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Team : Masum Aydn, Eray Alpay, Umut Ate, Selim Alp elebi, Burak ener MAN-335-1 CASE ANALYSIS

FOR EASTMAN KODAK Executive Summary KODAK is losing their market share year after year. There are several reasons behind this decrease. One of the things, they should notice that their prices is much higher when we consider the quality of their products. On the other hand, they dont offer something new to customer for years. So, it can stir current or potential competitors to offer innovation. Especially they should take precautions when we consider how tempting their category is to competitors. KODAK should enlarge their product range according to customer ranges. In addition, new ideas should be applied in new products. To sum up, we believe that Funtime Film strategy may be helpful for KODAK. Because they didnt care much the customer ranges for a long time.

Category: Category is not booming , exactly the opposite it is growing %2 annually. In order to increase this rate new segment have to be offered. There are 4 segments for film sector. Kodak is available for 2 of them which are super premium and premium. On the other hand Fuji is available on Economy segment. This fact can explain why Fujis sales increasing more than Kodaks( Fuji is %15 while Kodak is growing %3) In order to support the claim above we can examine the quality scores.(Fuji is 94 while Kodak is 93) Brands are not decisive about quality rate. Customers may also aware of this fact. For this reason majority of them (except serious amateurs and professionals) may prefers economy segment. As it can understood from above entering economy brand was very crtical and true decision in order to prevent to lose market share. Competition: Kodak dominating the whole market although there are two small potential threat company fuji and private label( Kodaks market share is %70 fuji %11 private level %10). Fuji and Kodak are both photograph machine company this may increase their reliability and also their competitiveness. The main competitiveness is on the segments. Only two companies can produce super premium products (Fuji and Kodak) while lots of companies can produce price brands. On the other hand Fuji was behave critical with sponsorship of Olympic games. Company : KODAK is a photography company that keep the domination of the photo film market. However, their market share decreased from 76% to 70% in 5 years. Behind this recession, there are observable reasons. First of all, their market share is really tempting for other companies. Seemingly, KODAKs gross margin is 70% whereas their first pursuer Fujis gross margin is 55%. So, it can be said

Team : Masum Aydn, Eray Alpay, Umut Ate, Selim Alp elebi, Burak ener MAN-335-1 that KODAK is a company who have several alerted and eager rivals. They also have a problem with innovation. Even though their success in market share, they have been offering almost same product to their customers for very long years. Consumer-Customer It is demonstrated in the article that Kodaks share in the market eased from about 76% to 70% over the past five years. The reason for this situation to exist was the increase in competitors awareness of the markets attractiveness. They wooed consumers with lower-price strategies. Then Kodak decided to make the move of Funtime . In 1984 Fuji became the official film of 1984 Summer Olympics in Los Angeles. This captured the consumer attention, was a good way for advertisement. It is stated that film usage was 15 years per year, which is a perfect number for a market. It is significant that most of the picture takers know little or nothing about photography. This leads to paying attention on prices rather that quality while buying a film. As most of the picture takers are not professional, they tend to buy films according to price, because quality is in the second stand for them. Of course the force of the brand name is another significant point for film market. Kodaks research shows that 50% of buyers were Kodak loyal % 40 were samplers and 10% shopped on price. This demonstrates how Kodak reaches 70% market share. Centers of Influence: KODAK realized that they need to reposition themselves in the film market. As we mentioned, their category is really noteworthy to others. The prices are also much higher compared to others. So Funtime Film is expected to be cure for this loss of market share. They need to keep 40% (samplers) as Kodak Loyals. Economic viability : Kodak and fuji are the leaders of film market and Kodak has a great economic power. It is stated that they spent on $50 million on camera and film supply advertising in United States in 1993. This is 4 times Fujis advertising spending. This puts Kodak in a different place in the market. It is a super advantage to achieve its goals. Other brands such as Polaroid and Kroeger had a little market share approximately 4% or 5%. CASE QUESTIONS Q1.What is the competitive marketing situation facing Kodak? Wat is the imperative for Kodak to take action?

A1.Kodak is the leading firm in the marken and its biggest competitor is Fuji. Fuji became the official film of the Los Angeles Olympics in 1984. After that, in 1989, Polaroid entered the market with its branded product which it sourced from 3M. As a result, in 1993, Kodaks market share was 70 % which has dropped from 76% over the past 5 years. This forced Kodak to take an action.

Q2.How did Kodak get into situation it now faces?

Team : Masum Aydn, Eray Alpay, Umut Ate, Selim Alp elebi, Burak ener MAN-335-1 A2.According to a survey in 1991, more than half of the picture takers in United States claim to know a little or nothing about photography . As a result, article stated that Consumers tend to view film as a commodity and often buying on price alone. Since Kodaks higher prices and Fujis attack , Kodak started to lose its market share.

Q3.Suppose that Kodak maintain its status quo? What would you project to happen to Kodaks market share in the future?

A3.While Fuji and Polaroid grew 15% in dollar sales, Kodak grew only 3% and markets growth rate is 2%. According to this data, Kodak will keep losing its market share. Now, Kodak has 70% , Fuji has 11% market share, Kodak is still far leader but in the long-run , Kodak may even lose its domination in the market.

Q5.As the new CEO ( George Fisher from Motorola ) you face a digital era that is coming but you need cash from conventional film now. What would your objective be at this point? What are your priorities?

A5.In 1993 , approximately 16 billion color exposures were made- the equivalent of 670 million 24exposure rolls. Typically , a 24 exposure roll cost 2.50-3.50. If we consider it as 3.00, 670 million times 3 gives us a market around 2 billion dollars and Kodak controls 70% of it.

On the other hand, like George Fisher said , digital era is coming and Kodak must adopt the changes that digital era bring. If they want to protect their brand equity and dominant position, they have to keep up wit new technology. But while they are doing that they cant ignore the money they make on conventional films.

To sum up, my objectives would be using the money that they make on conventional films in research and development to keep up with the digital era. Unless they want to end up like Nokia, they shouldnt fall behind in the technological competition.

Quantitative & Qualitative assessment of the strategical alternatives

Team : Masum Aydn, Eray Alpay, Umut Ate, Selim Alp elebi, Burak ener MAN-335-1 From 1990 to 1995, the market share of Kodak decreased from 76% to 70%. There are several reasons of that decreasing numbers. First one is the increasing numbers of strong competitors. They all affected the market share of Kodak. Fuji, Agfa and 3M were some of these. According to a survey from 1991, the rate of price-sensitive consumers in photo consumer population is only 10%. However in years it changed and the number of this population highly increased. The third reason of decreasing numbers in market share was about development. Kodak couldnt develop their technology during last 5 years and they were out of the technological competition.

According to the Table A, in 1993 the market share of Kodak was very high. However the growth rate of Kodak is only 3%. Comparing with Kodaks competitors this number was the lowest. Fujis and Poloraids growth rate is 15%. Some Alternatives: Development for a broader customer range, new products to have competitive advantage, departments for developing technology. Recommendation for one of the alternatives We think that the funtime strategy is ok for Kodak. Because the most important problem of Kodak is, they didnt give attention to the development for a broader customer range. Kodak produced products for only premium and super-premium classes of market. So that makes they have limited customers. Less than 50% customers are professionals, therefore, to control the market share, Kodak has to supply the demands of standard class customers. In addition to that, most of the customers of Kodak were non-professionals.