Kodak: Changing the Picture

Synopsis
The case begins by recalling Kodaks storied history, which began in 1888 with its
introduction of the Brownie camera priced at $1.00. By 2000, Kodak was one of the most
recognized and trusted brands in the world.
However, by the year 2000, the company faced many challenges. Its stock price had
plummeted, and it had begun laying off workers. Even worse, when the September 11
tragedy hit, consumers began to flock to digital cameras, and cell phone manufacturers began
to offer camera phones. As if all that werent enough, Fuji was slowly but surely exposing the
cracks in Kodaks marketing strategy. This was especially true of the move toward one-hour
photo processing.
In early 2003, the company began a major reevaluation of corporate strategy. In the years
following, Kodak reduced its dependence on traditional photography. The new direction for
the company would focus on non-photographic markets, digital markets (such as inkjet
printers and high-end digital printing), and medical imaging. The company would no longer
invest in traditional consumer film, which, along with photography, accounted for 70 percent
of Kodaks revenue and all its profits. By 2004, the company had been significantly
restructured in a manner reflective of the new strategic directions.
By 2006, it appeared that the new strategic plan was not working, as evidenced by heavy
losses and a declining stock price.

Discussion Questions
1. How are the market structure and demand, the nature of the buying unit, and the types
of decisions and decision processes in the proposed commercial and healthcare
markets as compared with Kodaks traditional consumer market?

In the traditional consumer film market, Kodak had to have its film everywhere.
Although it could deal with large chains like Walgreen or Wal-Mart, it had to have its
film available anywhere a consumer might need it. Every mom-and-pop drugstore or
grocery store or tourist gift store had to have Kodak film available. As it moves into
producing inkjet printers or high-end digital printing products or imaging for
healthcare providers, students should see that it would have a smaller number of
customers who are very different from the retail stores it traditionally targeted in
order to reach end customers.
To the extent that its customers use the new products it develops in their processes or
in products they make for resale, its demand will become derived demand and become
more price inelastic. We would expect that the demand for consumer film was more
price elastic.
The text suggests that the demand for business goods and services would be more
fluctuating, although the September 11 tragedy certainly had a profound effect on
demand for many consumer goods.
As to the nature of the buying unit, as Kodak moves to sell products that businesses
will use in their own work, such as the inkjet printers or x-ray film, it will be dealing
with professional buyers versus the individual consumers, who are its traditional
customers for its film.
Because of this, we would expect Kodak to face more complex, more formal, and
longer decision processes.
2. What examples of the major types of buying situations do you see in the case?

The case discusses Walgreens efforts to install one-hour photo-processing systems in
its stores. It approached Kodak and asked them to help with this. This is a new-task
buying situation where Kodak had to develop a new system for its customer. It
purchased the machine from a Swiss manufacturer and provided the service and
financing itself.
Because of problems Walgreen experienced with the Kodak system, it approached
Fuji. We can assume that Walgreen asked Fuji to provide machines that would solve
those problems. This is an example of a modified rebuy, even though Walgreen was
switching suppliers. It was using its experience with the first system to make
modifications that would improve the system. Students will also suggest that Kodaks
attempt to offer kits that would modify its mini-labs so they could handle digital prints
is an example of a modified rebuy.
The case indicates that Walgreen first installed the Fuji machines in its stores. This is
another example of a new task purchase. Then, it began to spread the machines to its
other stores. We can assume that this has resulted in a straight rebuy as Walgreen
simply placed orders for additional machines.
Fujis development of a Web site for Walgreen is also an example of a new task
purchase.
3. How might Kodak have made better use of the buying center concept in order to
more effectively meet the needs of its commercial customers?

In its traditional markets, Kodak had established buying processes with customers
who knew Kodak and its products. Walgreen, for example, had an established
relationship with Kodak. Kodaks sales force was familiar with their customers and
knew how to work with them.
As Kodak moves into new products that target new markets, it will have to develop
new relationships. Not only will these be relationships with new customers, but also it
will be offering new types of products and services that its sales force is not used to
selling. Selling inkjet printers to a company for its own use or to a company like Best
Buy for resale is a very different process than selling film. Selling x-ray film for use in
medical offices or hospitals will require Kodaks sales force to develop an entirely
new set of customer relationships.
For each of these new customers, Kodaks sales force will face a new buying center.
At each customer, there will be different people with different rolesdifferent buying
centers. At each customer, members of the buying centers will have different
environmental, organizational, interpersonal, and individual factors at work.
In addition, each customer will have a different business buying process. The ways
they specify, search, solicit, and select suppliers will be different.
This discussion should help students appreciate how difficult Kodaks transition is
going to be. Even though it has been involved in organizational buying in its
traditional film business, its new products and services will be different and will
target different organizations. This will be a great challenge for both the company
and its field sales force. As noted in the case, Kodakwill be entering markets where
there are strong, established competitors and where its brand reputation is not
developed.
4. With respect to Kodaks industrial commercial customers, how is the buying process
different for their current situation relative to their old business model?

The old business model referred to is that of the traditional film, chemicals, and
paper structure that Kodak followed for decades. The new model is the structure of
imaging, commercial print, medical, and traditional film. With this change in
structure, to some extent, the customers are different. But as traditional film phases
out, even the customers who are the same are buying different products to satisfy
dramatically changing needs.
Thus, students can be led through the eight stages of the business buying process and
prompted to consider differences at each stage. Consider an example based on an
industrial customer (a large corporation, for example) of digital printing products.
Note how this process is different from a companys phot ographic needs 15 or 20
years ago. The problem being recognized is one that did not even exist with customers
under the previous corporate model (e.g., the company has numerous sources of
digital images and needs to be able to print selections quickly and reliably).
Therefore, the companys needs are going to differ dramatically. Additionally, the
company is going to be considering a dramatically different set of potential suppliers
both in terms of type and quantity.
5. What marketing recommendations would you make to Antonio Perez as he continues
to try to turn things around at Kodak?

Students may suggest that as Kodak enters new markets with new products, it will be
most important for it to listen to its new customers and determine what their needs are
and how it can satisfy those needs better than the competition. Kodak has owned
the consumer photographic film market for many years and knows that market well. It
will have to conduct market research and learn to listen to customers.
Much of Kodaks work will have to focus on promotion. First, it will have to begin to
educate its potential new customers about its new products and services. It will have
to build awareness.
A second major challenge for Kodak will center on its sales force. As noted in the
discussion above, its salespeople will have to call on new customers to sell new
products and services.Kodak will have to retrain many of its salespeople. It may find
it necessary to hire salespeople with experience in the new areas it is entering, or it
may find it necessary to acquire companies already operating in those areas that have
established sales forces.
Kodak will also have to begin advertising in different kinds of magazines. Whereas it
has traditionally advertised in consumer-oriented publications, it will now have to
advertise in trade publications.
Finally, as the text notes, much business-to-business marketing is conducted over the
Internet. Kodak has not traditionally sold its film over the Internet as it had
established an intensive distribution network. Now it will have to consider developing
this capability if its customers want to purchase this way.