The results directly follow the marketer's first introduction of new consumer products in more than 20 years -- two instant cameras aimed at generations X and Y. The fall launches of the tiny I-Zone Instant Pocket Camera, which creates postage-stamp-size photos or photo stickers and is designed for 12- to 17-year-olds, and the JoyCam, which targets the teen and young adult market, boosted Polaroid's fourth-quarter net sales by 20%. Of the 9.7 million instant cameras the company sold last year, 4.5 million were sold in the quarter ended Dec. 31. Net sales for 1999 were $1.97 billion, up more than 7% from the previous year.
Polaroid aims to continue that momentum with a sponsorship of teen pop star Britney Spears' 2000 concert tour, hot on the heels of backing the Backstreet Boys' tour last year.
But the question industry analysts are now asking is whether Polaroid can sustain those huge gains. Were they a holiday phenomenon or will they continue to grow?
Ulysses Yannas, an analyst at Buckman, Buckman & Reid, is optimistic, noting that in January -- historically the slowest month for the photography industry -- both Polaroid's cameras and film posted more than 10% sales hikes compared with the same month in 1999.
But whether the new products will propel long-term gains is uncertain. Mr. Yannas believes the key will be Polaroid's ability to "continue to innovate and renew its products," especially important "with generations that bore easily."
Michael Ellmann, an analyst at Schroder & Co., is less bullish about Polaroid's long-term prospects from its youth-oriented products. He said the company previously relied on sales from the commercial as well as the consumer market, and now, it has "repositioned itself to focus most heavily upon consumers and, really for the first time, to focus on the youth market." Although this repositioning might have been necessary, Mr. Ellmann added, the target is riskier because "the fad element or the fashion element is stronger; the sustainability of the market is more open to question."
Polaroid, however, is intent on maintaining its commitment to these younger markets and will do so by introducing new products and creative new ways to use them, said Brian Poggi, Polaroid's VP-general manager, North America.
Although he would not disclose specific spending figures, Mr. Poggi said Polaroid has increased its ad budget 10% to 20%, most of that in support of the I-Zone and JoyCam. For the first nine months of 1999, the company spent more than $30 million in measured media, according to Competitive Media Reporting.
Polaroid's dedication to younger markets is apparent in its willingness to depart from traditional marketing strategies. Although the company typically does not release new creative until spring, this year it broke a new 15-second spot highlighting the JoyCam in January. In the commercial, from agency Goodby, Silverstein & Partners, San Francisco, a navel-baring teen girl takes photos of things around her house and strings them up to hang in her bedroom. A full new campaign will break in April.
The company also is sponsoring a mall tour with girl group Nobody's Angels, which is helping the marketer reach teens and also gain it distribution in new outlets like record and toy stores, including Tower Records and Toys "R" Us.
In addition, Mr. Poggi said, "we have new products coming out every six months," consisting primarily of new color options. Polaroid will launch new opaque-color I-Zones this spring in Wicked Wasabi (pale green) and Go Grape Sorbet (pale purple), which will replace the current red and green cameras, much as fashion colors change with the seasons.
ADS WITH SPEARS
In summer, Polaroid will highlight its sponsorship of Ms. Spears with print ads from Goodby running in teen magazines, Internet advertising, point-of-purchase, a sweepstakes and PR.
Messrs. Yannas and Ellmann agree Polaroid's prediction of selling 10 million instant cameras this year seems reasonable, but it's still a game of wait-and-see, they admit.
"The ads for these products are catchy and attention-grabbing," Mr. Ellmann said. "I think that may encourage trial. But [as for] the degree to which the products are sustainable, in my opinion, advertising will have very little to do with that," he said. "The satisfaction and perception of price value is going to determine if these products are good to great [or] explosive."