Kodak Digital Conversion & Archiving

June 3, 2005

Marketing Final Project

Ron McClurkin
Shaina Swartz
Eric Goehring
Takahiro Degach
Table of Contents

Introduction & Concept................................................................................................................................3
Demand...........................................................................................................................................................5
Customer Analysis.........................................................................................................................................7
Competitor Analysis......................................................................................................................................9
Competitor Position.....................................................................................................................................13
SWOT Analysis.............................................................................................................................................14
Strengths........................................................................................................................................................14
Weakness.......................................................................................................................................................15
Opportunities................................................................................................................................................16
Threats……...................................................................................................................................................17
Key Performance Issues...............................................................................................................................19
Marketing Mix..............................................................................................................................................19
Marketing Communications and Customer Response…………………………………………………..20
Marketing Channels and E-Marketing…………………………………………………………………..21
Market Based Pricing and Pricing Strategies……………………………………………………………23
Product Positioning, Branding, and Product Line Strategies…………………………………………..25
Marketing Budget………………………………………………………………………………………….29
Performance Timeline……………………………………………………………………………………..31
Process Workflow…………………………………………………………………………………….……34
Performance Metrics………………………………………………………………………………………34
BIBLIOGRAPHY………………………………………………………………………………………….37

Marketing Plan
Ron McClurkin
Shaina Swartz
Eric Goehring
Takahiro Degachi Introduction & Concept
Two of the fastest growing industries in the U.S. today are scrap booking and genealogy. According to Fun Facts Publishing (Fun Facts Publishing) the “scrap booking industry is a $3 billion+ industry” and MyFamily.com (based on their October 15, 2003 press release) has over 1.25 million paid subscribers to their genealogy and family services. More and more users are focusing on their family and preserving their memories, which is also the same reason over 75% of camera users are taking pictures. (Marketing to Mom Page 5). The photo-imaging industry has shifted. Consumers are now using digital cameras for photos and the use of film based cameras have decreased. Retailers (online and local) have started to provide a digital archiving service that converts the older film based images into a newer digital media.

The digital archive concept allows Kodak to move into the digital age with the same focus it had with the long-time strategy on its film products and may help to grow into emerging technologies as well. Digital cameras have transformed the consumer film industry and the idea of instantly printing, transferring, and archiving images has quickly drawn favor. Using hard drive space instead of film allows its user more flexibility and our imaging industry must follow suit.

Based on information from the Photo Marketing Association International (PMAI), we can see the progression of younger generations switching to a digital system. Kodak and its retailers may not think this is a very good sign for the future, but retailers are noticing more and more digital prints being sold. Some may still use the film products, but many are electing to go digital for their first camera.

The opportunity lies with the images still archived (although deteriorating) on the older film products. By creating centralized locations, a concentrated workforce, and advertising, Kodak can capitalize on an emerging opportunity to convert the older film based images into digital with a small investment and cooperation with its retailers. Advertising this new service will most likely be the crucial step throughout the pioneering campaign and we think this is exactly what our consumers have been waiting for. Younger generations can also use this technology through many channels whether it is a Kiosk, camera phone, local retailer, or even their home studio because the system is web based. This system will allow Kodak’s customers the ability to have their photos accessible anywhere and anytime and will profit from downloads, storage, and prints.

Demand
A heightened demand for digital cameras has influenced many organizations in the photo processing industry to rethink some of their business strategies. Photo Houses are starting to see over 7% of their prints are coming from digital media instead of the traditional film based products (PMIA Photo Industry 2005: Review & Forecast,7). Kodak can capitalize and grow with this new trend as the imaging and archiving leader for the emerging digital market. To create a greater demand and leverage the company for future growth, Kodak will utilize its acquired Kodak Gallery (formerly OFoto) infrastructure and develop newer batched high-speed scanning technology that emphasizes the conversion and storage of older analog images into digital ones. By helping consumers to convert, store, and organize their images in a web based atmosphere, Kodak can become the most used media storage device enabling consumers to have AnyImage, AnyWhere, AnyTime.

After speaking with authorities like David Lanzillo (Director Kodak Digital Imaging), Gary Pageau (PMIA, Research Director), and Ron Glass (IDC market research analyst) on this subject it was obvious there were no clear answers to exactly how many unconverted slides were in the market. Ron Glass at IDC stated that he thought the overall number of slides could be estimated at a couple thousand slides per household for those in the Silver generations. The U.S. Census reports over 57.6 million households fit in our demographics of those ages fifty-five and older. If these households had an average of a couple thousand slides, that equates into a total demand of over 115.3 billion slides.

While this number may seem large, it is finite. The number of slides will diminish over time and more generations will add these newly acquired images to their digital album. Kodak’s role over the next 15 years would be to offer this service, provide consistent picture quality, and a place for families to upload their family albums and store them for generations to come.

