David V. Tennant - Product Development

Numbers in billions of dollars

Note that some of the companies that were on the list in 1980 are now absent. This is especially notable for the oil companies, and this will continue as the shift from petroleum (gasoline) to electric and alternative-fueled vehicles continues.

New firms in the form of big tech, Facebook, Google, etc. have been displacing more “traditional” companies. By the 2060s we may find a whole new set of innovative companies on the list.

At the turn of the last century (1900) the horse and carriage gave way to the automobile. There were most likely excellent buggy whips for sale, but no matter how excellent your product may be, innovation will ultimately replace it.

If we consider Kodak, which had the lion’s share of the film market, this was completely made irrelevant by digital photography. The major camera producers: Canon, Nikon, Olympus, and others developed highly successful digital cameras which took excellent pictures and no longer required film. Apple’s iPhone further hastened the decline of film in that anyone could take very good pictures with their phone’s camera (including Android phones).

The Eastman Kodak Company, founded by George Eastman, devised and marketed the first simple camera in 1888. As time went on, Eastman incorporated the name Kodak as part of his product line, which included various film products (Kodachrome, Ektachrome, etc.). Later, his company turned out 35 mm format slides, 8 mm and 16 mm movie film, and a variety of projectors and cameras, for both professional and personal use.

Continuing with innovative and interesting products, Kodak also produced slide projectors, the Browning personal movie camera, and film-processing machines. Many Hollywood movie studios used Kodak film in their movies. By 1976, Kodak had 90% of the US camera film market. The peak revenue year for Kodak was 1996, with revenue of $16 billion. The company was traded on the stock exchange with a share price of $90. At that time, Kodak had two-thirds of the global film market. Employees peaked in 1988 with over 145,000 employees worldwide.

Kodak continued in their attempts to be innovative with digital cameras and the CD format for pictures, but each camera sold lost $60. In 2004, it was ejected from the Dow Jones stock exchange. As a side note, the Dow Jones Industrial Average is a stock index of the top 30 US corporations. On this note, Kodak closed many manufacturing plants and cut thousands of jobs.

Kodak worked to restructure its business, acquired several companies, and provided licensing which brought in much-needed revenue. In 2010, Kodak sued Apple over its iPhone technology, claiming a patent infringement, but did not prevail. By this point, employment was down to 18,000 employees. In 2012, the company filed for bankruptcy and sold its online photo business to Shutterfly.

Kodak was somewhat reluctant to move into digital photography as it did not involve the use of film. The company today provides traditional and digital printing, hardware, and software services to the print, packaging, publishing, manufacturing, entertainment, and film industries. The company’s four primary segments include advanced materials and chemicals.

At the time of writing (August 2021) Kodak’s stock price is $6.86 and the company has earnings of negative $400 million on revenue of $1.1 billion. 6

1 As a large, successful US company, Kodak was once a “dogs of the Dow” firm listed on this stock exchange. It could be argued that Kodak’s management was unwilling to change or consider new ideas to displace or augment its line of film products. What does this tell us about the role of innovation in a company?

2 With the advantage of twenty-twenty hindsight, it is easy to criticize Kodak’s lack of foresight or imagination. However, it is likely that past success blinded Kodak to the future of film. This might be categorized as a resistance to change, which is found in most large corporations; it becomes part of the corporate culture.If you are in a senior level position – at any company – how would you work to change the corporate culture?

3 What role should the marketing department have played in this long-term decline?

4 From a managerial standpoint, what are the challenges when a company is in decline?

A common misunderstanding is “marketing is the same as sales.” They both are concerned with increasing the company’s sales. Both need to be knowledgeable about who their competitors are and their products. Both need to understand their current and potential customers’ needs. But there is a difference. Let’s first consider the sales team.

The sales group is first and foremost responsible for bringing in revenue. A second objective is to establish relationships with customers. It is always easier to sell to an existing customer than to find a new one. However, to increase sales, a sales representative must also be able to meet potential new customers. This can be done in a variety of ways. The traditional methods include attending trade shows, cold-calling (i.e., working the phone), attending local business meetings (city business chapters, chambers of commerce, etc.), and attending regional or local professional trade associations; for example, engineering chapters such as ASME (American Society of Mechanical Engineers), IEEE (Institute of Electrical and Electronics Engineers), and other similar organizations. Beside technical groups, there are organized chapters of venture capitalists, human resources management, etc. Any professional group will be a source of potential customers.

In today’s environment, where pandemics can disrupt traditional sales prospecting, most companies have a strong online presence. This is in addition to your company’s website, and may include sites such as LinkedIn, Twitter, Reddit, Facebook, and a host of other platforms. However, an online sales presence starts to encroach into the domain of Marketing.

As noted earlier, the fundamental aim of sales is to sell products and obtain contracts: ultimately, to turn potential customers into current customers. Note that sales reps generally have goals to meet on a quarterly or yearly basis. This is typically a financial goal; for example, “Jill must bring in $400,000 dollars in revenue each quarter.” While the sales rep is concerned about meeting his or her sales goal, it is also important that products and services should have enough profit (also called “margin”) so the company makes enough money to stay in business – and ideally to grow.

The marketing group, while concerned with sales and profits, plays a very different, but complementary role to sales. Marketing is integral to the financial health of a company and must support the sales team. Pick up any book on marketing, and you will learn about the four Ps:

Product

Promotion

Pricing

Placement.

These are the marketing fundamentals, but true marketing can be very analytical, with spreadsheets, detailed market analyses, and estimated demand for the product. But first, let’s focus on the 4 Ps.

It is not unusual for a Marketing Manager (sometimes called a Product Manager) to have the leadership role in the development of products and services. This will become apparent as our discussion unfolds.

Obviously, to have sales a company needs to have a product that has demand in the marketplace. The market is constantly churning with established products being bumped by newer products. Perhaps the newer product is cheaper, has better features, or has captured the imagination of the buying public. History is littered with products that were successful but ultimately replaced by a competitor.