The Kodak Comeback – A Case Study

Brief Introduction: 

Kodak is an American company popularly known for making printing machines, films, camera, etc. It was once a market leader, but with the disruptive technological innovations happening in 21st century, and big players entering the market, the company suffered huge distress and even faced bankruptcy in 2013.

This case gives an insight about the company’s downfall and it’s comeback to market in 2016-17, with newer strategies, which may be effective in getting back the brand value they once had.

About Kodak: 

The Eastman Kodak Company (referred to simply as Kodak) is an American technology company that produces imaging products with its historic basis on photography. The company is headquartered in Rochester, New York and is incorporated in New Jersey. Kodak provides packaging, functional printing, graphic communications and professional services for businesses around the world. Its main business segments are Print Systems, Enterprise Inkjet Systems, Micro 3D Printing and Packaging, Software and Solutions, and Consumer and Film. It is best known for photographic film products.

Kodak was founded by George Eastman and Henry A. Strong on September 4, 1888. During most of the 20th century, Kodak held a dominant position in photographic film. The company’s ubiquity was such that its “Kodak moment” tagline entered the common lexicon to describe a personal event that was demanded to be recorded for posterity. Kodak began to struggle financially in the late 1990s, as a result of the decline in sales of photographic film and its slowness in transitioning to digital photography. As a part of a turnaround strategy, Kodak began to focus on digital photography and digital printing, and attempted to generate revenues through aggressive patent litigation.

In January 2012, Kodak filed for Chapter 11 bankruptcy protection in the United States District Court for the Southern District of New York. In February 2012, Kodak announced that it would stop making digital cameras, pocket video cameras and digital picture frames and focus on the corporate digital imaging market. In August 2012, Kodak announced its intention to sell its photographic film, commercial scanners and kiosk operations, as a measure to emerge from bankruptcy, but not its motion picture film operations. In January 2013, the Court approved financing for Kodak to emerge from bankruptcy by mid 2013.

Kodak sold many of its patents for approximately $525,000,000 to a group of companies (including Apple, Google, Facebook, Amazon, Microsoft, Samsung, Adobe Systems and HTC) under the names Intellectual Ventures and RPX Corporation.

On September 3, 2013, the company emerged from bankruptcy having shed its large legacy liabilities and exited several businesses. Personalised Imaging and Document Imaging are now part of Kodak Alaris, a separate company owned by the UK-based Kodak Pension Plan. On March 12, 2014, it announced that the board of directors had elected Jeffrey J. Clarke as chief executive officer and a member of its board of director.

*List of products by Kodak is given in Exhibit 1

The downfall of Kodak:

There are few corporate blunders as staggering as Kodak’s missed opportunities in digital photography, a technology that it invented. This strategic failure was the direct cause of Kodak’s decades-long decline as digital photography destroyed its film-based business model.

A new book by my Devil’s Advocate Group colleague, Vince Barabba, a former Kodak executive, offers insight on the choices that set Kodak on the path to bankruptcy. Barabba’s book, “The Decision Loom: A Design for Interactive Decision-Making in Organisations,” also offers sage advice for how other organisations grappling with disruptive technologies might avoid their own Kodak moments.

Steve Sasson, the Kodak engineer who invented the first digital camera in 1975, characterised the initial corporate response to his invention this way:

But it was filmless photography, so management’s reaction was, ‘that’s cute—but don’t tell anyone about it.’ [via The New York Times (5/2/2008)]

Kodak management’s inability to see digital photography as a disruptive technology, even as its researchers extended the boundaries of the technology, would continue for decades. As late as 2007, a Kodak marketing video felt the need to trumpet that “Kodak is back “ and that Kodak “wasn’t going to play grab ass anymore” with digital.

To understand how Kodak could stay in denial for so long, let me go back to a story that Vince Barabba recounts from 1981, when he was Kodak’s head of market intelligence. Around the time that Sony introduced the first electronic camera, one of Kodak’s largest retailer photo finishers asked him whether they should be concerned about digital photography. With the support of Kodak’s CEO, Barabba conducted a very extensive research effort that looked at the core technologies and likely adoption curves around silver halide film versus digital photography.

The results of the study produced both “bad” and “good” news. The “bad” news was that digital photography had the potential capability to replace Kodak’s established film based business. The “good” news was that it would take some time for that to occur and that Kodak had roughly ten years to prepare for the transition.

The study’s projections were based on numerous factors, including: the cost of digital photography equipment; the quality of images and prints; and the interoperability of various components, such as cameras, displays, and printers. All pointed to the conclusion that adoption of digital photography would be minimal and non-threatening for a time. History proved the study’s conclusions to be remarkably accurate, both in the short and long term.