This emerging market has been entered by local retailers and online retailers as well and some households may have already utilized their services or simply converted the media on their own using their home studio. After doing an intensive search on the web it has been found that over 21,900 online retailers (worldwide) have already entered this market specializing in “slide scanning”. Many of our customers want this service, but would rather enjoy the peace of mind by sending their treasured family images to a reputable brand name as opposed to a fly-by-night web services organization.

Customer Analysis
The Baby Boomers are the influx of children born between the years 1946-1964 because of servicemen returning home after World War II. The ages of the Baby Boomers today are 41-59. There are about 77,702,865 people in Baby Boomer bracket that make up 27.5% of the population (2004 US Census).
The Baby Boomer phenomenon is broken into two areas, Older Boomers who were born 1946-1955 and Younger Boomers who were born 1956-1964.
The Baby Boomers have an average spending power of $1.05 trillion and an average annual income of $576944.50 (average of the young and old boomers on the 2004 US Census) The Geographic Distribution of the Baby Boomer demographic is clumped in a few areas; about 50% of Baby Boomers live in nine states: California, Florida, Illinois, Michigan, New Jersey, New York, Ohio, Pennsylvania, and Texas (2004 US Census). The appealing part is that the majority of the US population also lives in these areas.
The educations of the Baby Boomers have been higher than the previous age groups. About 88.8% of the demographic have High School Degrees and 28.5 % have Bachelor’s Degrees (2004 US Census).

The Life expectancy of the targeted market has risen from expectancy from the past. It is projected that the expected age for a person in the Baby Boomer field is 76.8 which is an average between the life expectancy of male and women in the 2004 US census.
Due to the age of the market, the Baby Boomers have been exposed to many changes in technology. The problem with change in technology is that things get left behind or forgotten accidentally. Now the children of the Baby Boom were exposed to analog film but times are fiercely changing to digital quality photography. Since things are going to digital, the target needs a way to uniform their old pictures with the newer prints that they are now receiving.

In the minds of the Baby Boomer generation, Kodak is an American company. The Baby Boomers were raised as a loyal Patriotic group. The Baby Boomers still keep the belief that they had growing up by buying “American”, has been engrained into their purchasing decisions. Kodak being viewed as an American company will have more clout in the purchasing decision than Fuji, a foreign Japanese organization. While the youth may not feel this is a disadvantage, the older Baby Boomers would view Fuji a threat to their patriotic ways.

With the average life expectancy going up in the US, many people in the age of the Baby Boomers are becoming more technologically savvy. With the Baby Boomers having an excess of cash since they no longer have dependants in the home, the Baby Boomers can spend more discretionary cash on upgrading and maintaining family legacy’s. With the use of Kodak’s digitizing services the Baby Boomers can connect their legacies with younger and more digitally capable groups.

Competitor Analysis
Currently, there are no real direct competitors with Kodak that involves a high speed scanning of slides and negatives. The primary competitive threat indirectly comes from Fuji. Comparable to Kodakgallery.com, Fuji has its own digital storage site FujiFilm.Net. Other current indirect competition are from retailers, online as well as brick and mortar stores that offer scanning services and home studios consisting of scanners, digital cameras, and photo printers. Kodak’s competition lacks primarily the ability to invest in the technology needed to cut costs efficiently and the time it takes to deliver the product. Kodak has an advantage of using its cutting-edge technology that could save the consumer time and money.
Fuji
As Kodak’s major competitor, Fuji is seen as a great potential threat in the high speed scanning service industry. Because of the company’s scale and available resources, Fuji may be able to duplicate and provide the services offered by Kodak at lower prices and also enter new markets. With the launch of FujiFilm.Net, Fuji is currently in direct competition with Kodakgallery.com. FujiFilm.Net as well as Kodakgallery.com enables its customers worldwide to upload, store and share digital photos. Customers can also order prints as well as gift items containing their digital images, such as greeting cards, mugs, puzzles, mouse pads, etc. just as Kodakgallery.com offers to its customers. Already replicating Kodak’s website’s features, a good prediction would be that Fuji will invest in the technology and equipment and enter the market to potentially take away some of Kodak’s market share. Fuji may also use this technology to enter new as well as foreign markets that Kodak has not yet entered. By entering new markets Fuji may gain a leading position in the industry. Kodak must take advantage of their opportunity as the new product leader and promote heavily as they enter markets before Fuji or other competitors. This way they will be able to hold on to existing and loyal customers and not lose a substantial percentage of untapped market shares.
Retailers
Current retailers like www.slidescanning.com and www.ltlimagery.com that offer slide-scanning services are expensive as well as labor intensive. Each slide or negative must be scanned individually, making rapid service not available and especially for larger jobs. High quality scans may run upward to $5.00 per scan. For individuals with thousands of slides or negatives converting to digital images may not be an option. With high speed scanning, Kodak will be able to charge substantially less and provide fast service to beat out retail competitors. An advantage of retail stores would be the fact that slides and negatives can be dropped off rather than mailed. Customers may feel more comfortable with their images not being sent in the mail to unknown service providers and may be willing to pay more and wait longer for their images to be converted.

