Branding In A Changing World

Jack TroutAugust 27, 20075 min

A recent article caught my attention. It was entitled “Kodak takes Hit in Film and Digital.” It discussed, in some detail, how analysts had begun to question just what future the firm that has been synonymous with film and pictures might have in the consumer photography market. This problem is worth writing about as it is an example of what can happen to even the biggest brands in an era of change. But to learn, you must study history.

Like AT&T and General Motors, Kodak is an industry icon that is having difficulty dealing with competition and new technology. Because of their long history of success, they have put inordinate faith in their name and logo. They could do what they wanted to do.

A fundamental mistake that big successful companies often make is to see themselves and their reputation far beyond the way the world is willing to see them. The corporate feeling is, “All I have to do is put my well-known name on the product and the world will buy it.”

No they won’t. Especially if you’re horning in on someone else’s specialty. And besides, the world also loves an alternative. So if you’re sitting there all alone, enjoy it while you can for as soon as an attractive alternative comes along, you’re going to lose some business.

During the 1870s, George Eastman, a young bank clerk in Rochester, N.Y., took an avid interest in photography. But wet-plate photographic equipment was bulky and unwieldy, so people could not take a camera on a trip. A photographer traveled with a whole photographic outfit of which the camera was only a part. After much work in his mother’s sink, Eastman came up with dry plates and gelatin-coated paper “film” to be used with his new patented roll holder. Small cameras were then possible and, at last, people could take easy-to-use cameras everywhere.

The brand name, Kodak, was another invention of Eastman. “K”” happened to be his favorite letter. He also liked the name because it was short, easily pronounced and didn’t resemble any other brand name in the industry. It was and is a brilliant name.

He topped that great name with a brilliant positioning line for his advertising:

Kodak Cameras.

You press the button.

We do the rest.

The rest is history: Photography became a gigantic industry and that little yellow film box was its visual symbol. Everything went swimmingly until, you guessed it, a strong alternative arrived.

In the late 1970s, the weak Japanese yen allowed a very strong competitor to get a toehold in the U.S. market. Fuji Photo entered the fray with a little green box of film that challenged Kodak’s dominance. By offering a similar quality product at a much lower price, Fuji began capturing a substantial share of the U.S. market through the 1980s and 1990s. In 1996, Kodak had an 80% share against Fuji’s 10%. By the year 2000, Kodak’s share was estimated at 65% vs. Fuji’s 25%.

The lesson Kodak missed here was that “leaders have to block.” It took too long for Kodak to aggressively reduce its cost and prices to challenge Fuji’s aggressive pricing moves. The competitive rule in play is that you always have to stay in the ballpark on pricing. Even the vaunted Marlboro brand discovered this as they dramatically dumped their price to counter the low-price cigarettes. (They dumped their stock price as well.)

By hanging back and allowing a big price differential, Kodak encouraged people to discover that Fuji pictures came out about as well as Kodak pictures. And when in 1984, Kodak lost the title of “official film of the 1984 Summer Olympics” to Fuji, it solidified the perception of its being a legitimate alternative and not just a low-price brand.

Green was here to stay as the alternative to yellow.

Having to cope with Fuji was one thing but having to cope with the arrival of digital pictures just might be Kodak’s ultimate test of survival. To succeed its next century of existence, it will likely have to shift toward newer digital imaging technologies that will be a far cry from Mother Eastman’s sink. Kodak faces fierce competition from U.S. and Japanese companies like Hewlett-Packard, Sony and Canon that are accustomed to the quick pace of change in digital technology. Many hold that Kodak’s chances of making a profit with digital camera manufacturing are slim. Most analysts feel that Kodak will ultimately fail to reinvent itself and make it into the ranks of leading U.S. digital corporations.

I agree with that, especially if you’re talking about the brand, “Kodak.”

As I’ve often written, “if you’re known for one thing, the market will not give you another thing .” Kodak is “film” in the minds of the marketplace and not “camera.” Nikon, which is a camera in the mind, has a better chance at becoming a successful digital camera (it’s simply the latest form of camera).

If you view the new camera as “electronic,” then Canon, Sony and Hewlett-Packard have a better chance at being big in digital picture systems.

Because each emerging market segment has its own leader, Kodak, the leader in film photographic technology, has little chance of becoming the leader in the segment of digital photographic technology once the category was under way and had momentum.

Kodak’s best chance would have been to buy or launch a new brand in this arena some years ago. Ironically, a scientist at Kodak actually invented digital photography. That invention should have been nurtured despite its potential to undermine the film business. It’s better to attack yourself than to have a competitor do it.

The Kodak brand would be reserved for film. The new brand of company would have no Kodak connection and would run on its own. Kodak’s headquarters would be in Rochester. The new company would be headquartered as far away as possible, say, somewhere in Silicon Valley.

This type of move would have been hard for Kodak to swallow since it attacked the mother lode. But, if they continue to try to turn their 100-year-old film brand into a non-film brand, the future picture doesn’t look very sharp.

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Jack Trout

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