Kodak-Think Category Not Brand-Core Competency and Strategic Focus
Transcript of 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