Eastman Kodak Company: Funtime Film
On January 25, 1994, George Fisher, Kodak’s recently appointed chief executive officer, met with analysts and investors to set out Kodak’s new strategy for film products. During the past week (between January 17 and January 24), Kodak stock had lost 8% in value on rumors of a price cut on film.
While Kodak continued its overwhelming domination of the photo film market, its market share in the United States had eased from about 76% to 70% over the past five years “as competitors like Fuji Photo Film Co. and Konica Corp. wooed consumers with lower-priced versions.”1 Previously, Kodak had attempted to blunt share-gaining attempts by such rivals and private label products by introducing a superpremium brand, Ektar. Now Kodak proposed to introduce a brand at Fuji and Konica’s price level, 20% below the price of Kodak’s flagship Gold Plus brand. The new brand, Funtime, was to be available only in limited quantities during two off-peak selling seasons. While some viewed the move favorably, others were more skeptical. One analyst termed the strategy “seemingly a long step down the slippery slope that ends in private label trial.”
The U.S. Photo Film Market
In 1993, approximately 16 billion color exposures were made—the equivalent of 670 million 24-exposure rolls. Typically, a consumer paid between $2.50 and $3.50 for a 24 exposure roll. Over the past five years, the market’s annual unit growth rate averaged only 2%. Major suppliers were Kodak, Fuji of Japan, Agfa of Germany, and 3M. Kodak and Fuji sold only branded products. Because of a 1921 consent decree still in force, Kodak could not sell film on a private label basis. Both Agfa and 3M sold their film to consumers as branded product and to other firms for sale under a private label. Polaroid entered the market in 1989 with its branded product, which it sourced from 3M. Film was intensively distributed through discount and department stores (32% of sales), drug stores (24%), camera shops (14%), supermarkets and convenience stores (13%), wholesale clubs (9%) and mail order (2%).
Analysts’ estimates of unit market shares by manufacturer are shown in Table A.
1Wendy Bounds, “Kodak Develops Economy-Brand Film That Is Focused on Low-Priced Rivals,” Wall Street Journal, January 26, 1994, p. A3.
Professor Robert J. Dolan prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
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Table A Approximate Unit Market Shares in 1993 (U.S. Market)
| | | |Kodak |70% | |Fuji |11% | |Polaroid |4% | |Private label |10% | |Other |5% |