ROYAL UNIVERSITY OF BHUTAN

GAEDDU COLLEGE OF BUSINESS STUDIES

CASE STUDY- 1 EASTMAN KODAK COMPANY: FUNTIME FILM

MARKETING MANAGEMENT (501)

Submitted in Partial fulfillment for the Requirements of

Master of Business Administration

Submitted by: Baken Dhungyel (031902)

MBA – II

Submission Date: 20th September, 2019

 DECLARATION FORM

Type of Course Work: Case study-1 Module tutor: Dr.Dhiraj Sharma

Date of Submission: 21st September, 2019 Module code: MKT501

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appropriately acknowledged. I understand that if found otherwise, my academic work will be
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Sangay Tenzin
Student ID No: ( 031820)

For Module Tutor

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Table of Content
US Market of Photo Film Analysis...........................................................................................................3
Competitor Analysis..................................................................................................................................3
Product Line Analysis...............................................................................................................................4
Environmental Analysis............................................................................................................................4
1. The Porter’s five forces that affect the US Market of Photo Films:...............................................4
a) Competitive rivalry:..................................................................................................................4
b) Threat of New Entrant:.............................................................................................................4
c) Bargaining power of buyer:......................................................................................................5
d) Bargaining power of Suppliers:................................................................................................5
e) Threat of substitute products:..................................................................................................5
2. SWOT Analysis:................................................................................................................................5
a) Strengths of Kodak:...................................................................................................................5
b) Weakness:...................................................................................................................................5
c) Opportunities:............................................................................................................................5
d) Threats:......................................................................................................................................6
3. BCG Matrix...........................................................................................................................................6
Analysis Report..........................................................................................................................................6
Recommendation.......................................................................................................................................8
References................................................................................................................................................11
The case on “Eastman Kodak Company: Funtime Film” is about the witnessed of a drop in the
market share of Kodak for two consecutive years 1993 and 1994, a problem faced by Kodak.

US Market of Photo Film Analysis

Kodak witnessed a decrease in market share from 76% to 70% for five years which was mainly
due to the pricing strategy followed by its competitors such as Fuji by taking up lower pricing
strategy. Kodak had lost its 8% of the stock on rumors on its price cut of the products. The
survey conducted in the case showed that people valued films as any other commodity which the
buyers often selected from different brands depending on its pricing only. Kodak’s growth in the
market became stagnant and was only capable to achieve 3% of the growth compared to Fuji and
Polaroid who had market growth reached to 15%. Kodak lost its market as Fuji grew to become
the biggest competitor capturing the market share through a low pricing. Fuji’s adoption to
competitive strategy along with different marketing tactics achieved it the worldwide sale of
$10% which amounted to half of Kodak’s sales. The gross margin earned by Kodak was about
70% with market share shrunk by 1.2%.

Competitor Analysis
The major competition of Kodak was firstly the Fuji, secondly Agfa followed by 3M and
Polaroid’s branded products. Kodak and Fuji were the players having brand products including
films, image products, and cameras with which they dominated the worldwide photography
market. Agfa and 3M’s products included the private labels and the percentage sale of Private
label were high but Kodak could not make a sell on a private label basis mainly due to the 1921
consent decree in force. Polaroid was a new competitor to Kodak who sourced its product from
3M for sale. Despite Kodak’s U.S market share, Fuji was a strong competitor in the worldwide
sales ($10 billion v. Kodak’s $20 billion)

Product Line Analysis

The offerings of Kodak were in four diverse product range, each having different prices with the
view to capture a maximum market share. Ektar brand was a premium product which was used
professionally and the Royal gold was another which was positioned for precise special
occasions ranging from the birth of a baby to graduation ceremony. Kodak spent 40% of the total
budget on this line of product to draw and acquire more customers. This drew and influenced
many consumers as they people were highly accompanied by special occasions also known as
‘Kodak Moment’. The Gold Plus being the flagship brand was appropriated with approximately
60% of the total advertising financial support. Kodak later launched a brand in the name of
Funtime film which was segmented towards the customers who were price sensitive. It was an
economic brand with no advertising support which was available only in limited quantities and
only in particular season or time. This product was packed in convince of the customers in value
packs i.e. 2 rolls package of 24 exposure and 4 rolls package (3rolls of 24 exposure rolls and
with 1 roll of 36 exposure).

