*NEWS*KODAK BUCKS INDUSTRY TREND

[Anonymous]

Kodak Bucks Industry Trend
Sells Ink Cartridges for Less Than $15, Backs Effort With Multiplatform Campaign
YORK,
Pa. mar 07 — Did you know printer ink is three times more expensive
than premium champagne? Kodak plans to help consumers come to that
realization this month with an aggressive “think ink” marketing
strategy as it enters the highly competitive inkjet printer and
cartridge market.The cheaper-ink strategy Kodak is undertaking has
never been done before in the $50 billion inkjet printer industry.The
strategy revolves around Kodak’s cheaper ink costs vs. the
traditionally high price of ink. And while that may sound like a simple
price-advantage marketing gambit, it’s something that’s never been done
before in the $50 billion industry.

Inverting the model
Printers
until now have been sold at a loss, with profits being made up by the
later sales of high-margin ink cartridges. Kodak’s plan is to invert
that model by selling premium-priced printers with no discounts, and
then also selling much-cheaper ink cartridges for a profit, although at
slimmer margins.To do that, the company will aggressively advertise its
lower ink prices—$9.99 for black and $14.99 for color cartridges—on
packaging, in-store displays, and in mass-marketing advertising. The
printers range in price from $149 to $299 and will be branded with
Kodak’s popular EasyShare moniker as EasyShare All-in-One printers.”Our
strategy around point of sale is to crystallize for consumers that
they’re not only buying a printer today, but also buying into three to
four years of ink purchases,” said Bob Ohlweiler, Kodak marketing
director of the worldwide inkjet division.

‘Plastering their costs’
“When
you look at where revenue comes from now, almost all of the profits in
the industry come from cartridges,” said Charles LeCompte, president of
Lyra Research. Kodak is “plastering their costs per printed page all
over the place. No one has ever done that before in this market. They
don’t want to remind consumers how much it costs.”But changing the way
the industry functions, as well as convincing consumers to buy the new
products, is a huge task, and one that will require a multifaceted and
ambitious marketing approach. Mr. Ohlweiler said the effort is “the
biggest campaign that Kodak has done in many, many years.”Online viral
efforts already begun center around two humorously dorky guys named
Nathan and Max who love to print, but lament the high cost of ink.
Their home on the web at inkisit.com includes viral videos that have
been seeded on YouTube. They’ve also got a MySpace page where they
provide more ink-related thoughts.

Truncated message
More
traditional ads will be built around the idea and visual image “think”
with the first two letters in black and the last three in white type,
creating a truncated “think ink” message that appears as “th ink.”The
Concept Studio and Animax Entertainment created the Max and Nathan
online and viral work, while Kodak’s primary agency, Ogilvy &
Mather Worldwide, is handling the “think” campaign that will appear in
media including TV, print and online.Mr. Ohlweiler said the target
buyer for Kodak printers and inkjet cartridges are consumers the
marketer internally calls “enterprising parents.” Those individuals
have children and above-average to affluent incomes and want to empower
their kids’ creativity but don’t want to be hampered by “silly
economics.” While the Nathan and Max work may not reach them those
consumers, it will touch people around the target, such as teens, savvy
friends, consumer advocates and bloggers.

Exclusive deal with Best Buy
The
printers will be available exclusively at Best Buy until June, a choice
Kodak made to take advantage of Best Buy’s on-the-floor sales staff and
the retailer’s ability to educate consumers.Whether Kodak will succeed
with its mission has been widely debated, but most agree the film giant
needs a hit as it moves to transition to digital. Kodak’s
fourth-quarter revenues swung into the black for the first time in two
years, but that gain came through cost cutting.”Kodak is in a bind.
They’ve finally got a good position in digital cameras, but the only
place to make money there is printing. For them to succeed, they’ve got
to succeed in printers,” Mr. LeCompte said. 

[Author]

March 13, 2007 at 10:49 AM