Case Study 3 - Professor Harvey and White had us write 3 case studies throughout the semester, PDF

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Professor Harvey and White had us write 3 case studies throughout the semester, this is the third one on wearable devices such as Fitbit. This one also includes formatting such as executive summary, introduction, conclusion....

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ADMN 400 R13 November 2, 2018 The Business About Wrist Study Executive Summary Fitbit received a lot of attention over their release of a wearable device with the capabilities to track one’s movements and give feedback. Seven products were introduced to the market to aid users of different demand levels. For example, Fitbit Flex is the model aimed for consumers looking for simplicity, where the Fitbit Surge has a larger range of functions that touch into the features found in smartwatches. The demand for wrist devices became quite high leading to the development of a competitive market. Fitbit has some advantages and disadvantages like any company, they moved the market forward with their innovative ideas and are the preferred wearable device company according to multiple surveys. Fitbit created an app to connect with their wrist devices, consumers can access fitness tips and videos on this app, and Target implemented a program to improve employee’s health by using Fitbit wrist devices. This corporate wellness market has a lot of potential to bring in money for the company. Fitbit is at a disadvantage when it comes to the technology found in smart phones, for example the Apple Watch models have more advanced smart phone technology that attracts a lot of attention from consumers. When reviewing the four stages of a Product Life Cycle (PLC), it can be stated that Fitbit is in the maturity stage, a point where there is a lot of competition and differentiating one’s product from another is essential. Incorporating the features desired by their audience into their models

would further Fitbit’s success as well as keep consumers engaged. Any way in which Fitbit can improve their technology based around fitness tracking would be capitalizing on their strengths.

Introduction The market of wearable technology is an ever growing and evolving market because of the crave for mobile devices. Although “wearable devices” refers to devices worn anywhere on the body, wrist wear makes up 90% of the market. With the launch of the first wearable device, many other firms followed suit, joining the market, altering the original product to reach a target audience of their own. Fitness related perks, such as the ability to track one’s steps, record heart rate, calculate calories one is burning, tracking exercise movements, as well as connect to a mobile phone app, attracted many consumers looking for modern wellness aids. Other firms took the wearable device product in a different direction, some focused more on the fashion aspect, by using the expensive leather used in their other products and designing a product that had advanced technology but was disguised as an ordinary watch. Whereas companies like Apple and Samsung focused heavily technology. Their goal was to put the advanced technology used in their mobile phones into their watches for easy access and availability. Companies based around technology and companies based around wrist wear are entering the wearable device market, proving the market is not limited to one type of company.

Analysis Fitbit has an advantage over other wearable wrist devices because they were the leaders of the market. They sent the surged the market forward into evolution and innovation. Consumers prefer Fitbit more than other fitness tracking wearable devices, as discovered in an RBS survey report. Another advantage Fitbit possess is Fitstar, “a mobile fitness training app…that provide[s] users with paid workout training videos and progress management. The acquisition was aimed at building more into the Fitbit premium membership.” Fitstar is not just aimed at ordinary consumers, the company decided to involve its employees. “Companies were becoming increasingly concerned about their employees’ wellness, and more eager to create a healthy and active image.” In order to pursue this idea, Target subsidized Fitbit Zip, the clip-on tracker model, for $335,000 employees which made Target Fitbit’s largest corporate account. The corporate wellness market is one of the fastest growing aspects of this business, giving Fitbit an advantage over other wearable device producers.

