Sample1-kodak - Eastman Kodak Company: Funtime Film TMBA...

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Unformatted text preview: Eastman Kodak Company: Funtime Film TMBA TEAM 1: Chris Erichsen Robert Knapp Carrie Knowles-Atkinson Marc Simons 1 TMBA Team 1 Overview of Third-price Tier Rollout Pros / Cons of third-price tier rollout Alternative strategies for Kodak Financial analysis of third-price tier rollout 2 TMBA Team 1 Third-price Tier Implications Off-peak availability Pro: less cannibalization of current product lines Con: do not compete with lower price rivals during time of their most important sales 3 TMBA Team 1 Third-price Tier Implications Lack of Advertising Pro: name recognition of Kodak makes advertising less necessary Con: causes market to question the higher prices of existing brands 4 TMBA Team 1 Third-price Tier Implications Limited production quantities Pro: Minimize potential cannibalization of current product lines Con: limiting ability to compete with low price rivals 5 TMBA Team 1 Third-price Tier Implications Only 2 speeds: 100 & 200 Pro: Focuses on most popular film types Con: ignores potentially price sensitive consumers looking for other speeds of film 6 TMBA Team 1 Third-price Tier Implications Available to all classes of trade Pro: provide greatest product availability to consumers Pro: opportunity to see which trade classes the product moves best in Con: may be more appropriate for "discount" trade classes 7 TMBA Team 1 Units Sold in Peak and Off Peak by Distribution Channel Split by Distribution Method Peak Sales Percentage Discount and Department Stores Drug Stores Camera Shops Supermarkets and Convenience Stores Wholesale Clubs Mail Order Total 32% 24% 14% 13% 9% 2% 94% Actual Units (millions) 214 161 94 87 60 13 670 70% 150 113 66 61 42 9 441 Non-Peak Sales 30% 45 34 20 18 13 3 132 8 TMBA Team 1 Third-price Tier Implications Group "value" packaging Pro: minimizes cost vs. quality perception issue Pro: potential increase in volume due to "buying" multiple rolls when only looking to purchase one Con: may lose consumers who were only willing to buy one roll 9 TMBA Team 1 Third-price Tier Implications Pricing Pro: new focus on previously underserved market Pro: pricing lower than Fuji improves position against them Pro: price above private label brands maintains perception of higher quality 10 TMBA Team 1 Third-price Tier Implications Pricing (cont.) Con: may still impact perceptions of quality for other Kodak products Con: priced into "economy" brand tier dominated by Fuji with no advertising Con: product pricing may still cannibalize Gold Plus 11 TMBA Team 1 Third Brand Strategy Alternatives Establish Funtime with minimal connection to the Kodak brand name Can't be a private label Divert 10% ($5 million) of Kodak's existing advertising budget Lower the price of Funtime to compete with the private label brands Distribute Funtime primarily through discount stores 12 TMBA Team 1 Third Brand Strategy Alternatives Instead of rolling Funtime out nationwide, limit the initial rollout to a handful of test markets. Select 3-4 markets in which Kodak has a market share comparable to its national share. Rollout Funtime to all trade channels. Track sales of Funtime as well as market erosion of existing Kodak film lines. Determine which trade channels are best for Funtime i.e. strong sales of Funtime and minimal Kodak cannibalization. By looking at market shares in units, determine which national segments are being affected by Funtime introduction. Run cost/benefit analysis to determine whether a national Funtime rollout is warranted. 13 TMBA Team 1 Third Brand Strategy Alternatives Abandon Funtime and look toward other strategies Run discounts and promotions of Kodak Gold in off-peak seasons. Rebates for multipac Discounts/coupons for single roll packages Offer "super" multi-pacs Pursue new film-related products rather than a discounted version of traditional film. Increase market share through substitution. 48-exposure film roll Digital technology Disposable cameras 14 TMBA Team 1 Third Brand Alternative Strategies Cross Promotions Sell rolls of Kodak Gold / Royal Gold with the purchase of a new Nikon or Cannon camera or possibly sell a roll of Kodak Gold with the purchase of a bottle of coke Distribute primarily around the holidays 4th of July and Christmas for example Look to establish joint advertising with other brands 15 TMBA Team 1 Funtime Potential Market Approximate Unit Market Share Peak Season Sales Percent of Market Kodak Fuji Polaroid Private Label Other Total 70% 11% 4% 10% 5% 100% Actual Units (millions) 469 74 27 67 34 670 70% Non-Peak Season Sales 30% Decrease Due to Funtime (millions)* (5) (8) 0 (1) (2) (15) Percent 328 52 19 47 23 469 98 15 6 14 7 141 30% 50% 0% 7% 13% 100% Total Funtime production equal to 15 million units 16 TMBA Team 1 A Look at Kodak's Margins Kodak margin calculations Product Gold Funtime Sale price 3.49 2.79 Wholesale Price 2.79 2.23 Cost of Goods Sold 0.84 0.84 Contribution Margin 1.95 1.39 Gross Margin 0.7 0.62 Margin on Funtime is lower than on Gold Funtime margin is still higher than Fuji's 55% 17 TMBA Team 1 Profit Gain-Loss From Funtime Introduction Kodak difference in Profits due to Funtime(millions) Loss of Profits on Gold Increased Profits from Funtime Net Profits Critical Quantity Erosion $ $ $ (8.79) 20.88 12.09 10.7 Funtime introduction is a clear winner as long as its sales are taking more away from the competition than from Kodak Gold 18 TMBA Team 1 Net Kodak Profits as a Function of Sales Erosion 30 20 Additional Profits in millions 10 0 10% -10 20% 30% 40% 50% 60% 70% 80% 90% -20 -30 -40 Percent of Funtime Sales that Erode Kodak Gold Loss of Profits on Gold Increased Profits from Funtime Net Profits 19 TMBA Team 1 ...
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This note was uploaded on 05/12/2010 for the course MAR 5805 taught by Professor Sawyer during the Fall '08 term at University of Florida.

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