Kodak Case Study
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KODAK FUNTIME ANALYSIS
Diagnosis of the reasons for Kodaks market share loss and assessment of likely development of the market if Kodak maintained the status quo.
Answer:
Kodak had been experiencing a loss on market share from 76% to 70% over the past five years, which was caused by the action of its competitors like Fuji Photo Film Co. and Konica Corp., wooing consumers with low-priced versions.
If Kodak did nothing to deal with the situation, either in pricing or creating something new, sooner or later its competitors would continue to tighten their grips on Kodaks market share. The market share would slowly, but steadily, decreased. The growth, compared to Fujis 15%, could not be relied on. At some point, it would be possible for Fuji to equalize its position with Kodak on the market share.
Specification of what Kodaks objective ought to be at this point. This involves possible trade-offs between market share, profitability, and brand equity.
Answer:
These are the known facts from the case:
Kodaks market share was declining over the past five years, from 76% to 70%, although it remained owned the largest market share in the US with 70%. However, last year (1993) it still showed growth of 3%.
In 1993, it made profit about $20 billion worldwide (Fuji managed to make half of it).
Kodaks Gold Plus brand was the standard of the photo film industry, became the largest-selling brand by far, set the Premium brand price at $3.49.
Right now, Kodak should be more concentrating in sustaining its current market share. Even thought the competition is fierce and the competitors is closing in, either in market share or profit, Kodak still has the advantage of being the standard of the photo film industry. Low-priced versions might interest the costumers for a certain period of time, but for people who want a much better result or quality, Kodak still manages to lead for the reference. However, pricing strategy is still possible to establish.
Evaluation of the general concept of Funtime proposal and its implementation details given consumer behavior.
Answer:
Kodak proposed to introduce a new brand at Fuji and Konicas price level, about 20% below the price of Kodak flagship Gold Plus brand, named Funtime. According to an article in Discount Merchandiser, consumers tend to view film as a commodity, often buying on price alone. A new brand with an affordable price range, along with Kodaks standard should attract their interests.
The brand was only available in limited quantities during two off-peak selling seasons. It was also offered in the two most popular speeds, ISO 100 and 200. Amateurs typically used 100, 200, or 400, but the 100 being the most popular.
Funtime was packaged in “value packs”, specifically in two forms, which were 2 rolls of 24 exposures and 4-roll package (3 rolls of 24 exposures, a roll of 36 exposures). This was adjusting to the consumers (households) habit in purchasing film, which was often in “multipacs” containing 2-3 rolls of film.
Consideration of other action plan options – such as a price cut on the flagship Gold Plus brand.
Answer:
A price cut on Gold Plus brand is not an option. Gold Plus is by far the largest-selling brand, setting the Premium brand with its $3.49. It is also the standard for the photo film industry. It would be ridiculous to sacrifice this reputation by lowering its price.
Other options were offered as such:
Funtime was projected to be sold with a 20% below Gold Plus price, about $2.79. It was lower than Fuji and Konica, but higher than any other economy brands procured from 3M and AgfaColor XRG. The price was considered to be rational, considering Funtime was a modified version of Gold film, Kodaks main brand.