What factors were responsible for the early success and growth of Fitbit?
Answer the following questions: What factors contributed to the early success of Fitbit?
What competitive advantages does Fitbit have, such as brand, market share and market position, products, pricing, and pricing?
Analyze the market segmentation, targeting, and positioning, as well as the brands not mentioned.
What company strategy and which strategy is most likely to be the most successful in the future? How do you see the market’s future?
Your argument must be supported by your knowledge of each company’s strategy and strengths, as well as your expectations of the market. You can also use supporting justifications from other sources, the case, your analysis and acknowledgment of any assumptions.
The Fitbit Initial Success Factors:
This case study outlines several factors that have contributed to Fitbit’s early success in the American market.
Fitbit, an American manufacturer of wellness devices, manufactures devices that can monitor health conditions such as pulse rate.
These are the factors that have made Fitbit a success in the US market:
Factor 1: Product line:
Fitbit’s product line has been a key factor in the company’s success on the American market.
Fitbit was introduced to the American market as a fitness tracker device manufacturer in 2007. It could be worn on the wrist by users.
The company has now expanded its product range to include seven fitness tracking devices.
Fitbit also makes devices that can be matched to the user’s lifestyle and dress patterns (Chuah, et al.
Both technologically-sound and ignorant consumers can use the fitness tracking devices.
There are low-priced versions that can do basic functions like tracking pulse rates.
Fitbit offers high-end fitness trackers for upper-class consumers that have the same features as smart phones.
Fitbit.com offers a variety of fitness tracking products in different forms, including straps and necklaces.
Fitbit’s extensive product range has allowed it to meet diverse customer requirements and was a key driver of its early success in America.
Its early success in America was due to its strategic use of niche marketing and diversification.
Fitbit made fitness trackers in simple and advanced versions.
Simple versions like Fitbit Flex are low-priced and serve the primary purpose of monitoring health conditions such as pulse.
Premium versions, such as Fit Surge, allowed users to access the features of smart phones and also provide basic fitness measurements.
Fitbit was able to target different customer segments with one product through niche marketing.
To attract the right customer segments, the company used technology and pricing to differentiate between the advanced and basic variants (Pradhan and Sujatmiko 2014).
Diversification was a deadly strategy that Fitbit used in order to gain a competitive advantage on the American market in its early years.
The company produced products in a variety of variants, including basic and advanced. It also offered a wide range of formats.
Fitbit offered its fitness in a variety of formats, including necklaces and straps. This could be customized to suit the individual wearer.
The company expanded beyond its core business of manufacturing fitness hardware and opened new markets to meet the needs of customers.
The company expanded its manufacturing operations to produce fitness software that could be used, shared, and tracked by Fitbit users.
Users of Fitbit software were able to upload their fitness data to other IT companies such as Microsoft.
Users who walk a specific distance or burn a certain number of calories earn rewards points (Lim and al.
Fitbit products are available in low- and high-priced versions.
This analysis shows Fitbit successfully combined niche marketing with a diversification strategy to gain a strong foothold on the American market.
Factor 3: Support from Stakeholders
Fitbit’s ability to fulfill the expectations of stakeholders was a key driver for its success in the American market.
The company was viewed by stakeholders such as shareholders, journalists and business analysts as a manufacturer of wearables.
However, the company diversified its product range to include both hardware and software.
Analyzing the company’s product strategy, it found that it focused on expanding its product range to include both hardware and software.
The fitness trackers were also available at low and high prices, which allowed both lower and higher class customers to use them (Ali Kim, Hong 2016,).
The company was able to serve a large consumer base and generate high revenues through this customer-centric product line.
Fitbit was able to provide high returns to shareholders which encouraged them to invest more in the shares.
The company was able to generate huge capital due to the high demand for shares.
This analysis shows that customers and investors were the main beneficiaries of the company’s success.
This allowed the company to generate capital and profits.
Fitbit’s success in America was fueled by the support of its stakeholders (Mannov and Maalej 2015).
Five Cs of Marketing are five key criteria that multinational companies such as Fitbit consider when making marketing decisions.
These are customers, competitors and collaborators, as well as climate.
This is Fitbit’s 5C analysis, which allows it to maintain a high ranking in the United States’ fitness market.
Before forming a marketing strategy that works, companies must first determine the customer’s needs and expectations.
The case study clearly shows how Fitbit did extensive research on the needs of its customers, which allowed it to gain detailed knowledge about their consumption habits.