Home Scanning Equipment and Photo Printers
There are numerous scanning devices on the market today that enable consumers to convert their slides or negatives into digital images. Hewlett Packard (HP) can be seen as a major competitor in the home scanning and printing market. The HP PhotoSmart Photo Scanner scans either slides or negatives easily and conveniently as an addition to the home studio. Other brands and models are also available for at home scanning, some of them include the Microtek9800XL, Minolta Dimage Scan Elite, Nikon Coolscan IV ED Film & Slide Scanner, and SmartDisk SmartScan 3600 Film & Slide Scanner, just to name a few. These scanners run from $75 to over $800 depending on the quality of the scan.

Another product on the market is a device that connects to digital cameras or digital camcorders that will capture the image of a slide or negative and then can be archived in digital format. ShotCopy retails at $59.95 and is compatible with most digital cameras. Photosolve’s Xtend-a-Slide, a similar product retails for $65 and offers different mounts for scanning several types of slides. These devices are an alternative to pricier scanning options, and can be seen as a real threat especially for older consumer markets that have a limited or fixed income that want to digitally preserve their images.

With Americans constantly on the go, home scanning is expected to be a major industry. And with the wide price range, it is affordable to every income level. Photo printers are beginning to taking off and HP is a leading the trend. HP offers a wide range of photo printers with prices that range from $80 to $500. Today’s high quality prints can be made from home and are very comparable to lab prints in price and quality. With new technologies emerging and in home and equipment becoming more affordable, consumers do not have to rely on retailers to provide them with imaging services, but many still find they like the quality.

Competitive Position
Kodak is the world’s leading photography company according to sales and is also the market leader in the United States with 21.9% of the market share in the digital camera market throughout 2004 (IDC website). Kodak has marketed many products related to info-imaging. In existing products, Kodak has a strong reputation in brand awareness and brand imaging. With Kodak’s brand name, they can comfort customers with the reliability of Kodak’s history of performance giving Kodak an advantage when trying to pioneer, and venturing into a program that will allow customers to convert analog images into digital prints. The consumers in this industry are looking for a trusted company to send their treasured images to be transformed into digital form. Kodak can utilize its brand equity and their reputation for quality to extend its product line in this new market.
Kodak must stay consistent with the quality and service that has been established through out the existence the company, to stay constant, consumers expect Kodak to provide high quality images, easy access to scanned photos, and keep the security of ones privacy.

Since Kodak already has info-imaging equipment for existing uses, fixed costs would remain consistent for the new venture and the savings would be passed on to the customer. Kodak’s prices will be competitive to existing retailers and online service providers. Even if the company chooses a market based pricing structure, Kodak would still have a stronger brand benefit and provide a higher quality product.
SWOT Analysis
STRENGTHS
WEAKNESSES
• Trusted brand name
• Imaging Leader
• Financially stable
• International Presence
• Small Digital Camera Market Share
• Unstable Digital Pricing
• High production scans not in current infrastructure
• R&D for production scanner and IT systems

OPPORTUNITIES
THREATS
• Better shipping quality
• International opportunities
• Growth in emerging market
• Can be marketed and extended into digital archiving
• Competition
• International Economy
• New Technologies
• Finite product lifecycle

Strengths
Kodak is a strong and experienced company that has been the leader in the photography industry. Therefore, they have a powerful hold on the imaging industry. Since Kodak is a household name, people trust them and can rely on Kodak to produce strong, reliable products. Kodak already has a part of the image processing market and this puts them at a great advantage because it is usually very difficult for new companies to break into a market that is dominated by a big experienced firm.

Since Kodak is a large corporation, Kodak has the necessary resources for research and development. Kodak employs more than 5,000 engineers and scientists. Kodak also has R&D laboratories in the United States, England, France, Japan, China, and Australia. By having such a strong focus on R&D; Kodak has a distinct competitive advantage to develop a batched, high speed, color correcting scanner need for this venture.

Weaknesses
Kodak is one of the world’s largest and most trusted names in the imaging industry. The company may find it difficult to reinvent its consumer strategy, but that may not be a choice. Digital technologies instead of film-based imaging will be the new media and the upfront cost depends heavily on investments already in place to support this new media.

Kodak’s long history in the film based camera market has been less known then their domination in the film market. Today, the company has been trying to leverage its brand name and develop digital cameras in a highly competitive market. Nikon, Cannon, and Sony have all entered and flourished because they all have technological expertise. Kodak, while it is an excellent producer of film, is finding it very difficult to carve out a niche for itself with its EasyShare cameras.

Kodak and the photography sector will also have to combat the unstable pricing strategies that will likely impact this industry when they move to digital. Richard Stice from S&P was quoted that the move to digital “will make the achievement of profitability goals more difficult.” (S&P NetAdvantage Industry Report) Kodak can set the bar and align their retailers for a consistent pricing strategy that will likely influence their competitors.

