Gopro CASE Analysis PDF

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GOPRO CASE ANALYSIS....

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GOPRO CASE ANALYSIS

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GOPRO: The disruptive innovator faces challenges Trung Duc Nguyen Northeastern University

Author Note This paper was prepared for MGT4230, taught by Professor Boviard

GOPRO CASE ANALYSIS

2 GOPRO CASE ANALYSIS

I. SUMMARY In 2015, over ten years after the first successful product debut and a lot of new marketchanging products, seen the first decline in GoPro’s revenue. Based on the general information provided in the case, there are critical problems which lead to GoPro’s lost in innovation momentum: 

Huge profit from the success of past products made GoPro the market leader with approximately 47 percent of the market share. However, this made GoPro neglect its competitors who already had a reputation in the camera market like SONY and ION.

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Investing in new technologies was not adequate. As a result, GoPro had to rush to research and develop new technologies that lead to not-so-surprising failure. GoPro Karma was the most typical example of GoPro’s fail in the technology race.

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They are focusing too much on media and the social effect without spending on the root of user experience. Managing and editing raw video footage recorded on GoPro devices was always a burden to its users. This issue is seen in many continuous that made customers resist buying new models.

II. ANALYSIS GoPro was founded by Nicholas Woodman who is a passionate entrepreneur and a highaction sports lover. The idea of the GoPro camera was born from Nicholas’s own need of recording footage of his experience. However, at that time, there was no camera that was durable and handy enough to do the task. With the mind of an entrepreneur, he created a camera which can be mounted to almost anything, set at any different angles, be able to withstand extreme

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conditions and easy to carry around. This product did not only create a totally new camera market segment but also bring a fresh video recording experience to every people. GoPro is not just an ordinary camera but it represents a lifestyle – a life full of precious moments, a life that worth sharing. Nicholas Woodland succeeded in turning his own need into everyone’s demand and making a simple idea become a company with billions dollar value. 1. Strategic Analysis GoPro action camera was a radical innovation. It created a new technology (action camera) for a new market segment (sports enthusiasts). What set GoPro different from smartphones and other video cameras is the experience of using the camera. GoPro has never been known for its outstanding video quality. Unlike any other camera brands, GoPro has always been known as a sports brand. Whenever people want to buy camera for their adventurous trip, they immediately think of GoPro as their first choice. The early success of GoPro came from its very first adopters who eventually became the brand representatives as they created and posted videos on the social media. This created a great effect because the experience audiences receive from the videos was so new. GoPro immediately realized this effect and created a community for the customers to share their footages and moments recorded with the device. This community also a good place not only for professional video makers but also for public to share their daily moments. GoPro’s official fanbases reached millions of followers on various platform like Twitter, Instagram, Facebook, YouTube. This marketing strategy had helped GoPro position itself from “a niche brand to a wider recognizable purpose brand”. (Dwesar and Singh, 2003)

GOPRO CASE ANALYSIS

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Strengths Market leader: GoPro was the first company came up with the idea of action camera. Fast growing: In the early years, GoPro had seen a significant increase in their revenues which brought them a lot of cash to reinvest in their products. Loyal customers: The community that GoPro had created throughout their early years are undeniably strong. Those are loyal customers who help company increase its brand recognition. Opportunities New technologies: Drones, high definition video, streaming services are new potential areas that GoPro can find new potential customers. A GoPro ecosystem: video editing, video sharing services where all the videos are edited right off the camera and shared right away among people with same passion. Moreover, this ecosystem can attract more people to join in as they are inspired by other users. An accessible-for-everyone high quality camera: the needs to record moments should not be limited in a small group of people who are able to afford a high-end camera

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Weaknesses Slow reaction to new technology: GoPro started investing in researching and developing drone when it was already so popular. Lack of flexibility: GoPro relied too heavily on its loyal customers community and neglected reaching out to customers outside the closed circle. Inadequate attention to customers’ experience: The difficulty in managing and editing recorded videos had been a problem for a long time but only been treated after it affected the return rate of customers. Threats Direct competitors: Companies like Sony, Polaroid are large companies which have high reputation in camera market. Therefore, intense competition from those companies are undeniable. Outdated technologies: Hardware technologies are becoming more and more limited, so it is important to invest in the software to standout in the race with other companies. Financial health: A long period of being slowed down and fail products launching have deeply affected GoPro’s financial status which possibly make it difficult for GoPro to raise more money to invest in future projects.

2. Financial Analysis According to the Gartner Hype Cycle for consumer devices (2015), 360-degree cameras plateau will be reached in 2 to 5 years. However, GoPro was the special case when it performed

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well in the first 10 years by doubling yearly revenue. Furthermore in 2013, it was U.S fastestgrowing image company. In 2014, the company went IPO and was value at $3 billion. After the incredible success, we saw a decline in the performance of the company marking a sight that should lead to plateau. 2015 was the year competitors like Sony, Polaroid entered the market. The one and only competitive advantage of GoPro at that time was its community. However, by offering similar devices with better pricing, those competitors easily attracted those customers. There is no doubt that those competitors had enough technologies, inventories and experiences to build the same device or even better devices in comparison to GoPro. Along with the competition, GoPro singlehandedly made itself became the victim of its own success by launching Karma to join the drone market. However, in the effort of catching up with new trending technology, Karma launching resulted in a huge loss for the company. Research and Development expenses for the new product is now a total loss since they had to recall all the device and gave away a new GoPro Hero 5 – which was planned to be new strategic product release – as a way to maintain the customers’ trust in the brand. This incident put a red mark on the financial status picture of the company. Gross margin continued declining and income statement balance was a loss of 62.8 billion dollars in the first quarter of 2017. III. RECOMMENDATION The capital for research and development should be reallocated into other different projects. HERO 5 was a success as it became the best-selling digital camera in several regions. Focusing on improving this product line up is a must since it is the core product of the company – a signature product. GoPro should take a step back on Karma Project by repositioning itself to match with company’s core value. What makes GoPro different has always been the experience

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it brings to the users. Karma was nothing than a normal drone that other competitors already launched. I suggested GoPro to develop a new software that allows drone users to create a fly pattern syncing with his movement. All the drones in the market right now, at the moment, require a people to control it and do nothing rather control the drone. It would be a giant leap for the company to create a single-person-operating drone to bring back the GoPro’s core experience – handy, easy to use, easy to operate. As David Cray (2015) said “Because it’s a small company that’s living on its innovation, GoPro’s got to try and innovate like hell or else it just dies”, GoPro should work fast on creating new ideas. The pricing should be changed as well to target wider customers range since GoPro current price can make the product be perceived as high-end device. The biggest problem that the company is now facing is the capital. GoPro has to continue on developing new product and new product line and also increase revenue after the Karma incident. There are still a lot of loyal customers, so focusing on improving customers’ experience is a must. Those customers will be the first ones to buy your new products and also influence the opinions about the product which will lead to success or failure of the devices. IV. REFERENCES Scarborough, N. M., & Cornwall, J. R. (2016). Essentials of entrepreneurship and small business management. London: Pearson. Dwesar, R., & Singh, G. (2018). GoPro: The Disruptive Innovator Faces Challenges. London, Ontario, Canada: Ivey Business School Foundation....