Kodak's Funtime Strategy

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KODAK CASE WRITE-UP The Problem  Kodak, the industry leader in photographic film market had lost 6% market share to competitors in the last 5 years.  The Photographic film market is growing at a meager rate of 2% Y/Y. Kodak was growing at 3% Y/Y whereas its competitors’ sales were growing at 15% Y/Y.  The Company did not have a product to meet the needs of the ‘Economy and Price Brand’ segments of the market, which were growing at an average rate of 12% p.a. and contributed 25% to the market share i.e. 167.5 million units (~ USD 429.74 million)1. The Market Situation  The photographic film market was segmented into the following four groups based on the retail price of the film roll (Refer Exhibit - 1): Super Premium…show more content…
Off peak sales units 160 Total Premium Units (in millions) % of P units that will migrate to E 0.1 Kodak research mentions that 10% buyers are price sensitive, therefore assuming same % here Sales for Funtime during off-peak 23 If Funtime sales were annual 57 For, p->SP sales, % units migration 0.1 Since SP will be branded as film for special occasions, assuming that there are 10% or less special occasions or else they are not special Therefore, for p->SP cannibalization 38 Net Units loss due to p->E cannibalization, if same no of P units are sold for SP 6.791836735 Decrease in unit price for p->E 1.04 Lost revenue if additional units are not sold 7.063510204 Increase in unit price for p->SP 0.71 Net Units gain due to p->SP cannibalization, if same no of P units are sold for SP 40 Additional revenue due to p->SP cannibalization, if additional units are not sold 1.42 Net revenue gain/loss due to cannibalization (A) -5.643510204 Per Unit Revenue loss due to decrease in SP film 0.07 Overall Units sold 70.35 Total Revenue loss (B) -4.9245 (A) + (B) -10.5680102 Exhibit - 4 Revenue Impact $ (In Millions) Possible revenue from Funtime sales 23.35 Cannibalization (Gold Plus ->

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