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Summarize the Market Characteristics and Trends

Essay by   •  October 1, 2013  •  Research Paper  •  1,111 Words (5 Pages)  •  1,800 Views

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1. Summarize the market characteristics and trends.

Characteristics

First, the photographic market is kind of oligopoly. The industry is dominated by a small number of producers. According to Table A in the case, Kodak and Fuji together control a total number of 81% of the market shares in 1993 in the U.S. market. In the global market, they also dominate the worldwide sales (with Fuji's $10 billion and Kodak's $20 billion sales amount).

Second, the market growth rate is relatively low. Over the past 5 years, the market's annual unit growth rate averaged is believed to be only 2%.

Third, four categories differentiated based on the pricing and ISO. The product are categorized due to different ISO, and there is corresponding difference price according to the quality of product.

Fourth, consumer's usage is relative fixed with a means of 15 rolls per year (Exhibit 1). This market characteristic is also the reason why the Funtime will be available only in limited quantities by the way.

Fifth, actual quality differences among films were unclear. Consumers know little about photography. The Consumer Reports show a huge difference between the actual quality and the perceived quality among consumer, which indicate that the consumers need to be educated about the quality of the product.

Sixth, there is a growing body of price-sensitive consumers. Since the consumers are not clear about the quality of the product, they tend to be affected by the price more than the quality.

Trends

The macro market: Shrinking & low sales growth rate

As consumer's relative fixed film usage and more and competitors like Fuji and Konica's competition, the market's annual unit growth rate averaged only 2% over the past five years. And it's likely to be shrinking in the long round as the development of relative technology.

From the angle of product life cycle, the photo film is in the maturity stage now. This industry is going to decrease in the future.

If Kodak launches Funtime, they will take a place in the Economy Brands, which will help them regain the market share. But the launch will not boost the industry, or the market.

The micro market: market share will change depends on the strategy of companies

Kodak is losing its market share due to the increasing competitors in the film market and their lower price strategy.

2. What drives the market share trend? Can Kodak stop the decline?

According to the case material, the market share trend is mainly driven by price and brand.

Beside the macro environment reason for the decline of the whole market, the most important reason for the market share loss of Kodak is come for the competitors. As the competitors like Fuji and Konica wooded the consumers with lower-price versions, Kodak faced with its U.S. market share eased from 76% to 70% over the past five years.

My answer is Kodak can stop the decline.

The usage of the customer (Exhibit 1) is mainly less than 15 rolls per year. Heavy user tends to be professional user, which would choose superpremium brands and premium brands. But most consumers (60%) will use less than 15 rolls per year. Fuji's key brand (Fujicolor Super G) and Konica's Konica Super SR are Economy Brands, which take Kodak's market share away.

Kodak research show that 50% of buyers were "Kodak-loyal", 40% were "samplers" relying heavily on Kodak, and 10% shopped on price (Exhibit 2). And in the long run, consumer tended to be more price-sensitive

Funtime

Belong to Economy Brands

Price: $2.79 ($3.49*80%)

By launching Funtime, Kodak can

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