Today’s scanners may not have the speed or efficiency for this type of operation. This will likely require some research and development costs to effectively automate, crop, and color correct images. High production slide and film scanners will have to be in place to make this a fast and almost entirely hands-off approach. The machines will also require at least an operator to convert the images to digital (batching slides and ensuring proper workflow) and a computer operator to download, sort the images, and upload for consumer use.

Images and video have always been the hard drive “hogs” and usually take up a lot of space. The acquisition of Ofoto (now KodakGallery.com) provides the Internet infrastructure, but the capacity for storage and bandwidth will most likely have to be upgraded to support the demand.

Opportunities
In the past one of the major concerns for this process was damaging the original slides during the shipping process or worse yet having them lost in the mail. Today the shipping quality has improved to the point where this is should no longer an issue. Shipping providers such as UPS and FedEx have improved their technology with web based tracking systems, improved their reputations based on reliability, and can efficiently handle fragile packages. These standards and continuing improvements should enable our consumers to feel secure and more comfortable with the process.

The demand of digital images is increasing in U.S.A. because the digital camera sales are growing. In other words, people are looking for digital format data. Therefore, the demand for this new product will increase. This product will not be only for domestic market but also for international market where demand of digital images is also growing. Kodak continues to excel internationally, ending 2004 with number one digital camera market share in Australia, Argentina, Peru, and Chile; and top three share positions in Germany, the United Kingdom, Mexico, and Brazil. We could expect that the market for this new product will also appear in foreign countries. Therefore, it will be an opportunity for us to grow and quickly expand our business into foreign countries.
After the market for this new product get into mature stage and the demand decreases, we could change our business formula form scanning analog imaging data to archiving digital imaging data. In this way we could continue and expand our business. This changing to second step of our business will be our opportunity.

Threats
Kodak main competition is form rival company Fuji. Today there are no firms that specialize solely in high speed scanning. Fuji may offer the same services when Kodak enters the market and takes part of the market share. Retailers already offer the scanning services for slides and negatives we are proposing, but have high labor costs for scanning and do not offer speedy service. Kodak also competes with consumer scanning products. Hewlett Packard is seen as a threat because of its position as a leader of digital imaging products for at home use such as scanners and high quality photo printers. Epson, Cannon, and Lexmark also have photo printers available and will compete indirectly with Kodak. Also, products, which use consumers’ existing digital cameras to copy slides and negatives to digital formats, are easy to use and convenient for the customer. New competitors that develop in this new market are particularly threatening to Kodak. As markets grow especially in other countries, Kodak may lose potential customers in those countries to new firms if they do not respond quickly to emerging opportunities.

International issues may also be major risks to Kodak. Kodak will have to effectively research international markets to determine a demand for a new location and of course whether the technology is available like the U.S. consumers. In entering international markets, Kodak may be subject to changes in factors such as regulatory requirements, trade barriers, costs of localizing services for foreign countries, lack of acceptance of the service in a foreign country, political instability, unfavorable tax obligations, restrictions and the responsibility of complying with numerous foreign laws and regulations.
Maintaining a healthy relationship with partners is an integral part of Kodak. Without effective relationships, communication may hinder and fail to produce new business opportunities. To stay competitive in the digital imaging industry, Kodak’s relationships with its partners are crucial to meet its targets and demands. Relationships with other firms may also enhance its marketing, sales, and customer support efforts in order to generate higher profits.

Innovation may hinder the success of Kodak. New technologies may bring new competitors into the market. Equipment may become outdated and to stay competitive, newer equipment may out perform and reduce costs. This can bring Kodak unwanted and improvement expenses. Retailers and other competitors possibly will offer new, faster, and cheaper services.

As technology grows and digital imaging becomes more and more dominant, slide and negative scanning will become obsolete. Kodak as well as other service providers will lose demand for the service over time and will need to expand into broader markets.

Key Performance Issues
In the area of digital imaging, there is a growing market for the presence of slide scanning and converting old film base products to digital. Kodak is well position in this market because of its long history and brand recognition within the industry. The organization is publicly traded and could easily raise the investment capital needed versus other privately held companies. The ability to raise capital the way Kodak can, will cause competitors to stray away from the project because of the competitive positioning that Kodak will have in this market.

Kodak has the ability to introduce the same product into foreign markets due to its international presence. Kodak has main subsidiaries in England, Argentina, Peru, Chile, Germany, Mexico, and Brazil. Many of these areas also have matching needs to our target market and we will be able to utilize these services for their existing images. The one problem with entering into other countries is the cost of expansion. If Kodak expands too fast, it would dilute our financial advantage in currently held market. The threat would be that competitors could see that we are growing too fast and concentrate their efforts in weak areas.

