Eastman Kodak Case
Eastman Kodak – Case Analysis
Problem
The problem in this case is concerned with Eastman Kodak losing its market share in film products to lower-priced economy brands. Over the last five years, in addition to being brand-aware, customers have also become price-conscious. This has resulted in the fast paced growth of lower priced segments in which Kodak has no presence.
Kodak plans to address this issue by introducing a new brand, “Funtime” in the economy brand segment. Kodak also proposes to replace their Superpremium brand by launching “Royal Gold” which would target a broader audience.
Solution
If I were responsible for solving the problem, in addition to Kodak’s repositioning strategy, I would do the following: * While the strategy to enter the ‘Economy Brand’ segment is strong, I would set the price of Funtime at $2.91 * Match the dealer margins given by other suppliers for the new product Funtime * Allocate $5 million of advertising support to support Funtime
As an alternate strategy, we could also offer Funtime on a year-round basis. However this approach has some drawbacks which make it less attractive than our primary strategy. Segmentation Analysis
Target Market:
The US photo film market is 670 million rolls units and divided into four segments. As shown in Exhibit 1, the Superpremium segment with an average retail price of $4.35 accounts for roughly 5% of the market. The Premium brand segment has an average retail price of $3.49 and accounts for a 67.67% market share. The fast growing Economy brand segment occupies about 13.34% of the market with an average retail price of $2.91. Finally the Price Brands segment occupies 14% of the market with an average price of $2.40.
Internal Analysis:
Kodak’s flagship product, Gold Plus, enjoys approximately 66% of the market share with revenues of $2.79 per unit. The total profit from Gold Plus without advertising expenses amounts to $371.4 million. Kodak has no major competitors in this
Problem
The problem in this case is concerned with Eastman Kodak losing its market share in film products to lower-priced economy brands. Over the last five years, in addition to being brand-aware, customers have also become price-conscious. This has resulted in the fast paced growth of lower priced segments in which Kodak has no presence.
Kodak plans to address this issue by introducing a new brand, “Funtime” in the economy brand segment. Kodak also proposes to replace their Superpremium brand by launching “Royal Gold” which would target a broader audience.
Solution
If I were responsible for solving the problem, in addition to Kodak’s repositioning strategy, I would do the following: * While the strategy to enter the ‘Economy Brand’ segment is strong, I would set the price of Funtime at $2.91 * Match the dealer margins given by other suppliers for the new product Funtime * Allocate $5 million of advertising support to support Funtime
As an alternate strategy, we could also offer Funtime on a year-round basis. However this approach has some drawbacks which make it less attractive than our primary strategy. Segmentation Analysis
Target Market:
The US photo film market is 670 million rolls units and divided into four segments. As shown in Exhibit 1, the Superpremium segment with an average retail price of $4.35 accounts for roughly 5% of the market. The Premium brand segment has an average retail price of $3.49 and accounts for a 67.67% market share. The fast growing Economy brand segment occupies about 13.34% of the market with an average retail price of $2.91. Finally the Price Brands segment occupies 14% of the market with an average price of $2.40.
Internal Analysis:
Kodak’s flagship product, Gold Plus, enjoys approximately 66% of the market share with revenues of $2.79 per unit. The total profit from Gold Plus without advertising expenses amounts to $371.4 million. Kodak has no major competitors in this