Eastman Kodak Company Case Study

Since our company’s main focus is premium products we will aim for high contribution margins, around 50%, on average, over all five products. After establishing our company brand and products within the market we will look to increase contribution margin to be between 55%-60% over all five products.

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.

1. Evaluate Kodak's strategy in traditional photography. Why has the company been so successful throughout the history of the industry?

The problem in this case is Kodak's steadily eroding market share and shareholder value in the film rolls market. This is especially undesirable given the fact that the market has been growing at a tepid 2% annual rate and the steadily increasing threat from competition. Kodak needs to come up with a strategy for corrective action so as to arrest this decline, regain market share and increase share holder value. Kodak's strategy is to reposition itself by targeting a new segment of price sensitive customers and re-segmenting the super premium customers’ space by including a wider segment of special occasion customers.

Fujifilm was able to being exporting film and optical products after World War II ended, they primarily focused on South American and Asia. There was a great demand

It is considered that photography only became widely available to the public when the Kodak Eastman Company introduced the box shaped Brownie Camera in 1900. (Baker, n.p.) Its features became more refined since its original placing on the market; one of the reasons why it has become considered the birth of public photography is because of the processing. Using a similar image capture system, the brownie exposed the light to a 120mm roll of film, which could be wound round, meaning six photographs could be taken before the slides needed removing. The first Brownie used a six-exposure cartridge that Kodak processed for the photographer. (Kodak.com, n.d.) Realistically, the armature photographers did not need to understand darkroom processes,

“Things changed dramatically in 1888 when George Eastman introduced the Kodak camera. A small hand-held box, it cost only $25--about the price of a higher-end iPad in today’s money, which put it in the range of the well-off middle class. And it offered simplicity: It arrived with 100 shots preinstalled, and when they were taken you shipped the entire camera back to Eastman’s factory in Rochester, New York, where workers developed the photos and mailed them back to you along with your reloaded camera. “You press the button, we do the rest,” as the Kodak slogan rang” (Thompson, Clive, 2012). This was the start of the Kodak monpoly of the film and photography industry.

The film industry has continuously changed since its inception due to rapid technology advancements. Camera technology has been a key factor that has influenced the growth of filmmaking. The first motion picture in the world was produced in the early 1880s, and the first public screening occurred ten years later. It didn’t take long for the quality of films to improve as new filmmaking equipment emerged. Ever since the first movie was produced, the film industry has been continuously changing in response to emerging filmmaking technology. Introduction of digital photography and digital data storage along with the development of internet significantly influenced the film industry (Barsam, 2015). These technologies contributed

When Kodak began making changes to its organizational architecture in 1984, its current architecture did not fit the business environment for the industry. The largest factor that motivated Kodak to make this change was increased competition and decreased market share. Until the early 1980’s, Kodak owned the film production market with very little competition. This suddenly changed when Fuji Corporation and many other generic store brands began producing high quality film as well (Brickley, 2009, p. 358). Another factor in this change was technology advancements. As technology rapidly expanded in the 1980’s, other

In my March 6 memo, I discussed the need for Kodak to revamp its core strategy and regain popularity. Eastman Kodak has been the leader of photography and printing products for nearly 130 years. Over the last few years Kodak has been in distress due to its poor fundamental shift into the digital age. Lack of strategic creativity led Kodak to misunderstand the industry in which it was operating. This lack of strategic creativity was costly for Kodak.

What I feel about Kodak’s move was that they are trying to make a space for themselves in an already crowded market. Kodak is trying to carve out a niche for them by offering inks for low prices. But, they have forgotten the abilities of the competitors. They have probably underestimated them. HP and Canon are big names in the printing industry and because of their continued rollout of good quality products; customers trust them more than they trust Kodak. It is also observed that Kodak had forgotten that if HP lowers their price to almost the same level like Kodak, Kodak won’t stand a chance. The only way that Kodak can hope to make some profit is by hoping that their competitors won’t reduce the price of the inks as it is the only source of revenue in the printing industry. But I am pretty sure that marketing research people of Kodak has made a blunder by opting for this. The major fact is that they have forgotten cartridge refilling industry which is cheap too and people have started to use that as they are comparatively cheaper to the original printing inks. I sincerely feel that Kodak has taken the wrong path to get out of their troubles.

