Loading…

Flash Player 9 (or above) is needed to view presentations.
We have detected that you do not have it on your computer. To install it, go here.

Like this presentation? Why not share!

Like this? Share it with your network

Share

Kodak Case Study

on

  • 34,218 views

 

Statistics

Views

Total Views
34,218
Views on SlideShare
34,218
Embed Views
0

Actions

Likes
6
Downloads
1,008
Comments
2

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Kodak Case Study Presentation Transcript

  • 1. KODAK Funtime Film Team O Eric Edmonds, David Graham, Deborah Mendez, Chris Priebe, Carolina Thomas
  • 2. The Problem •Decline in Kodak’s market share from 76% to 70% over 5 years (1989 – 1994) •8% decline in Kodak’s stock due to rumored price reduction in film •15% increase in U.S. dollar sales for both Polaroid and Fuji compared to Kodak’s 3% •lower priced brands such as Konica and Fuji were gaining market share faster than Kodak
  • 3. The Photo Market Market Size from the Last Year x = $3 average/roll $2 Billion 670 Million 24-Exposure Rolls
  • 4. The Photo Market Annual Growth Rate Kodak Fuji Other Market Share 15% 10% 19% 15% 15% 11% 5% 10% 70% 3% 2% 0% Average Kodak Fuji Polaroid Private
  • 5. The Photo Market • Fuji and Kodak sold only branded products • Suppliers 3M and Agfa sold branded products and private labels • Polaroid sold a branded product manufactured by 3M • Despite Kodak’s U.S. market share, Fuji was a strong competitor in worldwide sales ($10 billion v. Kodak’s $20 billion)
  • 6. The Photo Market Distribution Channels 2% 6% Department/Discount 9% Drug Stores 32% Camera Shops Supermarkets/Convenience 13% Wholesale Clubs Mail Orders Other 14% 24%
  • 7. Market and Pricing Fujicolor Superpremium 4 Price Reala Kodak Ektar Price: $4.27-$4.69 Tiers Kodak GoldPlus Agfacolor XRG Premium Price: $3.49 Fujicolor Super G Konica Super SR Economy ScotchColor Price: $2.69-$2.91 Polaroid High Definition, Kroeger, Price Walgreen’s, York, Clark Color, Price: $2.91-$2.49 Kmart Focal, Target
  • 8. Market and Pricing •Kodak Gold Plus •Industry standard •Premium price tier at $3.49 •An estimated 70% gross margin •Fujicolor Super G •Leader in Economy tier •Priced at 17% less than the Premium tier at $2.91 •An estimated 55% gross margin •Price Brands •Priced about 30% less than Premium brands •Offered higher margin for dealers
  • 9. The Photo Consumer By yearly usage, the consumers were segmented as follows: Annual rolls Percentage of Consumers 0-4 20 5-9 22 10-15 28 16-25 16 >25 13
  • 10. The Kodak Advantage •Over 70 years in film market •70% of U.S market share •Kodak’s 35mm negative film buyers: •50% brand loyal – “Kodak-loyal” •40% “samplers” – heavy reliance on Kodak •only 10% price shoppers •Kodak positioned as a high-quality product •Brand 1 - Ektar for professionals & serious amateurs •Brand 2 - Gold Plus for the rest of consumers
  • 11. The Key Issues •Private brands are growing rapidly •Retailers obtain a higher margin by selling private brands •1/2 of “picture takers” know little or nothing about photography •10% of Kodak buyers are price shoppers •Consumer Reports’ tests did not find actual quality differences among products
  • 12. The Option • To launch Funtime Film - a product to compete in Economy tier and be priced at 20% less than Gold Plus • Offered twice a year at off-peak times (2-3 months starting in April and then again in September) • No advertising support • Available in limited quantities and in only 2 film speeds (ISO 100 and 200) • Packed in “value packs” • 2-rolls of 24-exposures or 4-roll packs with 3 rolls of 24-exposures and 1 roll of 36-exposures
  • 13. The Option • Reposition Ektar as a brand, not for professionals and serious amateurs, but for the “very special” moments • The newly positioned product would be branded as Kodak Royal Gold • It would receive 40% of the total advertising budget • Maintain Gold Plus, the flagship brand • Would maintain same pricing strategy and 60% of the advertising budget
  • 14. The Analysis • As the brand with largest market share in a category dominated by premium brands, Kodak should exercise the “high road” strategy that implies high levels of innovation and “judicious pricing” • If Kodak starts to compete on price, they run the risk of transforming the category into a commodity • As the market leader, Kodak should not react desperately to movements of small competitors, but it should protect its market • Kodak must align its interest with those of the retailers • Sell on brand’s equity and image – promise consumers that although they can’t see perfection, it exists
  • 15. The Solution • DON’T launch Funtime • Questionable pricing strategy • Priced in the middle of the Economy category and not competitively priced with Private category • Could spur brand cannibalization • Kodak’s existing buyers are predominantly brand-loyal – giving them a lower-priced Kodak- branded option could subsume higher-margin lines
  • 16. The Solution • Lack of advertising support and limited availability create consumer confusion and retailer headaches • Consumers will only see the product by happenstance, and lack any communication regarding its merits. • If purchasers are pleased with the product, Kodak’s higher-priced lines may be the only Kodak film product available for repeat purchase, ie. bait and switch? • Retailers will have to deal with the potential customer confusion due to this inexplicable seasonal film product. Other seasonal product retail complexities apply as well.
  • 17. The Solution •DON’T use proposed nomenclature •Instead of Royal Gold, disambiguate the two “Gold” lines and rename Ektar as Kodak Platinum and Kodak Gold Plus as simply Kodak Gold. By having Gold and Platinum, the company clearly communicates quality differences to the consumer •Widen channels - Distribute Kodak Platinum through all the channels, not only through camera shops
  • 18. The Solution • Launch an advertising campaign that emphasizes long-term quality over short-term savings and educate the consumer. • The company should focus its efforts on innovation in all product lines, thereby justifying and maintaining its premium market position. • Innovation is the only way Kodak can fight their product becoming a commodity.
  • 19. The Solution • Product launches may be supported by promotional activities and materials that further educate the consumer about the superiority of Kodak products. • Implement a customer loyalty program to convert “samplers” into Kodak-loyal consumers and increase the number of rolls purchased per year.
  • 20. The Takeaways • Customer perception ultimately defines market • An increase in market share does not necessarily mean an increase in profitability • A company’s pricing strategy should consider the impact on its brand equity
  • 21. Thank You