Kodak lsn 9 Flashcards
What’s Eastman’s Vision and Early Marketing
George Eastman’s vision was to make photography as convenient as the pencil [1].
Introduced the first Kodak camera in 1888 [1].
Coined the slogan, “You press the button, we do the rest,” emphasizing ease of use [1].
Established principles focused on mass production, international distribution, extensive advertising, and customer focus [1].
Believed in the importance of the “value of our name and the quality it stands for
The Razor-Blade Business Model
Kodak used a razor-blade strategy, selling cameras at low cost to drive film sales
The company made profits from consumables (film) rather than hardware (cameras)
Over time, managers paid less attention to camera equipment itself
One executive noted, “No matter what they said, they were a film company. Equipment was ok as long as it drove consumables
This business model made it difficult for Kodak to transition to digital cameras
Kodak’s Strength in Color Film
Developing color film required significant R&D investment
Kodak spent over $120 million by 1963 to develop color film
Its photo-finishing process became the industry standard
Rival brands, even if high quality when properly processed, often fared poorly in typical photo shops
Kodak’s color film expertise created a barrier to entry for competitors
The Rise of Fuji Film
Fuji Photo Film was founded in 1934 as a comprehensive maker of photographic materials [5].
Fuji entered the U.S. market in 1965 as a private brand supplier
They began marketing film under their own name in 1972
In 1976, Fuji introduced 400-speed color film, the first to do so
Fuji capitalized on the 1984 Olympics, boosting its U.S. market share
By the end of 1993, Fuji had 21% market share worldwide
Kodak’s Initial Exploration of Digital Imaging
In 1983, Kodak created a division to explore new technologies like digital imaging
Hired John White, who had been in the software business, to push Kodak forward
Kodak wanted to enter the digital business, but in its own way, from Rochester and with their own people
White stated, “The tempo is different. The kind of skills you need are different” in the digital space .
Kodak introduced the world’s first electronic image sensor with 1.4 million pixels in 1986
Kodak’s Photo CD and “Film-Based Digital Imaging”
Kodak’s first widely announced digital product was the Photo CD, introduced in 1990
They believed that silver-halide technology provided the highest quality at the lowest price for the foreseeable future
Kodak aimed to “blend the best of the photographic medium with the best attributes of electronic imaging
The Photo CD was targeted at consumers, though its invention team thought its real potential lay in the commercial market
Senior managers did not understand the real vision or strategy of the Photo CD project
Fisher’s Background and Initial Vision
George M.C. Fisher was hired in 1993, and he was the first outsider to run Kodak .
Fisher came from Motorola, where he had been CEO [11].
He had a Ph.D. in mathematics and apprenticed at AT&T’s Bell Labs
He believed Kodak was in the “business of imaging” not just film
He felt Kodak could grow by focusing on its core business and exploiting new digital technologies
Fisher’s Restructuring and Digital Initiatives
Fisher divested Kodak’s health segment, except for X-ray film, and also sold Sterling Drug
He created a digital and applied imaging division to centralize efforts in this area
Fisher pushed the introduction of the digital print station and new digital cameras
He wanted Kodak to participate in the five links of the imaging chain .
He believed Kodak could be successful in the equipment business because it had the capabilities to “do much besides make film”
Fisher’s Cultural Challenges at Kodak
Fisher attempted to create an open and confrontational culture, typical of high-tech companies
Kodak’s executives were not used to open discussions and often deferred to authority .
The razor-blade culture was so deeply ingrained that even disposable cameras were considered sacrilegious .
Many Kodak insiders resisted Fisher’s initiatives .
He had difficulty changing the culture of middle managers
Fisher’s Shift to a “Network and Consumables” Model
By late 1997, Fisher admitted that 60% of Kodak’s losses were linked to digital cameras and other digital products
He shifted focus from hardware to a “network and consumables” business model
Kodak would position itself in the middle of the networked world with services people were willing to pay for
Fisher wanted Kodak to be a “horizontal company” that outsourced most digital photographic equipment and built alliances
He realized that, in the digital world, no single company can do it all
Kodak’s Struggles with Fuji’s Pricing Tactics
Kodak was caught off guard by Fuji’s price cuts in 1998 [19].
Fuji slashed prices to grab market share in the United States, where Kodak had the highest margins .
Kodak’s market share dropped from 46% to 42% in just one year .
Fisher contended Fuji was “buying customers in this country, selling film at unbelievably low price”
By late 1999, Kodak had to cut $1.2 billion in costs and 19,900 jobs
Carp’s Focus on Bridging Traditional and Digital
Daniel A. Carp became CEO in 2000
He continued the “horizontal company” and “network and consumables” business model
He focused on creating a profitable bridge between the old and new worlds of photography .
Carp aimed to transfer as many traditional snapshots as possible to digital form
He believed in the power of kiosks and online services to bridge the gap between the physical and digita
Kodak’s Digital Camera Market Share
By 1999, Kodak became number two in digital cameras in the US, with a 27% market share
In 2002, Kodak’s digital camera market share was 13%
While initially successful, profitability remained elusive for Kodak’s digital camera division
Kodak’s digital camera market share was consistently behind that of Sony
Other competitors like Olympus, HP, and Canon also had significant market share in digital cameras
The Rise of Digital Kiosks
Kodak’s network of 19,000 Picture Maker kiosks at retail stores was successful. highly profitable, accounting for $200 million in sales
Kiosks drove photo paper sales, with 95% of customers returning to use them .
The kiosks offered a modular solution comprising three stations: Picture Maker Order Station, Digital Station, and Print Station
Digital mini-labs and kiosks allowed for digital uploads from CDs, Zip discs, floppies, DVDs, and flash cards
Kodak’s Investment in Inkjet Printing
Kodak invested heavily in inkjet printers to compete with Hewlett-Packard
This was done to drive sales of high-margin inkjet cartridges and specialized paper
The inkjet printing market was dominated by Hewlett-Packard, Lexmark, Epson, and Canon
Kodak had a small role in the printing market thanks to its relationship with Lexmark
Hewlett Packard and Kodak dominated the specialty printing paper niche
