Major Case Study:
Eastman Kodak Company – Funtime Film
Kodak’s main problem was not foreseeing and adapting to market changes of price and competition. Kodak had dominated the photo film market for most of the 1900s until competitors like Fuji began taking market share from Kodak in 1984. Kodak ignored the new threats until the late 1990s, relying on their market dominance.
Kodak offered three product lines to target various market segments as a part of their Funtime strategy to regain market share. Prior to this strategy, Kodak offered only two product lines, Ektar, their superpremium line, and Royal Gold, their premium line. They planned to introduce Funtime film, an economy brand film, which targeted the price sensitive consumer. The target market is the average film user who has little or no education about film, buys strictly on price, and is not influenced by advertising -- the 50% of buyers that were not brand loyal (40% were film “samplers”; 10% purchased on price). Gold Plus is the premium brand film and is developed to target average consumers who are already Kodak-loyal or seeking quality photos over price. The superpremium film, Royal Gold’s target market is professionals, serious amateurs and average consumers who pay the premium for professional grade pictures for “very special” occasions. (See Appendix A)
In the 1990’s Kodak’s main competitors were Fuji of Japan, Agfa of Germany, 3M, Konica of Japan, and Polaroid as a late competitor. Kodak has many ways to differentiate themselves from all of these competitors. As an established photography and film brand, Kodak has dominated 70% of the market share in the U.S.; where many of their competitors are new to the market. Kodak has not offered a private or economy film line like many other competitors have. In the superpremium tier Fujicolor Reala was targeting advanced amateurs and professionals only while Kodak targeted a more broad segment with their competing Royal Gold line. In the Economy brand tier, Funtime was launched as an economy brand competing with Fujicolor Super G, Konica Super SR, and ScotchColor. Funtime was the only film in this brand tier to be offered only at off-peak film use times and only packaged in value packs. Kodak dominated the film market all through the 1900’s. They never received any major competition until Fuji began to attack their market share in the 1980s, when they were announced as the official film sponsors of the 1984 Summer Olympics in Los Angeles,
California. Kodak believed their dominance and customer loyalty would continue to carry them as new competitors entered the market and as film prices were beginning to fall. They underestimated their competition and did not react soon enough. It seemed as if Kodak believed that people would not buy another film other than Kodak. By the late 1980s the film market began to see many competitors and Kodak’s market share began to fall. While still the dominant competitor, their market share fell from 76% in 1989 to 70% in 1994, and similarly the average price of film began to fall. While Kodak’s film rolls were in the neighborhood of $3.50 to $6 per roll, competitors began releasing film under private brands starting at $2.19. Shortly after the economy film market began to form, Consumer Reports released a quality test of the top 6 films in the market. While Kodak positioned themselves as the superior quality film, Consumer Reports reported that, “We found most films to be no better or worse than their competitors of the same speed...and will yield prints of comparable quality. Kodak’s standard, Gold Plus, even ranked below Fuji’s economy film. With film market evolving, Discount Merchandiser released a survey in 1991 stating that “more than 50% of the picture takers in the US claim to know nothing or little about photography, and as a results they tend to view film as a commodity, often buying on price alone.” This led...
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