Introduction
Technology has brought with it a lot of dynamism in the market. The market has practically become unpredictable. With inventions and innovations, the world market has been reduced to a single unit, popularly referred to as a global market. A firm in the United States of America can easily trade in a Japanese market.
Similarly, a Chinese firm would comfortably trade in the American market (Carson 2008, 41). Because of this, competition has become rife. In the current market, the philosophy of sustained competitive advantage of a firm no longer holds. Evans (2010, 36) explains that what is regarded as a competitive advantage of a firm today may be the greatest undoing of the firm in a few years time.
The film industry is one such market where competition is rife. Since this market is directly affected by technology, the market is very sensitive as regards to its offerings. Cunningham (2000, 19) observes that in the recent past, there has been a drastic move to digital photography, a fact that has seen some traditional firms makers lose their market share.
Caught in this competition is Eastman Kodak, an American photographic film and paper company. Started in 1889 by George Eastman, this company experienced a massive growth in the nineteenth century, without any major competitor in the local and international market. This changed when Fuji, a Japanese firm, entered the market in 1934. Other companies joined the two companies in this industry, completely upsetting the market position of Kodak (Andrzej & Buchaman 2007, 26).
This paper seeks to address the major changes in the photographic film industry and how Kodak, once the dominant company in this industry has sustained itself, the current market situation, and effects of technology in this industry in general. The paper focuses on Kodak in specific.
Product Analysis
In order to bring an understanding of Kodak cameras as a brand, the PESTEL and SWOT analysis of the firm would be of help.
PESTEL Analysis
Kodak is operating in an environment, which is very dynamic. The market is very unpredictable and open to various sudden changes that are not easy to predict. A comprehensive study of factors that have contributed in the growth and development of the company can be analyzed through PESTEL analysis.
This kind of study enables the marketer to evaluate the performance of the company in the market. Without the study, it would be difficult to determine the position of the firm in the market. Therefore, the application of the model is inevitable in case the market is to understand the performance of the firm.
Political Factors
Kodak is an American firm. The political environment in America has been very stable over a very long period. According to Harris (2009, 45), the US has one of the best political environments for conducting business. The political class does not interfere with the way firms operate in the market.
As Giddens (2009) observes, the government has given business society freedom to operate without any interference at all. Political stability of the country has made this environment even more attractive. There has been a smooth change of guard from one government to another without any tussles. Kodak therefore has experienced one of the best political environments within which to conduct its business. This environment could sustain creativity and innovation, as the political class is always ready to support business ventures.
Economic Factors
Since the great depression of 1929 to 1939, America has not experienced any serious economic down turn until the recent depression of 2008, which was arrested in time (Zimmerman 1996, 22). Kodak Company had grown so fast in the early nineteenth century to cover the markets in America, Europe, Asia and Africa. It therefore had a global economic outlook. The economic environment has been generally attractive.
In US, which is the leading market for the products of Kodak, the economy has been stable, except the recent depression that took place in 2008. Other regions across the world also experienced growth, a fact that Kodak could easily capitalize on. A stable economy would enable the company advance its operational systems as was seen when it developed the first digital camera.
Social Factors
Kodak targets different market segments with different products. Within the American market, the majority of the population is employed, with only less than eight percent living without stable jobs. Cameras and other related stuff such as films and photographic paper have a great market because of social reasons. The baby boomers are currently retiring or planning to do so in the near future. This is the population with a vast wealth amassed during the two world wars (Kurtz 2008, 24).
The population travels within the US or in other tourist destinations across the world. With them are always cameras, which enable them to gather relevant experience. This segment can easily accept traditional cameras, which uses films. Kodak can therefore target this population with this product. The younger population would prefer the digital cameras, which are able to meet their photographic needs (Warren 2005, 485).
Technological Factors
The main challenge to every current firm is the fear of the unknown. Firms operate in an environment, which is very unpredictable. This is due to technological changes. Kodak exists in an industry that is directly affected by technological changes. Innovations and inventions have seen new firms overtake Kodak in the industry. So stiff is the competition that any slow response to changes in technology would result to low profits.
According to Hung (2011, 98), the greatest undoing of Kodak in this industry has been its slow response to changes in technology. New market competitors that had not been foreseen by the management suddenly appeared in the market. Smartphone has come out as a very strong competitor in the market with its digital technology emerging stronger than the film photos. As Giddens (2009, 75) observes, the current society has embraced technology in almost all aspects. For a firm such as Kodak, technology is inevitable.
