A Summary of
Eastman Kodak Company: Funtime Film
Current product offerings of Kodak:
Focus of the product
Professionals and serious amateurs
Fuji Reala @ 10% higher price
Market is stagnant with annual unit growth rate of 2%.
Kodak has overall 70% market share in films sold in US.
50% customers are Kodak Loyal, 40% are samplers relying heavily on Kodak and 10% are price sensitive Kodak does not have any offering in economy segment which is generally price sensitive.
Konica, Fuji have launched low price products
Competition is slowly eating Kodak’s market share – 6% in 5 years
Kodak’s New Strategy:
Kodak has decided to reposition its the product line.
Kodak is planning to replace its super premium offering Ektar with Royal Gold and target it to a wider consumer base. No change in the flagship product – Gold Plus
Plan to launch an economy band Funtime, priced 20% lower than Royal Gold and offered only during off-peak periods in limited quantity.
New product positioning:
Focus of the product
Professionals, Serious Amateurs as well as regular consumers for “Special occasion” Gold Plus
Flagship product, for regular consumers
For price sensitive customers
Value Proposition to customers
Better quality than Gold Plus
Trusted product, good quality
Better Price than Gold Plus
New Price Tiers:
Assuming other brand prices remains constant.
New Price Tiers in Market
Kodak Royal Gold
Kodak Gold Plus
FujiColor Super G
Konica Super SR
Impact of product portfolio restructuring:
By offering Royal Gold as a “Special occasion” film for regular consumers, Kodak can expect some increase in sales of super premium rolls. However, the primary concern is loss of market share to cheaper brands for price sensitive consumers. Funtime offers price advantage to regular consumers during off-peak season. This can have following impacts: Price sensitive consumers (10%) may buy Funtime over other brands in economy segment. ScotchColor is still the cheapest brand in Economy segment. The samplers (40%), who otherwise heavily rely on Kodak Gold Plus may also shift to buying Funtime. Thus there is risk of diluting sales of Gold Plus. Funtime is offered only in value packs of 2 and 3 rolls. An average household consumes 15 rolls a year. Even though Funtime is offered only in limited time periods per year, households can buy value packs of Funtime and use them throughout the year. Again, this can result in cannibalisation of Gold Plus sales. From a regular consumer’s point of view, the 2 new products Royal Gold and Funtime dilute the value proposition of Gold Plus.
Competitors are already playing the price game. If Kodak reduces prices, it will possibly trigger a price war in the industry. Although Kodak and competitors can sustain this price war, it is not good for the industry in the long run.
Funtime and Royal Gold dilute the value proposition of Gold plus. Funtime can result in cannibalisation of Gold Plus sales.
This strategy will result in bad competition for the industry. Funtime needs to present a unique value proposition to consumers over Gold Plus without intruding in...
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