Eastman Kodak Co. film is under intense price pressure from Fuji Photo Film USA, and Kodak is prepared to cut prices to the bone to stem market share loss to Fuji. At the same time, Kodak wants to maintain the premium position of its brand.
You can't have it both ways, fellas. What if a low-price competitor came after Hallmark Cards in a big way? Do you think for a moment (Kodak or otherwise) that Hallmark would respond by getting into a price war with the low-cost rival? Do you think that Hallmark would curtail its warm and emotional advertising that bonds consumers to its cards?
But that, incredibly, is just what Kodak has done. Kodak Chairman George Fisher, recruited from high-tech Motorola, is hellbent to propel Kodak into the digital age, and, in the process he didn't pay enough attention to his low-tech cash cows -- Kodak cameras and film. Being a scientific, high-tech guy himself, Mr. Fisher refused to believe that people didn't care about the wonders of digital cameras as much as they did about capturing their 4-year-old daughter blowing out her birthday candles. As often happens when a company falls in love with technology, management gets wrapped up in the process; but consumers only care about the end result -- in the case of Kodak, memories.
That's the business Kodak is in, the memories business, not the premium film business.
The biggest mistake Mr. Fisher has made in his brief tenure at Kodak is firing J. Walter Thompson USA, the creator of those brilliant ads reminding us of all the tears and laughter we've shared with loved ones throughout our lives and how Kodak cameras and film were always there to keep the moments alive.
Let me be more precise. Mr. Fisher no doubt didn't fire JWT; he let JWT be fired. Carl Gustin, senior VP and chief marketing officer at Kodak, did the ignoble deed when Mr. Fisher was off somewhere chasing his digital dream.
Mr. Gustin's explanation sounded cool and precise, and it matched the tone of the newly focused Eastman Kodak Co. "This move is aimed at improving Kodak's strategic focus and our ability to manage the brand on a worldwide basis," he intoned.
Granted, it's difficult to measure how the "Open me first" TV commercials or the "Daddy's little girl" spot or even Paul Anka's "Times of our lives" would have aided Kodak's focused quest for strategic focus. My guess is that they would have impeded it, because Mr. Fisher and his troops had no time for anything that stood between them and the digital and applied imaging revolution they were trying to foment.
And now look at the pickle Kodak is in. It's going to cut 10,000 jobs and take a pretax restructuring charge of at least $1 billion for the fourth quarter. All this to lower the company's cost base so it can lower the price of its film still further -- and in the process further erode the great Kodak brand name and all that it used to stand for.
If I sound angry about how Mr. Fisher and his cohorts have allowed the great old Kodak brand to fall into what I fear is terminal disrepair, I truly am.
Top management's top job is to be the loyal and trusted custodian of their company's most valuable asset, and they do not have the right to tarnish it.
Because a brand name, in many ways, is the institutional memory of a company. Wreck or weaken the brand name and you wreck or weaken the underpinnings of the company, to the point where it is vulnerable to the siren song of one strategic focus after another -- ever searching for what had been in the heart and soul of the brand all along: "Remember, remember, for the times of our lives."
Scott Bedbury, the VP of marketing at Starbuck's who also did duty at Nike, gave this brand-building advice to the fall conference of the Association of National Advertisers: "Weave yourself into an enduring piece of the cultural fabric."