York Contact Lens Company

Contact lenses are a relatively new way of correcting vision. The market has grown rapidly and changed in character in recent years. Prices have remained high, but York Contact Lens Company came up with a plan for selling contact lenses by mail, a system that would permit it to sell at a much lower price than was currently available. Before making the investment necessary to develop this new channel of distribution, York wanted to make a better forecast of possible sales than it had made up to date, and it chose to use the survey method for the forecast.

Prior to 1974 there was only supplier of contact lenses and related supplies – Bausch & Lomb. Its cleaning solution was the only one with federal approval. Both the lenses and supplies were sold through doctors, and prices were high.

Between 1974 and 1977 five new companies entered the field, and optical chains such as Pearle Vision became important. “Soft” contacts came into the market, demand expanded, and prices dropped. The Federal Trade Commission ruled that ophthalmologists and optometrists were required to give patients their eye glass prescriptions.

Thereafter, the number of manufacturers grew to 30 or more and consumer demand expanded rapidly. Manufacturers’ prices for a pair of contact lenses were $30 to $40, but retail prices were often 10 times as much. In 1980 that total market at manufacturers’ selling prices was estimated at $300 to $400 million and at retail price $3 billion. By 1985 the manufacturers’ market was up to $500 million, but the retail market did not increase proportionately because prices dropped.

Industry sources estimated in 1985 that about 50 million Americans needed vision correction and that 20 million of the latter wore contacts. The 20 million was expected to double by the year 2000. A somewhat conflicting estimate was that half the people using glasses could not wear contacts.

Two thirds of the total retail market was estimated to be replacement sales. The average life of a contact lens was thought to be about one year. If 20 million wore contacts and replaced each lens once a year the total replacement market was 40 million lenses a year.

York’s concept was for a mail order replacement service for contact lenses. Catalog sales were booming in many product areas, and the proposed plan would fit with this national development. A catalog would be prepared with pictures and descriptions of contact lenses and their advantages. A toll free number would be provided for quick service. Lenses would be shipped in sealed bottles within 24 hours of receipt of order and overnight delivery would be available at extra charge via Federal Express. Customers would mail in orders with payment or provide credit card identification for phone orders. Customer prescriptions would be entered in a computer database so future replacement could be expedited. Prices to consumers for a single contact lens were projected at $10 to $17, much lower than the current market level and in addition, this low cost would reduce or perhaps eliminate customer need for insurance.

Before going further, York set about to make an improved forecast of sales. They conducted a survey among wearers of both regular glasses and contact lenses to determine their attitudes toward the proposed mail order sales; the services they would want; the different kinds of contacts they were interested in (hard, soft, extended wear, gas permeable, tinted, bifocals); and the probability they would order lenses by mail.

According to the survey data the company has decided to launch the mail order schemes including replacement. The data gathered was formatted into 14 Tables and analysed.