Kodak marketing 26-28' Digital photo frames - Essay Example

? Kodak marketing – 26-28' Digital photo frames. Purpose of the report The purpose of this report is to analyze the market for Kodak 26-28' digital photo frames, complete the company's micro and macro audit, thus deducing and solving its problems. The marketing audit has been described by Phillips Kotler as a comprehensive, systematic, independent and periodic examination of activities and resources in order to determine problem areas and opportunities and recommend a plan of action. The tools employed will be the SWOT analysis, Pestels analysis and the five forces model. The analysis will lead to the discovery of marketing problems which will be solved using finding a new target market and proper positioning in that market. The paper will conclude with a market research plan to evaluate the success of the new market. This will be done for the 20-26 inch digital photo frames. Company background EastMan Kodak is a company which started in Newyork in the year 1880. The company presented the first camera in the hands of consumers in the year 1888 with the slogan "you press the button, we do the rest". Therefore the main aim of the company was to make photography as convenient as a pencil. (Kodak) The company was largely successful in doing so and developed different products for different market segments. The company currently operates in four segments which are photography, commercial imaging, health imaging and components. Its expertise lies in both types of imaging: traditional and digital, and it provides products, services and solutions for its customers in these arenas. Kodak tries to outperform its competitors in both digital technology and traditional forms of photography and realizes the threat which development of digital imaging presents to manufacturers and developers of 35mm. Thus its ultimate goal should be to become a market leader in digital imaging as it was in film based photography previously and to present such products in traditional imaging which are better than traditional products. The success of Eastman Kodak was due to an amalgamation of its inventive and marketing genius and more efforts like this are needed to regenerate this photography icon. The marketing expertise which made Kodak a household name was its catchy slogan along with the differential product mix which the company offered. By the end of the twentieth century Kodak had developed markets in France, Germany, Mexico, Brazil and the United Kingdom and its products were marketed by subsidiary companies in more than 150 countries. Kodak had virtually no competitors from its inception till the arrival of Fuji which was followed by Polaroid. The advent of new competitors coupled with the fact that the photographic film was becoming a less popular way of photography led to the company facing problems. By 2005, the company's share price had fallen considerably and the demand for its cameras and film rolls had also decreased considerably. The analog businesses were sliding irreversibly and Kodak tried becoming the digital forerunner. It closed its paper and printing plants, laid off jobs and went on a $3 billion shopping spree to gain technological expertise and resources for new product developments. (Eastman Kodak post 3Q profit) With the development of new products and the advent of new technology, new markets will have to be found and the products are to be rightfully targeted to those markets. Since the introduction of digital photo frames, the need for printing and processing a digital photo has been reduced as the image can be directly views. The proposed product is new as it is very large in size thus replacing the frames displayed in family houses. Audit Pest analysis Political environment The photography and imaging market faces a few challenges in the legal arena namely patent infringement issues and privacy issues. With high research budget and development it is very much possible that Kodak might use some other company's technology or its new technology might be used by its competitors leading to patent infringement, hefty law suits and heavy fines. Besides that since digital cameras are known to spread images faster than ever they are often thought to invade privacy and are often not allowed inside numerous places. Privacy issue are always present when using digital photo frames and in In February 2008, a number of digital photo frames manufactured in China were found to be carrying a Trojan horse dubbed Mocmex on their internal data storage (Chinese PC virus may have hidden agenda) Economic environment From the economic point of view it should be realized that Kodak products are bought both by individual customers on a small scale and are also large scale investments by companies particularly health care firms. Though Kodak health imaging products and services are not faced with the slump, it is the imaging supplies to the general customers which are resulting in a decline. Film developing is almost obsolete and therefore is no longer generating revenue from that sector. Inflation is making a huge impact on customers when making decisions to invest in cameras and Kodak being highly priced than Sony or Canon often loses the race in this regard. Also Canon and Nikon's products are far more popular in the photojournalist market and Kodak also cannot win the race their too. Since Kodak has to invest a lot to develop digital technology, one of its key strategies was to use its profits from film sales to invest in research and development. Since profits from film sales are low, Kodak needs to finance digital research and development from other areas. These also means that Kodak is feeling the crunch financially from the decreasing cash flows from film , to the huge investments made in digital to the scant profits made from the digital segment which was supposed to be the new cornerstone of the company . Since these photo frames are multi-purpose and can display slideshows they