Eastman Kodak Company: Funtime Film

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Question: Is Kodak doing the right thing with the decision to have line extension: Kodak Gold Plus, Kodak Royal Gold and Kodak Funtime? In year 1994 Kodak is the dominant company in the US photo film market with a market share of 70%. Whilst Kodak dominates in the premium and higher quality markets, its competitors like Fuji, Konica, Polaroid etc. are mainly focused on the consumers who prefer lower-priced versions. Over past five years Kodak’s market share has eased by 6%. Due pricing policy, both Fuji’s and Polaroid US dollar sales have grown over 15% in the past five years, compared with Kodak’s 3% growth rate. As Kodak customer research shows 50% of buyers were Kodak loyal, however with no specific knowledge on photography and simply buying on price alone. Whilst brand loyalty is still important, there is a growing body of price-sensitive consumers. To drive both market share and earnings Kodak proposed to introduce a new brand “Funtime” at Fuji and Konica’s price level, setting it 20% below the price of Kodak’s flagship Gold Plus brand. It is believed that other “price brands” on average are about 30% less than Kodak Gold Plus. With no advertising support, the Funtime would be sold twice a year at off-peak film use times and available in limited quantities, packaged only in “value packs”. Gold Plus would remain flagship brand with 60% of the dollar advertising support. Royal Gold would be the new name for the products in Superpremium segment with recommended retail prices at 20% above Gold Plus. I believe that introducing a new product line in the mass market is the right strategy to reach full market coverage, however I would approach positioning of all the brands a bit differently. By selecting differentiated marketing as a strategy to create more total sales all of the product should receive marketing budget to communicate the differences for each

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