KODAK

Funtime Film
Team O
Eric Edmonds, David Graham,
Deborah Mendez, Chris Priebe,
Carolina Thomas

The Problem
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 film

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

The Photo Market

Market Size from the Last Year

=
$3 average/roll

670 Million
24-Exposure Rolls

$2
Billion

The Photo Market

Annual Growth Rate

Kodak

Fuji

Other

Market Share
15%

19%

10%

15%

15%

5%

10%

2%

3%

0%
Average

Kodak

Fuji

Polaroid

Private

11%

70%

The Photo Market

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)

The Photo Market

Distribution Channels

2%

6%

9%
32%
13%

14%
24%

Department/Discount
Drug Stores
Camera Shops
Supermarkets/Convenience
Wholesale Clubs
Mail Orders
Other

Market and Pricing

4 Price
Tiers

Fujicolor
Reala
Kodak Ektar

Superpremium
Price: $4.27-$4.69

Kodak GoldPlus
Agfacolor XRG

Fujicolor Super G
Konica Super SR
ScotchColor

Polaroid High Definition, Kroeger,

Walgreens, York, Clark Color,
Kmart Focal, Target

Premium
Price: $3.49

Economy
Price: $2.69-$2.91
Price
Price: $2.91-$2.49

Market and Pricing

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

The Photo Consumer

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

The Kodak Advantage

Over 70 years in film market
70% of U.S market share
Kodaks 35mm negative film 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

The Key Issues

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 find actual
quality differences among products

The Option
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 film
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

The Option
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 flagship brand
Would maintain same pricing strategy and 60% of
the advertising budget

The Analysis
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

The Solution
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 Kodakbranded option could subsume higher-margin lines

The Solution
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 film product available for repeat
purchase, ie.bait and switch?
Retailers will have to deal with the potential
customer confusion due to this inexplicable
seasonal film product. Other seasonal product
retail complexities apply as well.

The Solution
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

The Solution
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 fight their
product becoming a commodity.

The Solution
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.

The Takeaways
Customer perception ultimately defines market
An increase in market share does not necessarily
mean an increase in profitability
A companys pricing strategy should consider the
impact on its brand equity

Thank You