provide value to users who normally have to buy multiple frames to display their precious photographs and thus are economical. Social environment It is the changing trends in the social environment which can greatly help Kodak coming up with a new product and marketing it effectively. The greatest change in the social trends has been the birth of internet communities and frequent sharing of images. This has led to the bursting growth of digital photo sharing with uploading and decreases the need for photo development on film. Kodak tried to capitalize on this trend like its competitors but was not extremely successful but it should know that if it sticks to its slogan and makes digital photography even more convenient than a pencil than it can again be an icon. Thus the display of photography in an easier and more compatible way will reduce Kodak's dependence on films for revenue as another market has been tapped. Technological environment The technological environment has greatly developed in the last one decade and it continues to do so at a very fast rate. This technological change is driven by consumer demand for do it all objects. Thus Kodak has to work for its device's compatibility with cell phones, laptops and computers. Besides that continuous investment is required along with a full-fledged research and development team to keep pace with the changing technology. The new photo frame has tried to keep pace with the technology as it displays digital photos easily and therefore adds convenience to users who are big fans of social networking and don’t want to get into the hassle of printing and displaying them. SWOT analysis Strengths Kodak is a market pioneer in imaging. Its brand name and its familiarity is its biggest marketing strength. Besides that its positive customer relationship (Seed, 2006)management through its outlets can ensure that Kodak can easily jump back into business. Its cost cutting abilities by mass production and the availability of development and manufacturing resources can also be a huge advantage to the company. Its strategic alliances can also be a huge advantage to Kodak by which it has learnt to develop certain expertises. For example Kodak's data compression, image storage, and colour management technologies were deployed in alliances with Hewlett-Packard, Lexmark, Canon, and Heidelberg (Rober M Grant, 2004) The product strengths are multiple. It can display many photos at the same time and photos can be changed frequently without being involved in the hassle of storing previous ones. It is traditional frames. Weaknesses The lack of strategic creativity and missing the deadline when the world quickly moved from traditional processing to digital imaging was Kodak's biggest mistake. Kodak's strategy of investing film revenues into growth and development did not work as progressively as expected as film revenues slumped too quickly. It is expensive and very breakable. Users might not like the resolution and some users might complain that not all photos can be displayed properly. Opportunities Opportunities for Kodak can arise from untapped markets which it can enter through providing cost competition. It can also capitalize on the frequent change of cameras needed as a result of rapidly changing technology. Cash from sales of production centres can also be used for acquisitions. Opportunities also arise from diversification of the product portfolio. Kodak has also diversified into into imaging products, inkjet printers, digital picture frames, commercial printing services, scanners, photographic processing chemicals and retail printing kiosks, as well as software solutions for corporate consumers (staff, 2010). This is also a new market for Kodak and this new product will help in diversification. Threats Threats in traditional imaging include competitors in the traditional imaging and film production arena in the form of Fuji and in the digital imaging market in the form of Canon and Nikon. These along with Sony have become one of the most sought after brands because of their technological edge and low cost. Other competitors are also making photo frames and some of them are more cost effective than Kodak. Threats also come from substitute products which rapidly emerge as a result of fast changing technology. Economic threats also arise from global recession and a crunch in consumer spending as well as cell phones substituting frames. Porter's five forces model Barriers to entry Barriers to entry to the market exist in the form of the existence of strong brands who almost completely occupy their target markets. Consumers are not willing to invest in a relatively new product and thus Kodak cannot enter large photojournalist markets occupied by Canon and Nikon. Thus Kodak can target families who have considerable buying power for photo frames and ample need for displaying photographs of land mark events in families such as birth, birthdays, graduation etc. Suppliers The supply for Kodak comes in two forms; Technological man power and raw material. All companies are not willing to invest in vertical integration as it is costly and reduces their sight from their core competencies. So suppliers do not have a large buying power on the company. The other aspect that is skilled and educated workforce is a huge problem highly specialized labour is rare and is often a bone of contention amongst companies. Kodak's history of layoffs deters new workers from joining the company and this is where Kodak is at a disadvantage. (Seed, 2006) Buyers Though buyers in the health sector are not a threat as Kodak's market is firm there but other retailers have to be convinced to display Kodak products. Since retailers and image development kiosks hesitate to display multiple brands of the same product, therefore buyers have the ultimate power in deciding whether to sell the company’s products or not. Threat of substitutes The threat of substitutes is always present in the digital imaging market. cellular phones with