Kodak made the front page of the Wall Street Journal last Thursday, with the Journal reporting that this American titan of the 20th century is now hoping to avoid bankruptcy by selling off their patent portfolio. For the past five years they have been able to hold back the bleeding by filing patent infringement lawsuits, (Spector, 2012) but that strategy is running dry. Kodak’s largest problem stems from failure to capitalize on their own innovation way back in 1975 [the digital camera] because they were reluctant to disrupt their existing revenue stream that came from film. Let’s take a look at how they attempted to deal with issues of market share and service customization over the last few years.
Until the world of photography was revolutionized with the advent of digital imaging, Kodak’s primary focus was on the consumer marketplace with a secondary focus on the business marketplace. As they lost market share in the consumer side of the business, Kodak focused on building its business products and services and successfully transformed itself into a business-to-business (b2b) powerhouse. In an On the Record podcast interview, communications consultant Eric Schwartzman declares “Over the last five years, Kodak’s revenue from consumer film has dropped from $15 billion to $200 million, but the company still has sales of $8 billion annually through a portfolio of new products, most of which are less than two years old and 80 percent of that revenue comes from business customers.” (Hayzlett, 2010)
Mark Weber was the Vice President of Worldwide Sales Partnership in Kodak’s Graphics Communications Group, and led the sales efforts for Kodak’s Digital Printing Solutions Group, a strategic business unit. In a 2008 video, Weber stated this business group was the fastest growing business in Kodak’s portfolio (Cengage, 2008). Weber delineated their specific marketplace for their products and services as the commercial printing industry, in addition to government and corporate businesses. The four main segments of products in their business portfolio were digital printing, consumables, workflow, and services.
In the video Weber describes the different approaches Kodak adopted as they transitioned into b2b. For example, Kodak had to change their sales model to a direct and indirect sales force model and adjust their customer touch points. Weber points out that services and solutions are the most difficult items to sell and that it is imperative to point out to potential clients not only the features but the benefits of their product and services offerings.
In a press release dated October 23, 2008, Weber is quoted as saying “Marketers and others who communicate with print continually strive to distinguish their materials and set themselves apart from their competition. With solutions that include using variable data printing for creating customized documents as part of an integrated, personalized campaign or producing a raised print that looks and feels like the item in the image, digital printing provides many opportunities to maximize communications effectiveness.” (Kodak Press Release, 2008)
Charles Lamb writes in his book MKTG2 that “An important issue in developing the service offering is whether to customize or standardize it… Instead of choosing to either standardize or customize a service, a firm may incorporate elements of both by adopting an emerging strategy called mass communication.” (Lamb, Hair & McDaniel, 2008) Weber states Kodak utilizes this mass communication strategy.
Kodak offers to help their customers grow their business with a full complement of services whether they be customized or standardized. Weber explains that some of the products and services are standard out of the box offerings. However their workflow product offering provides customized solutions and services which tie all of their capabilities together to both their commercial printers whether they are traditional or digital printing customers. In addition, Kodak’s web-to-print service offers some customization related to the regional and seasonal aspects of their customers printing business needs.
Customized services are also available as part of their packaging and transactional printing services. Weber describes the coupon printing capabilities Kodak provides to Papa John’s pizza where basically each coupon is customized to the specific consumer recipient. Finally Weber discusses Kodak’s outreach to their customer base through surveys and user group associations.
Kodak has been a household name for over century with their cameras and film. Some of the mistakes they made over the years are now classic corporate giant errors. As “Kodak teeters on the brink” of bankruptcy (Spector, 2012), the American icon is paying close attention to their customers so they can provide the best possible solutions and services, and escape a tragic end. Meanwhile business consultants everywhere are paying close attention to correlations between what Kodak does and whether they survive.
Cengage. 2011, March 19. Kodak – Services and Nonprofit Organization Marketing [Video file]. Retrieved from http://www.swlearning.com/marketing/now/lamb_marketing9e/eoc_video/ch1100.html
Kodak Press Release. 2008. Kodak Experts Discuss Emerging Trends and Opportunities in Free Graph Expo Seminars. Retrieved March 21, 2011 from http://www.kodak.com/eknec/PageQuerier.jhtml?pq-path=2709&pq-locale=en_US&gpcid=0900688a809d0756
Lamb, C., Hair, J. F. Jr., McDaniel, C. 2008. MKTG2. Mason, Ohio: Cengage Learning.
Hayzlett, Jeffrey. 2010. Consumer Film is Dead. But Kodak is Alive. Jeffrey Hayzlett Explains. Retrieved March 20, 2011 from http://ontherecordpodcast.com/pr/otro/death-of-film-kodak-jeffrey-hayzlett.aspx
Spector, Mike. 2012, January 5. Kodak Teeters on the Brink. New York Times, p. A1.