Fitbit: Market Strategy Analysis

Introduction

Fitbit nowadays is well known as a fitness tracking wristband which is now very much popular to the health conscious people and wellness centres. Fitbit was first introduced to the market as a health related information tracking device with a cli-on that is wearable on the wrist by the US state’s Delaware city in 2007. The first introduced basis model was named as Fitbit Flex, whose simple aim was to gather and show calorie count, steps walked and sleeping cycles. Later on it was developed with many new features to consumers. There are various competitive advantages which Fitbit created to grab the attention of market and buyers despite having high competition with other rival companies. Here this report will be focusing on describing what the main advantages Fitbit pursues to compete in the market. This assignment will describe the importance of having competitive advantage and its impact on planning market strategies, marketing mix and business positioning in the competitive market.

Assessed Task 1: A Critical Analysis of a Marketing Tool as an Aid to Designing a Marketing Strategy

A. Concept of competitive advantage and its impact on the success of marketing strategy

The term competitive advantage refers towards those strengths which a business pursues to for competing in the market. Competitive advantage is built with a good overall value of the firm to its customers more than their competitors’ value to the buyers. According to Tran (2017), a business with its management team during their annual strategy planning develops their marketing plans also to maximise their business revenues which can be achieved with the same competitive advantages. The factors of a competitive advantage facilitate the firm to produce services or goods that are better or may be cheaper than its rivals. These factors allow the productivity of the business entity to generate even more sales and superior margins as compared to its market rivals. Those factors which affect the competitive advantage are selection, service, location, quality, price and speed. As per Khan (2014), competitive advantage is a kind of advantage over the competitors gained by the offering to customers valuable either by lower prices or by providing benefits and services that justifies higher prices. All the notion of both the competitive advantage and a marketing strategy are truly intrinsically linked with each other. A competitive advantage is a process of analysing the sustainable and fundamental basis with which one can compete (sciencedirect.com 2020).

The part of marketing strategy or product planning at the lowest level takes place in the market unit where typically the product, sales, price and services are planned. There the competitive advantage of competitors is also identified. A good competitive advantage impacts on the alignment of new products or services to the customers (Harb et al. 2019). Every business to understand their customer needs. A marketing strategy’s main focus goes to understand and benefit the audiences with their demands. A strong competitive advantage allows the firm to finitely use its resources to reach out to their prime customer targets with various different types of group of people. A new start-up if can be able to foot-hold its rivals with their competitive advantages then it becomes easy for them to hold the market. Competitive advantage also facilitates the expansion of distributors. As discussed by Thabit and Raewf (2018), a good increase in customer demand always adds the distribution channels with the help of best possible use of the competitive advantages.

B. An analysis of Fitbit’s competitive advantage and where this leads to Fitbit winning share over its competitors.

Fitbit was basically founded in March 2007, as Healthy Metrics Research, Inc. by Delaware of the US state. First when it was introduced in the market, the product was not so much popular and demanding but later on in year 2015, the company started to appear frequently in the US mainstream media channels and then it got eye-catched by the people as a wearable fitness tracking device. The factors which made it attractive to the people are it being able to record the daily steps walked and calories burnt on a daily basis with a clip-on stylish wristband which looks very much attractive.

The competitive advantages of Fitbit can be noted as:

It’s leading the market position with around 70% with its product and around 80% with its dollar value is one of the greatest strength of Fitbit. Fitbit kept maintaining their belief that they will always become the sales leader.

A competitive advantage that always proved as strength of Fitbit is its broad mobile compatibility facility with an open API. Fitbit’s API makes it easier for people to utilise that platform for their own services with even better connectivity.

Fitbit fitness wristband pursues advanced and specific purpose built software and hardware technologies. As stated by Tran (2017), it not only provides the hardware service but also gathers the information of users in a very meaningful way focusing towards health goals.

Fitbit always kept a direct relationship with its customers and created a regular communication with the users of Fitbit. This gave the consumers a sense of importance and closeness with the product they use. Fitbit seeks the collection of consumers’ tracked information to get a better understanding of their health and fitness goals and conditions which improved their relation with buyers (Harb et al. 2019).

Fitbit in its marketing strategy follows the differentiated and broad go-to-market strategy unlike its other competitors. Fitbit created one of its competitive advantages as it is widely available to the people not only in sports apparel and fitness stores but also in other general retail shops too. If calculated, it can be found that Fitbit is available in around 45000 US retail stores and along with that in 50 other countries than US through online stores and foreign wellness and healthcare partners (sciencedirect.com 2020).

