Eastman Kodak: Funtime Film Case Discussion

Group 8

Ankur Jain 08FT-007Meghna Pandey 08FT-024Rajesh Kumar 08FT-035 Raviraj Kurdekar 08FT-036 Suraj Jadhav 08FT-054 Vijay Adhyapak 08FT-058

670 million 24-roll exposures @$2.50-$3.50 per 24-rolls pack

2% average market annual unit growth rate. Kodak‘s Gold plus brand industry standard. 4 categories - on pricing- Super Premium, premium,

economy and price brands 24-rolls film categorized-on light sensitivity of film, as ISO

100, 200 & 400

US Photo Film Market (1993)

Agfa and 3M sell to consumers & other firms under a private label. Polaroid's branded product sourced from 3MUS sales (32%) is through discount stores and department stores where price brands are predominantly sold

Kodak’s market share fell from 76% to 70% over 5 years

Low 3% growth rate compared to an impressive 15% Fuji & Polaroid and 10% private labels.

Fuji grown to $10 billion revenue world wide in under 10 yrs.

Stocks stumbled 8% over rumors of price cut on film.

Current Issue

Kodak Number 1?

Kodak film graded “the same” as competitors in a Consumer Reports test

Past year sales growth at Kodak (3%); main competitors (Fuji and Polaroid grew 15%)

Consumer behavior – “tend to view film as a commodity, often buying on price alone”

Film purchased per year by Household

0

5

10

15

20

25

30

less than 5rolls

5 -- 9 rolls 10 -- 15rolls

16 -- 25rolls

more than25 rolls

% o

f h

ou

se

ho

lds

New Market Plan Strategy

Reposition film lineEstablished product line Superpremium Brand

Kodak Ektar Premium Brand

Kodak Gold Plus Economy Brand

Kodak -- NONE

New Line Superpremium Brand

Renamed Royal Gold and target a new consumer segment

Premium Brand (same) Kodak Gold Plus

Economy Brand Funtime

New Film Product Platform % of Advertising Dollars

60%

40%

0%

Gold Plus Royal Gold Funtime

Why was Kodak losing market share?

Mature Market Indications Market Growth Rate over last 5 yrs – 2% No more new Competitors No more sustainable competitive advantage Commoditization of product, price becoming major

concern. Lower pricing strategy of competing brands

No innovation for last few years ,scope of product innovation exists.

Distributor margins lower for kodak – 20% ,25% -competition.

No presence in economy segment where increasing volumes.

Marketing objectives i.e. Market share vs. Profitability?

Marketing Objective

Market share sustenance. For Premium and Super Premium

Continuous Innovation Economic segment

To gain market share through lower priced variants.

Evaluate the Funtime film strategy? Will it enable Kodak to achieve its marketing objective?

Funtime strategy-Evaluation

Price Tiers Super Premium

Fujicolor Reala $4.69 Kodak Ektar $4.27 Kodak Royal Gold $4.18

Premium Kodak Gold Plus $3.49 Agfacolor XRG $3.49

Economy Fujicolor Super G $2.91 Konica Super XR$2.91 Kodak Funtime $2.79 Scotch Color $2.69

Possibility of Price War? Communicate reduction in benefits w.r.t

Gold plus and hence lower price. At same speed quality difference

perception low. Current margin for funtime = 63.75%

No advertisement plan Dealer margins lower than competition by 5% Competitor margin 55% in economy segment

Incase of price war –Kodak deeper pockets. Possibility that customer would prefer

industry standard at equal price.

What other strategic options does Kodak have? Evaluate the same?

Possible Strategies

Options Available

Product and non product innovations Focus on market share

Price discounts Focus on profitability Strategic alliances Forward Integration

Suggest any modifications to Funtime film strategy or an alternative strategy, if required. Justify the same?

Suggestion Focus on CONTINUOUS INNOVATION. Establish point of difference in Gold Plus brand If film is marketed as a commodity, gain market

share by investing in one-time use camera models.

Establish developing centers, offer attractive schemes.

Funtime Strategy Market it with non product innovations – lesser

benefits – lesser no. of speeds and one pack size – less price. Imperative to communicate this so that industry is not

threatened of price cuts. No need to advertise on mass media Focus on POP. Increase in dealer margins very important in this

segment.

Suggestion

Reduce advertising spend on super premium brands.

Pricing of Royal Gold should be higher/equal to Ektar This segment is not price sensitive

hence no point in reducing prices here. Will reduce profitability. Already Ektar price 9% lower than Fuji. No volume already hence no point

reducing profitability also