Fitbit makes basic models at a low price to appeal to low-income members of society.
The more expensive premium fitness trackers are for the wealthy.
This analysis shows that Fitbit is well-versed in customer needs and can formulate an aggressive product strategy to maintain its market leadership (Weinberg, et al.
Before forming marketing strategies, the company’s management must conduct a SWOT analysis.
This is the Fitbit SWOT analysis:
Vast Product Line
Fitbit has a large product range, which is evident from an analysis of its success factors.
Fitbit is a multinational manufacturer of fitness devices. It manufactures both software and hardware.
Fitbit products can be lightweight, durable, and available in a variety of price points.
Simple fitness trackers are easy to use, while more expensive products offer the ability to access all of the features of a smart-phone.
Fitbit products can be used with a variety of hardware, including Microsoft devices (Drucker 2014).
Customers can communicate with one another and share information about their fitness using Fitbit software.
Fitbit’s greatest strength is its extensive product range.
Fitbit’s official website and case study reveal that it manufactures a variety of smart watches, fitness track software and smart accessories.
To generate large revenues, the company sells its products directly to a huge customer base.
Investors can expect a healthy return on their investment when the company is successful.
The company’s share price has shown steady growth in the past.
The company’s steady share price analysis shows that investors are able to invest in it, which is why it has a strong capital base (Mason & Brown 2013).
The company’s large revenue from selling products worldwide and the capital it receives from investors make it a strong financial base.
Technologically, Very Sound
Fitbit’s strong financial foundation allows them to invest in technology. This has helped the company become technologically strong.
Fitbit makes smart watches and software.
The company spends huge amounts of money on technology upgrades and acquisitions.
The Fitbit fitness trackers can send and receive data from smart phones and other platforms, such as Microsoft (Norman and Verganti 2014).
This shows that Fitbit’s technology is very robust.
Fitbit’s products are more limited than its strong competitors, Apple and Samsung.
Fitbit’s products are less appealing to customers than its competitors.
As a result, Fitbit’s revenue generation from selling its products is affected which ultimately reduces the company’s dividend giving capacity.
The company’s revenue generation capacity is affected by the limited product offerings available to customers. This ultimately leads to a decrease in capital generation.
Limited Global Presence
Fitbit’s global presence is smaller than that of its competitors, such as Apple and Samsung.
Fitbit is currently present in nine locations around the globe, with most of its presence in North America and Asia.
Microsoft and Samsung are available in North America, South America and Asia.
These multinational companies are able to reach more customers than Fitbit due to their vast global expansion.
This analysis shows that Fitbit’s limited global presence limits its revenue generation potential.
Limited Product Line
Fitbit has a range of fitness tracking devices that allow users to access the features of a smart phone.
Fitbit also makes fitness detection software that can be accessed on many devices, including smart phones.
It is important to note that Fitbit’s product line is not as strong as its rivals Samsung’s, which makes smart phones, smart watches and television sets, among other electronic goods.
This analysis shows that Fiitbit’s limited product range limits its ability to compete in the international market.
Expanding Product Line:
This discussion shows that Fitbit’s limited product range is limiting its ability to generate revenue and reducing its market share.
To manufacture smart phones and other electronic products, the company needs to expand its product range.
This would enable Fitbit to reach a wider customer base.
As a result, the company would be able generate more revenue from selling multiple types of electronic goods such as smart phones, television sets and smart watches.
This indicates that the company would have more revenue if it expanded into manufacturing new products.
As shown in the graph below, this company will be able to offer investors a higher return on their investments and attract more market capital as Samsung.
Fitbit would be able to expand its product line and increase its capital base.
Fitbit needs to expand in new markets that would offer it new business opportunities.
Fitbit is not as well-known in international markets beyond North America and Asia, as its rivals like Apple and LG.
As a result, Fitbit is able serve a smaller number of customers than Apple and LG (Apple 2017).
This narrow customer base limits the company’s revenue generation capabilities.
The company cannot offer dividends to investors due to lower revenue generation.
The graph below shows how Samsung’s share index is increasing, which is a sign of its growing financial strength.
Fitbit’s potential to expand into new markets and earn more revenue like Samsung will increase its financial strength.
Strong international competition
Fitbit is under threat from strong competitors such as Samsung and LG (lg.com 2017,).
These companies are manufacturing fitness trackers and threaten Fitbit with their market position.
