Kodak. A brand that remains as one of the top 50 most recognized logos after over 100 years in existence. What do you know about Kodak? The answer to that question probably depends on your age. For me, I grew up with this brand representing one of the premier film companies. I associate it with imaging in all regards – film, prints, cameras, and more recently inkjet printing – all that good stuff.
For those of you that are a bit younger, you probably recognize the logo, but are not sure what Kodak actually does these days. And that is for good reason. At this point in its history, one of Kodak's businesses is licensing its brand to companies competing in a variety of industries including the more obvious cameras, inkjet paper, printers and ink, as well as some less obvious categories such as batteries, binoculars, and eyeglass lenses. Kodak states that it “is committed to growing our product portfolio through a strong and vigilant brand licensing program.” With that, Kodak’s desirability among potential licensees depends primarily on its brand recognition within a particular industry.
With Kodak’s vast licensing business and previous product offerings from its OEM label, it is no wonder that some may be confused about what Kodak does these days. It made me wonder, can Kodak succeed in maintaining its brand recognition with its licensing business? And is Kodak's reputation strong enough to drive sales for its partners?
As an analyst specializing in print media and ink supplies, I’ve witnessed the rise and fall of the Kodak brand in these industries. Kodak’s ink supplies have been among the most interesting stories to watch and are an interesting example to examine. While Kodak’s consumer inkjet segment was just a small portion of its business, for the purposes of this discussion, we are going to focus on this area.
For some background, here is a brief history of Kodak and inkjet printing. Kodak entered the consumer inkjet printing market in 2007 and aimed to shake up a longstanding, very successful business model often referred to as the “razor and razorblades” model. Basically, a brand will sell the razors, or in this case, the printers, at low margins and depend on the future sale of high margin razorblades, or print consumables (think ink or toner) to generate profits. Kodak attempted to turn this model on its head in response to consumer complaints around the high price of ink. So, Kodak offered slightly higher priced printers in exchange for lower priced ink supplies. Kodak’s main marketing message was, “Save up to 50% on everything you print compared to other consumer inkjet printers.” Kodak gained ample shelf share in the retail channel and backed its campaign with significant marketing dollars.
Unfortunately for Kodak, it ran into some well established brands with very deep pockets in the likes of HP, Epson, Canon, and Brother. It was David vs. Goliath, but this time David didn’t fair quite as well and after only five years, the company announced that it was exiting the very competitive consumer inkjet business. But not without fundamentally changing the landscape of the industry. Ironically, all of these other major players have since introduced various products and services under this altered strategy. In 2012, Kodak declared bankruptcy and the company’s future was unknown. After emerging from bankruptcy, Kodak announced that it would focus on Digital Printing & Enterprise and Graphics, Entertainment, and Commercial Films. Despite its exit from the consumer inkjet hardware world, many ink supplies still maintain their shelf presence today in stores including Office Depot, Staples, Best Buy, Walmart, and Target. However, as the install base shrinks, these will slowly filter out, as well.
Kodak Brought to You by Funai
Keep in mind that consumer inkjet was a very small portion of Kodak’s overall business but the company holds numerous, very valuable patents, and of course its brand reputation. When the dust finally settled, in 2015, it was announced that Kodak actually licensed its consumer inkjet branding for hardware and supplies to Funai. For those of you that are unfamiliar with Funai, it is a Chinese company that has consumer product offerings in the TV and consumer electronics market under a number of brand names. In mid-2015, Funai placed its first Kodak branded inkjet printer – the Verite 55 – on the shelf at Walmart. Alongside the new hardware, naturally, came new supplies. The supplies were also branded with Kodak’s traditional yellow and black branding.
With the new Kodak branded products from Funai and Kodak’s legacy ink supplies still on shelves, the Kodak brand was now associated with two different printer lines. For those customers that saw Kodak leave the inkjet printer market, it likely came as a surprise to see the brand’s hardware and supplies back on shelves. From a marketing perspective, there is no indication that the new product is in fact from Funai with Kodak branding, and to make it more complicated, Lexmark technology (that’s another story). So for the general consumer, Kodak inkjet printing is back.
Within the printing supplies world, there are name brands (OEMs) and there are third party brands (think Skippy vs. store brand). In an interesting move, Kodak not only licensed its brand to Funai, but also to a third party brand, eReplacements. With that, over 100 third party ink supplies with the Kodak name have entered the ecommerce channel over the past couple of months including options for Brother, Canon, Epson, and HP. eReplacements is depending on Kodak’s reputation within the industry to sell the supplies. eReplacements worked diligently over the past several years with Kodak to meet the latter's quality control policies. eReplacements states that it will continue to add to its product lineup upon approvial from Kodak and eventually hopes to land on store shelves. In anticipation of customer concerns regarding the quality of the supplies and potential hardware issues, eReplacements offers a one-year guarantee on all supplies and if a customers' printer is damaged due to the use of the supplies (which has never been reported), eReplacements will service or replace that hardware. The third party brand revealed that it believes partnering with a highly recognized brand name is a better strategy to get to the top and not be competing soley on price within the non-OEM market.
So in total, Kodak’s brand name is on its original ink supplies, Funai’s licensed products, and eReplacement’s third party supplies. Is anyone confused yet?
Will It Work?
So is Kodak smart for riding on its own coattails and leveraging its brand recognition to regain strength as a company? In a very non-scientific study, I asked a few 18 year olds what they associated most with Kodak and they all said they knew the brand as a photography brand that sold disposable cameras. When I asked if they knew that Kodak ever made printers, none of them had a clue.
Only time will tell if Kodak turns its licensing business into a successful revenue stream that can help the company maintain its place on the list of the 50 most recognized brands. Until then, Kodak remains an interesting case study on rising to success, missing the boat on shifting its strategies, and then coming back and looking to transform itself once again.