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The Kodak   Fuji Price War
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The Kodak Fuji Price War

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  • 1. Christian Sandström holds a PhD from ChalmersUniversity of Technology, Sweden. He writes and speaks about disruptive innovation and technological change.
  • 2. It is well known that Kodak was hurt badly with the shift from film to digital imaging.
  • 3. But it is often forgotten that the problems started before the technological shift.
  • 4. The problem was spelled Fujifilm.
  • 5. Fuji had been on the rise for several decades, buthadn’t really been a big threat in the United States.
  • 6. Up until the mid 1990s, Kodak still had around 80 percent of the US market, despite being more expensive than Fuji.
  • 7. Towards the second half of the 1990s, this changed through a coincidence.
  • 8. In 1997, Costco, a big US retailer, dropped Fuji in favour of Kodak…
  • 9. Fuji suddenly had millions of film rolls that theyneeded to get rid of. The company therefore dumped its prices to 50 percent of what Kodak cost…
  • 10. The rolls were quickly sold and the new price turned out to be so successful that Fuji kept it…
  • 11. … Causing its market share to increase with 60 percent very quickly…
  • 12. The price war had started, and Fuji was now on the attack…
  • 13. For more than a century, Kodak had takentheir home market for granted and suddenly this was not the case.
  • 14. … The company had relied upon traditional and kind of cheesy marketing for over the years…
  • 15. The history of American families had basically been recorded with Kodak film…
  • 16. … And Kodak hadalways been kind of sentimental in its marketing…
  • 17. … It had worked for a century…
  • 18. … Around the entire world…
  • 19. No wonder Kodak got confused whenFuji ran ads saying “pictures should be nostalgic, your film shouldn’t”.
  • 20. Fuji’s slogan was also very forward-looking: ”You can see the future from here”
  • 21. Many Americans now bought the cheaper green roll…
  • 22. … Instead of the good old yellow box.
  • 23. When they noticed that the result wasn’t worse, many stayed with Fuji.
  • 24. Fuji was also highly innovative in its way of using seasonal campaigns, quick-hit programs and various tricks in order to sell more film.
  • 25. Kodak responded by getting rid of its cheesy image.
  • 26. And eventually by lowering prices.
  • 27. And by getting rid of about 19 000 employees in 1997 – probably the largest layoff in American corporate history.
  • 28. The price cutseventually stopped the rapiddecline in market share.
  • 29. Now Fuji had nothing to gain from thewar, and both companies now let prices drift up again gradually.
  • 30. While prices returned for Kodak, market shares did not.
  • 31. Through something that resembled a coincidence, Fuji had succeeded in buying market shares from Kodak.
  • 32. The deal with Costco had looked like a winner, but thingsturned out differently for Kodak…
  • 33. The price war with Fuji should be regarded as an important explanation to why Kodak suffered so badly later on in the shift to digital imaging.
  • 34. The company had been financially wounded before the digital revolution and this augmented the difficulties related to the shift…
  • 35. … Fuji, on the other hand, had gained momentum and obtained resources that were vital whendeveloping a competitive digital camera business.
  • 36. Image attributions
  • 37. Sources cnn.comSeattle Times
  • 38. Find out more:www.christiansandstrom.org