Case: Kodak Transitions Well into the Digital Market George Eastman was born in 1854 in Upstate New York. A high school dropout because of the untimely death of his father and the ensuing financial needs of his family, Eastman began his business career as a 14-year-old office boy in an insurance company, eventually taking charge of policy filing and even policy writing. In a few years, after studying accounting on the side, he became a bank clerk. When Eastman was 24, he was making plans for a trip to the Caribbean when a coworker suggested that he record the trip. Eastman bought considerable photographic equipment and learned how to take pictures. He described the complete outfit of his photographic equipment as a “pack-horse load.” Eastman never made the trip to the Caribbean, but he did spend the rest of his life in pursuit of simplifying the complicated photographic process, reducing the size of the load, and making picture taking available to everyone. After experimenting for several years with various chemical procedures related to the photographic process at night while maintaining his job at the bank during the day, Eastman found a dry plate formula that worked, and he patented a machine for preparing large numbers of dry plates. In April 1880, he leased the third floor of a building in Rochester, New York, and began to manufacture dry plates for sale. Soon Eastman realized that what he was actually doing was attempting to make photography an everyday affair. He described it as trying “to make the camera as convenient as the pencil.” In Eastman’s experiments, he discovered how to use paper with a layer of plain, soluble gelatin mounted on a roll holder to take pictures rather than using dry plates. In 1885, he began mass advertising his products, and 1888, he introduced the Kodak camera. By 1896, 100,000 Kodak cameras had been produced, and film and photographic paper was being made at a rate of about 400 miles a month. Today, the trademark, “Kodak,” coined by Eastman, himself, is known around the world for excellence in photographic products. Kodak has manufacturing operations in North America, South America, and Europe, and Kodak products are available in virtually every country in the world. Kodak’s products include digital cameras, healthcare scanners, printing equipment, imaging, radiography, projectors, film, digital imaging products, and many more. By the year 2007, the Eastman Kodak company had 26,900 employees and sales of over $ 10.3 billion. Discussion: Suppose you are a part of a Kodak team whose task it is to examine quality, customer satisfaction, and market issues. Using techniques presented in this chapter, analyze and discuss the following questions: 1. According to general market information, Kodak is number three in the sales of digital cameras in the United States, with a market share of 16%. However, your team wants to confirm that this figure is constant for various geographic segments of the country. In an effort to study this issue, a random sample of 30 current purchasers of digital cameras is taken in each of the Northeast, the South, the Midwest, and the West. If the 16% market share figure is constant across regions, how many of the 30 purchases of digital cameras would the company expect to be Kodak cameras in each region? If 8 or more of the 30 purchases in the Northeast are Kodak, what might that tell the team? If fewer than 3 of the 30 purchases in the South are Kodak brand, what does that mean? Suppose none of the 30 purchases in the Midwest is Kodak brand digital cameras. Is it still possible that Kodak holds 16% of the market share? Why or why not? If, indeed, Kodak holds a 16% share of the market in the West, is it likely that in a sample of 30 purchases that 20 or more are Kodak? Explain to the team. 2. Digital cameras have been quickly replacing film cameras in recent years. Companies that did not respond to the rapid market change were severely hurt and several went out of business. Kodak responded by embracing the new digital picture-taking platform, while at the same time continuing its efforts in the production and marketing of film and film cameras thereby creating a somewhat seamless segue into the digital market. Suppose the Kodak team wants to ascertain if people take more or fewer pictures with the digital format than they did with film cameras. Suppose in a previous study using film cameras, it was determined that, on average during daylight hours, families on vacation took 1.5 pictures per hour. Using this figure as a guide, if the Kodak team randomly samples families on vacation in various parts of the United States who are using digital cameras to take pictures, what is the probability that a family takes four or more pictures in an hour? What is the probability that a family takes six or more pictures per hour? What is the probability that a family takes nine or more pictures per hour? What might the answers to these questions indicate about the usage of digital cameras versus film cameras? 3. According to company information, Kodak Easyshare Digital Cameras ranked highest in customer satisfaction in the $200 to $399 and $400 to $599 price segments in a recent year. Suppose a consumer group conducts a study of 60 recent purchasers of digital cameras, of which 14 own a Kodak Easyshare Digital Camera. In the study, camera owners are asked to rate their satisfaction with their cameras on a scale from 0 to 100. The top 10 satisfaction scores are taken, and 4 of the top 10 are from owners of Kodak Easyshare Digital Cameras. Is this about what is to be expected given the number of owners of this camera in the pool of 60 purchasers? If not, how can you explain the disparity? Suppose seven of the top 10 satisfaction scores were obtained from Kodak Easyshare Digital Camera purchasers. What might this indicate?