With the increased internet and storage infrastructures Kodak can then establish themselves as a trusted digital archiving company. Again Kodak has the reputation as the imaging leader and trusted brand name throughout the world. The originally proposed idea has a finite product lifecycle and will eventually diminish. To continue profitability of Kodak’s investment, current info systems would have to be upgraded for Kodak to expand and become the first choice service provider for digital archiving. The idea would further our idea of any image, anytime, anywhere.

Marketing Mix
Marketing Communications and Customer Response
The product that is being delivered to the public is a program that offers professional slide and negative scanning, archiving, and image backup service. The service will scan your slides and negatives then archive them to digital. With the Kodak service Kodak will convert the consumers’ slides and negatives into digital images appropriate for reprints and enlargements, so the customer can share their digital prints with friends and family. With the service, the consumer can keep prints for long term archiving. The program has many advantages that all consumers can benefit from.

The service will allow the consumer to conserve and protect their slides and negatives. With time, negatives and slides tend to fade and degrade, but with digital transitioning the picture will not age and can be duplicated easily. Scanning your negatives allows you to have unlimited copies of your images and the ability to store pictures in many different locations.

Printing and sharing your images are other advantages of the product. Having the ability to change old analog film to digital allows customers to print off copies in a simple and inexpensive way by using a printer, local photo lab, or directly connecting to Kodak. The prints that are made can be made into any size. Also, the consumer can share their images with family and friends using e-mail or Kodak Gallery. Using the product will also allow consumers to organize their photo albums and lets the consumer share the images with family and friends online, via email or on a DVD. Also, you can make notes on your photos with brief explanations so the consumers can find and organize their photos. Additionally, users can pass their items on to friends and family members to continue legacies and maintain history.

Marketing Channels and E-Marketing
Kodak will place its digital scanning location in four centralized locations. The geographic distribution of Kodak’s target market (baby boomers), live in nine central locations thorough out the United States: California, Florida, Illinois, Michigan, New Jersey, New York, Ohio, Pennsylvania, and Texas. Locations of scanning centers will be placed in four coastal areas of the United States: California, Texas, Florida, and New York. Customers will send off their slides to the nearest location by mail. Since baby boomers are account for 48% of American families and Kodak expects numerous amounts slides, the strategically placed locations will help with distribution and efficiency for Kodak.

Kodak’s channels will include a mixed channel system that includes direct and indirect channels. Customers will send slides or negatives directly to Kodak in the direct channel. The images will be scanned and stored online on Kodakgallery.com and slides or negatives will be sent back to the customer. Digital prints of the images as well as CDs etc. can also be ordered from Kodak and sent directly to customers for an additional fee. The internet will also be a part of Kodak’s direct channel where customers will have the ability to order additional prints, download digital images, add photos to their gallery, and order gift items all for additional nominal fees.

Photo Retailers and Retail Chains comprise of Kodak’s indirect channels. Photo Retailers are photo shops associated with Kodak and use Kodak paper for prints and send out film to Kodak processing labs. Retail Chains are retailers such as CVS, Target, Rite-Aid, and Ritz Camera that include a Kodak Digital Print Kiosk in their store. In either location, customers can bring their slides or negatives to be sent out to Kodak scanning centers to be digitized, just as 35mm film is sent out to be processed at another location. The prints will be returned to the retailer for customers to be picked up and their images will be stored online. Prints, CDs, etc. can also be picked up form the retailer if ordered.

Using an online form or a form at a Kodak retailer, customers can tell us what slides they would like to convert into digital images and inform Kodak on what photos the consumer would like to receive. Once Kodak receive the consumers negatives, Kodak will send the consumer an email to let them know that the consumer’s treasures have arrived safely. When Kodak is done scanning the consumers images, the consumer will receive an email that will link to a secure preview page. Doing this before we send back the images will make sure the customers is happy with the product, which will help us cut down time and cost of time with returns and cancellations. Once the consumer is satisfied with the images Kodak will send the consumer a CD and place the photos on the consumers Kodak Gallery account. In 2004, Kodak expanded their Kiosk locations by 75%. Kodak will include to the over 12,000 Kiosks, access to Kodakgallery.com. Customers will be able to enter the retail locations and access their digital images and order prints, CDs, etc and pick them up from where they ordered it or have their order sent to their homes.

Market Based Pricing and Pricing Strategies
Currently, there are some competitors who already provide a high speed scanning of slide and negatives: retailers, online as well as brick and mortar stores and home studios consisting of scanners, digital cameras, and photo printers. In this situation Kodak needs to look at competitors in terms of pricing so that Kodak can price competitively.

