Eastman Kodak Company: Funtime Film
Case Analysis Group-5 PGP-RAK, 2012-14
PARTICIPANT Ankur Sinha Ishant Singal Prakhar Rathee Sambhav Jain Vikram Singh Shekhawat
ROLL NUMBER 2012PGPRAK013 2012PGPRAK023 2012PGPRAK031 2012PGPRAK036 2012PGPRAK039
Company Eastman Kodak is currently the market leader in the photo film market. The company has continued its domination of the photo film market, but in the past 5 years its market share has eased from 76% to 70%. Reason mainly being the competitors like Fuji Photo Film Co. and Konica Corp. lured consumers with their lower-priced versions. In 1993, Kodak spent an estimated $50 million on camera and film supply advertising in the United States; this was about 4 times its market competitor Fuji’s U.S. advertising spending. Both Kodak and Fuji tried to position themselves as providing superior quality film through their advanced technology, however according to consumer reports test, the top six ISO 100 films scored almost similarly on comparable print quality. Context Primarily there are four price tiers in the market (Super-premium Brands, Premium Brands, Economy Brands and Price Brands). Kodak is mainly in two of the price tiers-Kodak Ektar under Super-premium Brand and Kodak Gold Plus under Premium Brand. Kodak’s gross margins are believed to be about 70%. Kodak offerings for super-premium brand targeted very narrowly at advanced amateurs and professionals. Even though a high percentage of films are sold by private label, Kodak does not do so because of 1921 consent decree still in force. Competitors Key competitors for Kodak are Fuji Photo Film Co., Konica Corp, 3M Corp. and Bayer’s Agfa. Fuji’s key brand, Fujicolor Super G, anchors the Economy Brand tier, it is priced 17% below the Premium tier. Gross margin for Fuji is believed to be about 55%. Konica and 3M’s ScotchColor brand make up the other competitors in this tier. Film procured from either Agfa or 3M and sold under a different name make up the Price Brand tier. On an average, “Price Brands” are priced about 30% lesser than Kodak’s Gold Plus. Note: Private label products give high Dealer percentage margins. The market has shown an annual growth of around 2% for the past five years. In the same period Kodak has grown at 3% annually, but Polaroid and Fuji have reported a 15% jump. Customers Kodak’s research shows that 50% of buyers are “Kodak-loyal”, 40% are “samplers” relying heavily on Kodak, and 10% shop on price. The advertising cost for Kodak is high as compared to its competitors.
The Company is planning a major repositioning of its film product line for 1994. Gold Plus will remain the flagship brand at the similar price from 1993 levels. It will receive 60% of the dollar advertising support. Royal Gold will replace Ektar in the Super-premium segment. It is positioned at a lower cost than Ektar and it will receive 40% of the dollar advertising support. Funtime, a new product under Economy Brand Tier will mark its presence under this category and will increase the share of price sensitive customers.
Eastman Kodak Company: Funtime film – Group 5, PGP-RAK 2012-14
The company has to take into consideration whether entering the new segment is feasible. Private brands too are entering the market, could it trigger a price war? Further, why has there been negligible growth for Kodak in comparison to its competitors. 10% of customers are price shoppers. Additionally, according to reports they rank third on quality.
STRENGTHS 70% gross margin Market leader 50% of sales on basis of Kodak loyalty Perceived High brand value 40% samplers WEAKNESS Ranked third on quality. Other brands provide better products (although relatively small) Inability to sell to private labels High advertisement budget High price compared to quality THREATS Market share reduced from 76% to 70% in spite of increasing...
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