Case Study | Kodak’s failure: Here’s how

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Kodak was founded in 1888 by George Eastman as The Eastman Kodak Company. It was the most popular brand in the area of photography and videography in the 20th century as it revolutionized the photography and videography sectors.

There was a time when only mammoth companies could facilitate cameras but, Kodak enabled the accessibility of cameras to every household by generating equipment, which was portable and affordable.

Although it was dominant in the 20th century, the company announced its bankruptcy in 2012.

The failure

Kodak embraced the ‘razor and blades’ plan. The idea behind this plan is to sell the razors with a small margin of profit first. Once the razor is purchased, the consumers should buy the consumables again and again. Hence, sell the blades at a high-profit margin.

Kodak intended to sell cameras at reasonable prices with only a thin margin of profit and then sell the consumables like printing sheets, films, and other accessories at a high-profit margin.

And Kodak enjoyed its success internationally. It had covered almost 80% of the market share in the area of photography. It was able to generate huge revenues and transformed into a money-making machine.

Due to the invention of digital cameras in 1975, the usage of films and printing sheets reached the dot. However, Kodak refused to do something about the capabilities of the digital camera.

Did you know Steve Sasson, who invented the digital camera, was an electrical engineer at Kodak when he built the technology? When Steve told the bosses at Kodak about his technology, they said that it was cute but don’t tell anyone about it. Yes, they did say that!

That was Kodak’s first misstep towards failure. The ignorance of novel tech and not accommodating to the transforming market sparked Kodak’s downfall. However, Japanese company Fuji Films executed the new invention, followed by many others, leaving Kodak far behind in the race.

Once digital cameras became popular, Kodak spent around ten years arguing with Fuji and believed that the Americans would choose Kodak over Fuji, a foreign company. But Fuji and other companies concentrated on holding a stand in the photography and videography industry rather than involving themselves in a clash with Kodak.

Yet again, Kodak wasted resources on supporting the use of film cameras instead of adapting. Coupled with this, they completely disregarded the feedback from the market and the media. They lost ten valuable years promoting film cameras.

Also, Kodak lost the external funding it had at the time. People realized that digital was far ahead of traditional photography, and it was cheaper than film photography.

Kodak had a king of a strategy at the time. But, rapidly changing technology and the refusal to adapt to it nullified that strategy. By the time Kodak finally came to its senses, it was too late. When they started producing digital cameras, many companies already proclaimed themselves in the market, and because of this, Kodak could not keep up with the big shots.

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