These competitors are also present in more countries than Fitbit.
They are able to capture Fitbit’s market, thus reducing its revenue generation ability.
American Market Oversaturation:
Several companies are already manufacturing similar products in the US smart watch and fitness tracker markets.
There are strong local companies such as Microsoft and international companies such as Samsung.
The American market is also seeing the rise of smaller companies that offer more innovative and affordable products.
Modern products are preferred by today’s consumers (ebay.com 2017.
This fierce competition has resulted in the saturation of American fitness tracker markets, which has led to lower profitability for companies such as Fitbit.
Next, Titbit’s 5C analysis focuses on the analysis of US market competition and opportunities in the wearable device industry.
The case study includes information about three of the most prominent wearable companies in America, namely Motorola, Samsung, and LG.
In the case study, Apple is mentioned as a competitor to Fitbit.
The graph below shows that Samsung and Apple dominate the smart watch market.
These competitors are fiercely pursuing Fitbit, as we have seen in the discussion.
This analysis shows how the American wearable device industry is fiercely competitive.
Fitbit needs to restructure its marketing mix in order to meet this fierce competition (Takata 2016,
Source: Business Insider.
When constructing marketing strategies, companies should consider the potential partners with whom they could collaborate to grow their business.
This analysis clearly shows that Fitbit has a strong product line, but it is not as good as its rivals like Samsung or LG.
The product range of Samsung Electronics includes smart watches and fitness trackers.
If smart watches are not selling well, the company can offset the revenue loss by selling smart phones, TV sets, and refrigerators (Fuchs & Kostner 2016).
Fitbit must also collaborate with other companies that make electronic products in order to create new products.
This would give Fitbit a competitive advantage in the United States, its home market.
Context is the economic context of an economy. This context must be considered by companies when deciding on their marketing strategies.
An analysis of the economic and political conditions in the United States of America has shown that they are favorable for electronic businesses.
The country’s technological strength makes it a great place for multinational companies to collaborate with local and foreign firms.
American society favors high-end fitness equipment.
To take advantage of the favorable market conditions in America, Fitbit must have aggressive marketing strategies.
These are Fitbit’s competitive advantages in terms brand, market share and market position, as well as products and pricing
These are some of the competitive advantages that Fitbit has over its market competitors:
Position Leader in the Market:
Fitbit is the global leader in fitness tracking hardware and software measurement devices.
Fitbit Flex and Fitbit Charge, the two models made by the company, lead the fitness tracking market. They are even ahead of similar products from Apple and Samsung (Frosen et al.
Broad and Differentiated Market Strategy
Fitbit recognizes its brand as an important asset and creates innovative products to meet new user needs.
The company has a very aggressive marketing strategy in place to promote its brands to both middle- and upper-class customers.
These two segments are the target audience for the brand, which allows it to sell products and generate large revenue.
The company is well-versed in the changing needs of its customers and can market health and fitness products that meet their requirements (Liu and al.
This marketing strategy allows the company to distinguish its products from their competitors, which gives it a greater competitive advantage on the market.
These are the competitive advantages that Fitbit has that make it a leader in its market:
Fitbit’s financial strength is one reason it has a leading market share.
Fitbit is a niche marketer, making products for middle and upper class customers.
The basic Fitbit Flex fitness tracker model is affordable and is popular with middle-class customers. The Fitbit Aria model is more expensive and is aimed at the wealthy.
The company serves both middle and upper class customers, generating huge revenue.
It is also a publicly traded company that can raise huge capital to fund its innovative strategies and bring new products to market (Noori 2015).
This analysis shows that Fitbit’s financial strength is one of the key factors behind its competitive advantage internationally.
Acquisitions and Mergers
Fitbit’s competitive advantage in terms of market share is due to its strategy of mergers and acquisitions.
Fitbit purchased the smart watch manufacturer Pebble and Vector, a Romanian start-up for $23 million.
These acquisitions enabled the company to enter smart watch markets, which strengthened the company’s market (Bena & Li 2014).
This analysis shows how Fitbit has been able to increase its market share and competitive advantage through mergers and acquisitions of companies in different markets.
These are the competitive advantages that Fitbit has in terms of its products:
A wide product line:
Fitbit’s extensive product range has given it a competitive edge in the fitness market.
Fitbit manufactures products that are suitable for the middle class and upper classes.
Fitbit Flex, for example, is a low-priced fitness tracker that targets middle class customers who are interested in being fit.
