To: Inese Eglīte
RBS Professor, Marketing Management
Riga, 22nd of October, 2009
Case Study 4 Summary: Eastman Kodak Company – Funtime Film
Question: Is Kodak doing the right thing with the decision to have line extension: Gold Plus, Royal Gold and Funtime?
If we consider protection and growth of Kodak’s total market share to be the key objective then the introduction of a new brand in the Economy price-tier is a strategic MUST. It is crucial to be presented in the Economy tier which is fastest growing, and represents a segment with the biggest competitors. The key objective for Funtime is to maximize gain of incremental market share from Fujicolor Super G, Konica Super SR and ScotchColor, at the same time to minimize cannibalization of Kodak Gold Plus, the biggest volume source of Kodak.
Pricing strategy of Funtime is fundamentally correct, as it is competitive vs. main players in the Economy tier and is low enough to differentiate vs. Gold Plus. However, it must be clear that the price per pack should be compared. As mentioned in the case, Funtime is planned to be sold only in multi-packs of 2 and 4 rolls. In this case an additional discount per pack is necessary, in order to offer an additional value. I suggest 10% and 15% discounts respectively. Overall, I believe that multipack strategy is a very good step to boost product loyalty: for instance, a pack of 4 rolls is almost a yearly supply for 20% of consumers, thus preventing any competitive switching within 1 year.
Branding of Funtime represents a big challenge. On one hand, introduction of a new brand-name which is not a line extension of Kodak is a right decision, as it is an opportunity to minimize cannibalization of Kodak Gold Plus. Also, it shall not deteriorate the premium brand image of Kodak with a reference to a lower-price product. On the other hand Funtime is a completely new name, and shall not have any leverage opportunity with Kodak brand. Plus, it...