In view of the fact that the wearable device market is an extremely competitive and quickly evolving market, Fitbit has some obvious disadvantages and vulnerabilities. With a variety of companies entering the market, a variety of products are produced which leads to a market competing for area on the consumers small wrists. Apple and Samsung launched products that pursued the same target audience, Apple launched the Apple Watch and Samsung introduced the Samsung Gear. The focus of these companies was to provide consumers with miniature versions of smartphones that also included the fitness tracking abilities activity-tracking and heart-rate monitoring. Current consumers are constantly looking for easy and innovative ways to access information, Apple and Samsung produced products that hit that mark. An obvious disadvantage

regarding Fitbit is the absence of smartphone technology. Apple also managed to increase the appearance of the Apple Watch for consumers by partnering with Hermes, a luxury leather manufacturer. Similar to Apple’s idea for improvement, Withings’ outlook was to create a product that was “an honest and genuine watch that integrates these (fitness tracking) benefits and features.” Their watch’s appearance was an ordinary analog clock display with basic tracking functions connected and available only a connected smartphone. Although the fitness and wellness features were not the emphasized aspects of this product, consumers would be more likely to wear this at any occasion because of the normal watch appearance, which puts Fitbit at a disadvantage. Although Jawbone’s developments did not last in the long run, their approach was unique. Instead of making its device as complex as possible they took the simplicity route, their product was advertised as a “lifestyle tracker” with daily tracking abilities and could be worn with other devices. There was talk about there improved model would be the first to have communication payments with American Express. Simplicity did not attract as many consumers as the company had wished, giving companies who strived for complexity such as Fitbit and Apple an advantage. Nike has an advantage over other companies in the wearable device market because of the brand it has established in the fitness community.

Referencing the four stages of Product Life Cycle (PLC), it can be assessed that Fitbit is in the maturity stage. During the maturity stage, a company is focused on differentiating themselves from their competition and emphasizing that fact in advertisements, another indicator of the maturity stage could be a small decline in sales. The release of the Apple Watch raised concerns regarding sales for Fitbit, although the Apple Watch success did not have a large impact on Fitbit. Consumers were purchasing both Fitbit products and the Apple Watch, although Fitbit revenues

did not take a hit, competition rose. The market at this point is growing and becoming one with many competitors, meaning there will be numerous products that are trying to reach the same consumers for their similar products. Seeing that there are many products, companies must constantly emphasize the beneficial differences in their products over others in order to entice more consumers. This focus on differentiation is a key characteristic of the PLC maturity stage. Strategies for companies in this stage of Product Life Cycle would simply be to defend market share while maximizing profit.

Recommendations The best recommendation Fitbit could get is to design a wearable device that has both the technology of fitness devices as well as smart phone technology, along with multiple different appearances that would allow consumers to choose a more athletic look or a more original professional watch look. If the company was to include those characteristics which the consumers desire, they would reach an even broader consumer base. With the combination of all characteristic’s consumers desire in wearable devices, and there already developed and respected brand, Fitbit will pull ahead as the leading company in the market. Further engaging current consumers can be difficult but with the added smart phone technology, consumers will almost be forced to be further engaged, not only with the perks offered by the technology but Fitbit as well. In view of the fact that Fitbit’s knowledge comes from wellness and fitness, any way to add or improve the tracking and recording abilities of their models would be using their strengths to their advantage.

Conclusion The wearable device market is a highly competitive market due to the amount of companies entering, the different types of companies (in regards to what they normally produce or where their focus is), and the space they are competing for on the consumer is quite small. Fitbit surged this market forward into evolution and innovation when they launched the wearable wrist band that tracked a person’s movement, heart rate, calories burned, etc. Many other companies such as Apple, Samsung, Withings, Xiaomi, and Jawbone, followed suit with their own wrist device that emphasized different aspects and features to attract consumers. Features emphasized were technology, whether it was fitness related or smart phone related, luxury and appearance, and simplicity. A survey showed that Fitbit was still the preferred choice of producer, even among the numerous producers that followed suit. At this time Fitbit is in the maturity stage of the Product Life Cycle, a point where there are many competitors who must entice consumers by differentiating themselves from the rest. The best thing to do in this stage is to defend market share while maximizing profit. Recommendations for this company would be to incorporate the features that consumers are looking for to broaden the consumer base. Another strategy for Fitbit would be to focus on advancing their fitness technology to get ahead of other companies and produce what they know best....