The problem is that, during its 10-year window of opportunity, Kodak did little to prepare for the later disruption. In fact, Kodak made exactly the mistake that George Eastman, its founder, avoided twice before, when he gave up a profitable dry-plate business to move to film and when he invested in colour film even though it was demonstrably inferior to black and white film (which Kodak dominated).

The Comeback of Kodak: 

Returning to the Consumer Electronics Show (CES) for the first time in three years, Kodak came to the show with a roster of licensing partners who are bringing its iconic logo to some unexpected places, from a baby monitor (a CES Innovation Awards honoree) to the brand’s first smartphone. This is just one year after emerging from bankruptcy.

Brandchannel caught up with Steven Overman, Kodak’s Global Chief Marketing Officer (since Oct. 1st) and President of its Consumer and Film Division, during the CES fray to find out more about the comeback strategy—and also some insights into his new book, The Conscience Economy, about why and how brands must embrace corporate citizenship.

  • Kodak in 2016 came into consumer electronics such as Television, Mobile accessories, Different types of cameras, LED Lighting, Home monitoring system, etc.
  • They also introduced Eyeware division
  • Being a pioneer in manufacturing printing machines and accessories, it continues to produce printing accessories.

*New product details of Kodak is given in Exhibit 2

Strategic Decisions by Kodak to Re-Build its Brand Image: 

Diversification into Consumer Electronics: This strategic decision will help the company to gain volume in sales as well as get into various markets. Also, the company is looking forward to finding the right product type or category which the consumer is likely to see Kodak into.

Trying out technological innovation and using online platforms like Flipkart: Kodak very recently came up with its very first smartphone “KODAK EKTRA”, which is a crossover between digital camera and smartphone. Having Android as its operating system and a really upgraded camera system inbuilt, the product is one of its kind to the market.

It is also exclusively available on Flipkart, a strategy taken by most of the smartphone makers, due to the havoc dependence on Online app based sales in the last 2 years.

Kodak is trying to replicate the online selling model followed by all the brands by using an aggressive promotion strategy. Usage of #OnlyOnFlipkart is also a mode to increase the brand reach.

Retaining some of its iconic designs in camera: Kodak in its Gen-X camera’s, is providing with all the technological advancements that its competitors are giving, but, to create a point of difference, it has kept some of the camera model’s look similar to that of its iconic manual point and shoot cameras of the early 1990’s. This strategy will help Kodak establish its originality and heritage (Similar to the strategy followed by Rolls Royce)

Not just smartphones, Kodak is depending heavily on App based online shopping with its newly launched Smart TV’s being promoted aggressively online. It is also promoting its mobile accessories segment which provides a wide range of products such as Portable speakers, Power Banks, etc.

January 2017, Kodak announced it was bringing back its Ektachrome film: Maybe this is a decision on a strategic level to restore the essence of heritage in the company.

Conclusion: 

Since Kodak faced a huge setback in recent years, it is expected to take some years to re-build its brand image, step by step. But with the aggressive strategic decisions the company is taking, it would hopefully capture some markets by the end of 2017.

Kodak had faced difficulties in adapting to the huge technological advancements, which went against them and led them to a massive damage. But this time, the company is back with its newer technologies, and they are trying to portray themselves at par with all its competitors.

Penetrating to the Cameras and Accessories market is difficult for Kodak due to the huge dominance by Nikon and Canon, hence, the companies main strategy is to establish its consumer electronics business.

We can hope to see Kodak emerge with newer strategies to re-launch itself as the pioneer camera makers of the world, and re-gain its market position.

Exhibit 1: 

Former list of products by Kodak: 

Still film cameras

Instant cameras

Image sensors

Digital cameras and camcorders

Digital picture frames

Kodak gallery

Document imaging

Film and photographic paper

Photo Kiosks

Later list of products & services by Kodak: 

Digital printing and enterprise

Flexo-printing

Functional printing

Enterprise professional services

Digital printing solutions

Consumer ink-jet cartridges

Graphics, Entertainment and Commercial Films(GECF):

Graphics

Global technical services

Entertainment and imaging commercial films

Motion pictures and tv production

Exhibit 2:

The current product range offered by Kodak: (Attached)

Ritobroto Mukherjee

The author of this article is Mr. Ritobroto Mukherjee, who is currently pursuing MBA in marketing from IMI Kolkata. He is also the head of Cultural Committee at IMI Kolkata, done his internship from Future Retail Ltd. in Sales and Marketing. He is a music enthusiast, and has been part of various inter and intra college events.

Comments

3 comments

PranavSingh

Great insight to the overall story of Kodak.. May the company again come to the fore and be the leader in tech disruption :)… Thanks a ton Rotibroto