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Kodak Eastman Case Essay

1678 words - 7 pages

Problem statementKodak is the photo film market leader since 1994 but the company is loosing share, in the past five years in United States has decrease from 76% to 70%, the main reason is the growing share of brands with lower prices. In January of 1994 Kodak is analyzing if launching a lower price product is the best alternative to stop loosing share.DiagnosisAs said before Kodak is loosing market share and looks like if the company doesn't do something the tendency is going to be the same for the next years: Kodak loosing and competitors gaining. Here are the main reasons of the situation:The photo film market has reached a mature stage: there are many competitors in the segment and for a leader like Kodak is very hard to maintain the position, this can be evidenced in the fact that the growing rate for Kodak has been diminished.Competitors are attacking with lower prices and are using private labels: Kodak gold plus is the best seller product and is priced at 3,49, Kodak extra is the premium product priced at 4,27, this prices aloud Kodak to have margins of 70%. Kodak can compete with private labels because of a consent decree that forbids the company to sell products in a private label basis.According to and investigation on 1991 the consumer is seeing photo films as a commodity and were buying the lower price in the market.Kodak hasn't any innovation when it comes to technology; products from Kodak are very similar to the competitors.By analyzing the above reasons it can be conclude that if Kodak doesn't do something to change the situation the competitors are going to keep growing in bigger proportions than Kodak and sooner or later Kodak is going to stop growing and instead is going to decrease significantly in share and profits. Loosing 6 points of share, that have been gain by Fuji mean 78.566 millions (Exhibit 1) and this is going to get worse for sure, assuming that nothing change in the next 5 years and the tendency keeps the same Kodak would loose 6 points more and the cost could be 157.000 millions.The consumer behavior supports this hypothesis, according to the investigation stated on the case 50% of consumers in the market don't know anything about photography so they are or will be attracted by prices. 40% of Kodak consumers are samplers and sooner or later are going to find out that in terms of product is the same and they are going to buy on price and other 10% are already buying only on price.Even when it looks like Kodak is full of trouble, the company is maintaining a strong position and has strengths:Kodak is a leader company with tradition and history in USA. Meaning is positioned brand50% of Kodak customers are loyal to the brandKodak margin is bigger than competitorsKodak advertising is more effective. Kodak invest 714.286 dollars per point of share, Fuji invest 1.136.364.Objectives for the new strategyThanks to the fact that Kodak is the strongest brand in the market it is on time for act and diminished the bad...

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