Scanning
Retailers such as www.slidescanning.com and www.ltlimagery.com that offer slide-, and negative-scanning services price these services from $0.36 for each slide scanning and from $0.66 for each negative scanning. These prices are subject to change depending on the number of slides and negatives, and quality of scanning. These services are expensive offering quality options to customers. While these retailers provide a variety of scanning quality with variable prices, there are retailers such as www.myspecialphotos.com that offer slide-, and negative-scanning services with uniform price- $0.29 each- and uniform quality. These retailers offer cheaper services but do not Kodak’s competitors are short of the ability to invest in the technology required to cut costs efficiency and to provide quality options to customers. In addition to these lacks, these competitors set the minimum order such as $30.00 and $50.00, which means there are restrictions for customers. However, Kodak has an advantage of using its leading-edge technology and can create centralized locations and a concentrated workforce that could offer quality options and cut costs, which remove these restrictions, in turn offer competitive price and high quality comparing to competitors’ quality at the same price. Even though Kodak offer same price as the competitors, Kodak could have competitiveness. Kodak could offer price range for each slide scanning from $0.29 to $0.36 and for each negative scanning from $0.29 to $0.66 with quality options and without minimum order. In order to take advantage of their opportunity as the new product leader and promote heavily as they enter markets before Fuji or other competitors, Kodak must price lower in these price ranges.

DVD / CD
Competitors provide DVD’s and CD’s for storages of scanned data. Retailers such as www.ltlimagery.com offer CD’s as storage for $3.99 each and DVD’s for $5.99 each. As we mentioned before, Kodak could offer lower price for scanning service which make Kodak competitive. Therefore, even if Kodak offers the same price for these CD’s and DVD’s as competitors, Kodak could have competitiveness.

Printing
Kodak offer printing service online today. This service already has competitiveness because they offer cheaper price than Fuji and other competitors. Therefore Kodak needs effort to keep this price in order to keep having competitiveness.

Product Positioning, Branding, and Product Line Strategies
In almost every industry there has been a shift from older analog devices to a more digital media. Digital is shareable, easier to manipulate, and stored efficiently. Kodak’s role as it shifts from a film provider to a digital conversion service provider will need to ensure that this shift enhances the brand and in no way affects it negatively. The brand image is what will differentiate the service from any other service provider in the market. The brand will instill a sense of quality, reliability, and very easy to use.

As described in the competition analysis there are competitors in this segment, but many are unknown dot-com companies or local retailers that have added this specialty service. Retailers have always been an important part of the Kodak experience and this new service will allow retailers to offer a new service, with exceptional quality and reliability, with little or no added overhead or staffing expense. Other retailers already offering the service may find it is less expensive to offer this service through Kodak and decrease their operating costs by no longer doing the process themselves. Dot-com retailers without some corporate sponsorship have been viewed as less reliable fly-by-night operations that may or may not be there tomorrow. Most of our consumers would feel very uncomfortable trusting their treasured memories to this type of operation.
Home Studios utilizing scanner technology, photo editing software, and the enhanced photo printers available today make this option very appealing since the consumer can capture and store their images directly on their computer. This option allows the consumer to edit and color correct the images by hand so they can be shared, printed, and archived whenever they want. This process has been seen as the best alternative and many products have been designed solely for this purpose, but it is very time consuming to convert slide-by-slide or picture-by-picture. Kodak’s new service will make it so this by hand method will be a thing of the past and utilize the existing tracking system for UPS and FedEx to ensure deliverability and security.

Branding
One of the major marketing challenges Kodak faces by introducing its new service, is advertising and promotion. This new service should enhance the overall brand and product lines as well as show Kodak’s renewed focus on the future instead of being a follower of technology. Kodak will want to align their product lines with attributes that show as your family needs grow, so does our company. Kodak will need to position its brand as a family oriented company and may use an older nostalgic transition into a more futuristic look of a normal customer’s family portraits. The promotion strategy should consist of Television advertising, newspaper print advertising, promotions through the local retailers, and introductory bulk mail/email advertising. By increasing the frequency of advertising and promotions for this new service, while cross-promoting other service, Kodak will enhance their overall brand recognition and the services they provide. This new marketing push will reposition Kodak into the forefront of the consumers mind and relate its services with captured images, quality prints, and a futuristic outlook for their images as a trusted provider that can be anywhere the consumer needs them.

Advertising
Advertising in traditional media like newspapers and television will effectively capture this markets attention. This market segment was one of the first to grow up with a television in the home and has been increasing viewers as the years have progressed. Our target market is highly educated and generally watches television programs that are more family oriented and intellectually engaging. Television advertising may be very effective on networks like Lifetime, AMC, Daytime television, news broadcasts, and shows like the West Wing or Law and Order. This mature population also reads the newspaper on a regular basis and advertising in national and local news would also be very effective. Kodak will also want to issue a press release telling about its new service and will most likely gain journalistic coverage as well.

Promotions
Local retailers have been and will also be Kodak’s largest advantage. Local retailers in the U.S. will most likely tell their local customers about this new service and through promotions within the locations will also gain awareness. A promotional mailer via email or regular mail could display the new service and offer an incentive to utilize this service. Kodak can also ensure brand awareness and associate their organization with imaging technology by continuing their branding they currently display on other products. The digital conversion and archiving is not a brand new venture, but should compliment services like the Kodak Picture CD, Kodak Kiosk systems, website albums using Kodak Gallery (formerly Ofoto), and their photo processing capabilities to continue their awareness and promote aligned products.

