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Sample2-Kodak - Eastman Kodak Company Team 2 Penny Philips...

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Eastman Kodak Company Team 2: Penny Philips Michael Kaczowka Seth Schwartz Yandong Peng Erv Olmoguez
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MAR5806 - Group 2 2 Kodak Analysis of “Third Price-Tier” (FunTime) Strategy
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MAR5806 - Group 2 3 Kodak Strategy Overview Kodak’s ‘FunTime’ Strategy Objective: Improve film sales through the launch of a ‘commodity priced’ film A low end film would be able to compete with various economy brands Kodak would increase unit sales without sacrificing their flagship Gold product Strategy should help Kodak increase profitability while simultaneously raising brand awareness
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MAR5806 - Group 2 4 Kodak Variable Costs for Kodak and Fuji Brand Retail price Trade price Unit margin Unit variable cost Fuji super G $2.91 $2.18 $1.20 $0.98 Kodak Gold Plus $3.49 $2.79 $1.95 $0.84 Brand Dealer Margin Gross Margin Kodak 20% 70% Fuji 25% 55% Analysis of variable costs of Kodak Gold Plus and Fuji Super G Analysis of margins for Kodak and Fuji
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MAR5806 - Group 2 5 Kodak Impact of New Price Strategy Brand Retail price Trade price Unit margin Unit variable cost Gold Plus $3.49 $2.79 $1.95 $0.84 FunTime $2.79 $2.23 $1.40 $0.84 Conclusions:   Decrease in Unit Margin:  $0.55  Kodak would require a  29%  sales growth to compensate  for the decrease in price  Virtually impossible for Kodak to get a so high  growth  rate
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MAR5806 - Group 2 6 Kodak Alternative Price Strategy for FunTime Brand Retail price Trade price Unit margin Unit variable cost Gold Plus $3.49 $2.79 $1.95 $0.84 FunTime $2.97 $2.37 $1.54 $0.84 Conclusions:  Decrease in Unit Margin:  $0.51  Sales growth required to compensate the decrease in  price:  21%  The growth rate is still extremely high
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MAR5806 - Group 2 7 Kodak Alternative Options Option 1: Eliminate Gold Plus (middle tier) and move into low priced film. Analysis: Market seems to be moving in this direction Increase in unit sales (low tier film) may not outweigh the decline in profits from the discontinuation of the higher margin Gold Plus brand. Conclusion: Too risky, adopt another strategy
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MAR5806 - Group 2 8 Kodak Alternative Options Option 2: Create a economy priced film (lower price/lower quality) marketed towards young children and vacationers, while maintaining middle and upper tier brands. Begin to think about expanding business into other photography related areas. Analysis: Uncertainty right now with commercial digital imagining technology.
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