Eastman Kodak: Funtime Film Case Discussion Group 8 Ankur Jain 08FT-007 Meghna Pandey 08FT-024 Rajesh Kumar 08FT-035 Raviraj Kurdekar 08FT-036 Suraj Jadhav 08FT-054 Vijay Adhyapak 08FT-058

 670 million 24-roll 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 3M  US 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”

New Market Plan Strategy Reposition film line Established 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

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 Relevance and Need No presence in economy segment Growing segment Commoditization as price prime concern and no difference in quality perception. Benefits Reduced benefits at lower prices – only 2 speeds Increase in customer base Kodak – Industry Standard High Brand loyalty and trust Competitors will have to reduce quality to compete Accessible to the target markets – price sensitive consumers

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