Eastman Kodak: Competing in Mature Markets

Essay by jabarootUniversity, Master'sA+, October 2008

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Kodak… Not a Pretty Picture!"How can Kodak possibly sit on its hands and allow this to happen?" "You can't have your nearest competitor growing at this volume and not deal with it." - Alex Henderson, an analyst at Prudential Securities in New York.

Once upon a time, the film industry within the United States was basically stable and predictable, with the industry leader Eastman Kodak. But despite $10 billion in investments during the previous decade, Kodak's U.S. market share in film had plunged from a near monopoly to its 1993 level as competitors like Fuji, Konica and private labels enticed customers with lower priced options. According to industry estimates, in the first three quarters of 1993, Kodak's sales rose by 3.5%; the gain for private-label products was 9%, while Fuji gained 15%, Kodak's market share in the United States have gone down from 76% to 70% in five years.

Although Kodak was using more-advanced film production technology, the actual differences in quality were not readily evident to consumers most of whom claimed to know little or nothing about photography, and price became an increasingly important criterion for choice as film was being viewed as a commodity. A research survey commissioned by Kodak found that even though four out of five consumers said they preferred Kodak film, many consumers purchased other brands. In fact, half of the consumers were "Kodak loyal" 40% were "samplers" who relied heavily on Kodak film but purchased other brands as well, and 10% shopped exclusively on price. Our research could direct the erosion of market share and consumer loyalty and allegiance to Kodak to four main reasons:First, American consumers have become increasingly accepting of foreign-based products. Though still "Buying American" remains a source of pride, the typical user has less sensitivity and is more forth...