The Demise of Kodak
Think Kodak Failure. Think You Sell What You Make.
The Kodak failure should make us all take a breath. When you make a list of the world’s strongest brands, a few names surface quite regularly. Coca-Cola, Starbucks, Apple, Sony, Disney, Microsoft, Nike, and even Harley Davidson.
They either elicit a preference (meaning they are a preferred market leader — like Microsoft).
Or, they command a willingness on the part of the target market to pay a premium to own it. They are not the lowest price provider. They are like Harley Davidson.
Brand pundits and experts often tell interesting and compelling stories. Stories of how these brands took a place among the pantheon of marketing gods.
They tell you how those brands came to be, what they promise and how loyal customers are to the brand.
How many times have you heard a “brand expert” recall the power of the Harley Davidson brand by asking, “Would your customers tattoo their logo on their arms?”
It makes for great theater and it certainly demonstrates the sense of identification that the Harley rider has for his bike.
However, if we are going to hold these brands up as models to emulate, look at a similar list from the 1980s? Who was on that list then? And how have they fared?
Kodak Failures. Things Change.
Here then is a partial list of powerful brands from the 1980s.
It is not intended to be complete or even broad, just a bit of food for thought.
In 1982, you would have found Sony, Converse, Sears (read “Can Sears be saved?” here), Commodore, RCA, and Microsoft. You would have found Chevrolet, Coca-Cola, Disney, and Kodak included on that list.
Some are still as strong as ever. Others have gone away — some completely. The Kodak brand is worth a closer look.
Associated Press reported the downturn Kodak has taken, and it warrants a discussion about brand and the responsibility brands have to remaining relevant.
Kodak Failure posts narrower 1Q loss, sales edge up
By BEN DOBBIN, AP Business Writer
ROCHESTER, N.Y. – Eastman Kodak Co. said Thursday its first-quarter loss narrowed to $115 million as it chases a bigger stake in digital photography.
Hit by carry-over restructuring charges after navigating a four-year digital overhaul, the photography products maker lost the equivalent of 40 cents a share in the January-March quarter, compared with a loss of $151 million, or 53 cents a share, a year earlier.
What happened to Kodak? What was behind the Kodak failure? It was one of the most recognizable brand names in the world. Kodak promised a premium product, highest quality standards and an emotional involvement in the lives of its adoring customers.
But it did not capitalize on its brand meaning and permission.
When you think about a Kodak moment, images and emotions flood your senses.
The TV commercials from the past were thick with emotion and memories, and they had a promise to capture the “moments of our lives.” That certainly claimed an important place beyond just “making snapshots.”
Kodak owned even more than that and meant twice as much.
It was a brand that represented what was important to all of us, reached beyond the category of film and placed itself front and center in the “fabric of our lives.”
Kodak WAS in the fabric of our lives
We trusted Kodak with our children, weddings, vacations, pets, and holidays. It owned heritage, innovation, safety, and an emotional attachment that was so strong it reached beyond measure.
Even as the camera store salesperson tried to talk us into the more reasonably priced Fuji film, we grabbed the Kodachrome with zeal. Paul Simon even wrote a song about it.
When we counsel brands and develop brand strategy to grow market share, we emphasize how important it is to see yourself beyond the category. The category of product you sell.
In other words, don’t confuse the process with the purpose that drives the purchase decision.
For example, airlines are not in the “flying business,” they are in the “transportation business.”
And, more specifically, the “time-saving” transportation business. This realization could certainly account for their loss of importance and preference in recent years, as the promise of speed has been lost.
Kodak brand meaning was most certainly a film & film development company. But their brand reached much further than that.
We bought the Kodak brand
We bought the film and we paid for the processing. Because we cherished the importance of the memories we were capturing.
For such a “heady” cause, this was no place to skimp. (Read how Kodak lost its relevancy here.)
Kodak failure grew.
It began to fail when it stubbornly held onto a profit model that no longer worked.
Like the ostrich with its head stuck in the ground, Kodak refused to embrace the digital revolution. It wanted to hold onto its model of selling both film and development. They always manufactured cameras (albeit without the luster of a premium brand).
And they always manufactured paper as well as film and chemicals. But they refused to see the writing on the wall. Instead, they choose to pretend that the old profit model was all that there would ever be.
Kodak Real Lessons
Here’s the astounding thing that would have prevented the Kodak failure. The world has changed, yes. But Kodak had the infrastructure, the capital, and the distribution to OWN the digital market.
Had they transitioned from a centralized film processor to a co-brander of ink jet printers (ink) and glossy paper, Kodak would have a very different report on earnings.
They would be the market leader in an ever-expanding market.
Instead, they are a glory brand from 40 years ago – one we remember we could not live without and yet not quite remembering why we used to feel that way.
Sometimes, fundamental shifts take place in the market that changes everything. Brands can either re-tool or re-configure to leverage their equity and remain vital and dominant or they can sew the seeds of failure. Kodak chose the later.
Today, airlines are following Kodak’s example.
They taught customers to shop by price, held them captive by affinity programs that feel more like chains than benefits, and they stubbornly cling to a model top heavy in service salaries all the while they cut service and jobs.
Sometimes, it is the business model itself that needs the most surgery. Even the best of brands cannot change that. (Read a market study on technology here.)