kodak funtime ans2

2. Fuji, seeing that Kodak is trying to capture market share by launching a brand close to Fuji’s price can respond in the following manner: Fuji can enter into a price war with Kodak in this situation. Considering that Fuji is already well established in the economy segment, it will try everything possible to ensure that Kodak stays out of that segment. Market share of Kodak is the highest currently(70%) but their concern after seeing the growth rate of Fuji(18%) has made them think about launching Funtime to compete with economy brands. In terms of cost advantage, Fuji had an advantage over Kodak because of following reasons: Low advertising cost- Kodak spent close to $50 Million on advertising. This was four times that of Fuji’s advertising cost ($12.5 Million). The other cost advantage that Fuji had over Kodak was the margin advantage that Fuji got (55%) over a film of $2.91 versus the margin that Kodak got(70%) over a film of $3.49. If Kodak did decide to launch Funtime version, their margins would also be affected because of cannibalization and seeing the increase in

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Kodak Funtime Ans2

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2. Fuji, seeing that Kodak is trying to capture market share by launching a brand close to Fujis price can respond in the following manner:Fuji can enter into a price war with Kodak in this situation. Considering that Fuji is already well established in the economy segment, it will try everything possible to ensure that Kodak stays out of that segment. Market share of Kodak is the highest currently(70%) but their concern after seeing the growth rate of Fuji(18%) has made them think about launching Funtime to compete with economy brands. In terms of cost advantage, Fuji had an advantage over Kodak because of following reasons:Low advertising cost- Kodak spent close to $50 Million on advertising. This was four times that of Fujis advertising cost ($12.5 Million). The other cost advantage that Fuji had over Kodak was the margin advantage that Fuji got (55%) over a film of $2.91 versus the margin that Kodak got(70%) over a film of $3.49. If Kodak did decide to launch Funtime version, their margins would also be affected because of cannibalization and seeing the increase in product lines that Kodak has to offer, we can assume that dealers could increase their margin on Kodak film from 20% to 25%, thus again hurting Kodak. Kodak historically focused on increasing advertising and focusing on marketing, however it is important that they also build in house strength and keep the price on line like Fuji did.3. Considering introduction of Funtime, we calculated the breakeven points in terms of increase in market share and breakeven units needed. As per the below calculations, Kodak would gain market share of almost 24% if it goes ahead with the introduction of Funtime.Also, for cannibalization we assumed the rate to be 10%. The other assumption we made was the split of unit sales from Kodak gold plus would be 80%.Fun Time

Price2.792

Gross Margin70%

Dealer Margin20%

Profit Markup0.5584

Selling Price2.2336

Per Unit Profit1.56352

Cannibalization37520000

Lost Profit73329088

Breakeven Units46900000

Mkt Share Gained23.33%

Absolute Market Share7.00%

Gold Plus