Deborah Mendez, Chris Priebe, Carolina Thomas !"#$! %&'()*+ %),*
Decline in Kodaks market share from 76% to 70%
over 5 years (1989 1994)
8% decline in Kodaks stock due to rumored price
reduction in lm
15% increase in U.S. dollar sales for both Polaroid
and Fuji compared to Kodaks 3%
lower priced brands such as Konica and Fuji
were gaining market share faster than Kodak -.+ /012,+* 670 Million 24-Exposure Rolls = 2 x $3 average/roll $ Billion Market Size from the Last Year -.+ /.1(1 3405+( 19% 11% 70% Market Share Kodak Fuji Other 0% 5% 10% 15% Average Kodak Fuji Polaroid Private 10% 15% 15% 3% 2% Annual Growth Rate -.+ /.1(1 3405+( Fuji and Kodak sold only branded products Suppliers 3M and Agfa sold branded products and private labels Polaroid sold a branded product manufactured by 3M Despite Kodaks U.S. market share, Fuji was a strong competitor in worldwide sales ($10 billion v. Kodaks $20 billion) -.+ /.1(1 3405+( 6% 2% 9% 13% 14% 24% 32% Distribution Channels Department/Discount Drug Stores Camera Shops Supermarkets/Convenience Wholesale Clubs Mail Orders Other -.+ /.1(1 3405+( 4 Price Tiers 3405+( 4'6 /0)7)'8 Polaroid High Denition, Kroeger, Walgreens, York, Clark Color, Kmart Focal, Target Fujicolor Super G Konica Super SR ScotchColor Kodak GoldPlus Agfacolor XRG Fujicolor Reala Kodak Ektar Superpremium Price: $4.27-$4.69 Premium Price: $3.49 Economy Price: $2.69-$2.91 Price Price: $2.91-$2.49
Kodak Gold Plus
Industry standard
Premium price tier at $3.49
An estimated 70% gross margin
Fujicolor Super G
Leader in Economy tier
Priced at 17% less than the Premium tier at $2.91
An estimated 55% gross margin
Price Brands
Priced about 30% less than Premium brands
Offered higher margin for dealers
3405+( 4'6 /0)7)'8 -.+ /.1(1 91':&*+0 By yearly usage, the consumers were segmented as follows: Annual rolls Percentage of Consumers 0-4 20 5-9 22 10-15 28 16-25 16 >25 13 -.+ !1645 $6;4'(48+
Over 70 years in lm market
70% of U.S market share
Kodaks 35mm negative lm buyers:
50% brand loyal Kodak-loyal
40% samplers heavy reliance on Kodak
only 10% price shoppers
Kodak positioned as a high-quality product
Brand 1 - Ektar for professionals & serious
amateurs
Brand 2 - Gold Plus for the rest of consumers
Private brands are growing rapidly
Retailers obtain a higher margin by selling
private brands
1/2 of picture takers know little or nothing
about photography
10% of Kodak buyers are price shoppers
Consumer Reports tests did not nd actual
quality differences among products -.+ !+< =::&+: To launch Funtime Film - a product to compete in Economy tier and be priced at 20% less than Gold Plus Offered twice a year at off-peak times (2-3 months starting in April and then again in September) No advertising support Available in limited quantities and in only 2 lm speeds (ISO 100 and 200) Packed in value packs 2-rolls of 24-exposures or 4-roll packs with 3 rolls of 24-exposures and 1 roll of 36-exposures -.+ ">()1' -.+ ">()1' Reposition Ektar as a brand, not for professionals and serious amateurs, but for the very special moments The newly positioned product would be branded as Kodak Royal Gold It would receive 40% of the total advertising budget Maintain Gold Plus, the agship brand Would maintain same pricing strategy and 60% of the advertising budget As the brand with largest market share in a category dominated by premium brands, Kodak should exercise the high road strategy that implies high levels of innovation and judicious pricing If Kodak starts to compete on price, they run the risk of transforming the category into a commodity As the market leader, Kodak should not react desperately to movements of small competitors, but it should protect its market Kodak must align its interest with those of the retailers Sell on brands equity and image promise consumers that although they cant see perfection, it exists -.+ $'4,<:): DONT launch Funtime Questionable pricing strategy Priced in the middle of the Economy category and not competitively priced with Private category Could spur brand cannibalization Kodaks existing buyers are predominantly brand-loyal giving them a lower-priced Kodak- branded option could subsume higher-margin lines -.+ ?1,&()1' Lack of advertising support and limited availability create consumer confusion and retailer headaches Consumers will only see the product by happenstance, and lack any communication regarding its merits. If purchasers are pleased with the product, Kodaks higher-priced lines may be the only Kodak lm product available for repeat purchase, ie. bait and switch? Retailers will have to deal with the potential customer confusion due to this inexplicable seasonal lm product. Other seasonal product retail complexities apply as well. -.+ ?1,&()1'
DONT use proposed nomenclature
Instead of Royal Gold, disambiguate the two Gold
lines and rename Ektar as Kodak Platinum and Kodak Gold Plus as simply Kodak Gold. By having Gold and Platinum, the company clearly communicates quality differences to the consumer
Widen channels - Distribute Kodak Platinum through
all the channels, not only through camera shops -.+ ?1,&()1' Launch an advertising campaign that emphasizes long-term quality over short-term savings and educate the consumer. The company should focus its efforts on innovation in all product lines, thereby justifying and maintaining its premium market position. Innovation is the only way Kodak can ght their product becoming a commodity. -.+ ?1,&()1' Product launches may be supported by promotional activities and materials that further educate the consumer about the superiority of Kodak products. Implement a customer loyalty program to convert samplers into Kodak-loyal consumers and increase the number of rolls purchased per year. -.+ ?1,&()1' Customer perception ultimately denes market An increase in market share does not necessarily mean an increase in protability A companys pricing strategy should consider the impact on its brand equity -.+ -45+4@4<: -.4'5 A1&