Kodak Market Segmentation - Case Study Example

Kodak Contents Introduction 3 Case Analysis and Discussion 4 Market Segmentation 4 FDI (Foreign Direct Investment) 5 Marketing 4Ps 5 SWOT analysis 6 Value Chain 8 Porters 5 Forces 8 Bowman’s clock 9 Ansoff matrix 9 References 11 Introduction In 1880, George Eastman invented and then made a dry-plate formula and a machine for preparing large numbers of plates, from which he led to the foundation of Eastman Kodak Company. By 1884 Kodak had become a common name in every house after George Eastman replaced the glass photographic plates with a roll of film as he believed it would be very convenient and user friendly for the users, Kodak did its first marketing strategy with the slogan; “You press the button, and we do the rest”. Later on though Eastman realized the policy for Kodak as mass production and selling it at low cost, international distribution, extensive advertising, focusing on the customer and grow with continuous research and development, treating employees in a fair, self-respecting way and reinvesting profits to build and increase the business. He always pressed more importance over the quality of the product and wanted Kodak to be shown as a high quality product. Kodak did come up with many new technologically equipped devices , it made world’s first megapixel electronic image sensor with 1.4 mega pixels in 1986 and it was followed by many other electronic equipments. George Fisher was been appointed as CEO in 1993, he established a digital imaging strategy for the company that was to give the company a right direction till 2004. Fisher Strategic vision for Kodak was completely different as it wanted it to be shown as the company which dealt with picture business and thus he gave orders to spin of Eastman chemical company and many other disinvestments. Fisher came up with this strategy as he wanted Kodak to concentrate on its core business and focus its all resources into its core side. Fisher’s digital strategy basically had three themes which always had an incremental approach towards the growth of the company coming up with new cameras. By 2000, Kodak had around 30,000 retail outlets across the world that created and provided a lot of imaging, printing, editing and sending digital images (Gavetti, Henderson and Giorgi, 2005, pp. 1-3). Case Analysis and Discussion The case is analyzed using various marketing tools like International trade theories namely political, cultural and legal, FDI (JVs, Greenfield and Franchising), Marketing theories namely 4Ps, Strategy (SWOT, Porter generic, Bowmans clock, Value Chain, Ansoff). These tools have been implemented to analyze the case. Market Segmentation The market segmentation done by Kodak based on the factors legal, Political, cultural and economics. Legal: Legal issues are more related to the pricing policy of the products owned by the companies. Kodak does emphasizes a lot on the quality of its product as a result of which it does sets its prices for all the customers based on the legal terms in different countries across the world globally. Political: Political issues of every country does plays a vital role as the company’s growth and expansion and Kodak has looked to segment its products by helping the countries in making their national census in US, UK, France, Australia and Brazil. Cultural: Culture, is the set of values, ideas, and attitudes that are been learned and shared by all the members of a group. Many factors of culture do influence consumer buying patterns. Kodak segmented its product market based on various cultures of consumers at different places in the world as it came up with professional cameras for the professional camera. Economics: Kodak had segmented its market for both the top end and bottom end customers of the market, Kodak launched a camera whose cost was $8,500 in 1994, and this was basically done eyeing the high end customers in the market. On the same place it also launched a computer camera which was only costing $75 and was the cheapest digital camera available at that time in the market. FDI (Foreign Direct Investment) Greenfield Concept of FDI: Greenfield type of FDI is the one wherein companies go to a new place and set up a new factory. Kodak has looked to open its channels and factories at various countries like in USA, UK, and France and also is trying to have a market growth in China (Lukac, 2008, pp. 22-25) Joint Ventures of Kodak: Kodak has joint ventured itself with Philips and also when it diversified itself in to chemical factories it got many mergers and also had a series of joint ventures with Sanofi, intel, Microsoft and many more . Franchising Policy of Kodak: Kodak has looked to have its presence in every part of the world and has tried to launch and have retail outlets in every part. By 2000, Kodak had around 30,000 retail outlets across the world. Marketing 4Ps The major 4Ps of marketing mix on which a particular product is been launched in the market are Product, Price, Promotion and Place. Product: Product is the most important tool as it is the one which will reach to the end consumer. The various factors which fall under this category are Features, Brand name, Packaging, Service and Warranty. Kodak highly concentrates on the quality of the product and it doesn’t wants to compromise over its quality at any cost. It has looked to spread its brand image across the globe posting itself as an image company which is more into picture business. Price: Price of a particular product determines which category the product is for and is been launched for which category. Kodak has always looked to target all the customers