Eastman Kodak Company: Funtime Film Case Solution

1. What was happening in the film industry that had Kodak worried?

A brand delivers value to the customers and to the company. Kodak faced a challenge to connect with customers by understanding their personal and shared values and enabled them to improve their daily lives. Kodak experienced that the photo film competitors are courting the customers with low priced versions of photo films, which was their greatest concern. There was a need of creating trust and generated excitement with customers to introduce brand loyalty. Kodak provided the pleasure experience of capturing the memories at different price categories. The brand needed to be repositioned and assured that the customer is buying the best in the category. Brand positioning is the reality check that tells that how the brand is perceived in the hearts and minds of consumers.

Kodak started experiencing market loss due to a number of reasons such as, increase in the number of competitors, change in consumer behavior, Confusion in the pricing strategy, quality of the product, and pricing competition in the photographic industry. Competitors like Fuji and Konica started catering to price conscious customers as most of the camera customers preferred low priced over extra features in a camera. The growth of Fuji and Polaroid sales to 15 percent as compared to a 3 percent growth in Kodak was a major concern for the company to improvise the existing strategy or introduce a new strategy in order to sustain in the industry. Positioning of consumer products is an important task to increase the consumer base and capture a large proportion of the market. Kodak management was worried due to the increase in the number of customers in the industry and their preference on the basis of price as compared to the quality of products.

2. How did Kodak segment the market before and after the introduction of Funtime film? How would you segment the consumer film market and what would be the key drivers of your segmentation scheme?

Kodak was experiencing loss of market share from the last couple of years and brands like Fuji and Konica were giving tough competition to Kodak. Kodak was offering premium and super premium brands with premium brand considered as the standard of the industry because of its high sales. While, competitors including Fuji and Konica were also offering less than premium brands, which were selling in Economy brand tier with priced less than the premium brand. This strategy by competitors was resulting in loss of market share for Kodak. Eventually, the company decided to launch another brand for economy brand tier that was priced 20% lower than the Kodak’s flagship brand. This brand was named as Funtime, and its price was at par with the lower end brands from Fuji and Konica. So, Kodak added a new price tier by introducing a new brand for a low price category; thus, making three segments based on price instead of two as before.

In order to segment the film market, major drivers for segmentation would be pricing and consumer behavior. Pricing is the major determinant in this market because large percentage of consumers had less knowledge of photography and pricing was the big factor for them, and there was a growing segment of price sensitive customers, as well. However, pricing have to be justified with the product attributes like offering higher speeds for premium brands and giving more exposures, as well. Advertising also needs to reflect the consumer segment that is being targeted at that price. Other major driver for segmentation is by seeing trends from consumer behavior. Consumers were to be differentiated based on their usage of films as it would reflect their usage frequency.

3. How should Kodak adapt its products and strategies to your segmentation scheme?

SWOT Analysis of Kodak

• Strength: Huge market share almost 70%, high quality.

• Weakness: Unavailability of product and high price in the competitive environment.

• Opportunity: Innovative products, reasonable pricing strategy.

• Threats: Competitor’s low pricing strategy, increasing share of competitors, new rivals.

Kodak has a huge market share as compared to its competitors making it as a plus point for Kodak, but it is not offering the right product to the right market and availability is limited which can decrease the annual sales of Kodak every year by 5% and due to new comers in the market who are offering products on very low prices. Kodak has never focused properly on the advertisement part which is a very important aspect in globalization. The strategy, which Kodak should focus on, is the advertisement for its product so as to reach the segmented market and to aware consumers about the product’s advantages and merits.

Kodak should offer products on reasonable prices so as to increase its sales. Kodak is in need of increasing the availability of its products in order to boost the market share. Kodak should align with its retailers and distribution channels. If proper advertisement campaigns are launched, Kodak can easily develop brand image and Kodak’s quality should play a phenomenon role in the advertisements so as to stand out from competitors. Kodak should provide differentiation in its product range, and it should rename its product range in a simple manner such as Kodak gold plus should be renamed as platinum, Gold should stay gold and fun time should be renamed to silver. This will help the consumer to easily choose between qualities. Camera shops should not be only channel for distribution, addition of super marts, pharmacy, general stores in the distribution channels will increase sales and availability of the product. Innovation is the key to success for Kodak, innovative products rules the market and Kodak should adopt innovation in every sense to maintain its position in the market. Loyalty cards can increase brand loyalty for Kodak which can guarantee long term customer bond to Kodak.