Marketing challenges face digital cameras, APS - advanced photo system

Brandweek, Feb 23, 1998 by Tobi Elkin

Digital convergence, already exerting a decisive influence within the consumer electronics industry, now is moving rapidly up the learning curve in the photo industry.

It was apparent at this year's Photo Marketing Association trade show in New Orleans, where film and camera makers scrambled to position their products and services within this evolving realm. Digital cameras and camcorders under CE brands such as Panasonic, JVC and Samsung vied with digital and silver-halide offerings from Olympus, Canon, Nikon and Pentax. The expected corridor talk about new consumer films and single-use cameras was balanced by discussion of the evolving market for digital products and Internet-based consumer photo services, both at retail and via the home PC, and of how to market the slow-out-of-the-gate Advanced Photo System (APS).

Traditional photo vendors showed digital products alongside those of high-tech marketers Intel, Hewlett-Packard and Iomega, and the CE giants. From this proliferation, one could forget that market penetration remains in the low single digits. Still, the industry is projecting 1.2 million unit sales of digital cameras this year, increasingly via computer superstores and mass merchants as prices fall, and Eastman Kodak, a pioneer with many arrows in its back, is projecting an even more robust 2 to 4 million unit sales.

Many general-merchandise retailers profess optimism but aren't making big commitments yet. "We feel pretty confident that it's [digital cameras] going to be the place to be, though we're not a destination for it yet," said Kmart film and camera buyer John Jansen. The discounter currently offers just two digital camera SKUs, with little ad support, because "our customers determine the shelf space."

Discounter ShopKo is waiting for prices to drop to the $100 range, and for 30% return rates to ease off, before it carries any digital cameras in its 148 outlets. "Our channel doesn't plow the initial furrows," said film and camera buyer Bob Pitzer. But he expects to be there once the segment is established.

By contrast, electronics chain Best Buy is making digital imaging the centerpiece of its CE strategy in '98. "Our focus is the home market, and digital imaging makes the PC more useful," said svp-marketing Wayne Inouye.

Despite its heft and lower storage capacity, retailers said Sony's Mavica with 10x Zoom, a floppy disk-based digital camera, won enough consumer acceptance to make it the No. 1 brand at retail since last fall because of its perceived simplicity and familiar brand name. In merchandising and ads, Sony is using that positive image to help spur sales of its Vaio PCs. Clearly, consumers have been quicker to embrace the Mavica because it uses a familiar media format, the ubiquitous floppy, lessening the intimidation of novel ideas like sharing photos with family and friends via email and the Internet. But with the quickening pace of digital technology, the Mavica's bound to be a temporary fix. Up next? Sony's working on a high-capacity "memory stick" no bigger than a stick of chewing gum as the next generation storage medium for digital cameras and other devices.

For its part, Kodak is taking the infomercial route to clear up consumer confusion. After a fourth-quarter test, a half-hour infomercial from Ogilvy & Mather, N.Y., returns this spring to pitch the possibilities of digital photography.

Although APS is less of a paradigm shift than digital cameras, retailers frequently expressed frustration on the marketing of the now two-year-old format. "There needs to be more awareness about APS," said Peter Liebmann, vp-purchasing for Atlanta based Wolf Camera & Video.

"That should be top-of-mind on the part of manufacturers, especially Kodak and Fuji. They haven't handled the marketing properly ... They haven't communicated the benefits of how easy it is. They have a long way to go."

Retailers complain the marketing messages aren't simple, processing is costly, and photofinishing for APS isn't available yet on every street corner. Some even question the name. "APS sounds intimidating; it's not warm and fuzzy," Liebmann said. "Then each individual manufacturer chooses a name for their APS. It's confusing."

Canon hopes to address these concerns with a new print and TV effort breaking this spring behind its second-generation Elph APS camera. The ads, via Grey, N.Y., feature a stylish, pixie-like woman with the camera, and highlight more of the APS unit's special features, while retaining the tagline, "Have you seen the Elph?"

Kodak, saying 20% of all cameras sold last year were APS units, likewise plans a brand awareness effort this spring, via Ogilvy & Mather.

In the point-and-shoot segment, Samsung's Opto-Electronics company will break a cable TV effort around its Evoca cameras in May, via The Total Image Group, Ridgefield Park, N.J. The spot, skewed mostly toward women with kids, will strike a wholesome family chord to stress value, ease of use and the joy of picture-taking, in sharp contrast to the minimalistic fashion statement employed in Samsung's CE campaigns via The Arnell Group, N.Y.