Environmental Analysis
The Environmental analysis carried out are Porter’s Five Forces Model, SWOT Analysis and BCG Matrix

1. The Porter’s five forces that affect the US Market of Photo Films:
a) Competitive rivalry: There are many different players in the market with the same
product offering. The major competitors of Kodak are Fuji, Agfa, 3M, and Polaroid’s
branded products with the quality of the products almost of the same level.
b) Threat of New Entrant: The photo film industry is based on high technology requiring
the need for huge investment and because of this the threat of new entry in the market is
limited as a start needs to have a hefty sum of money to enter this market. The growing
competitor the Polaroid entered and sustained the market only by selling the branded
products of 3M. Thus, the threat of new entrant is lesser in this market.
c) Bargaining power of buyer: The bargaining power of the buyers in the photo film
industry is high as there is less or no switching cost involved in the industry as the
products are with the same level of quality.
d) Bargaining power of Suppliers: The power of suppliers to bargain is high as films are
viewed as a commodity product as per the consumer trend report. This was because the
consumers knew little or nothing about photography.
e) Threat of substitute products: The threat of substitution is high as per the survey report
in the case, the consumers could easily switch over to other films depending on the
quality and price of the films are offered on.
2. SWOT Analysis:
a) Strengths of Kodak:
Kodak is a company who has a strong brand name with 70 years of film market experience,
enjoying 70% of the market share and approximately gaining 50% of the loyal customers to the
brand image of the company. The competitors like Fuji, Agfa, 3M, and Polaroid has not even had
more than half of the Kodak market share. Though there is a fall in market share from 76% to
70% in the past 5 years, Kodak still leads with it's market share proving that they have
competitive capabilities.

b) Weakness:
As the market share decreases the company’s profit would as hampered that lead to the low
growth rate for market share. The dip in market share could have subsided if management
catered and focus on finding the loopholes. Indirectly it is also a sign of management failure in
finding the problem.

c) Opportunities:
Kodak as a leader in the market has the potential to advance or diversify into a bigger market
through strategic alliances. Kodak has this opportunity as the photo industry is getting bigger
with globalization. Moreover, due to connectivity via social media, online photo sharing and
storage there is an alarming need for the creation of innovation in the photography industry for
Kodak and other companies.

d) Threats:
Kodak for a few years has been losing its market share with the upcoming of the competition
from Fuji and Polaroid who offered lesser price than Kodak. There is the possibility of some
phone companies offering a mobile phone that have the capability of capturing photo same as
that of Kodak and with the advancement in technology, there is the possibility of a reduction in
the need of rolls offered by the companies and going digital. Besides that some customers are
price sensitive who look for a branded product with fewer prices and trying to meet their need
with the pricing strategy would lead to a price war and also losing its quality while
compromising for the price while it is already having a slow growth rate.
 3. BCG Matrix

20%
Market Growth Rate

High

10%

Low KODAK FHJI FILM

10X High 1X Low 0.1X

0

Market Growth Rate

Analysis Report
In line with the study of SWOT analysis, Porter’s Five Forces Model and BCG Matrix, the
Kodak Company is seen to have trouble in maturity stage of the photo film industry having a
shrink in its market share and growth rate. The reason is mainly due to their competitors,
Kodak’s price was higher than others products and with the quality not being very outstanding.
The customer rating showed that even Kodak Ektar had lower quality than Kodak Gold Plus
where Polaroid High Definition which was of 0.71% of the price of Kodak Gold Plus was
evaluated as having the best quality. Polaroid hence not only entered the market as the new
entrant but also started incursion into Kodak’s territory along with Fuji.

