Vistakon, a high profile business in Johnson & Johnson (J&J) professional segment, has become a market leader in the contact lens industry due to the development and launch of Acuvue, the first one week disposable extended wear lens, and of Surevue, a two week disposable daily wear contact lens.
Vistakon’s key success factor lies in the company’s strong technological advantage. Acuvue’s revolutionary manufacturing process (“stabilized soft molding”) allowed Vistakon to produce lens with improved optics and superior comfort to patients, whilst also keeping production costs (and prices) low. The technological leadership and continued innovation was also made possible by J&J. On the one hand, the highly decentralized organizational structure provided an ideal entrepreneurial environment which fostered change and innovation. On the other hand, the parent company provided Vistakon with the financial resources needed to attack a mature and competitive market. The latter two elements will prove to be crucial in creating a sustainable competitive advantage based on technological superiority and fast go-to-market (first mover advantage). In fact, although Vistakon’s current manufacturing technology will likely be matched and surpassed by competitors, Vistakon’s continuous search for innovation, coupled with J&J’s strong financial support will ultimately guarantee a constant technological leadership.
In 1993 Vistakon is considering launching 1 Day Acuvue, the first daily wear single-use, truly disposable contact lens. As Bernie Walsh said, the introduction of daily wear disposable contact lens truly represents a logical next step in an industry gradually shifting toward shorter replacement cycles as well as more practical/ comfortable lens. At the same time, the introduction of 1 Day Acuvue would represent a unique opportunity to preempt competition and enhance Vistakon’s leadership position.
In 1993 1 Day Acuvue was test marketed in selected states. One year later, based on the feedbacks collected, Vistakon proceeded with a Western Regional Launch (WRL), which aimed at further testing the launch strategy (targeting and positioning), the pricing of the new product, the distribution and acquisition strategy, and the marketing strategy, budget, and allocation. Finally, Vistakon’s top management is currently debating whether to extend the regional launch or proceed to a national launch immediately.
A. Launch strategy
Vistakon aims to target 3 consumer segments: (I) patients who experienced problems with conventional contact lenses or who pursued active lifestyles, (II) contact lens “drop outs” or ex-users, and (III) existing conventional daily wear users willing to upgrade their lens wear.
Based on the results of the WRL I strongly recommend Vistakon to also actively target part-time users, i.e. customers using contact lens less than 7 days per week (almost 75% of patients), since this segment places great value on comfort and economic convenience. In this regards 1 Day Acuvue would be able to fully satisfy them since the key benefits of daily wear single-use lens are superior comfort and economic convenience relative to other disposable lens (see Exhibit 1). Vistakon should thus position its new product as the “high quality, most comfortable and convenient daily wear single-use contact lens ideally suited for dynamic and part time lens users”. B. Pricing
Since both the market test and the WRL indicated price as one of the primary deterrent to purchase of 1 Day Acuvue, Vistakon’s management is debating about the ideal pricing level for the new product (see Exhibit 2). I recommend Vistakon to price 1 Day Acuvue in the range of $0.70-0.75 (9-15% more expensive then Acuvue) since this pricing strategy would allow Vistakon to effectively target several segments whilst also limiting cannibalization with other existing products. First, this pricing strategy will make the new product more convenient not only for part time users but also for full time consumers looking for superior comfort and ease of use. Second, it will attract “drop outs” or ex-users as well as increase the conversion rate between lens trials and subsequent purchase. Third, it will allow Vistakon to gain significant volumes, which will in turn allow them to further reduce price in the future. Finally, it will ensure a limited cannibalization due to the different positioning and pricing of 1 Day Acuvue relative to Acuvue and Surevue.
C. Distribution channels
With a market share of over 60%, ECPs still play a major role in contact lens selection and purchasing behaviors. At the same time, as the number of daily wear single-use contact lens consumers increase, retail stores are expected to becoming increasingly important due to their geographical advantage (i.e. multiple points of sale) as well as their ability to handle large volumes and multiple SKUs. For these reasons I recommend Vistakon to strengthen its sales force in order to gain ECPs support and thus increase the number of customers trying 1 Day Acuvue. Second, the company should start building strong relationships with retail stores by negotiating shelf space and appropriate sales representatives training directly at corporate level – this will greatly reduce the cost to serve whilst also increasing sales volumes. Finally, in the medium term I recommend Vistakon to start selling 1 Day Acuvue through selected mail-order houses since this would provide target consumers with an additional channel fully consistent with their active lifestyle, as well as ultimately increase Vistakon’s sales volume.
D. Marketing strategy
Vistakon’s marketing team is suggesting continuing to follow Acuvue’s previous hybrid marketing strategy (i.e. “pull” end customers through consumer marketing as well as “push” the product via ECPs). Given the positive results obtained with Acuvue, I recommend Vistakon to continue with the same hybrid marketing strategy. Although very costly, the “pull” strategy will play an essential role in promoting product awareness among customers. At the same time, the “push” strategy will increase the number of ECPs suggesting 1 Day Acuvue to customers. Lastly, in order to further increase the number of patients trying 1 Day Acuvue I also recommend Vistakon to intensify consumer promotions by offering higher rebates (e.g. $75 instead of $50) and/or larger free-trials packages (e.g. 7-day instead of 5-day trials).
E. Next steps
Going forward, I recommend Vistakon to proceed to a national launch immediately and pioneer the daily wear single-use lens industry. First, this will guarantee Vistakon a clear first mover advantage, including the possibility to capitalize on the unique benefits of 1 Day Acuvue by capturing significant market shares before competitors lunch equivalent products. Second, the monopoly-like status in the daily wear single-use lens segment will greatly increase product awareness among patients as well as help Vistakon’s sales force to continue building significant goodwill and trust with ECPs. Lastly, if properly exploited, the tremendous market potential will enhance Vistakon’s scale, thus enabling the company to further lower prices in the medium term.

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[ 1 ]. See Exhibit 14 of the case – the industry is moving from the upper right corner (conventional extended wear) to the lower left corner (almost daily disposable lens)
[ 2 ]. See Exhibit 21 of the case
[ 3 ]. 80% of patients indicated during the trial phase that 1 Day Acuvue were more comfortable than existing lenses
[ 4 ]. Includes Private Ophthalmologists (16%), Private Opticians (13%), and Private Optometrists (33%) – See Exhibit 6 of the case
[ 5 ]. Mainly highly educated, high income business travelers – See Exhibit 18 of the case