Assessed Task 2: An analysis of a case study organization and recommendations for a marketing strategy, competitive positioning and marketing mix

A. An analysis of the marketing situation of Fitbit

The following analysis describes Fitbit’s marketing strategy using the VRIO analysis tool.

The Business of Fitbit: Fitbit is basically US based digital health and fitness brand popularly known among people for its fitness tracking devices which are wearable and promotes health consciousness among people and the trend of fitness wearables. In initial days Fitbit only featured calorie counts and steps walked with fewer elements in it (Martínez-Ruiz et al. 2016). But later on as the popularity took a fly it changed its wristband models with new features. As stated by Tran (2017), a customer always looks for new and innovative changes which Fitbit understood. The main aim or motive of Fitbit is to ignite the diversification in heath solution business which comes playfully. They have always been committed to their customers in growing new and exciting experiences. Shaw (2017) suggested that despite regular and trendy changes in their products, Fitbit’s core value and purpose have not changed with the same endeavour in the domain of health and fitness sector.

Fitbit’s Core Strategy: Before Fitbit’s rise the business of wearables has been declined; however, Fitbit established a great integration in the healthcare system which revived the industry later on. Baldassarre and Campo (2016) stated that Fitbit facilitated its audience by selling subsidised devices and their employees also by managing wellness programs for them. These activities bring opportunities for more recurring stream revenues. For Fitbit to negotiate its method of involvement in the health ecosystem, it needs to maintain the consumer brand in the market. Nowadays the trend of environment of the healthcare ecosystem needs brands to get engage consumer in products those buyers wants (Yoo et al. 2018). This is the place where Fitbit’s business and products came to effect. Fitbit as a fitness and healthcare enterprise stood alone by introducing fitness wearables by generating more revenue from the health system. Fitbit seeks one of its most strong strategy that is to keep continuous communication with their customers.

Fitbit’s Market Position: For gaining a competitive market position in the market, it is necessary for a firm to define their target in market and identify the competitive advantages. In this regard Fitbit is still standing alone as one of the leading fitness brand after Apple and Xiaomi Corp among the global market share. In every market no brand’s position is sustainable and fixed (Yoo et al. 2018). Fitbit’s primary resources are mostly either imitable or substitutable, which says that Fitbit’s position in market is always at risk and can be overtaken by rivals anytime. This risk always keeps Fitbit attentive in pursuing the differentiation strategy for their business with a focus on the broad market (onlinelibrary.wiley.com 2020). The strategy relies on the premium designed devices and features to continuously increase customer’s willingness to pay attention towards these gadgets and buy them too. This also created more demand of smart fitness gadgets and resulting to more production in number.

Fitbit’s Competitiveness: In capital system, market competition can be called as the heart of the market. The market competition is that force which drives creative thinking and innovation by which the market demands and supplies are coordinated equally for goods or services (sciencedirect.com 2020). In a free market, where there exists the force of demand and supply, the presence of competition is inevitable. This demand and supply forces lead Fitbit to increase their number of users in year 2015 after adaptation of new improved technology as compared with its introduction year approximately around 19 million more users (sciencedirect.com 2020). Being the current leader of healthcare service provider, Fitbit faces a tough fight with other brands like Xiaomi and Apple. Rivals want to get on that space where Fitbit is standing alone with their more research and development strategies. With rapid rise in competitors, even if Fitbit loses a little bit of its market share to its rivals, it will still stand making massive gains for over next few coming years.

VRIO Analysis of Fitbit’s Market Strategy

This VRIO analysis of Fitbit will focus on its internal resources to find out whether these are sustainable competitive advantage for planning market strategy or not.

B. Proposed marketing strategy, including objectives, strategic focus, competitive positioning and a marketing mix

Marketing Strategy

Marketing strategy is the backbone of a business because it gives the firm the required direction to follow to achieve the desired objective. Thai is why it becomes critical for a firm to choose an appropriate marketing strategy to work in best possible ways. As per Khan (2014), it can be imagined that marketing strategy is a map which navigates the business towards greater sales, wide brand recognition, and high extended market penetration. Some of the benefits of marketing strategy are –

It is an identifying tool which a company can efficiently utilise to fight in the open market against rival brands and hold market share.

It improves the impact and effectiveness of marketing messages of a brand to its customers.

It adds value of that brand for the customers that ultimately increase the sales resulting into profit.

