Abstract
Innovation is not only about coming up with new inventions but it is also about how the product is marketed. Many a times an excellent product fails in the market due to poor innovative marketing strategy. Therefore, it is important to integrate the concept of innovation circle with marketing theories.
Camera industry is a classic example of why some companies failed because of lack of a good innovative marketing plan while others succeeded. Kodak was one of the pioneers in the digital camera industry. In fact, it was one of the first who introduced digital camera in the marketplace. However, due to poor management of its innovation and shifting of its brand image from a film camera company to a digital camera company Kodak went bankrupt. On the other hand, in the same environment companies like Nikon, Canon and Sony thrived. In fact, Canon was one of the late entrant in the camera industry when it was going through the new innovation and growth phase but it was able to successfully manage its innovation marketing strategy to position itself as a new-age brand.
Figure 1: Kodak Film Camera-1910 (left), Polaroid Camera-1949 (Middle) and Sony Mavica- First Digital Camera-1981 (Right) (Sandstorm, 2009) 5
Figure 2: Product Life Cycle (Cowan, 2014) 6
Figure 3: One of the first digital camera by Nikon and Kodak (Cowan, 2014) 7
Figure 4: Analog Camera companies failed to shift from mechanical camera core to digital technology (Sandstorm, 2009) 8
Figure 5: BCG Matrix (Cowan, 2014) 9
Figure 6: New mobile cameras are threat to the compact digital cameras (Sandstorm, 2009) 10
Figure 7: Casio QV10- This design revolutionized digital camera market (Sandstorm, 2009). 11
Figure 8: Different Stages of S-Curve and path of High Performers in S-Curve (Neumann, 2013) 12
Figure 9: Segmentation of Customers for Digital Camera in late 1990s (Neumann, 2013) 15
Figure 10: Positioning of different camera brands (Neumann, 2013) 15
Introduction
There is no denial of the fact that innovation is instrumental for future social and economic prosperity of all the countries across the world, but what kind of innovation is required for development and what is the best possible way to manage, steer and organize innovation are still debated. A study conducted on leading firms on innovation reveals that most of the innovation processes follow marketing design and innovation theories. There are firms relying immensely on research and development for innovation. However, innovation is more than just invention. Innovation also includes the strategic management of innovative design and marketing activities. This essay will analyze and explain how innovation in the camera industry followed management principles and techniques at different phases of product development lifecycle.
Influence
While growing up, I witnessed that Kodak dominated the camera industry for a period of time. Kodak was not only a product innovator, but also a great marketer. It controlled the whole product chain related to camera starting from the body of the camera to films. However, after the advent of digital camera, even though Kodak was one of the pioneers to have introduced the digital technology in the camera industry, it failed to adapt the whole company to the new market trend of digital camera.
Figure 1: Kodak Film Camera-1910 (left), Polaroid Camera-1949 (Middle) and Sony Mavica- First Digital Camera-1981 (Right) (Sandstorm, 2009)
Although Kodak was the trailblazer in digital technology innovation, it failed to innovate the marketing design strategy to transform the organization and its customer base according to the new environment. This was the major motivation for me to select the camera industry for this project submission. I wanted to scrutinize the reasons behind Kodak’s failure by analyzing the whole camera industry through the use of marketing innovation theories.
Critique
Overview
A brand is known as innovative brand when it can exceed the expectations of customers through its physical character or personality attributes. Therefore, to establish a brand as an innovative brand, it is important first to understand how the marketing innovation techniques work in the market place. The camera industry became a major economic force in the early part of the 20th century. Although the technology was widely available from the second half of the 19th century, none of the companies at that time was able to revolutionize the product features in a way to make the camera appear not only innovative but also useful to the customers. When George Eastman came up with his Kodak camera, it was not a novel technology but was more of a marketing innovation (Sandstorm, 2009). However, Kodak with its new look, compact design, and affordable price revolutionized the camera industry. The subsequent changes made to the camera industry in the last 100 years will be analyzed in the subsequent sections using different marketing innovation techniques (Sandstorm, 2009).
Product Analysis
Figure 2: Product Life Cycle (Cowan, 2014)
There are four stages in the product lifecycle; introduction, growth, maturity, and decline. In the camera industry, analog film camera was introduced in the first two decades of the 20th century and grew over the next 50 years. During the World War II, the product stopped growing and then the analog camera manufacturers launched a new marketing strategy to sell camera films at a higher price and the body of the camera at a low price. The industry reached a stage of maturity in the 1960s and 1970s. Even during the 1980s, the analog camera was doing well, but due to increased competition in the market, the profitability of almost all the manufacturers declined (Sandstorm, 2009).
