Polaroid Disruptive Innovation

Group 8

POLAROID- Family Imaging Market

Submitted To: Prof. Rahul Gupta Chowdary

SUBMITTED BY: Arpita Bahadur Gaurav Kumar Manish Gupta Pavan Kumar Ranjini Ballal

Disruptive Innovation and the Bankruptcy of Polaroid: In 2001, Polaroid declared bankruptcy. The disruptive shift from analog to digital photography put this industrial giant out of business. The beauty of Polaroid cameras was that photos could be viewed instantly. When digital imaging enabled this to be done in a much cheaper way the competitive advantage of Polaroid was destroyed within only a few years. Polaroid made their money by selling cheap cameras and then charge a lot of money for the Polaroid film. Since film is used continuously this turned out to be a fantastic business model with fantastic profits. Just like Gillette makes great money by selling razor blades, Polaroid made great money by selling film. The main source of profit is not the razor or the camera; it’s the continuous consumption of blades and film. The firm made improvements to this technology over the decades. Polaroid experienced a remarkable growth and soon became a householdname.Between1948 and 1978 sales grew 23 percent and profits grew 17 percent, both annually. This remarkable success was based upon technological innovation. Hence, Polaroid became a technology-driven company which always looked for new challenges. Edwin Land himself held over 500 patents. Polaroid believed firmly in innovation: ‘Do not undertake the program unless the goal is manifestly important and its achievement nearly impossible. Do not do anything that anyone else can do readily.’ The firm was so successful and profitable that Kodak just couldn’t keep away from the instant photography business. Kodak made its own version, was sued by Polaroid for huge patent infringements and had to leave the market in 1986. Launch of Digital Photography: Sony launched the first digital camera, the Mavicain 1981. The photos were stored on a floppy disk and had a photo quality of 0.3 Megapixel. During the 1980’s digital imaging was still in its infancy. The different ’Mavicas’ that were launched by other firms did not turn into any commercial successes.

In 1986 Polaroid invested 30 million USD in a new unit called”The Microelectronics Laboratory”. In 1989, more than 40 percent of Polaroid’s R&D budget was spent on exploring various digital imaging technologies. However, being a technology-driven company, Polaroid always regarded the shift to digital imaging as a technological challenge, not as a market challenge. It was assumed that once the technology is ready, it will become profitable, somehow. Therefore, Polaroid never developed any marketing capabilities for digital imaging, or a new business model. It was assumed that the firm should stick to its fantastic razor blade business model, since it was so profitable. So technologically speaking, Polaroid was well prepared for the shift to digital imaging. It even had a sensor of 1.9 megapixels in 1989. Butin terms of marketing and business models, it was never prepared. And as we know, disruptive innovation is mainly a business model challenge.

Polaroid’s mistakes: Mistake1: Poor Promotional/Ad Campaigns Solution: Market Penetration •

Polaroid’s marketing strategy proved to be a failure as a result of “MARKETING MYOPIA”. The failure is at the top. The executives responsible for it, in the last analysis, are those who deal with broad aims and policies. The company has to do what survival demands. It has to adapt to the requirements of the market, and it has to do it sooner rather than later. But mere survival is a so-so aspiration. Anybody can survive in some way or other, even the skid-row bum. The trick is to survive gallantly, to feel the surging impulse of commercial mastery, not just to experience the sweet smell of success, but also to have the visceral feel of entrepreneurial greatness.

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The PUBLIC RELATIONS campaign of Polaroid was unsatisfactory. The advertising campaigns didn’t suit the requirements of mass public. Slowly Polaroid was creating a niche for itself due its high prices and expensive films. Although Polaroid associated itself with Nascar racing competition, it couldn’t create a successful impact with the mass. Polaroid’s efforts to

attract customers after 1991 with extensive marketing did create a short-lived impact, but the emergence of digital photography instant photography market phased down.