Kodak’s advertising claim that buyers can “Save up to 50% on everything you print” with its EasyShare line. Among other things, Canon claimed that Kodak didn’t make it clear that the savings claim was based on ink costs only. This week Canon it lost its challenge when the National Advertising Division of the Council of Better Business Bureaus ruled that Kodak “provided reasonable support for the advertising claim.”
Last year, Kodak introduced a brand new low-cost ink strategy with the launch of the EasyShare multifunction printer line. Kodak offered cheaper inks for a higher upfront cost of a printer.
This strategy seems to have bothered Canon USA, which recently filed a complaint with the NAD of the Council of Better Business Bureaus. There are reasons for Canon to worry, even when Kodak has less than 1% of the market for consumer multifunction printers.
First, printer manufacturers hand around the hardware at little or no cost, making major profit on the ink. Second, Kodak’s ink is indeed cheaper.
Kodak’s new pricing strategy that breaks the current business model for consumer printers. Also, it is aiming at those who do a lot of printing of photographs at home — a selected group of Canon’s most profitable customers.
Mass adoption of EasyShare printers and word of mouth about the advantages of using low-cost ink could turn upside down the today market’s business model.
Speaking of the market. Of 61 millions sold printers, Kodak’s share is only 520,000 units. Kodak’s distribution channels are also not so broad. So why would that make a difference to Canon? Because Kodak doesn’t need to get a large overall market share to cause trouble. Approximately, 10% of consumers do 80% of printing, so all it takes is capture a significant portion of that small group to put pressure on the rivals. Perhaps that’s what Canon is worried about.