Environmental Concerns
Environmental conservation has been an issue for the past few decades. Environmentalists have been keen to fight carbon footprints. Kodak has been accussed by ecologists as one of the main polluters of the atmosphere (Ferguson 1999, 84). This mounted pressure on the company to reduce carbon emissions.
This has earned it a negative public image, a fact that may hurt its sales within the local environment. It must therefore device methods that would ensure that it complies with the environmental regulatory policies. However, this would mean reduced profits, as the company would be forced to eliminate some products and cut down the level of production on others.
Legal Concerns
The legal factors are always very important for any firm. This entails rules and regulations that govern the general operational activities of the firm in the market. The legal environment may be defined through legislation or regulations set at the ministry or state level. Kodak is expected to operate within the stipulations that govern the operations of the industry.
The industry practices that govern how the firm should relate to other firms in the industry should closely be observed (Kimmel 2007, 68). It is important to note that legal environment may control certain inventions, especially if they have a negative effect on the environment.
Kodak SWOT Analysis
Kodak as a company and a known brand can be analyzed through a SWOT analysis. By looking at its strengths, weaknesses, opportunities and threats, it would be easier to understand how it has reached where it is today.
Strengths
Kodak is one of the strongest brands in the world. Klein (2009, 64) says that just as Coca Cola, Kodak is a household name when it comes to the photography industry. Mentioning the name Kodak brings in mind the film and the photography. This has been one of the major strengths of the company. With a brand name that is widely known and appreciated, this firm can easily access loans to fund its projects.
This was seen recently when Citibank gladly accepted to loan it $ 950 million to help in catering for current operational activities, which saved it from being declared bankrupt. The current management has the required experience that can help the firm make a turnabout in its activities.
As Baron and Sissors (2010, 43) argue, Kodak has seen a new light in the tunnel through its new management body. The management has embraced technology and is currently working on new projects, which would ensure production of products that are needed in the market. This flexibility may help it come back to its footing. It is presently manufacturing a variety of digital and film cameras. Kodak EasyShare Z1015 is one such camera.
Weakness
Kodak as a company and brand has some weaknesses that have made it difficult for it to prosper in the current market. Andresen (2001, 67) notes that for a long time Kodak has been operating in the market that lacks any competitor. This monopoly helped it develop a relaxed attitude towards innovations and new inventions. When new firms came to the market, they quickly overtook it in coming up with products that were of higher technological value.
This created a perception in the mind of the market (both American and other overseas market) that Kodak was slow in adopting new technologies. They therefore associated Kodak with traditional products that were analogue in nature as opposed to what the market required (Drewniany & Jewler 2008, 31). Another weakness that brought this giant firm to its current humble position is the philosophy of ‘too big to fall.’
The management had assumed that Kodak was a name that could not be eliminated in this industry. This made the management underestimate the capabilities of new entrants in the market. By the time it realized the potential threat posed by Fuji film, it was too late to restructure itself in order to compete appropriately. The financial position of this firm is another point of weakness. The firm’s capital base has consistently been reducing in the last one decade, a fact that almost saw it declared bankrupt in early this year.
Opportunities
Although the future looks bleak for this company, there is still hope of emerging strong from the current predicaments. The market and the business environment in general have some opportunities that if well tapped, can result to positive changes for the firm. The economy of the US has become stable once again. The number of those employed has increased and with this comes increased disposable income.
Being an American firm, growth in the economy of America would be a positive indicator of the possibilities of the firm becoming profitable once again. The local market will have more disposable income to spend on such products as cameras as people tour the world. Other commercial photographers will need more products because they will also be having an increased customer base. With financial institutions such as Citibank still having trust in the company, Kodak can access loans that would be used for its expansion.
Threats
The market within which this company operates is full of threats. The main threat in the market is competition. Companies such as Fuji, Canon, Sony, among others are posing serious dangers to the prosperity of the firm. The competitors have mastered the art of technology, which was first invented by Kodak and they are beating Kodak through it. Fuji Film, the current market leader in this industry, enjoys the economies of scale, enabling it to trade its products at reduced prices.
