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EASTMAN KODAK ANALYSIS


Background
It was disclosed in January, 1994, that stock of film manufacturing giant, Eastman Kodak, had lost 8% in value, and its market share in the United States had dropped from 76 to 70%. Figures for 1993 showed that U.S. dollar sales of both Fuji and Polaroid had increased to over 15% compared to Kodak’s 3%.
Core Issues
• Declining differentiation of goods in the filming industry, so other companies are providing almost the same product but with lower price than Kodak.
• A persistent problem for Kodak was its inability to keep the line on price and constraints imposed by a 1921consent degree which disallowed Kodak from marketing under a private label.
Kodak, with twice the sales dollars of Fuji, spent four times the amount Fuji spent on advertising. Both companies attempted to position themselves in the marketplace by promoting the superior quality of their film accomplished through advanced technology. However, in a series of tests performed by Consumer Reports, it was found that there was no significant difference in the quality of the top six ISO 100 films.
Proposed Strategies
Introduction of a New Product Line
To offset a perceived downward trend and to compete with main rivals, the Fuji Film Co. and Konica, Kodak proposed to introduce a new brand priced comparably with Fuji and Konica and 20% cheaper than Kodak’s top-of-the-line film, ‘Gold Plus’. The new brand was named “Funtime”.
Shortcomings
There was considerable skepticism regarding the ultimate success of Kodak’s ‘Funtime’ venture. Reservations were based on the following shortcomings: 1. the 1921 consent decree seemed likely to limit product distribution and sales since the film could only be sold under the Kodak brand name; 2. no advertising dollars were earmarked for the venture; 3. the product would only be offered twice a year at off-peak film use times; 4. limited...