Fitbit Surge is a more advanced fitness tracker that targets upper-class customers.
Fitbit products can be worn in the form of pendents or bands.
Fitbit software can be used with other fitness hardware manufacturers, such as Microsoft.
Both are compatible with the android and IOS platforms.
Fitbit’s product line, which includes both hardware and software, has a high market competitive advantage.
Fitbit products are multifunctional and improve customer satisfaction.
Fitbit Surge, a high-end fitness tracker device, can be used as a smart watch, fitness tracker, and phone.
These devices can keep track of users’ lifestyles, such as their sleeping patterns and exercise routines.
The multitasking ability of Fitbit products maximizes customer satisfaction, which makes Fitbit products more popular than products from LG.
This proves that Fitbit products have a high competitive advantage on the market because of their multitasking ability.
Here’s the competitive advantage that Fitbit products have in the market when it comes to pricing:
Pricing based on customer needs:
Fitbit makes fitness trackers for the middle and upper classes. It uses appropriate pricing models which give it a competitive edge in the market.
It produces basic fitness tracking products that are affordable and targeted at middle-class customers.
The high-end fitness trackers combine the features of a smartwatch and a fitness tracker.
They are targeted at the wealthy segment.
Fitbit can cater to both the upper and lower classes by using the appropriate pricing model.
Fitbit’s competitors LG, for example, offer fitness trackers that are more expensive but can be purchased by the upper classes.
This shows that Fitbit has a pricing strategy that allows both upper and lower class customers to benefit from its products. It is therefore able to compete with its competitors.
This section will discuss the current market segmentation, targeting, and positing for wearable devices.
The wearable device market segments its customers based on their income, education and lifestyle.
To market their products, they use the demographic segmentation theory.
The market is divided into two broad categories based on lifestyle. These are the fitness-conscious customers who choose smart watches with fitness trackers, and the customers who prefer watches that have fitness trackers.
The income of the customers is then used to divide the market.
Low-priced watches are made by companies like Xiomi and Pebble.
As mentioned in the case, high-end wearable devices are made by companies like Samsung and Apple.
Slide and other lesser-known companies, such as Slide, also manufacture wearable devices. They have the potential to grow the smart watch market through their affordable products.
This analysis shows that wearable device manufacturers segment the market demographically in order to market and sell products.
As shown in the case study, wearable device companies such as Samsung and LG target middle and upper-class customers.
Fitbit, as the case study reveals, targets customers who are concerned about their health and want to monitor their pulse rate.
These companies are geared towards customers who are health conscious.
Google is also mentioned in the study.
Samsung, Motorola, and LG all make smart watches that target upper-class customers who are technologically savvy.
Slide, a lesser-known smartwatch company that is not included in the study, targets the lower income customers who can’t afford the high-end wearables made by these large electronic goods companies.
Companies that manufacture wearable devices position themselves according to their products and pricing strategies.
As mentioned in the case study, Fitbit is a company that manufactures products that can be used as smart watches and fitness devices.
They are manufacturers of wearable fitness devices for the upper and middle classes.
Apple and other companies make wearable fitness products that are targeted at the upper classes.
Rolex, a Swiss watchmaker, also makes smart watches. They are positioning themselves as premium smart watchmakers for wealthy customers.
This analysis shows how wearable device manufacturers position themselves on the international market according their target customers segments.
Below is a perceptual map that shows cost-benefit analysis. It compares Fitbit to the top ten global manufacturers of wearable devices like Apple and Samsung.
This map assumes that consumers will get more benefit from Fitbit’s brand value.
Apple, for example, is the leader in terms of brand value. This means that it benefits the most.
According to the map, Fitbit is in the top position with the highest average cost and the highest market share.
The company does not have a global market position, and therefore cannot offer the same customer benefits as Apple and Samsung.
In terms of global position, the company is ahead of Lenovo and LG.
With their low-cost product strategies, low-cost manufacturers of wearable devices such as ASUS and Lenovo would be able to dominate the global market.
Electronic wearable devices are expected to be a bright future with affordable and high-end products catering to customers.
Apple, for example, would be able to serve high-end customers while Lenovo, on the other hand would cater to middle-class customers with its low-cost products.
This would result in revenue generation from both high- and low-class customers.
This would allow new companies to enter the smart phone market, making it more profitable.
This analysis shows that expectations for the wearable device market are high.
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