Kodak Funtime Films

Ola Allaymoun Echo Chen Carli Gillett Ericka Hightower Ranjani Venkataraman

Agenda
Company Background Current Problems Major Market Players
Market Share US Photographic Industry

Consumer Behavior Kodak s Market Strategy before 1994

Fuji s Strategy

Kodak s Proposed Strategy Recommendations

Evaluating the recommendations

Company Background
Kodak was founded in 1892 by George Eastman and Henry Strong George Eastman gave the advertising line You press the button, we do the rest Market Leader in US Enjoyed Monopoly before the entry of its competitors Sold cameras, films and other imaging products Entered professional tape market for a brief period in 1980s Largest supplier of photographic films in the world, for the amateur, professional, and motion picture
market

Current Problems
Lost 8% stock value in one week Due to rumors of price cut Losing Market share in its home territory Market share dropped from 76% to 70% in 5 years (1989 1994) Slow Growth rate due to competitors Kodak growth rate 3% in 1993 Could not compete with its competitors in Price Could not sell private labels due to a consent decree High advertisement spending pushing up the price

Major Players in the Film Market in US

Kodak Market Leader Fuji Kodaks major competitor Sells Branded products Agfa of Germany, and 3M Branded and private label products Konica Price level 20% below Kodaks Gold Plus Polaroid Entered market in 1989

Market Share
Fuji 11%

K odak 70%

Polaroid 4% Private L abel 10%

O ther 5%

The U.S photographic film industry

00 Annual Market Share 80 60 0 20 0 70 72 7 76 78 80 82 8 86 88 0 Year ui

oda

Kodak s Marketing Strategy Before 1994

Positioning Strategy Spent heavily on advertising products Positioned as a provider of superior quality films Marketed 2 products Super Premium Brand Kodak Ektar targeted at advanced amateurs and professionals Premium Brand Kodak Gold Plus flagship brand

About Fuji
Sold only branded products. Worldwide sales of $10 million (half Kodaks size) Started serious competition with Kodak in 1984 by becoming the official film provider of the 1984 Summer Olympics in Los Angeles Growth Rate of 15% in 1993 Price was 20% below the price of Gold Plus brand

vs
Similarities
Fuji and Kodak both sold only branded products Offered superpremium brands with a target market of professionals and advanced amateurs

Contrasts
Fuji was a leader in the economy brands market while Kodak was not in the market at all initially Kodak s marketing through advertisements was much heavier (in order to position the products in the minds of customers) Kodak spent more than 4 times more on advertising than Fuji

Film Distribution
% 35 30 25 20 15 10 5 0

D iscount & D epartm ent Store

D rug Store

C am era Shop Super M arekt & C onvenience

W holesale C lubs

M ail O rder

Consumer Behavior
10<x<15 29% 16<x<25 16%

5<x<9 22%

x<5 20%

25<x 13%

X = rolls/year

Consumer Behavior
Average film usage was 15 rolls/year 80% film users use more than 5 rolls/year and often in multipacks (2-3) Over 50% picture takers know little or nothing about photography Consumers tend to view film as a commodity, and often buy on price (survey) 50% film buyers are Kodak Loyal, 40% samplers relying heavily on Kodak and 10% purchased films based on price (Kodak research) Quality difference among films is unclear

Consumer Behavior
Product Super premium Brands Fujicolor Reala Kodak Ektar Premium Brands Kodak Gold Plus Agfacolor XRG Economy Brands Fujicolo Super G Konica Super SR Scotch Color (3M) Price Brands Polaroid High Definition (3M) 2.49 95 1 2.91 2.91 2.69 94 93 92 2 3 4 3.49 3.49 93 88 3 4.69 4.27 90 92 5 4 Price ($) Quality Rank

Kodak s Proposed Strategy Repositioning

Benefit segmentation New Emulsion Technology Segments included: Gold Plus as flagship product and no price reduction on this Special memories targeted consumers who would be attending graduations, weddings, baby births, etc. Diverted 60% of advertisement spending for promotion

Kodak s Proposed Strategy Repositioning

Royal Gold good strategy to replace unprofitable Ektar
Unexpected moments targeted wider audience that would utilize the film on a more regular basis for any event that was not targeted by the Royal Gold film Will have rich colors and sharp pictures Specifically targeted at customers looking to make enlargements Diverted 4 % of advertisement spending for promotion Prices % above Gold Plus for higher trade margin

Funtime to compete in the Economy Brand Market

Priced

% below Gold Plus

Important Features of Funtime Strategy Niche marketing

Price-conscious customers % advertisement spent Limited presence 2 times an year during off peak season From April to June From September to November Sold in limited quantities To be made available in speeds ISO 1 ISO To be made available only in value packs rolls of 4 exposures 4 roll package with 3 rolls of 4 exposures and 1 roll of 3 exposures

Snapshot of New Strategy

Specifically Why Funtime?? Bolster the return of former Kodak customers Use Funtime to segment a specific Market Lure non-Kodak users Good price for price-conscious customers Cannibalization took some focus off Gold products but overall retained customers for Kodak rather than letting them go to Fuji Though Funtime is cheaper than Fujicolor Super G, Funtime has higher gross profit than Fujicolor Super G.

Recommendations
Funtime should be made available throughout the year Single packs should also be made available in limited quantities at department stores and discount stores Channelize some advertisement dollars towards Funtime promotion

Why?
All Year supply Price sensitive customers can buy it all round the year Definition of off peak season not clear. April June does not seem to be off peak Single packs Target customers who are price sensitive but do not like to buy in bulk Distribution in discount and department stores as most customers buy from there Funtime Promotion Kodak Gold is an already established brand Funtime needs to be advertised to make people aware of this product
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