Case Analysis Group-5 PGP-RAK, 2012-14
PARTICIPANT Ankur Sinha Ishant Singal Prakhar Rathee Sambhav Jain Vikram Singh Shekhawat
ROLL NUMBER 2012PGPRAK013 2012PGPRAK023 2012PGPRAK031 2012PGPRAK036 2012PGPRAK039
Company Eastman Kodak is currently the market leader in the photo film market. The company has continued its domination of the photo film market, but in the past 5 years its market share has eased from 76% to 70%. Reason mainly being the competitors like Fuji Photo Film Co. and Konica Corp. lured consumers with their lower-priced versions. In 1993, Kodak spent an estimated $50 million on camera and film supply advertising in the United States; this was about 4 times its …show more content…
In addition, we can predict that the customers of the other companies are quite price-sensitive, because the products that they purchase have lower prices than the products of Kodak, Fuji and Polaroid, and the price of Funtime cannot attract those people easily. Kodak has difficulty in attracting these many no of new customers as there is no advertising support in the Funtime marketing plan.
Analysis for the impact of cannibalization in terms of the extra sales that Kodak should aim for Funtime. Retail Price of Gold Plus = $3.49 Retail Price of Funtime = $3.49 * 0.8 = $2.79 MARKETING-II Eastman Kodak Company: Funtime film – Group 5, PGP-RAK 2012-14 4
Profit for Gold Plus = 0.7 * (3.49 – 0.2 * 3.49) = $1.95 Contribution Margin for Gold Plus = Profit for Gold Plus/ Retail Price of Gold Plus = 1.95/3.49 = 0.56 = 56% Production Cost = $3.49 - $1.95 = $1.54
Assuming that the Production Cost for Gold Plus and Funtime is the same Contribution Margin for Funtime = (Retail Price for Funtime – Production Cost) / Retail Price for Funtime = (2.79 – 1.54)/2.79 = 0.45 = 45% Increase in Sales needed to target current revenue if there is complete cannibalization of Gold Plus customers by Funtime customers = Profitfor Gold Plus / Contribution Margin for Funtime = $1.95/0.45 = $4.33 Extra % of customers needed for Funtime = 4.33/2.79 = 1.55 => 55% increase in customer base If there is