1. Diagnose the reasons for Kodak’s market share loss and make your assessment of the likely development of the market if Kodak maintained the status quo.
Kodak has been losing market share for the past five years to the point it has gone from 76% to 70%. The underlying causes that have generated such losses and have ultimately led consumers to favor competing brands with larger growth are:
I. Consumers are tending to view film as a commodity, often buying on price alone. Half of the picture takers claim they know little or nothing about photography. II. Quality differences among films are unclear. Superpremium, Premium, Economy and Price brands showed no real quality difference amongst each other between consumers. As a matter of fact, they perceived a Price Brand as the better quality film. III. Kodak does not compete in the lower tier segments: Economy and Price Brands, and has no real offer towards consumers.
The combination of these three factors has led Kodak to lose ground versus their immediate competitors and consequently a decrease in market share.
If Kodak maintained the status quo, a comparative sales analysis from 1992 to 1994 demonstrates that Kodak would continue to lose market share while its growth rate would also decline.
In 1988, market share and unit sales of Kodak were as follows, 1988| Kodak|
Market Share| 76%|
Sales Unit| 461.1981284|
If the other players in the market maintain their growth rate in 1994, Kodak’s market share would drop to 69.2% and growth rate would drop to 0.86%. 1993| Kodak| Fuji| Polaroid| Private Label| Others| Market| Growth Rate| 3%| 15%| 15%| 10%| -37.06%| 2%|
Market Share| 70%| 11%| 4%| 10%| 5%| 100%|
Sales Unit| 469| 73.7| 26.8| 67| 33.5| 670|
| | | | | | |
Sales Unit(1992)| 455.3| 64.1| 23.3| 60.9| 53.2| 656.9| Market Share| 69.32%| 9.76%| 3.55%| 9.27%| 8.10%| 100.00%| | | | | | | |
Sales Unit(1994)| 473.0| 84.8| 30.8| 73.7| 21.1| 683.4| Market Share| 69.22%| 12.40%| 4.51%| 10.78%| 3.09%| 100.00%| Growth Rate| 0.86%| 15%| 15%| 10%| -37.06%| 2%|
A further analysis of year 1997 shows that Kodak’s market share would further decline to 61% with a negative growth rate. Sales Unit(1997)| 446.1| 128.9| 46.9| 98.1| 5.3| 725.2| Market Share| 61.51%| 17.77%| 6.46%| 13.53%| 0.72%| 100.00%| Growth Rate| -4.88%| 15%| 15%| 10%| -37.06%| 2%|
2. Could you specify what Kodak’s objectives should be at this point? Should they pursue market share, profitability, brand equity, …?
Firstly Kodak should aim to maintain current level of market share and start to regain its dominance in the market. At the same time, as global film market was only growing at 2% per year, there is little potential to gain new customers. Therefore, it is important to increase current level of film consumption per household in order to achieve larger sales and profit. As 42% of household buy fewer than 9 rolls per year only, improvement in sales is possible if Kodak could influence purchasing behavior in this segment of customers.
Kodak should also target to improve trade margin to at least match competitor’s level.
3. What is your evaluation of the general concept of Funtime proposal and its implementation details given consumer behavior?
In order to assess Funtime’s general concept, we need to address Funtime’s Portfolio Strategic Role, marketing plan and Contribution Margin.
Portfolio Strategic Role: Funtime is being launched as a response to a growing body of price-sensitive consumers in a market Kodak has not been actively involved. It is an intelligent strategic move in order for Kodak to defend itself from a growing lower tier segment and avoid further category commoditization eroding brand value and profitability. Kodak has already built a strong Brand awareness, and many consumers are already...