Problem Statement: Eastman Kodak Company: Funtime Film is the instance which deals with the job which is faced by Kodak. In the twelvemonth 1993 and 1994, Kodak has witnessed a bead in the market portion.
US Market of Photo Film: ( 1993 )
First, we will hold a expression at the US Market of the movies, which will assist us in understanding the market and the grounds for the ruin of Kodak can be analysed. In 1993, the sum of 16 million coloring material exposures were made which was tantamount to 670 million 24 – exposure axial rotations runing from $ 2.50 to $ 3.50 for a axial rotation. From last few old ages, the industry has witnessed a growing of 2 % with Kodak, Fuji, Agfa and 3M as the major participants in the industry. Kodak offered its Gold plus trade name which was the standard axial rotation of the market. The US market offered four different classs of the movies which was differentiated on the footing of monetary value i.e. Super premium, premium, economic system and monetary value trade names. The movie functions were categorized on the footing of light sensitiveness as ISO 100, 200 and 400.
The major gross revenues of movies in the US market were made through price reduction shops and departmental shops.
The major rivals of Kodak were Fuji, Agfa, 3M and Polaroid ‘s branded merchandises. Kodak and Fuji sold branded merchandises, movies, imaging merchandises, and camera. These were the two companies who has laterality in the world-wide photographic market. Agfa and 3M sold the merchandises under the private labels. Polaroid sourced its merchandise from 3M and sold them.
Current Situation of Kodak:
Kodak has witnessed a lessening in the market portion from 76 % to 70 % over past five old ages chiefly because of the low monetary value scheme that was followed by its rivals such as Fuji. Kodak besides lost 8 % of its stock because of the rumor for the monetary value cut in the merchandises of Kodak. Kodak ‘s market growing was dead and it could accomplish merely 3 % of the growing in comparing to Fuji and Polaraid who witnessed the market growing of 15 % . Kodak was fring its market as its biggest rival Fuji was capturing the market by following low pricing scheme. Fuji adopted competitory scheme and different selling tactics to accomplish the world-wide sale of $ 10 % which amounted to half of Kodak ‘s gross revenues. The market portion of Kodak is shriveling by 1.2 % and the current gross net income earned by Kodak is 70 % .
Product Line of Kodak:
Kodak offered 4 different merchandise scope each with different monetary values to capture the maximal market. Kodak Ektar was a premium merchandise of Kodak which was used professionally. The other trade name was Royal gold which positioned itself for ‘very particular ‘ occasions like the birth of babe, graduation ceremonial, Kodak spent approximately 40 % of the entire budget on this merchandise line to pull more and more clients. The placement used by this merchandise helped in act uponing many consumers as they are extremely associated with the particular occasions besides known as ‘Kodak Moment ‘ . Kodak Gold Plus was the flagship trade name of Kodak and had about 60 % of the entire advertisement support. As Kodak by and large had premium trade names, it launched a trade name in the name of Funtime movie which focused on the clients who were monetary value medium. It was an economic system trade name and did non hold any advertisement support. This merchandise was available in limited measures on a peculiar season or clip. This merchandise packed for the convince of the clients in value battalions i.e. 2 rolls bundle of 24 exposure and 4 axial rotations bundle of 3 24 exposure axial rotations and 1 axial rotation of 36 exposure.
In this subdivision we will seek to analyze the current state of affairs of Kodak through Michael Porter ‘s Five force analysis, Swot analysis and BCG Matrix
The five forces that affects the US Market of Photo Films ( Kodak ) :
The strength of competitory competition: There were different participants in the market which offered the same merchandise as offered by Kodak. Major participants in the market were Fuji, Agfa, 3M and Polaroid ‘s branded merchandises. The quality of the merchandises were about of the same degree.
Menace of New Entry: The exposure movie industry is based on high engineering and demands immense investing. So, the menace of new entry in the market is limited. Polaraid entered the market but it sold the branded merchandises of 3M. Therefore, the dainty of new entrant is less in this market.
The Bargaining power of purchaser: The dickering power of the purchasers in this industry is rather high as there is no exchanging cost in the industry.