incorporating both the high end and low end consumers by posting its products in varied range of prices. Place: It is very important to decide which place a particular product need to be launched as a segment of people in the particular place may like the product more than other places. Kodak on the other hand has looked to target everyplace and launch its products globally across at every country based on the consumers likes. Promotion: Promotion plays important role as it helps in improving the brand image in the market. Kodak lacks a lot in this section as it emphasizes more on its product quality and manufacturing rather than promotion and other marketing activities. SWOT analysis SWOT (Strengths Weakness Opportunities and Threats) does helps in knowing the current position of the product and also gives the chances to know where to improve upon. SWOT of Kodak is: Strengths: Existing Brand image Distribution channel present in the world Quality Brand name advantage Weakness: Rapidly decreasing sales revenue Work force has been cut off Corporate Culture of not agreeing to change Lack of market research Opportunity Digital Image Diversification Photo sharing and storage online basis. Threat Competition from other traditional cameras like Fuji Extinct of silver halide technology Mobile phones enabled with camera Price sensitive Many competitors (Ferrell and Hartline, 2012, pp. 85-86) Value Chain Value Chain is very useful tool for knowing how the product can create the greatest possible value the target customers. The value chain for the traditional cameras being used in the earlier days was wherein the image was been captured by film camera or video cameras and the film used to go through the processing in the retailer outlets after which the photo was been stored, printed or edited or projected at all other retailer outlets and then was handed over to the customers, but these traditional photo quality used to be very high but they were only once edited and were also not that user friendly for the customers to use. (Mendes, 2011, pp. 12-15) Porters 5 Forces This analysis is done basically to find the competitive position of the company in the market. Threat of new Entrants: The threat of new entrants in the market of traditional cameras is very low as companies are trying to move towards the digital phase and come up with new techniques of photography using digital cameras rather than traditional cameras. Bargaining Power of Buyers: With the huge number of digital camera verities being existing in the market and also the trend is moving towards digital cameras the bargaining power of buyers is a moderate. Bargaining power of suppliers: This is also moderate as the suppliers have got other companies also to supply their products but in traditional cameras market it has very few options for supplying. Threat of Substitutes: The threat for substitutes is moderately high as there are many substitutes that are coming up like mobile phones, camcorder. Rivalry among Competitors: The rivalry among competitors is very high as the competitors like Fuji, Canon are looking to grow at a very high pace. Bowman’s clock Kodak is placed in the hybrid category of the Bowman’s clock where it does places itself in both the categories as it has launched products in the high range for high end consumers and also at low price for the low end consumers. Ansoff matrix Ansoff matrix is done on basis of 4 factors described as follows. Market Penetration: Kodak has looked to penetrate in the existing market pitching on to the quality factor of its products. Product Development: Kodak is very stagnant in this approach and is not trying to come up with new products in the market. Market Development: Kodak has looked to develop new markets in various countries with the same traditional cameras and is trying to get into the emerging economies like china and build its own market across the globe. Diversification: This is another factor where in Kodak doesn’t want to go into as it always wants to stick to its traditional product and pitch it with its quality in the market. Conclusion This case study gives a clear indication of how a great company falls down because of its strategically wrong decisions. Kodak always tried to maintain its quality and always showcased itself in the market as a quality based company and never tried to improvise or innovate itself and bring new products. Despite its strength in applied research it always lacked behind in the race of bringing up with new products which Kodak has now under its CEO Dan Crap is looking towards slowly to come up in the digital market of cameras where there are many other competitors already existing with highly equipped and specified models . The greatest strength of Kodak pressing over its manufacturing and less on market research has become its biggest weakness now and it is hampering the growth of the company in huge way. Using all these tools we can say that Kodak should look towards innovations in high speed and come up with better products and use the new value chain for providing more facilities to customer in the market to gain position again the market and gain profits. References Gavetti, G., Henderson, R. and Giorgi, S. 2005. Kodak and the Digital Revolution. New York: HBS. Mendes, G. 2011. What Went Wrong at Eastman Kodak?. [Pdf]. Available at: http://www.martinfrost.ws/htmlfiles/oct2011/What-Went-Wrong-At-Eastman-Kodak.pdf. [Accessed on: 26 February, 2014]. Ferrell, O. C. and Hartline, M. 2012. Marketing Strategy. Stamford: Cengage Learning. Lukac, D. 2008. Key Success Factors for Foreign Direct Investment. Munic. Diplomarbeiten Agentur. Read More