| After 132 years, Kodak is no longer in the picture | Send to a friend |
| Saturday, 11 February 2012 11:17 |
|
The Citizen Correspondent London. Brands such as Cadbury confectionary (Founded 1824), Coca-Cola (1886), Sony (1946), Toyota (1937) and Kodak (1880) are telling case studies of longevity.Masses have been weaned on these products and their advertising straplines and jingles would make a favourite test of “which brand is it?” Over decades, they have delivered products that were as essential as they were popular. But for Kodak, after 132 years it appears the Kodak moment is over. With liabilities close to $7 billion, the once famous photography business had to go bowl in hand to lenders. Its demise is certain as it has struggled in a marketplace that has been redefined both by consumers and new-age competitors. So how did it come to this sad end for a business whose big K in gold and black ads was ubiquitous the world over? It is a story of failing to capitalise on a first mover advantage, being blindsided by agile competitors and an apparent misreading of the consumer behaviour. Traditional photography was based on the film and plate printing but in a significant R&D masterstroke (and folly), in 1975, Kodak was the first to develop the digital camera. But rather than deliver this to the masses, in a move that would return to haunt the organisation today, Kodak decided not to release its new magic wand. The rationale was that marketing it would cannibalise its existing business and products. By contrast, competing brands gobbled up the technology and made huge leaps in product and in the marketplace. This was a double blow, failing to recoup R&D costs and losing in the market share. History shows that organisations reap gains from being first movers as it becomes seared in consumers’ mind —Apple in the tablet market easily comes to mind. Competitors such as Sony and Samsung proved to be more agile and responsive to consumer trends or dictated them. They dominated the market for compact cameras designed for personal and hobby use. In addition they buttressed their brands with synergy and complimentary audio, visual and optical products — televisions, DVD and blu-ray players, video recorders and phones. In the premium end of the market, Nikon and Canon cornered it, offering long lens gadgets preferred by professional photographers, dedicated enthusiasts, paparazzi and journalists. In the midst of the crowded marketplace Kodak lost its positioning and its place in the consumers mind; the final battle ground for brand marketing. When a brand is not among the first in a consumers mind, often measured in brand memory recall tests, it inevitably is losing market share. The growth of mobile phones, their increased functionality and how consumers used photography/pictures dealt another hit to beleaguered Kodak. Its camera competitors launched themselves into the phone market with abandon. Their smart phone ranges converge voice, data, web, low level computing and imaging in one gadget. The photo function is so advanced and at par with the typical compact camera. For example, Sony cameras and mobile phones use the Carl Zeiss lens and it is now not uncommon for phones to match camera in number of pixels. The underlying product proposition is why buy a camera when you can have one in a phone. Indeed Apple’s iPhone 4S advert seduces users thus: “If you are going to buy a camera, buy the one in the most advanced phone yet. ” And what’s more, users can edit pictures and email or share on social networks all from one gadget. Fuji, another pioneer in photography was more adept at reacting to the threat from newcomers. Fuji retreated from the camera shelf space and became a supplier of LCD screens and technology to medical and industrial users and even chemicals to pharmaceutical and life science researchers.This was a strategic shift that created a narrower portfolio of B2C offering and a contrasting larger focus on B2B services and products. So, what’s next for Kodak? Several scenarios are probable.Foremost, a natural response will be “POP”’ (people off payroll).A headcount of its 28,400 staff as at 2010 would make for huge overheads to any business and opportunities exist for cost saving. Citi’s advance of $950 million is but a stay of execution and will only give the ailing business a semblance of a going concern; a makeover to prime Kodak for suitors. Seen as dated, the Kodak brand name may possess negligible value that can be unlocked. Asset strippers that may be circling would, however, be eyeing the patents and intellectual properties. In 2010, R&D cost $321 million and there are opportunities to license the technology, earn royalties or bring forth products to the market. There may still be some significant value that can be carved out of its carcass; hopefully as valuable as what was overlooked in 1975. Another alternative is to reassess the profit and cost centres and offload the loss making units and direct new investment into profitable and in-demand areas. This way Kodak will rediscover its knitting —what it is really good at. Kodak’s founder George Eastman committed suicide aged 80. The company he created is facing its own life -and- death test. Mr Munene is a lecturer, Waltham Forest College. This article was first published by our sister paper Business Daily. Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it Add this page to your favorite Social Bookmarking websites           |
Comments
RSS feed for comments to this post