Question

Here is a short history of the Eastman Kodak company (adapted from Wikipedia):

Kodak was founded by George Eastman (Links to an external site.)Links to an external site. and Henry A. Strong (Links to an external site.)Links to an external site. on September 4, 1888. During most of the 20th century (Links to an external site.)Links to an external site. Kodak held a dominant position in photographic film used in cameras. The cameras were used to take photos, and once the film roll was filled with pictures it was taken to a drugstore or someplace else such as a kiosk in a mall to be developed and the photos printed on paper stock.

From the time of its founding, Kodak followed the razor-and blades-strategy (Links to an external site.)Links to an external site. of selling inexpensive cameras while making large margins from consumables, namely the film, chemicals, and photo paper. As late as 1976, Kodak commanded 90% of film sales and 85% of camera sales in the U.S.

Kodak began to struggle financially in the late 1990s as a result of the decline in sales of photographic film and some believe because of its slowness in transitioning to digital photography (Links to an external site.)Links to an external site.. In 2012 Kodak filed for bankruptcy and announced that it would stop making digital cameras, pocket video cameras, and digital picture frames. It also announced its intention to sell its photographic film (Links to an external site.)Links to an external site. and photo kiosk operations.

Task:

In the article "Marketing Myopia," Levitt discusses the crucial distinction between a “market-based” and “product-based” definition of the business a firm is in. Using these concepts, briefly describe the business frame that Kodak appeared to use up until 2012. Discuss the value (and limitations) of Kodak adopting the other frame. Needs to be less than 250 words.

Answer 1

Kodak had faced failure due to its improper strategies.They suffered with Marketing Myopia and focused on short terms sales gain than actually sustaining in the market for long time. When the entire world was moving towards digitalization, Kodak was satisfied with their dominant market share and didnt bring about any change in their product strategies. This is market based strategy where the company focuses only on the market sales and do not pay attention on the products. Until 2012, Kodak makes use of market based frame and focuses only on the market sales.

Value of Market based business frame

• Not much investment is required for updating the product.
• Short term high sales gains.
• Not much expenditure required for any changes in the product, distribution or promoting the product.

Limitations of Market based business frame

• Threat of getting extincted as the market evolves and tastes and preferences of the customer changes.
• No upgradation in the product.
• Short term sustenance. Threat for sustenance in the long term.