innovations to develop a unique manufacturing process to attain low cost and high volume production. Third, it developed strong relationship with a wide network of eye care professional (ECPs).

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While the first two competitive advantages are sustainable because it is quite challenging to replicate them (and almost impossible to take away), the sustainability of the third is less obvious – competitors can potentially attract ECPs with better ncentives. However, ECPs care a lot about the product quality (discussed below in more details), and Vistakon’s competitors currently don’t have superior product nor can they offer more lucrative business model. Therefore, relationships with ECPs can also be considered sustainable, at least mid-term.

Decision making process of patients and ECPs The cost and comfort are the ultimate factors that drive the patient’s decision to change their behavior in regards to the usage of vision correction products. In analyzing Vistakon’s decision to develop daily disposable lenses, it is important to hink of consumer needs that the company was able to address with the revolutionary product (please see Exhibit 1 for the list of consumer insights and corresponding product features). The crucial component of Vistakon’s customer acquisition strategy was recognition of ECPs playing a huge role in a patient’s decision making process.

ECPs exerted influence not only when it came to conversion a patient into contact lens wearer, but also in terms of type of lens and various technical characteristics. ECPs could also be considered as raising product awareness medium, as the study indicated some 60% of patient first heard about the Vistakon’s product from their ECPs. Finally, the historical industry practice made ECPs well incentivized to cooperate with lens manufacturers, allowing them to earn profits on product sales.

Hence, this medium was highly receptive to manufacturers promotional efforts, given that these efforts were aligned with the ECPs interests. In the Exhibit 1, we analyze a set of key needs and concerns of ECPs and explain how Vistakon was able to successfully address them with the introduction of 1 Day Acuvue. Despite the challenges to convert patients resulting from switching barriers, t can be clearly seen that 1 Day Acuvue product is ideally suited not only for patients’, but also for ECPs.

In fact, ECPs have to do one-time investment – that is, higher customer satisfaction, and longer relationships with their patients. What was also of great importance to Vistakon, is the overall presence in the vision correction products category – following the notions of relationship with consumers and brand reputation, they always asked ECPs to offer other products if 1 Day Acuvue didn’t fit. The company recognized that it’s crucial to keep the customer and be able to convert him at a later time.

Recommendations According to the study conducted, product cost was still one of the primary barriers for adoption (“… 86% of ECP citing it as the major reasons… “). However, it is important to recognize that costs will matter most at the inflection point, when patient is considering switch. Once the patient has started using the product and discovered its unambiguously superior characteristics (comfort of wearing, no cleaning and maintenance, simple replacement schedule), it will be extremely costly to switch back to conventional lenses.

Since quality and convenience are the key factors and cost of xperiments is high, the most sensible strategy will be to subsidize the trial and charge regular premium prices once the patient experiences the value. Going forward, additional effort should be spent on educating ECPs to communicate the cost in the right way. Considering the “hybrid marketing strategy’ Vistakon utilized, it is sensible to note that the importance of advertising via mass media in the overall marketing mix was somewhat overvalued. The post-campaign study indicated that only some 30% of patients first heard about the product from a print or TV ad.

Moreover, considering the decision making process described above, we can assume hat patients are much more likely to respond to their doctor’s advice rather than to ad when it comes to health. Additional support to this argument is the distribution pattern evidenced by the case: 72% of patients purchase lens at their doctor’s office. Therefore, the company should re-balance its marketing mix, cutting back on advertising expenditures and investing more in promotion through ECPs, especially given that they approve the product, are highly responsive to the manufacturers’ actions and have incentives to cooperate.

Finally, we believe there is no reason to hold back on the national launch of the 1 Day Acuvue product. The company should move ahead and leverage its first mover advantage in expanding the market for the product on the national scale. Once mass consumers are exposed to the product via free trial, they will appreciate the superior product qualities and face high switching costs, making them loyal customer base for the manufacturer (as the case suggest, 60% of patients accept free trial and 93% of those buy Vistakon product afterwards).

Besides, increasing volume of customer base will help the company strengthen such competitive advantage as lower manufacturing costs, resulted from economies of scale and learning curve in manufacturing. Vistakon was really a forward-looking company, ready to sacrifice part of what it had for the better future, whereas its competitors didn’t realize they had fallen into the trap being blinded by their current margins. They wanted to sustain their high-margin supplies businesses, while Vistakon was transforming the whole market, eliminating any need for cleaning and maintenance supplies at all.

Vistakon should take advantage of this myopia, gain momentum in customer acquisition and thereby solidify its long-term leadership on the market. EXHIBIT 1 Adherence to replacement schedule is painful The adherence problem no longer xists with daily disposable contact lenses (discard after one day of use) Don’t want to spend time cleaning & maintenance The cleaning problem is also eliminated because of the short-lived product.

Need comfort in case of active lifestyle The contact lens are superior to eyeglasses for the active lifestyle consumers because of the convenience Want to manage costs Perception of costs can change due to more granular approach of manufacturer in communicating costs ECPs need / concern Vistakon’s response Profitability While with conventional lenses patients tended to extend the product ife, patients wearing daily disposable lenses will invariably need to buy a new product once the old one is used.

This leads to more stability in demand, and, as a result, more stable revenue stream for ECPs. Frequency of visits, relationship Switching to daily disposable lenses will decrease the incidence of infection or discomfort issues, but still ECPs will be better off as the frequency of visits to purchase goes up substantially. Quality of treatment, health-related issues Risk of health-related issues was much lower with daily disposable lenses, so ECPs would feel more confident recommending this high-quality product.

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