Case Study of Vistakon and Disposable Contact Lenses
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. The launching of 1 Day Acuvue, with newly invested manufacturing technology in place, provides a great opportunity to preempt competition and thus enhance its positioning. However, 1 Day Acuvue potentially flourishes by cannibalizing the company's existing product lines such as Acuvue and Surevue. With a major portion of its sales ($250 million) coming from these products, Vistakon faces significant risk in launching 1 Day Acuvue.
Competition
Vistakon's major competitors within the disposable contact lens market are Bausch & Lomb ("B&L") and Ciba. With a 23% and 21% share respectively in 1994, they led the soft contact lens market. In addition, both B&L and Ciba offered high margin cleaning solutions products for conventional lens. These competitors, therefore, were seen as being reluctant to immediately launch their own equivalent product of 1-Day Acuvue, which will undermine their highly profitable solutions business.
In launching their new product, Vistakon needs to predict two scenarios: competitors' "defensive" and "offensive" actions against the launch of 1-Day Acuvue. The "defensive" scenario anticipates significant price reduction and/or launching of aggressive marketing campaigns by these competitors once 1-Day Acuvue proves successful enough to cannibalize their sales. The "offensive" scenario is where the competitors will launch a similar product to the 1-Day Acuvue. As stated above, based on the potential ...