This analysis explores several challenges that Kodak is facing as it enters a new market.
Understanding the firm and challenges
Kodak is an American company based in New York. It was founded in 1888, and if focuses on developing imaging products. Kodak is trying to enter a new market with a line of printers and cartridges. The photos will have high quality and brightness for 100 years, the cartridges will also be cheaper than the currently offered. In the printing industry, they will have several competitors including Canon, HP, Dell, etc.
Kodak’s sales declined significantly in the 90s, digital printing got more popular, and the regular film was no longer needed. Kodak wants to offer new technology, with a very attractive value proposition: High-quality products at an affordable price for refills. There is a large public that prints photography at home. Because of this market, several suppliers of ink have joined the market over time.
Kodak seems to have a very attractive value proposition to enter the market, but Kodak will be facing several challenges. Internally, they have to change their infrastructure for new products and enhance their personnel. Externally, Kodak has many competitors in the markets that are already well position in the industry. Kodak also does not have ink distributors that make ink refills or purchases convenient for clients. Kodak is entering the market later than its competitors and will be facing many challenges, but it has a disruptive technology that could change the industry completely.
Recognizing the Problem
Kodak has developed new products, products that will give photography prints a better quality. The company has been successful in entering new markets in the past with high technology. The company is well known in the US and internationally. The home printing industry will be a difficult industry to enter. Competitors have a very well developed strategy. The group of clients interested in home printing photography already uses competitor’s products. It will be difficult for Kodak to convince clients to switch providers. Clients will need to buy a new printer, which can be very costly. On the other hand, cartridges are cheaper, the price will even out after a few printing jobs.
A New Brand Image
Kodak has a brand image that relates to its past products. Its products were reliable and high quality, but their innovation strategy was slow. They are entering the market later than most of its competitors. When the company enters the market, it will face many challenges, but the main challenge will be: convince clients to switch to new Kodak Equipment, making a long term commitment. A customer that already has the whole setup will find difficult to have 2 different printing machines, they will have to decide for one, and they already have the competitor’s brand at home. The cartridges are better and more affordable to clients, this is a very significant advantage. Kodak will have to figure out how to distribute the ink. Most of the competitors have third party suppliers that also sell ink. It is convenient for customers to get refills and new cartridges.
Entering the new market will be significantly difficult. Kodak has to focus on its new strengths and sell its new high-quality product. Kodak will also have to change its image because it has never produced printers or cartridges before. Customers usually associate Kodak with film or cameras.
Kodak has strong core competencies and a new line of products. To overcome the root problem and enter the market, Kodak could follow this solution:
Build relationships with suppliers to get Kodak’s product available for everyone. Also placing the product in several stores will give the brand exposure, for customers to be aware of the new product Kodak is offering
The first step to implement the solution is to start by determining a way to help clients finance the printers. An appropriate length to pay for the printer will be maybe 2-3 months. The printers will be sold in several stores, therefore, clients have to have an easy and reliable way to set the payments.
Each store has to be prepared to handle the purchases, Kodak can design a manual to train the stores. The manual will be fairly simple but will have the necessary information. The manual would also need to have contact information for technical difficulties. Kodak already has relationships built with several retailers, they have to make use of this strength.
While the site is being developed Kodak has to promote the new cartridges and focus on their value proposition. They have to be sure to create a feeling of high technology, and high quality with their new product. They have a superior product, but they need to spread the word across new users. Once this user knows about their product, and they want it they will have no many options to buy the printers too.
All in all, Kodak will offer their value proposition with high-quality products, but with extra benefits to help clients switch from the other brand. Financially the company will have to invest in a developing team to update the site, and then maintain it to keep optimal performance. They will also have to invest in training materials, for sale locations. Competitors may try to offer special promotions, but they won’t be able to keep prices for cartridges as low as Kodak.