The Bargaining power of Suppliers: The dickering power of providers is high as it is a trade good merchandise.
Menace of Substitute merchandises: The menace of replacement is high as per the study conducted in the instance, we ca see that consumers switch over to other movies easy depending on the quality of the movies offered.
Strengths of Kodak:
Enjoys strong trade name name
Enjoys high market portion i.e. 70 %
Enjoys high gross net income border of
Failings of Kodak:
The monetary value of the merchandises offered is relatively higher than the sensed value.
Has merely 3 % growing rate compared to 15 % growing rate of Fuji
Growth of the exposure industry and increasing demand and demand of the axial rotations and other exposure movie merchandises.
Competition chiefly from Fuji and Polaraid
Promotion in engineering which will cut down the demand of axial rotations offered by the companies.
Several ordinances that are followed in the exposure movie market.
Low growing rate.
Schemes to be followed by Kodak to derive the market portion:
Kodak has to concentrate on deriving back its market portion from 70 % back to 76 % . If Kodak does non work on forestalling the loss in growing rate, than Fuji and Polaraid will take over the market of exposure movies.
For this, the company has to change over about 20 % of the clients of the rivals towards their merchandise and seek to pull new clients every bit good. From the instance it can be analysed that the mean movie use of axial rotations have increased from 15 axial rotations to 20 axial rotations in the span of two old ages, therefore we can pull new clients as the exposure movie market is turning.
Royal gilded merchandise of Kodak is a merchandise of premium class the monetary value of the same ranges from $ 4.50 to $ 5.0. This merchandise is based on advanced engineering and therefore offers high quality. Kodak should market this merchandise to the consumers for whom movie is more than a trade good. The professional scope of Kodak should besides be targeted to the professional lensmans. Kodak should cut down its disbursals on selling and advertisement and dressed ore on the bettering the quality of the merchandise as Kodak has more of loyal clients, lesser advertisement disbursals will assist Kodak to derive more net incomes.
Funtime trade name is available to the clients in limited measure and in a limited season. It is an economic system trade name with a monetary value scope of $ 2.50. Harmonizing to the analysis and the instance, Kodak might confront hazard in establishing this merchandise instead than deriving benefits from the same.
To derive market portion and net incomes, Kodak should work on bettering its quality and work towards new engineering which will ensue in better public presentation of the merchandises offered.
Kodak should scan the market and work on the options so as to establish its merchandises competitory pricing as its rivals.
It should besides follow an effectual selling technique to capture the market.
The company should concentrate on following new engineering so as to hold higher quality public presentation.
Kodak besides deals in imaging and camera merchandises, Kodak should follow new designs and new engineering for its merchandises which will add value to its pricing.
Design a selling scheme in a manner so as to change over the sampling station clients to loyal clients of Kodak. This will assist in increasing about 40 % of new clients.
Scan and spread out the market to different states such as India, China which will assist in deriving net incomes.
Develop rolls aiming kids who are fond of picture taking.
Cut down the advertisement cost.
Particular Service and offers should be offered to its premium scope clients.
Exhibit 1: % of sale by shops in US
Exhibit 2: Market portion of the major participants of Photo Film in US in 1993
Exhibit 4: Analysis of pricing:
Axial rotations sold by Kodak: 467 million in 1993
Gross Margin: 70 %
Gross saless gross by Kodak: 520.94 + 349 = 869.49
Gross saless gross by Fuji: 628.46 +241.53 = 869.99
Gross saless gross by Polaraid: 176.79
Expenses on Ad: $ 50 million
Exhibit 3: Calculating the feasibleness of Funtime merchandise
The gross net income border earned on Gold Plus scope is 70 % , retail merchant ‘s border is 20 % .
Selling monetary value of Gold plus is $ 3.49.
Net income earned = 70 % ( 3-49 ( 3-49 * 20 % )
= $ 1.9544
Gross Net income earned by Funtime is 70 % ( premise ) , retailer border is 20 %
Selling monetary value = $ 2.79
Net income earned = 70 % ( 2.79 – ( 2.79 * 20 % ) )
= $ 1.5624
Therefore we can see that Funtime has lower net incomes than that of Gold plus.