Eastman Kodak Company
In year 1994, KODAK had important strategic decisions to make in order to ensure that a bright future is waiting for KODAK. At that time, although Kodak was dominating the consumer photographic film market, it had been facing a 6% decline in market share over a five year period. The reasons for KODAK's market share loss could be examined in two major parts; supply effect and demand effect. SUPPLY EFFECT DEMAND EFFECT
-Attractive Market for new supplier
-High margins (Kodak estimated at 70%)
-Dissipating loyalty from consumers and retailers
-Kodak did not offer any competition in economy and price brands -Relatively small market growth
-Consumers did not perceive any major print difference in quality output among the brands
-Consumers tendency to view film as a commodity
-Kodak focused commitment on "Ectar"
-Increased competition from Fujifilm in the US market.
Under these circumstances, if KODAK maintained the status quo, it will continue losing market share as customers will attract to the market price. If it stays above market price, consumers will turn to brands offering market price
At this point, Kodak's ultimate objectives should be maximizing its profits, gaining the lost market share, entering into the economy market with a new brand and establishing better communication with stockholders to avoid stock prices fall due to the misleading information in market.
What Kodak does with this respect is to introduce a new strategy called "Funtime". With this strategy they establish a new brand called "funtime" for economic brand tier at a price 20% below Gold Plus (flagship brand). Gold Plus's price would not change but "Ectar" would be replaced by "Royal Gold" with a price 20% higher than Gold Plus. I support the firms' decision of "funtime" for economic brand tier. But in order to increase market share and
-Attractive Market for new supplier
-High margins (Kodak estimated at 70%)
-Dissipating loyalty from consumers and retailers
-Kodak did not offer any competition in economy and price brands -Relatively small market growth
-Consumers did not perceive any major print difference in quality output among the brands
-Consumers tendency to view film as a commodity
-Kodak focused commitment on "Ectar"
-Increased competition from Fujifilm in the US market.
Under these circumstances, if KODAK maintained the status quo, it will continue losing market share as customers will attract to the market price. If it stays above market price, consumers will turn to brands offering market price
At this point, Kodak's ultimate objectives should be maximizing its profits, gaining the lost market share, entering into the economy market with a new brand and establishing better communication with stockholders to avoid stock prices fall due to the misleading information in market.
What Kodak does with this respect is to introduce a new strategy called "Funtime". With this strategy they establish a new brand called "funtime" for economic brand tier at a price 20% below Gold Plus (flagship brand). Gold Plus's price would not change but "Ectar" would be replaced by "Royal Gold" with a price 20% higher than Gold Plus. I support the firms' decision of "funtime" for economic brand tier. But in order to increase market share and