Sony cameras are preferred over Kodak because there is a general belief in the market that ‘if it is Sony, it is quality’ (Gorchels, Marien, & West 2004, 71). This has seen Kodak struggle to stay afloat in the market. Technology has also come out as a threat to this firm. Instead of offering a competitive advantage to this firm, technology has turned out to be a threat because the firm has been slow to adopt it. This has seen its cameras faced off in the market because of the introduction of new digital cameras.
Benefits and Value of the Product to Consumers
Marketing as a strategic activity of a firm demands that there should be a proper market research in order to manage the current dynamic market. Through research, a marketer would be in a position to segment the market and choose the most attractive segment that meets the demand. Kodak’s Cameras may not be targeted to the mass market as Coca Cola would to its soft drinks. In Maslow hierarchy of needs, one must meet various basic needs before looking for higher needs.
Physiological needs such as food, shelter and clothing are the most basic. Kodak should realize that individuals in this segment are the least attractive. This market segment does not need the benefits that the camera offers. The marketing strategy should therefore not focus on it. The next stage is safety needs. This market segment is struggling to acquire safety and job security.
They are not keen on purchasing Kodak cameras because it does not fall within their needs presently. It should also be avoided. The next stage in this hierarchy is the need for love and belonging. This segment may form a portion of the market for this company. It can develop cheap cameras that can be bought by this group. The next level comprises those looking for self-esteem. This group forms the most attractive segment of the market.
Kodak cameras offer its users the ability to record memorable moments in life for future reference. It provides its customers with the ability to take still pictures, record films and take animations. This is what the group could be looking at. At this stage, one has fulfilled most of his or her needs in life and the only remaining need is self-esteem and recognition. They would want to be seen and remembered in society in different capacities.
Kodak camera makes this possible by providing EasyShare, which allows photo sharing. The last stage in this hierarchy is self-actualization. At this stage, one has achieved all the attainable factors and hence needs acceptance and morality in society. This market segment, though it has the ability to buy, is less concerned about such things as publicity. It is therefore not a very attractive market segment.
Comparison of Leading Brands
There is a stiff competition in the film industry. Many of the companies in this industry have embraced technology in their production, giving them an edge over Kodak, which for a long period shied away from technology for fear of unknown.
Some companies such as Fuji are direct competitors that have majored in producing exact products as those of Kodak. Because of Fuji’s flexibility to changes in the environment, the firm has managed to topple Kodak as the market leader in the industry. Other firms have been in this industry due to extensions of their production.
Sony is one such firm. It is specialized in producing a wide range of electronic products. Its cameras are very popular, making Kodak’s EasyShare less glamorous. Sony is trusted by the market since it offers quality products. This is because it has advanced its technological system and is able to provide products that surpass the expectations of the market. Other serious competitors include Canon, Nikon, Olympus, Panasonic, and Konica.
Financial Performance
Kodak’s financial performance was very admirable in early and mid nineteenth century. Records show that the firm made a profit margin of $ 2.5 billion in 1999, with the total revenue of $ 16 billion. Kodak was operating as a monopoly. When Fuji entered the American market, things changed.
The firm started experiencing reduced sales because Fuji was eating into its market. Things become worse when firms such as Sony and Canon entered the market. They came with new inventions that saw the performance of Kodak drop significantly. Currently, the firm’s financial performance is at its knees, forcing the firm to seek help from Citibank to avoid being declared bankrupt.
Brand Appeal in the Contemporary Market
Brand refers to the identification of a given firm or product. The brand name is the known name that a given business conducts its operational activities in the market. According to Jarboe (2009), a firm is identified in the market through the name.
With a brand name comes the brand symbol, sign, color and slogan that helps in its identification. As Garvin (1998, 37) once stated, the strongest asset of a firm is its brand. All the brick and moter of a firm can be taken away but if the brand is strong in the market, it can easily gain its footing in a very short period (Keegan 2007, 23).
Although Kodak has experienced a lot of problems in maintaining its profitability, it has not closed its operations like other giant American firms such as the Lehman Brothers. It has made use of its brand as an asset to maintain the market share despite the storm that has rocked its boat for the last one decade. It is signifies the strength of brand as an asset to any given company.
Brand Awareness
Brand awareness refers to the level of knowledge concerning a brand in the market. A given brand is identified within the market it covers easily. Kodak as brand is a family name (Thomases 2010, 84). Kodak is known worldwide for it dominated this industry until it was later toppled by Fuji.