Figure 3: One of the first digital camera by Nikon and Kodak (Cowan, 2014)
At that time, the digital technology was introduced for the first time by Sony through the launch of Mavica camera (Sandstorm, 2009). Soon, more companies such as Nikon, Cannon and Kodak followed suit. This trend shift from the analog camera to digital camera started the decline phase of analog camera, but many traditional film camera companies were unable to accept the new trend. Companies such as Kodak, Konica, and Polaroid failed to come up with a new product range, which could have saved the companies from the declining sales of their products (Sandstorm, 2009). Anew innovative digital camera introduced during that time could have saved those companies from bankruptcy.
Figure 4: Analog Camera companies failed to shift from mechanical camera core to digital technology (Sandstorm, 2009)
On the other hand, electronic chip companies such as Samsung, Cannon, and Casio realized that they could utilize their expertise in the digital chip manufacturing space to exploit the new wave of change. They launched products viewed as innovative by the customers. Companies such as Polaroid and Kodak also launched their version of digital cameras, but they were not innovative enough as they could not alter their image from an analog camera manufacturer to a digital camera manufacturer.
Understanding and innovating according to the tacit knowledge of the market are important for introducing marketing innovation design and strategy. In the last 3-5 years, the camera industry has been swept by a new trend in which the customers are more drawn towards using their mobile cameras than buying digital cameras only for taking pictures. It is a warning sign for the digital camera industry. Like the analog camera industry in the 1990s, the digital camera may be entering the decline phase of the product lifecycle. Until and unless the digital camera industries come up with new marketing innovation strategies, they will not be able to reverse this trend.
Market Analysis
Figure 5: BCG Matrix (Cowan, 2014)
Product lifecycle theory provides an outline of individual product state. However, a comprehensive analysis of the portfolio of products a company offers is required to understand the health of the company. BCG Matrix provides a framework for analyzing when a company needs to start a new innovation in the product market. BCG Matrix divides the portfolio of products into four distinct groups; cows, dogs, stars, and question marks. It is important for an innovative company to have products in all four stages. In the 1980s, most of the camera companies had products fallen under the categories of cash cows (analog films) or dogs (analog camera body). Star companies such as Kodak, Hasselblad, and Leica were happy that they were making a lot of money through their cash cows. However, they had no stars in their portfolio or even question marks. Question mark products are extremely important from marketing innovation perspective, because these products have the potential to become stars and cash cows of tomorrow. Sony and Nikon during the 1980s were small companies in the camera industry, but they had many products pertaining to question mark category, which at that time were not successful (Kotter, 2012). However, with the shift of market trend, technology and innovating marketing, these products became stars and cash cows for Nikon and Sony from 1990 onwards.
Figure 6: New mobile cameras are threat to the compact digital cameras (Sandstorm, 2009)
Similarly, in the current market, although the established camera companies such as Nikon and Cannon have substantial market share, companies like Carl Zeiss and Apple are emerging as a potent threat through their mobile cameras. We may again see a major shift of the camera industry in the coming days.
Customer Analysis
Product lifecycle and BCG Matrix provided an insight into individual product innovation cycle and marketing innovation based on product portfolio analysis. However, customers also play a big role in the innovation industry. Until and unless customers consider a product as innovative and commercially usable, even the best of products can be a failure in the market. Therefore, apart from coming up with new innovative product, it is important for the customers to perceive the product as innovative and usable. Here the concept of brand pyramid plays an important role. Establishing a brand as an innovative brand in the minds of a customer is not an easy task. It goes through five different phases; presence, relevance, performance, advantage, and bonding. During the 1980s, customers were only aware of the presence of digital technology. In subsequent years, owing to the ease of storing and capturing images, the relevance of digital technology increased significantly.
Figure 7: Casio QV10- This design revolutionized digital camera market (Sandstorm, 2009).
However, at that time, the overall design and the performance of digital cameras were nowhere at par with the then existing analog camera technologies. Subsequently, through the launch Casio’s QV10, Nikon’s Coolpix, and Cannon’s Ixus, the performance difference between digital and analog cameras reduced substantially and customers began to notice the advantages of the digital cameras for the first time (Sandstorm, 2009). Then the customers formed a bond with the new evolving digital camera technology and brands and gradually, they made a brand transition from analog to digital camera.
Again in the recent years, the mobile smartphone makers have started guiding the customers along the brand pyramid and ultimately pushing them to become loyal customers. Presently, these companies are aggressively marketing mobile cameras highlighting their performance and advantages over normal digital cameras so that customers can easily pass those brand pyramid phases and reach the bonding stage.
