Marketing at Kodak

Only available on StudyMode
  • Download(s) : 96
  • Published : April 1, 2013
Open Document
Text Preview
Kodak

"Will Kodak's 'razor and blade' pricing strategy succeeds?"

"Will Kodak's 'razor and blade' pricing strategy succeeds?"

I believe Kodak’s razor and blade pricing strategy will succeed. Kodak started the photo business a century ago so it is conceivable that they will enter the printer business, particularly with an eye on getting more of us to print our digital photos. The Kodak brand has always ranked among the top in the world by name recognition and quality which is a plus on their behalf. The leading printer manufacturers such as HP, Epson, and Lexmark International follow a classic “razor and blades” model. These companies are willing to sacrifice profits on the “durable” portion of their product (the printer itself) to make money on the “consumable” portion (printer cartridges). Kodak is now flipping this approach and radically lowering the price of the printer cartridges. It plans to charge $9.99 for black ink cartridges and $14.99 for color ink cartridges. This is the main reason why I believe that Kodak will be successful. Ink cartridges sold by competitors retail for $30 or more. Not surprisingly, companies typically hesitate to chop prices by 50 percent or more. Currently, cartridges cause more than the printer itself. Why would a consumer by a cartridge for sixty dollars or more when they can by a printer with cartridge for thirty dollars? The good news for Kodak is that the home printer market continues to grow, meaning that incumbents might prioritize seeking high-margin growth opportunities over fighting desperately for customers they consider unprofitable. Kodak has the potential to transforms the existing market and grows the market by making it easier or more affordable for more people to consume cartridges. Not only does this give Kodak more growth potential, it can lead to incumbents feeling less immediate pain, mitigating their desire to respond fiercely. I feel that this will eventually cause the printing market...
tracking img