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Chains establish three tiers of photofinishing.

NEW YORK - The aggressive introduction of one-hour minilabs has helped keep chain drug stores at the top of the photofinishing market.

While discounters process the most rolls of film, drug chains generate the most photofinishing revenue. At first glance that might be attributed to discount stores' lower prices, but the premium services of drug chains - including minilabs - are equally responsible.

Actually, chain drug retailers have successfully established three tiers of photofinishing service. There is one-hour processing, overnight branded service and overnight private label processing. And, according to Konica Corp. advertising and marketing director Paul Gordon, the different levels complement, rather than cannibalize, one another.

The installation of minilabs creates incremental overnight business, he says, because it enhances the trade class' image as a photofinishing source. Consumers know they can use the same store when they are in a rush for their pictures or are willing to wait a day and save some money.

"Photofinishing has always been a strength of the industry," notes one chain drug category manager for photography. "By adding minilabs we're showing that we're not complacent. Different levels of service can meet the full range of customer needs."

Qualex Inc., a subsidiary of Eastman Kodak Co., has helped drug chains become photofinishing destination centers by installing over 4,500 minilabs, the majority in drug stores.

The company also offers Kodak premium service, which provides an index print and sealed negatives. While the service costs $2 to $3 more than private label photofinishing, Qualex senior vice president of sales and marketing Garry Briddon says that revenues from Kodak Premium have doubled this year, and that it accounts for 30% of some chains' processing business.

A new offering of Kodak Premium is the picture disk, which provides a floppy disk with all the processed pictures on it along with software suitable for a home computer. An image can then be pasted into a document or e-mailed from home. "If 5% of photofinishing consumers ordered one it would translate into millions of dollars in incremental profits for a drug chain," says Briddon.

A fourth quarter promotion for picture disks will give consumers who choose them a full-featured CD-ROM from Adobe Systems Inc. The CD-ROM, billed as a $49 value, includes software to create cards, calendars and school projects. The promotion will be backed by print ads and point-of-purchase signing.

Briddon stresses, however, that photofinishing must be treated as one element in a total category plan. It's essential, for example, to link service to film and camera sales, he says.

To that end Fuji Photo Film USA Inc. is offering rebates of up to $15 on the photofinishing costs of one roll of its SmartFilm when consumers purchase certain Endeavor Advanced Photo System (APS) cameras. Customers must mail in the rebate coupon and receipts for the Endeavor and photofinishing within 30 days of purchase. The promotion provides a powerful incentive for consumers, says Fuji APS group marketing manager Tony Sorice.

For its part, Konica has introduced VX400 black-and-white film. Executives note that the launch recognizes the growing appeal of black-and-white film for consumers and the problems getting such film processed. Minilabs, in particular, were limited to color.

Because it is printed on color paper, VX400 can be handled in any lab that develops and prints color film, allowing for one-hour service. Gordon says photographers like black-and-white for its dramatic effects as well as nostalgic portraits.
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Title Annotation:chain drug stores
Publication:Chain Drug Review
Date:Oct 6, 1997
Words:564
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