kodak-think category not brand-core competency and strategic focus

8/12/2019 Kodak-Think Category Not Brand-Core Competency and Strategic Focus

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Kevin Williams


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War On All Fronts

Traditional business under attack. New technology will displace old.

Economics of value creation changing.

Vertical vs. horizontal integration. Every link in value chain will change.


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Kodak Results

1999: Brand worth $14.8B, now $3.9B. From 145,300 employees to 26,900.

Revenue flat for 15 years.

NI down from $1.5B to net losses.

Stock < 50% of value in 2000.


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Kodak Stock Performance


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KodakFundamental Questions

What are their core competencies?

What is their strategic focus?

How did they create value?

What does the brand mean? Was there any way to stop Fuji? Would

it have made sense to try?

What business are they in?

What business should they be in?


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Core Competency

Internal, specialized expertise that: Provides access to a variety of markets,

Increases benefits to the customer,

Is hard to imitate. (SCA)

Examples: 3Msubstrates, adhesives, coatings.

Hondainternal combustion engines.

Black & Deckersmall electric motors. Microsoftintegrated OS and applications

software for Intel-based PCs.


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Strategic Focus

Product Innovation/Differentiation

Infrastructure/Operational Efficiency

Relationships,Market Niches,Customer Intimacy


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Kodak Focus Success came from user-friendly

productconvenientmarketing. Guiding principles:

Mass production at low cost.

International distribution.

Extensive advertising.

Customer focus.

Growth through continuous research.

avoided anything risky or innovative Quality [is] our fighting argument.

Leadership came from marketing and

relationships.


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Value Chain

Capture

Mechanical

Electronic

Process

Chemistry

Software

Storage

Shoebox

Digital

Output

Lab/Paper

Disk/Paper

Delivery

Retail

Online

Kodak was a film/chemical company.Money came from consumables.


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Cognitive Traps

The lure of new technology.

The threat of new technology.

Inappropriate business definition.

Winners curse.

The infinite extensibility of brand.

People, resources, know-how,

processes, competencies can changequickly.

2ndSystem Syndrome.


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Think Category, Not Brand

Good marketing programs seek to

dominate a category, not build a brand. Examples: Starbucks, Red Bull,

Google, Southwest Airlines.

New categories need a new brand. The best brands are narrow but deep.

As categories fade, so will the brand,

e.g. Coke, Marlboro, Rolex. Brand extensions often sub-optimize

value: Polaroid, Kodak, DEC.


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Kodak Strategy

Develop all new

competencies to

Beat HP in printers!

Beat Adobe at SW!

Beat Nikon, Canon,

Sony, Samsungincameras!


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What Could Kodak Have Done?

Defend the film business!

Create a fun film brand to position against Fuji. Undercut Fuji in Asia.

Tap international markets.

Own the high end (movies, pros, prosumers).

Strong arm distributors.

Slow the adoption of digital cameras.

Look for new opportunities in chemical

processing markets.


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Additional Takeaway Points

You cant survive if your entire

business environment changes. Photography, Tobacco, Chemicals, Computing.

Markets dont end abruptly.

Core competencies can evolve butpeople, processes, values, know-how,brands, physical assets dont change

quickly or easily. It may be easier to abandon a market

for new opportunities.


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Kodak Paper Plant

kodak-think category not brand-core competency and strategic focus

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