Case Study, BEP 430 Marketing
20030059 Dong-ock Kim1, 20030071 Min-geuk Kim2, 20040054 Keehyung Kim3, 20040535 Yohan Jo4, 20076006 Huang Qiuling5, 20076035 Dorjsuren Bayarmaa6 Marketing Team A1 2 3 4 5 6
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Professor: Wonjoon Kim Date submitted: April 10, 2007
TO: George Fisher, chief executive officer, Eastman Kodak Company FROM: Dong-ock Kim, Min-geuk Kim, Keehyung Kim, Yohan Jo, Huang Qiuling, Dorjsuren Bayarmaa RE: Eastman Kodak Company: Funtime Film DATE: April 10, 2007
First of all, we’ve analyzed about Kodak’s circumstances and problems. Next, we will recommend a strategy for Kodak. From surveys, people started to think films as commodities, but buyers often select films depend on price only. Even though pretty high percent of films are sold by private label, Kodak can’t sell film on a private label basis because of 1921 consent decree still in force.
According to SWOT analysis [Exhibit 1], BCG matrix [Exhibit 2] and Porter’s 5 forces [Exhibit 3], we tried to understand the circumstances of Kodak. From these analyses, we’ve found that Kodak is in trouble now because of shrinking of market share and low sales growth rate. Therefore, we thought that Kodak should use the strength of their overwhelming market share and high gross margin compared to other companies to break through this hardship.
After that, we analyzed the reason of decreasing market share. First of all, 'Price' is relatively higher than other products and their quality is not very outstanding. -1-
By the evaluation of the consumers, even Kodak Ektar has lower quality than Kodak Gold Plus. Furthermore, though Polaroid High Definition is price brands ($2.49, which 0.71 of Kodak Gold Plus, it means very cheap), consumers evaluated it has the best quality. Appearance of many competitors can be another reason of shrinking market share. Polaroid and Fuji started incursion into Kodak's territory.
Then, let’s think about the situation of doing nothing. Market share of Kodak will diminish continuously like it has been. Through the calculation [Appendix 1], we can conclude that there is a risk of decreasing profit of Kodak. It means that Kodak has to make some strategies.
According to the case, film market’s annual unit growth rate is only about 2%. It means that you can’t expect exponential growth of new-comer consumers anymore, so you have to make potential consumers to buy Kodak’s product. Potential consumers here not only include present consumers who buy competitors’ product but also future consumers such as children. Therefore, Kodak’s first objective is to make at least 76% of new-comer consumers and 20% of competitors’ consumers buy Kodak’s product in a year. In addition, Kodak can get more profit if Kodak’s customers buy
more and more films. Moreover, the second objective is increase average households’ film usage rate from 15 rolls per year to 20 rolls per year in two years time.
The strategy of Funtime is pretty interesting. Funtime has a lower price compared with other products of Kodak and sells only in off-peak time. It might be a good idea to sell it in a low price because it attracts more customers. Although I agree that your company has history, high technique, and knack, the products of your company are expensive in spite of having no special merit. According to the data of testing many films, the prices of your products are unreasonable, because the other good quality films of other companies are sold in lower prices. If you provide a good product in a lower price, then it can be a good chance for you to gain many customers.
But I found some problems in your situation. Your main customers are consisted of loyal customers and samplers who rely heavily on Kodak. Equally, they are stable customers and they will not...