The firms market’s annual growth rate in the photo film industry is only 2%. It means that there
won’t be any exponential growth in new-comer consumer so Kodak have to make potential
consumers to buy kodak’s product.
Gold Plus

The gross profit margin earned on Gold Plus range is 70%, a retailer’s margin is 20%.

The selling price of Gold plus is $3.49.

Profit earned = 70% (3.49- (3.49 * 20%)

= $1.9544

Funtime

Gross Profit earned by Funtime is 70% (assumption), retailer margin is 20%

Selling price = $2.792

Profit earned = 70% (2.792– (2.792 * 20%))

= $1.5624

Thus Funtime shows lower potential of profitability than that of Gold plus.

If Kodak goes for Funtime then there is every chance that the customer of Gold Plus would move
to Funtime as it is cheaper which would be swapping of the customer to one brand label to
another. The number of new customers needed would be 0.25 times of the number of the
‘swappers’ to compensate for the loss. If 10% of the customers swap to Funtime from Gold Plus
then 2.5% of new customer needs to be attracted from other companies to fill the gap of Gold
Plus requiring a increase of 1.8% of the market share. With Fuji’s market share of 11% and
Polaroid’s 4%, snatching the one tenth of the glitch from them would be hard. This indicates that
Kodak should not advertise as it would be hard for them to get this many amount of new
customers.
According to the data provided in the case, the prices of product one offers doesn’t matter as
there are other good quality films of other companies sold in lower prices thus, taking a new
brand Funtime in the market might backfire to the name and leadership that Kodak holds in the
market and would even risk 50% of their loyal customers.

Recommendation
The recommendation are stablished in five parts for Kodak Company to consider and the
recommendation is mainly based on the above analysis done on the Kodak company labels. The
recommendations are as follows:

1. Do nothing.
Shrink of market share = 1.2% p.a
Growth = 2% p.a
Kodak’s market share = 70%.
Assuming X films sold this year
Films sold this year = .7X
Then films sold next year = .70176X (1.02*0.688= .70176)
It means that Kodak will sell a little bit more than before but if their market size decrease
over 1.4% per year then they will have a lesser sales.
2. Reduce the advertising cost and improve the quality.
Reducing the advertising cost and improving the quality will help Kodak to lead by
example as a leader and also to attract customers. The customer sensitivity over the years
would definitely increase giving them a greater sense of photography and memory
keeping through photo which would later make them compromise a bit of a price over the
quality. The quality of service can be taken into consideration supplying mostly through
Departmental/Discount and Drug stores as these are the only portal through which the
 sales generation is high.

Percentage of Sales
2 6

9
Department/Discount
38 Drug Shop
Camera Shops
13 Supermarkets/Convenience
Wholesale Clubs
Mil Orders
Others

14

24

3. Sell films to other countries like China, India, Uk, etc as the percent of new customer they
require are beyond their geographically covered market areas.
4. Develop film for children who are potential customers because those generation would be
in the next level of photography and would not compromise quality for price. Effective and
efficiently attracting those potentials as customers would give an edge to diverge the newer
generation to the brand Kodak.
5. Give premium customers more special services.
This strategy is the best and primarily suggest to Kodak. It can also be known as balling
alley strategy targeting specific class of consumers who purchase more of Kodak’s
product targeting through quantity of buying. This strategy will then serve as a success to
other class and can be done only by Kodak as it has exclusive profit margin and market
share. It should include premium through coupon which allows them to print more for
 free. This strategy would suck variable cost and reduce profit margin in the short run but
in long run this would help the company to reinforce the quantity of customers. This
strategy has the potential even to drive the competitors out of the market as this strategy
would force them to lower their prices when they are already under lower profit margin.
Thus, leading them towards bankruptcy.

References
Case analysis Eastman Kodak Company Marketing Essay. (2018, November). Retrieved from
ukessays.com: https://www.ukessays.com/essays/markekting/case-analysis-eastman-kodak-company-
marketing-essays.php?vref=1