Product Lines
We have been following Kodak’s current strategy for its product line which is: AnyImage, Anywhere, Anytime. Kodak has a suite of products that compliment our proposed addition and may help sell more of each. The digital conversion and archive product will enable Kodak’s customers to browse, edit, and control their albums using the Kodak Gallery. Users will be able to add to their collection, arrange the images, download anywhere, and share or print the images for others to view.
Retail operations would also benefit and could install a number of PC’s that could connect to Kodak through a VPN (virtual private network) and access collections by customer number. This access would allow certified Kodak retailers the ability to print customer designed collections or batch of pictures that need to be printed without the use of film. The kiosks in some locations could also make it easy for shoppers to quickly access their account and view and print their images. Kodak PhotoCD may also be another option, but as more and more computers have CD-R drives as a standard, this may become less of a product and may just be an added service for deliverability.

Marketing Budget
Bottom-Up Budgeting
Cost
Activity
10 %
Marketing Management
10 %
Kodak Retail Representative Team
5 %
Tech Support
5 %
Customer Service
30 %
Promotion Expenses
40 %
Advertising Expenses
100 %
Overall Marketing Budget

Since Kodak is entering a new market and is providing a new service, Kodak must create awareness about the intentions and services of the product. Kodak must take advantage of the opportunity of being the new product leader, and promote heavily as Kodak enter the market before competitors. The promotion strategy should consist of a blend of television, radio, newspaper, email, and through local retailers.

As already mentioned before, advertising in traditional media like newspapers, radio and television will effectively capture target markets attention. These media are expensive, especially Television advertising, and Kodak needs to make the promotion strategy strong enough to reach the target markets. Therefore, we say 40 % of marketing budget will cover the expenses for advertising. Also for marketing Kodak is going to need to follow their management very well, so Kodak should spend around 10% of the budget on the marketing management.

For Kodak, 30% of the budget will cover the promotion expenses, which consist of sales promotion, incentives and free sample and trial programs. Since Kodak enters new market, they should use promotion tools strongly in order to gain customer awareness and intention to buy the services.

Kodak will need to hire or retrain technical employees for customer problem solving in order to provide the new service. To continue Kodak’s exceptional customer service Kodak will need to make the workforce knowledgeable about the new service. Since Kodak already has excellent foundation in these fields to offer this service, the 5% each for technical support and customer service will be enough to make them suitable to the new service.

Kodak will also need to have a tech support team that can assist consumers with how to work Kodak Gallery along with the Kodak scanning service. Kodak should only spend around 5% of the budget on the technical team.

Kodak will need to have representatives at retailers in order to operate the new service, create customer awareness and offer promotion tools. It will be expensive to send representatives to all Kodak retailers. Kodak could send representatives to retailers in certain geographical areas where many target customers live, in order to operate more efficiently. Also, they will need to send representatives to other retailers to educate the retailers in order to execute the operations efficiently. By focusing on retailers in certain areas, the expenses will decrease. Kodak should spend around 10% of their budget on the Representative team to gain consumer trust with local vendors.

Performance Timeline
Startup
• R&D for batch enabled film scanner & Networked computer system between film scanner and Kodak Gallery Database
• Location & Workspace
• Upgrade Kodak Gallery Hard Drive capacity
• Upgrade Kodak Gallery bandwidth capacity
Staffing
• Train Scanner Operators and Digital Enhancers
• Train Customer Service Team
• Train Technical Service Team
• Train Kodak Retail Representative Team
• Train Fulfillment Team
Customer Targeting (Test Market)
• Implement Advertising Promotions
• Implement Promotions Campaign
• Implement Kodak Retail Team
Review & Control Customer Targeting
Launch Expansive Campaign
• 4 Region expansion project for regional workplaces (NW, NE, SE, SW coastal)
• Centralized Technical & Customer Service
• Expand Kodak Retail Representative team for newly expanded regions

With the performance time line Kodak should have everything ready to implement tteh the expansive strategy in roughly 13 months.

Startup
Kodak should have the initial startup finished within 6 months of starting the venture.
1. Since the only scanning technology that is currently present can only process one slide at a time, time will need to be invested in Research and Development to develop a scanner that can transform many slides at once.
2. Kodak Gallery will have to upgrade its’ hard drive capacity so that customers can easily place photos on the web.
3. To make Kodak Gallery easily accessible to customers, the consumer would need to place pictures on the web and receive pictures off the web quickly. To ensure quickness Kodak will have to upgrade the bandwidth capacity of Kodak Gallery.
4. Kodak is going to need find a location work place to store the scanners and train newly hired staff.

