This document discusses Kodak's declining market share in film and proposes options to address the issue. It analyzes Kodak, Fuji, and Polaroid's market shares, growth rates, and pricing strategies. One option is to launch a new economy-tier film called Funtime Film, but the team recommends against this. Instead, they suggest renaming existing film lines to clarify quality differences and focus on innovation to justify Kodak's premium position.

1. Team O
Eric Edmonds, David Graham,
Deborah Mendez, Chris Priebe,
Carolina Thomas
KODAK
Funtime Film

2. •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
The Problem

3. 670 Million
24-Exposure Rolls
= 2x
$3 average/roll
$Billion
Market Size from the Last Year
The Photo Market

4. 19%
11%
70%
Market Share
Kodak Fuji Other
0%
5%
10%
15%
Average Kodak Fuji Polaroid Private
10%
15%15%
3%
2%
Annual Growth Rate
The Photo Market

5. •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)
The Photo Market

6. 6%
2%
9%
13%
14%
24%
32%
Distribution Channels
Department/Discount
Drug Stores
Camera Shops
Supermarkets/Convenience
Wholesale Clubs
Mail Orders
Other
The Photo Market

7. 4 Price
Tiers
Market and Pricing
Polaroid High Definition, Kroeger,
Walgreen’s, York, Clark Color,
Kmart Focal, Target
Fujicolor Super G
Konica Super SR
ScotchColor
Kodak GoldPlus
Agfacolor XRG
Fujicolor
Reala
Kodak Ektar
Superpremium
Price: $4.27-$4.69
Premium
Price: $3.49
Economy
Price: $2.69-$2.91
Price
Price: $2.91-$2.49

8. •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
Market and Pricing

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. •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
The Key Issues

12. •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
The Option

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. •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
The Analysis

15. •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
The Solution

16. •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.
The Solution

17. •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
The Solution

18. •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.
The Solution

19. •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.
The Solution

20. • 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
The Takeaways

21. Thank You