Marketing Myth-Busting: Kodak Wasn't Slow to Digital; It Was the First One In

Bankruptcy Had More to Do With Branding Than Technology

By Published on .

In 1996, Interbrand ranked Kodak the fourth most-valuable brand in the world, just behind Disney, Coca-Cola and McDonald's.

Today on the stock market, Disney is worth $70 billion, Coca-Cola is worth $154 billion, McDonald's is worth $104 billion and Kodak is bankrupt.

How could the fourth most-valuable brand in the world have fallen so low?

Everyone has an opinion on the subject. If I could summarize that opinion, it would be: "A company slow to recognize the popularity of digital cameras," which was a headline for a New York Times article eight years ago. Or as Donald Trump told Sean Hannity a few weeks ago, "Kodak didn't get into digital fast enough."

The facts suggest otherwise. In 1976, Kodak invented the digital camera. In 1986, Kodak announced the development of the world's first megapixel digital sensor small enough for a handheld camera, one that had 1.4 million pixels. In 1994, Kodak introduced the first digital camera under $1,000. Between 1985 and 1994, Kodak invested some $5 billion into digital research & development.

As a result of its massive investments, Kodak holds more than a thousand patents related to digital photography. Kodak recently received, in patent-suit settlements, $550 million from Samsung and more than $400 million from LG Electronics.

A company slow to recognize the popularity of digital cameras? No company has poured as much time and as much money into digital photography as Kodak.

Eastman and His Kodak Camera
In 1888, George Eastman invented "rolled" photographic film and a camera to use it with. During most of the 20th century, Eastman Kodak dominated the global photographic-film market. In America, Kodak was even more dominant, reaching a 90% share in the year 1976.

Kodak's current share of the global digital-camera market: 7%.

Kodak trails Canon, Sony, Nikon, Samsung and Panasonic. Unless you are the market leader or a strong No.2 brand, it is difficult to make money. Hence, Kodak's weak financial position.

Conventional logic blames Kodak's weak position on the product. Why is this so? Because most people believe the better product wins in the marketplace.

And since Kodak is No.6 in the market, it obviously didn't have the better product. Nice, tightly-reasoned thinking. Who can argue the point?

I can. What's the difference between Kodak photographic film and Kodak digital cameras? Kodak means "film" photography. Kodak doesn't mean "digital" photography.

When a category is changing, the worst thing that can happen to a brand is being stuck in the past. The Kodak brand was stuck in the past and the only thing that could have saved the company was a second brand.

Kodak should have given its digital brand a different name than its film brand.

There's a lot of evidence the brand name "Kodak" is not worth much outside of photographic film. Consider the introduction of the following Kodak products that never achieved much success.

  • In 1975, Kodak plain-paper copiers.
  • In 1976, Kodak instant cameras.
  • In 1984, Kodak videocassette recorder and cameras.
  • In 1985, Kodak floppy disks.
  • In 1986, Kodak batteries.
  • In 2005,
  • In 2007, Kodak ink-jet printers.
There are a lot of reasons for a product to fail, but two of the most important reasons are: (1) the product itself and (2) the name.

But nobody ever seems to consider the latter. It's always the former.

A Well-Known Name Is Not Always an Advantage
Almost everybody thinks a well-known name is an advantage when introducing a new product.

Take Eveready, a brand which also had a dominant share of its market until Duracell came along. Thanks to the marketing push behind the Duracell brand, consumers eventually perceived that there were two categories of appliance batteries: (1) inexpensive zinc-carbon batteries and (2) long-lasting alkaline batteries. And Duracell rapidly became the market leader, a position it still owns today.

But six years before the launch of Duracell, Eveready had introduced its own alkaline brand, called -- naturally -- Eveready alkaline battery.

No matter. The Eveready name was forever linked to zinc-carbon, not alkaline batteries, much the same way that Kodak is linked to film, not digital photography.

Finally, Eveready introduced an alkaline battery with a different name, Energizer, a move it should have made much earlier.

Decades ago, the primary objective of a marketing program was to make your brand well-known. And when there were fewer brands and less competition, perhaps that was a winning strategy.

No longer. The emphasis today is not on being well-known, but on "what" you are well-known for. Yet too many companies and too many brands are still focused on yesterday's strategy.

Al Ries is chairman of Ries & Ries, an Atlanta-based marketing strategy firm he runs with his daughter Laura.
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