Staffing
To successfully hire the correct amount of personnel and have them train adequately, should take 2-3 months.
1. The team that handles the film and makes the film digital is called Scanner Operators and Digital Enhancers.
2. The team that handles the insecurities or complaints of the consumer is called the Customer Service Team.
3. With the transformation of slides to digital photos and the integration of the photos to Kodak Gallery, Kodak is going to need a Technical Support Team. The Technical Support Team would help consumers with software problems and help consumers familiarize with Kodak Gallery.
4. For Kodak to convince current photo retailers to join with Kodak, Kodak is going to need a Retail Representative Team. The Team will be trained in showing the benefits that the retailers would receive by joining with Kodak.
5. The group of employees who will process data base work and mailed in slides is the Fulfillment Team.

Review & Control Customer Targeting
The test market stage must be in action long enough to see if the venture is worth continuing, yet being quick to the market to keep Kodak’s advantage in being the first company to the market. Adequate time to have this completed and reviewed is 1months

Launch Expansive Campaign
The launch expansive campaign should take around 5-6 months.
1. Kodak is going to need to find 4 central locations to place their product to make sure film can be sent and delivered safely and quickly to the consumer. The four locations selected are: California, Texas, Florida, and New York.
2. Kodak will also have to work on its email service which has Kodak’s consumers know that their images are ready. The email will also have a link to a secure preview page. Doing this before we send back the images will make sure the customers is happy with the product, which will help us cut down time and cost of time with returns and cancellations.
3. Kodak will have to expand their Retail Representatives for Kodak’s newly expanded regions.

Process Workflow

Performance Metrics
Throughout the implementation of the marketing plan for digital conversion, Kodak will have to evaluate how the plan is proceeding and if it is realistically working. The most critical evaluation of this process will be the analysis of the projects financial stability. Sales revenues can be a good indication of growth as it is compared from year to year, but this is the start-up venture and do not have comparative years to evaluate.

The financial bottom line of any publicly held organization is the main focus of the executive team and of course the shareholders. This new marketing plan will have to prove itself as a viable integration of Kodak’s services as the move into the future. Most organizations have a required ROI (return on investment) or required rate of return for any new projects. The proposed project has a higher then normal yield and because of economies of scale should prove to be a good source of income as the market matures and as the organization grows its digital infrastructure. Resources will also need to be allocated for this project (workspace, staffing, etc.) and a good measure like ROA (return on assets) may also prove to be a good indicator of how efficiently the resources are being used as compared to other ventures.

The main focus for this project will pay particularly close attention to our advertising, promotions, and sales force to ensure an optimized net marketing contribution. The impact of this new venture based on the dollars spent and the response from the targeted consumers will show how well the dollars are being spent and an outlook of the success from the launched campaigns.
Proposed Dollar Performance Metric:

2005

Actual
Goal
Demand

Market Share

Sales Revenue

%Margin

Gross Profit

Marketing Expense %

Marketing Expense $

NMC

Return on Assests ROA

Return on Investment ROI

The overall use of services may also show indications of how the public is grasping the concept and utilizing the services. By closely monitoring how many of the images in the market have been converted and the average number of images being downloaded by each account, we can see the level of interest and may be able to gauge the reaction of the investment. Tracking not only the Kodak Gallery usage, but watching the other distribution channels as well, we can start to analyze the channels consumers prefer and which channels are not be fully utilized. The vision is to share AnyImage, AnyWhere, AnyTime and by using an interconnected web service in retail locations, home studios, kiosks, and camera phones we think the vision will succeed.

Proposed Volume Metric:

2005

Actual
Goal
AVG # Downloads

# Archived Images

% By Channel

Retail

Kiosk

Home

Cell Phone

BIBLIOGRAPHY
Stice, Robert. S&P Net Advantage Kodak Industry Report May 18, 2005 http://www.netadvantage.standardandpoors.com Fun Facts Publishing. Homepage cached Apr 18, 2005 Accessed May 18, 2005 http://www.funfactspublishing.com

My Family.com. October 15, 2003 Press Release Accessed May 18, 2005 http://myfamily.mediaroom.com/index.php?s=press_releases&item=20 Photo Industry: 2005 Review & Forecast Camera Sales. Photo Marketing Association International February 2005, Accessed May 20, 2005 http://www.pmai.org/mktrsrch/mrweb/pi2005.pdf Marketing to Mom: Mom in the Digital Era. Photo Marketing Association International August 2004, Accessed May 20, 2005 http://www.pmai.org/studies/pdf/Marketing_Mom_04.pdf Retailing in the Digital Era. Photo Marketing Association International July 2004, Accessed May 20, 2005 http://www.pmai.org/pdf/2004_retailing_in_the_digital_era.pdf Photo Solve Products. Accessed May 19, 2005. http://www.photosolve.com/main/index.html Shot Copy Products. Accessed May 19, 2005. http://www.shotcopy.com Kodak Makes It Easier for Consumers to Print Digital Pictures. June 24, 2004. June 1, 2005
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