Kodak, the industry leader in photographic film market had lost 6% market share to competitors in the last 5 years. The Photographic film market is growing at a meager rate of 2% Y/Y. Kodak was growing at 3% Y/Y whereas its competitors’ sales were growing at 15% Y/Y. The Company did not have a product to meet the needs of the ‘Economy and Price Brand’ segments of the market, which were growing at an average rate of 12% p.a. and contributed 25% to the market share i.e. 167.5 million units (~ USD 429.74 million)1.
The Market Situation
The photographic film market was segmented into the following four groups based on the retail price of the film roll (Refer Exhibit - 1): Super Premium Segment for the professionals and serious amateurs, Premium Segment for special occasions, Economy and Price Brands segments for the price sensitive customers. The total sales volume of photographic film roll industry was 670 Million rolls.
The Kodak Strategy
Kodak had a 70% market share and a very strong brand value in the Super Premium and Premium segments.
Kodak decided to implement a three pronged approach, explained above. Analysis
The above strategy adopted by the Company would result in the following: FUNTIME
Taking into account the favorable price position of ‘Funtime’ in the Economy category, the price sensitivity of the customers in the lower priced segments, the strong brand presence of Kodak and the fact that the product would be available only during off-peak periods, we estimate that ‘Funtime’ would: •Draw 1% of the market share from the Price Brand segment and 10% from the Economy brand segment. •Contribute an additional 8.34 million units ($19.60 million) to the total market share of Kodak (167.5 million units) •The above figure also takes into account the fact that Funtime is a new product with no advertising support and will face some resistance from the masses. This will result in net...