In the camera film market, Kodak was the dominant name that professional photographers were used to. This scholar notes that at times, the customers would ask for ‘Kodak’ instead of photographic films. Although the firm has experienced some of the worst challenges that has threatened to force it out of the market, its brand awareness has remained very strong. Treadaway (2010, 45) argues that the brand Kodak remains the strongest in the photography industry despite its dwindling market share.
Perceived Quality
In the current market, Fuji has managed to outsmart Kodak as the brand that offers quality at a relatively reduced price. When Fuji entered the market, it found a dominant Kodak, which was operating as a monopoly due to lack of proper competition in the market. Because of this, Kodak was concerned with mass production because the market was guaranteed. Kodak employed an inward out approach marketing strategy.
It would produce in mass, and then take to the market. Because there was no an alternative in the market, consumers had no other choice but to buy the products. When Fuji entered the market, it brought new inventions. It took a completely different approach to marketing. It preferred an outward in approach as regards to production and marketing.
It studied the market needs and then developed products that satisfied these needs cheaply (Xenos & Moy 2007, 706). This positioned it as a firm that upheld quality in production. This market positioning has been maintained through awareness creation.
Brand Loyalty
Brand loyalty refers to the attachment that a market or a section of the market has towards a given brand. When a customer is satisfied, he or she would always remember the firm that offered the satisfaction (Wayne & Hoyer 2008. 19). If this level of satisfaction were maintained, the customer would develop some attachment to the firm because of the perceived value generated by the product.
For a long time, Kodak had a large base of loyal firms within the American market and abroad. Hung (2011, 29) observed that the top management of Kodak Company dismissed the entry of Fuji Film into the American market.
The local customers were very loyal to this firm, something that the management could not envision a foreign firm such Fuji eating into its market share. When Sony came in the market with better digital products, it toppled the two industry leaders as the preferred manufacturer of digital cameras.
Because of the quality of its cameras, Sony has earned market trust, making it develop a strong base of loyal customers, both in the local US markets and abroad. This brand loyalty has been increased by the fact that other electronic products of Sony are perceived to be of high value in the market.
Brand Association
Brand association refers to sounds, symbols or images that are associated with a given brand. It is always important for a firm to develop a proper brand association that would make it memorable in the minds of consumers. It should be appealing and in the right context. Kodak has developed its brand association by using colors. It has combined the two colors- red and yellow. The red color is imposed on a yellow background.
The words Kodak is written in yellow, with a red background. Through this, the company is telling the market that it is keen on producing quality pictures with sharp contrast in colors. This has however been criticized by some scholars.
Drewniany and Jewler (2008, 56) say that brand association should be as simple and direct in meaning as possible. It should not engage the pubic in interpretation of some sort, but have a meaning that would make sense to customers by the first sight. Carson (2008, 72) cautions that leaving room for interpretation could well be leaving room for misinterpretation.
Journey of Discovery
The world is changing at a pace that many had not predicted before. Technology has completely redefined the way things are happening in our current society. What is considered as technologically advanced today may not be considered as such in a few years time. This has forced firms in the contemporary markets to restructure their marketing and production strategies. There is need to adopt modern methods of production, which are responsive to the market demands.
The difference between failure and success is very small. A firm that succeeds in the market does so because of a small difference in operational activities adopted over the other. As Garvin (1998) notes, technology is a two faceted phenomena. On one hand, it brings success as it allows adoption of new ways of doing things in the market. On the other hand, it brings failure as those firms that are not able to cope with the changes are swept off. Depending on whichever face a company chooses, it will either fail or excel in the market.
The photography market has embraced the inventions and innovations brought by technology. New ranges of cameras with sophisticated features are currently available in the market. It is now possible to share photos with the help of cameras such as Kodak’s EasyShare. The cameras also come with in-built memories that allow the user to store large masses of photos.
Conclusion
Technology has brought changes in the way firms operate within a given market. The market is sensitive to changes brought about by technology. A firm that fails to adopt new inventions brought about by technology may find itself at a precarious position in the market.
One of the companies affected by these changes is Kodak. Kodak, once the largest firm in the photography market, was slow to integrate new technologies into its production system. This made its rivals such as Fiji overtake it in production of digital cameras. Although it has managed to get back to its feet, it will take a while for it to regain its glorious position in the market.
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