While Kodak has historically been a well-established brand name in the marketplace, it struggled to find a niche when the industry morphed from a film-based market to a digital-based market. Kodak has struggled to successfully evolve its film-based business structure to the new structure of digital-based technology, which has allowed for competitors to enter the market, decreasing Kodak’s market share. Competitors (such as Canon Inc., Fuji Photo Film Co., Hewlett Packard Co., Nikon, and Sony Corp.) have posed major threats to Kodak’s livelihood. Kodak faces a 5% drop in film sales (2001-2003) and a 3% reduction in overall revenues over the same time period. In addition, revenues and net income are expected to be fairly flat (or decrease) in future estimates. Kodak faces much pressure to revitalize their business through digital imaging, a radical innovation, or risk being eaten alive in an industry they thought they controlled.

Photographic film is the indispensable part of Impossible Instant Lab when taking photos. The quality of colorful photos depends on the quality of photographic films in some degree. The company can launch three different levels of photographic films onto the market. Firstly, the photographic film is needed to meet the demands of common consumers who only can afford low level products. This type of photographic film may cost 20 penny each and be sold at the price of 50 penny. Next, regular level of photographic needed to be produced in order to offer the convenience for the majority of consumers. This type of photographic is produced at the cost of 25 penny and the price of 60 penny. Furthermore, some advanced photographic film is also in the consideration since one part of consumers focus on the quality and the style of photos. As a result, the company can produce some photographic films with better material and decoration. Consequently, the cost of it is higher and the price is more expensive at 50 penny and 1 pound respectively.

The roll out of new technologies can often be met with scepticism, which is the problem that Kodak are faced with, a new technology that they need to make sure the public will view it in an optimistic light, throughout history multiple advances in technology both and a minor and major scale have been met with scepticism, a prime example being a respected French military commander Ferdinand Foch who concluded in 1904, “Airplanes are interesting toys but of no military value.” This of course was not the case, and is an example of why it is important that the public are presented with the product in the right way. Market orientation can be viewed in two different One school of thought on marketing orientation is that it is behaviourally orientated, described as “organization-wide generation of market intelligence pertaining to current and future customer needs” (Kohli and Jaworski, 1990). Market orientated companies tend to build anticipation for new releases which is something that can Don has touched on during his pitch to Kodak. During the pitch he highlighted the opportunity to take advantage of nostalgia to “take us to a place where we ache to go again” the idea of being able to relive moments that had sentimental value to a customer is a way to build anticipation and highlights behavioural market orientation tendencies in the way that a personal feeling like nostalgia can be manipulated in a way that can influence customers.

According to the definition, a relevant product market includes “all those products which are regarded as interchangeable or substitutable by the consumer by reason of the products characteristics, their prices and their intended use”. We can presume that the relevant market for film includes all of the five firms: Kodak, Fuji, Konica, Agfa and 3M. However, not all of these firms’ products are viewed as fully interchangeable and substitutable by the consumer as stated in the definition. According to statistics, about 50% of consumers will only buy Kodak film despite of substantial price increases. This phenomenon indicates the consumers’ adamant belief in the superior quality of Kodak film. There were two different viewpoints on the relevant geographic product market for film discussed in the case. According to the district court, the relevant geographic market for film is worldwide, since foreign manufactures sell considerable amounts of film in the United States and Kodak’s market share is only 36% globally. However, the government argues that this determination is wrong and that the relevant geographic market in this case should be limited to the United States. The main explanation here is that a relevant geographic market comprises an area where the firm can exercise the market power. Taking into consideration the fact that Kodak charges much higher prices in the US comparing to other countries, the relevant geographic market