Register to read the introduction…
Next, we will recommend a strategy for Kodak. From surveys, people started to think films as commodities, but buyers often select films depend on price only. Even though pretty high percent of films are sold by private label, Kodak can’t sell film on a private label basis because of 1921 consent decree still in
…show more content…
Funtime evaluation Gold Plus Gross margin: 70% Retailer margin: 20% Retail selling price: $3.49 Profit = Gross margin * Selling price = Gross margin * (Retail selling price – (Retail selling price * Retailer margin)) = 0.7 * (3.49 – (3.49 * 0.2)) = 1.9544 ($) Funtime Gross margin: 70% (We assume that the gross margins of Funtime and Gold Plus are same) Retailer margin: 20% (We also assume that the retailer margins of Funtime and Gold Plus are same) Retail selling price: $2.79 Profit = Gross margin * Selling price = Gross margin * ( Retail selling price – ( Retail selling price * Retailer margin ) ) = 0.7 * (2.79 – (2.79 * 0.2)) = 1.5624 ($) Gold Plus Profit / Funtime Profit = 1.9544 / 1.5624 = 1.2508 If 10% of Gold Plus users change their films to Funtime, then 2.508% of the number of Kodak customers has to be filled with new customers. This number of new customers occupy 2.508% * (70% / 100%) = 1.7556% of the whole market share. Moreover, the market share of Fuji and Polaroid is totally 15%. Therefore, if Kodak want to compensate their loss, 1.7556% / 15% = 0.11704 = 11.704% of Fuji and Polaroid’s customers have to change their films to Funtime. Here we just consider these two companies, because these are the largest companies except Kodak with respect to their market shares. In addition, we can guess 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 can not attract those people easily. In the Funtime marketing plan, there is no advertising support. Therefore, Kodak has difficulty in attracting these amounts of new
Funtime evaluation Gold Plus Gross margin: 70% Retailer margin: 20% Retail selling price: $3.49 Profit = Gross margin * Selling price = Gross margin * (Retail selling price – (Retail selling price * Retailer margin)) = 0.7 * (3.49 – (3.49 * 0.2)) = 1.9544 ($) Funtime Gross margin: 70% (We assume that the gross margins of Funtime and Gold Plus are same) Retailer margin: 20% (We also assume that the retailer margins of Funtime and Gold Plus are same) Retail selling price: $2.79 Profit = Gross margin * Selling price = Gross margin * ( Retail selling price – ( Retail selling price * Retailer margin ) ) = 0.7 * (2.79 – (2.79 * 0.2)) = 1.5624 ($) Gold Plus Profit / Funtime Profit = 1.9544 / 1.5624 = 1.2508 If 10% of Gold Plus users change their films to Funtime, then 2.508% of the number of Kodak customers has to be filled with new customers. This number of new customers occupy 2.508% * (70% / 100%) = 1.7556% of the whole market share. Moreover, the market share of Fuji and Polaroid is totally 15%. Therefore, if Kodak want to compensate their loss, 1.7556% / 15% = 0.11704 = 11.704% of Fuji and Polaroid’s customers have to change their films to Funtime. Here we just consider these two companies, because these are the largest companies except Kodak with respect to their market shares. In addition, we can guess 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 can not attract those people easily. In the Funtime marketing plan, there is no advertising support. Therefore, Kodak has difficulty in attracting these amounts of new