Case Study: Kodak

Pages: 10 (1076 words) Published: February 12, 2014
CASE:
EASTMAN KODAK

Funtime Film

The Company: Milestones
Eastman Kodak Company, commonly known as “Kodak”, is an American company focused on personalized imaging business. An iconic innovator. The leading name in photography.
1880 – Established in Rochester, N.Y.
1962 – The company's U.S. sales exceed $1 billion for the first time. 1969 – A Kodak camera was used on the
Apollo 11 mission.
1980 – Kodak celebrated its 100th
Anniversary.
1983 – Kodak begins its cost-cutting
years, eliminating 7,000 jobs worldwide.
1995 – Average stock price is $58.41,
revenue reaches $15 billion and profit is
$1.3 billion.

2

The Market: Major Players
1993: Approximately 670 million rolls sold times $3 average selling price of a 24-exposure roll = over $2 billion.
1988-1993: Market’s annual growth rate averaged only 2%.
Fuji and Kodak are locked in a global battle for dominance of the worldwide photographic market.

Annual Sales Growth Rate

U.S. Photo Market in 1993

15%

Others
19%

10%
15%

15%

5%

10%

Kodak
70%

3%
0%
Kodak

Fuji
11%

Fuji

Polaroid

Private
labels

3

The Product: BCG and PLC
Market Share

High
Low

Market Growth

High

Low

Stars

Question
Mark

Cash
Cows

Dogs

Kodak has a large market share in a mature, slow growing industry. Kodak’s “Gold Plus” is the largest-selling brand, a “cash cow” that is “milked” to provide as much cash as possible.
Gross margin: Kodak – 70%; Fuji – 55%.

4

The Product: Pricing & Positioning
Tier

III. Economy
IV. Price

Company

$4.69

Reala

Fuji

$4.27

Ektar

Kodak

$3.49

Gold Plus

Kodak

$3.49

XRG

Agfa

Super G

Fuji

$2.91

Super SR

Konica

$2.69

II .Premium

Brand

$2.91

I .Superpremium

Price

Scotch Color

3M

$2.19 – $2.49

Others

Others

POSITIONING:
Both Kodak and Fuji positioned themselves as providers of superior quality through their advanced technology.
Kodak’s “Gold Plus” is the standard of the industry.
Super premium brands are targeted to advanced amateurs and professionals. These products were distributed mainly through camera shops and were not major sellers.
5

The Consumer: Usage & Brand Loyalty
Brand Loyalty
Usage Rate

Share

Very Heavy

13%

more than 25 rolls

Heavy

45%

Price
Shoppers
10%

Rolls per Year

10-25 rolls

Medium

22%

5 - 9 rolls

Light

20%

Samplers
40%

Kodak
Loyals
50%

less than 5 rolls

More than 50% of picture takers in the U.S.A. claim to know “little or nothing about photography”.

6

The Problem: Shrinking Sales

Over the past 5 years Kodak saw its market share eroding from 76% to 70% (1.2% loss on average per year) as competitors like Fuji and Konica attracted more customers with lower-priced products.

7

The Causes of the Problem
Change in consumers behavior – The importance of the brand name in consumer decision making is still strong, however, there is a growing body of price-sensitive consumers.
Change in value perception of the product – Consumers tend to view film as a commodity, often buying on price alone.
Fading differentiation between Kodak and its competitors – Actual quality differences among films brands were unclear to customers. Quality has become an “order qualifier” rather than an “order winner”. Huge advertising budgets spent inefficiently – In 1984, Fuji stunned Kodak by winning sponsorship of the Olympic games in Los Angeles. Fuji had lower- priced products and made American customers aware of it. Involvement level – The time and effort the consumers spend for their buying decision. Film is a low involvement product and the poor knowledge of the customers about photography accelerated film's commoditization.

8

Kodak’s Options
1. Do nothing – hold the line, hope for better times to return, and in the mean time continue to lose market share (i.e. customers who might never come back)....
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