extreme photo sharing capabilities are the biggest threat to digital cameras. This is followed by the recent arrival of i-pods and i-phones which provide extremely high resolutions. In built store image processing kiosks are also a threat to Kodak kiosks as they provide the same service at a lower price. Thus there are multiple substitutes to be feared. These digital photo frames are already competing with traditional photo frames and have yet to develop a market. Rivals Gone are the days when Kodak was the market leader and sole competitor. Hewlett Packard competes with Kodak in the image development market whereas the digital camera market is occupied by multiple companies such as Canon, Nikon and Sony. These brand names have become increasingly popular in the U.S. with total sales growth in 2003 ranging from 8.8% (Canon) to 47.4% (Olympus). Fuji in particular has been moving into the kiosk market where Kodak had the largest market share. Therefore its rivals will also manufacture similar photo frames if this product is successful and therefore Kodak has to ensure that it is providing this product at the optimum price. 5P's for Kodak Photo frames Product The product is the 26-28' Kodak photo frames Place The product will initially be launched in the US but will be available throughout the world. It will be available with all Kodak dealers Price The initial price will be set at $150 which is lower than it competitors but enough to generate decent profits. Promotion The product will be advertised well in all forms of media. An intense promotional campaign in the form of free gifts and endorsement by celebrities will take place. People The product is aimed at families as generally it is families who need large photo frames to display their pictures and frequently need to change them. Families also have the buying power to invest in such gadgets. New Market Development Kodak should focus on families since they have adequate buying power for middle class luxury appliances. A photo frame can be presented as an ideal gift as the traditional photo frame once was. The product is cost effective and hould be intended for those families. Its positioning should be such that it can be availed by everyone who could afford a photo frame and the quality should be prime. The product should be promoted heavily with families as a part of the promotion and catchy slogans such as "reliving the Kodak moment" should be used. Since the market for Kodak is international, therefore the market should be segmented not geographically but demographically. It should be aimed at all families who have income above their immediate expenditures and thus can afford to spend on a frame. The resolution should not be extremely high but should be compatible with computers and the product should not be expected to be outdated immediately. The product should be sturdy for everyday use but should also be light weight. Besides compatibility, affordability and quality the product should also appeal to the entire family and should be readily available. The development of this new product and its launch might be cumbersome but the success cannot be determined until a proper market research plan is implemented to find out if the strategies are working. Market Research plan The market research plan will identify strategies that generate leads and sales. It will include providing customer feedback form with the product which will help determine whether customers are satisfied with the product or not. Customer responses to each marketing strategy will be tracked and evaluated,. Besides that customer surveys will take place. These surveys can be available at the website or customers can be contacted via email. Potential customers can also be surveyed to find out about their inclination towards the Kodak product and the reasons for the choice. Regular users can also be interviewed to find out the reason for their preference and ideas and suggestions can be generated from them. Random interviews from families can take place to find out their affordability ranges and whether the product delivers value for money? Sales results are also a form of customer feedback and the market response to a product. Therefore if the sales have risen it indicates that the product is successful and if they slump or are stagnant, a problem with the product is indicated. Last but not the least the products market success and the marketing research plan greatly depends upon its marketing budget. If the budget is large then extensive research efforts can take place which will include in-depth collection of data and analysis, but if the marketing budget is not that huge than a skimmed research plan will be developed. Conclusion Kodak has been a pioneer in imaging and though it has lost its market due to the advent of digital technology it can regain its strength by productive strategies and sound implementation. For this it will have to gain technology, develop new products and market them to the public in an adequate way. The product is very feasible for the new market as the screen size is adequate, the starting price is reasonable, it is compatible with most devices and it has a touch screen and wi-fi accessibility is available. References Chinese PC virus may have hidden agenda. (n.d.). Retrieved January 7, 2011, from http://www.seattlepi.com/business/351670_picframevirus18.html Eastman Kodak post 3Q profit. (n.d.). Retrieved January 7, 2011, from http://www.bookrags.com/news/eastman-kodak-posts-3q-profit-sales-moc/ Kodak. (n.d.). History of Kodak. Retrieved January 7, 2010, from www.kodak.com: http://www.kodak.com/global/en/corp/historyOfKodak/historyIntro.jhtml?pq-path=2217/2687 Rober M Grant, C. B.-F. (2004). A knowledge accessing theory of strategic alliances . Journal of management sciences . Seed, S. (2006). Case analysis: Eastman Kodak company. Pacific Lutheran University. staff, I. g. (2010, November 2). Is Eastman Kodak back on the track? 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