For more than 100 years, Eastman Kodak has been known for its easy-to-use cameras, high-quality film, and solid profits. During the past decade, Kodak’s sales have flattened and its profits have declined. Kodak has been outpaced by more innovative competitors, many of whom are Japanese, who introduced or improved on 35-mm cameras, videocameras, and digital cameras. Then Fuji photo Film Company moved in on Kodak’s bread-and-butter color film business by offering high-quality color films at prices 10 percent lower than Kodak’s. Kodak successfully defended its US market position, and by the early 1990s, its share of the domestic film market had stabilized at 80 precent.
But Kodadk took the battle a step further by setting up a separate subsidiary-Kodak Japan-to do battle on Fuji’s home turf. Kodak bought out a Japanese distributor and set up its own Japanese marketing and sales staff. It invested in a new technology center and research facility. Finally, Kodak greatly increased its Japanese promotion and publicity. Kodak Japan now sponsors everything from Japanese television talk shows to sumo wrestling tournaments.
Kodak sought to take advantage of several benefits of its stepped-up attack on Japan. First, Japan’s film and photographic paper market is second only to the United States in size. Second, much of the new photographic technology originates in Japan. Third, having ownership and joint ventures in Japan helps Kodak to better understand Japanese manufacturing and to better develop new products. As a consequence of Kodak’s ramped-up attack, Fuji devoted heavy resources to defending its home turf, and therefore had fewer resources to use against Kodak in the United States. In 1998, Kodak had a 10 percent share of the Japanese color film market, compared with Fuji’s two-thirds share.
Heublein’s brand Smirnoff, which had 23 percent of the US vodka market, was attacked by another brand, Wolfschmidt, priced at $1 less per bottle. Instead of lowering the price of Smirnoff by $1, Heublein raised the price by $1 and put the increased revenue into advertising. At the same time, Heublein introduced another brand, Relska, to compete with Wolfschmidt and still another, Popov, to sell for less than Wolfschmidt. This strategy effectively bracketed Wolfschmidt and protected Smirnoff’s flanks.