Managing Innovation
Figure 8: Different Stages of S-Curve and path of High Performers in S-Curve (Neumann, 2013)
Until now, I have analyzed the camera industry from the perspective of product, market and customer innovation. Even after addressing all these three parameters, a company may not be successful in the long run if it is unable to manage innovation properly. S-Curve is a measure of adoption and speed of an innovation. S-Curve presents the standard lifecycle of innovation. According to the theory of S-Curve, there are five stages of innovation, including innovators, early adopters, early majority, late majority, and laggards (Neumann, 2013). At each stage of the S-Curve, the innovation strategy to be adopted by the company should be different. At the startup stage when a company presents its product to the innovators, the main challenge is to survive and get validation from this set of customers. As there is no economic profit generated at this stage, substantial funding is required during this time. In the early adopter stage, the innovation strategy should focus upon aggressively marketing the product and increasing the market share. In the next two stages as the number of competitors grows in the market, the focus changes towards more operational efficiency and cost-cutting. In the last stage known as transition, the main marketing innovation focus should be on strategies around elongating the life of the existing product before another innovative product of the company captures bigger market share (Neumann, 2013).
In the camera industry, Kodak, which was a market leader in analog camera, excelled in the first three stages of the S-Curve when it introduced the analog camera in the early part of the 20th century. However, during the 1980s, when the transition from analog to digital camera was happening, Kodak only focused on elongating the life of the existing products without concentrating on introducing new products along the S-Curve, which could have saved the organization from bankruptcy (Neumann, 2013).
Value Chain and Innovation Circle
Innovation circle typically identifies the different stages of a product innovation. Innovation circle combined with innovative marketing plan creates the recipe for success in the market. Sony like Kodak had a good team that followed the innovation circle of idea generation, idea selection, idea implementation, sustaining ideas, and idea diffusion. Both the companies were able to come up with a lot of new product features in the camera industry. In fact, Kodak was the first company to commercially introduce a digital camera in the USA well before others. Innovation was not a problem for Kodak, but the company lacked Innovation marketing strategy (Neumann, 2013). The company could never understand the critical success factors for the product that would differentiate the product from that of the competitors. Sony, on the other hand, had a marketing team that did a marvelous job of marketing its product as a new innovative product despite the product features being similar to that of the competitors. It is, therefore, important to identify which ideas in the innovation circle can add more value to the market place.
Segmentation and Positioning
Invention of a new technology, creation of a new product, creation of brand image in the minds of customers are all importance aspects of innovation, but the most important aspect of all is the company’s ability to sell its products. There are strong examples of a product being perceived by customers as highly innovative and better than that of the competitors, but it failed to generate revenue as the segmentation and positioning of the product versus its price were not in sync. Using standard marketing theories like 7 P’s and segmentation and positioning, I will be able to understand the dynamics of the camera industry during the 1990s and the present day (Tracy, 2004).
Figure 9: Segmentation of Customers for Digital Camera in late 1990s (Neumann, 2013)
During the 1990s, Kodak, Nikon, Sony, and Cannon came up with their digital version of camera. However, initially, only Nikon and Cannon were able to capture the market share because of better segmentation and positioning of their digital cameras. Although the digital technology was new in the 1990s, these two companies offered their products at a reasonable price and targeted the customers aged between 22 and 35 years.
Figure 10: Positioning of different camera brands (Neumann, 2013)
This segment was more willing to shift to a new technology than the older generation. On the other hand, Sony introduced a better quality digital camera targeting the same market at a higher price, but as digital camera was a new technology product, most of the customers were not willing to take the risk of buying a high-priced product as the technology was still evolving. Also, the young segment, in many cases, could not afford a high-priced digital camera. Sony understood this issue after a few years and then successfully launched its low-priced digital camera, Powershot.
Conclusion
The camera industry has seen major shift from analog to digital camera in the 1990s. Probably, it is again going through a major shift from digital to mobile camera in recent years. Whenever there is a major shift in technology, analysis of the marker and product using product innovation theories plays a big role in the success of a company. During the 1990s when the analog to digital camera shift was taking place, Kodak became a major casualty of that innovation phase as it still employed incremental innovation strategy whereas others like Cannon and Nikon completely revolutionized the market with new technology products. Companies such as Leica and Kodak lacked dynamic capability to adapt to the changing market situation. Even though these companies had technological knowhow, they could not translate the tacit knowledge into a workable product innovation strategy.
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