Objectives

Marketing tools are an integral part of marketing strategy and they are designed with the motive to gain the overall organisational goals smartly (Harb et al. 2019). With the analysis of situations that are stated before, the below table highlights the objectives of both a business and marketing strategy-

Strategic Focus

Fitbit’s strategic focus was always towards staying different and far top from its competitors like Xiaomi and Apple. The firm aimed to encourage the users for becoming more active and healthier through Fitbit devices and services (sciencedirect.com 2020). Fitbit’s social aspect is to develop Fitbit’s growth through their key products and devices. As discussed by Thabit and Raewf (2018), Fitbit spread that “it is a social network which is coupled to hardware”. Fitbit’s strategic focus needed to be on the objectives as mentioned in the figure above: deeply penetrating them in the healthcare system so that no one can touch their level, creating new improved value for the firm and hold a great market share being in competition (Harb et al. 2019). In order to achieve these goals Fitbit needs to collaborate with the various types of Medicare, Healthcare and Insurance companies. Based on the situation analysed here, the strategic focus needs to be turned to expand the market share of Fitbit as described in the objectives of marketing strategies. This can be achieved by creating values for the customers or clients by offering them the products and services with B-to-B services. Baldassarre and Campo (2016) stated that this strategic focus might somehow, will ignore the consumer demanded products and the new demographical changes which could be very crucial for Fitbit to cover by their brand value name.

Competitive Position

According to the latest studies and media new about Fitbit, There will be big money in Fitbit only if it goes towards the digital health care plans for their customers. These studies indicates that in case of employees, Fitbit’s average cost for healthcare plans for their employees who opted for a Fitbit fitness and wellness plan has calculated as less than 25% (onlinelibrary.wiley.com 2020). This count is translated in approximately around $1300 dollars for saving against for someone who have not opted for any Fitbit plan. As discussed by Thabit and Raewf (2018), Fitbit planned to shift its business from just B-to-B to healthcare system, where it gained its greatest competitive advantage beneficial for the firm. In recent market, Fitbit has become a trusted brand name who added value to the healthcare market ecosystem which was strategically very hard for its rival brands like Apple and other to have a long term survival in the healthcare system (Martínez-Ruiz et al. 2016). In market Fitbit’s position is as a neutral brand that works with any of the smartphones which makes it more desirable for the insurance companies and other hospitals to reach for collaboration (sciencedirect.com 2020). Contrasting this, Apple smart watches only works with Apple iPhones, where if Apple wants anyone like an employee or a hospital or any insurance company to use their smart gadgets, they have to reach people and make them buy the iPhone first which is very much difficult. Shaw (2017) suggested that the price of iPhone range is also a reason for which every people can afford them hence it restricts them to use Apple’s smart gadgets also.

Marketing Mix (4Ps)

The figure below will describe the 4Ps i.e. Price, Product, Place and Promotion of Fitbit.

Conclusion

This above written report presents the Marketing strategically style of Fitbit a healthcare and fitness brand which introduced its health tracking device to the market. This assignment shows hoe marketing strategy is said as the backbone of any business and upon which the whole functioning and running of that firm depends. A descriptive concept of competitive advantage is shown above with a detailed knowledge about Fitbit’s competitive advantages and how the firm utilises them to gain market share is also described above. A short VRIO analysis has been mentioned presenting Fitbit product’s valuability, rarity, imitability and organisabilty. Some of the marketing strategies were also proposed defining the marketing mix, objectives of market strategy, market positioning and strategic focus point. Lastly it can be concluded that this report gives a brief picture of Fitbit brand and its business elements.

References

Harb, A.A., Fowler, D., Chang, H.J.J., Blum, S.C. and Alakaleek, W., 2019. Social media as a marketing tool for events. Journal of Hospitality and Tourism Technology.

Martínez-Ruiz, M.P., González-González, I., Jiménez-Zarco, A.I. and Izquierdo-Yusta, A., 2016. Private labels at the service of retailers' image and competitive positioning: The case of Tesco. In Handbook of research on strategic retailing of private label products in a recovering economy (pp. 104-125). IGI Global.

Tran, T.P., 2017. Personalized ads on Facebook: An effective marketing tool for online marketers. Journal of Retailing and Consumer Services, 39, pp.230-242.

Baldassarre, F. and Campo, R., 2016. Sustainability as a marketing tool: To be or to appear to be?. Business Horizons, 59(4), pp.421-429.

Thabit, T. and Raewf, M., 2018. The evaluation of marketing mix elements: A case study. International Journal of Social Sciences & Educational Studies, 4(4).

Yoo, B., Donthu, N. and Lee, S., 2018. An examination of selected marketing mix elements and brand equity. Journal of the academy of marketing science, 28(2), pp.195-211.