This marketing plan informs the strategic market positioning of Fitbit to offset the fierce competition wedged against its smartwatch product line by Apple, Samsung and other smaller industry players. The company is currently experiencing dwindling sales, reduced revenues and plunging market share courtesy of high-profile product launches by prominent brands in 2017 and 2018. This report suggests creating a stronger brand that consumers can quickly identify with its products. The key recommendation is using price skimming to boost sales and proceeds during product launch by creating perceivably superior quality. Also, the company should add more features and aesthetics to its smartwatch to make it more appealing to the current consumer segment.
Following the wide acceptance of smartphones, the wearable technology industry has also experienced rapid growth in recent years. The most popular wearable products include smartwatches, smart clothing, smart glasses, and fitness bands. The smartwatch sensation is attributed to increased health-consciousness and fitness concerns among younger generations. However, Fitbit, a significant player in the wearable technologies industry, is struggling to gain a stronger foot in the market due to the numerous high-profile product launches, conducted in 2017 and 2018(Forbes, 2019), that have intensified competition. Notably, its smartwatch device shipments have plunged by 37 percent annually, and its market share has capitulated to intense competition. In turn, its total revenue decreased by 15 percent in 2018 compared to 2017. This report analyzes the current situation of the company’s smartwatch product category and the wearable technologies industry and provides recommendations on how best the firm can position itself relative to the competition.
Fitbit aims to increase its current market share and revenue by 40 percent and 20 percent respectively after the figures plunged in recent years. For example, the company’s device shipments reduced by 37 % and its market share too fell because of increasingly intense competition in the wearable device market (Maythaler, 2016). Thus, the company wants to take advantage of the recent rapid growth smartwatch product category by manufacturing and marketing them on a global scale. The company culture is ‘Don’t’ Sit, Stay Fit,’ and the company’s smartwatch is not only for entertainment but also helps its buyers to achieve their fitness goals. However, the company’s small business unit might impede its strategic marketing goals dues to its limited resources.
This section critically analyzes Fitbit’s strategic planning tools and its current market situation by highlighting the firm’s strengths, weaknesses, threats, and opportunities.
Fitbit Inc. draws its key strength from building and enhancing its capacity to thrive in new markets. The company has a highly skilled workforce that has been achieved through education and training programs (Armstrong et al., 2015). Besides, it has a strong distribution chain facilitated by reliable suppliers. The company has excellent expertise at entering emerging markets, which has contributed to a higher revenue stream, business expansion, and diversity of its economic cycle.
Fitbit scores considerably low figures in innovations, product range, and product marketing. The company should consider outsourcing new skills due to the high attrition rates among pre-existing employees (Kotler et al., 2015). Also, Fitbit is poor at integrating mergers and acquisitions with different work culture and creating an organizational structure that permits venturing into adjacent product segments (Strobl et al., 2018). Therefore, competitors gain a competitive edge over the firm courtesy of poor marketing strategy and ‘unknown’ brand loopholes.
Fitbit can enhance its profitability through capitalizing on open taxation policies in various countries. Also, new environmental policies that drive green economies create a level ground for all players in the industry to solicit competitive advantage (Ouma & Ambrose, 2016)and market shares through compliant CSR policies (Kotler, 2016). Additionally, more apps are needed by customers, which is an opportunity for Fitbit to develop a collection of freemium and premium apps to boost its current offers.
Shortage of skilled workforce coupled with intense competition in international markets represents a significant threat to Fitbit’s growth and profitability. Additionally, the company is exposed to currency fluctuations, liability laws, and scarcity of innovation resources in various markets, thereby causing swings in the number of sales (Kotler & Armstrong, 2015). Lastly, the rise of advocacy movements in several countries demanding pay raise imposes severe pressure on the company’s profitability.
Fitbit has about 25 million active users. Most of these users acquire Fitbit’s products such as smart watches for fitness purposes. The customer derives value from Fitbit’s products because they have no reason to upgrade as they still serve the purposes (Mahar, 2018). However, this behavior is not appropriate for Fitbit because when customers fail to update their devices, the company’s revenue either drops or stagnates (Cravens & Piercy, 2016). Most of the company’s customers in the U.S, Europe, and Australia are fond of acquiring activity trackers such as the Fitbit Flex, which is a replaceable wrist. Hence, the company wants to introduce a smartwatch that serve as entertainment and fitness tool.
Porter’s Five Force provides a comprehensive analysis of Fitbit’s competitive environment by illustrating the potency of suppliers and customers in the marketplace.
Threat of New Entrants
The threat of new entrants is weak. Firms in the wearable technology industry require large amounts of capital to set up businesses due to high expenditure. Mainly, a lot of expenses are incurred in research and development for the firms to innovate new and innovative products.
Bargaining Power of Suppliers
Bargaining power of suppliers is weak. The numbers of suppliers in the wearable industry are many as compared to buyers. Thus, they cannot exert control over prices as overcharging customers (firms) will make them turn to other cheaper suppliers.
Threats of Substitutes
The threat of substitutes is weak. Apart from the smartwatch, the only other product that can be worn on the hand for entertainment is the wristband. However, this wristband cannot provide the same level of entertainment as the smartwatch because it is smaller and needs an external device to display videos or results.
Rivalry among Firms
The competition among firms is very strong. Fitbit operates in an industry where large companies such as Apple are producing more sophisticated smartwatches that could attract customer’s attention. However, the idea that other firms in the industry focus on entertainment-based smartwatch could make competition weaker.
Bargaining Power of Buyers
The bargaining power of buyers is weak. There are only a few firms that produce similar items to that of Fitbit, and customers have a few companies to choose. Hence, customers’ bargaining power is weak.
This section analyzes macro factors beyond any company’s control that affect Fitbit’s aggregate performance (Abott, 2015). These elements play a significant role in shaping the landscape of business and determining the growth and profitability of a company in a particular market.
Political stability is an essential feature of business success in the dozens of countries that Fitbit operates. The company operates in the wearable technologies industry of various economies that are exposed to political risks such as military invasion, high levels of corruption, bureaucratic interference, unfavorable pricing, and wage regulations. For instance, some governments impose mandatory employee benefits and tariffs on technology enterprises, which drive up operating costs.
The most prominent factors that impact on Fitbit’s financial performance include variable inflation rates, foreign exchange rate, interest rates, savings rates, and the economic cycle. These factors determine cumulative investment and the aggregate demand in any given economy. Also, the financial systems of various economies differ significantly in terms of free market, infrastructure quality, comparative advantages, and host currency stability (Abtt, 2015). Therefore, Fitbit capitalizes on economic variables such as consumer spending and industry growth rate to project the growth trajectory of the Scientific and Technical Instruments industry.
Social factors encompass societal aspects such as culture, shared beliefs, attitudes, trends, tastes, and preferences of a population. These elements define how Fitbit marketers understand their target market and design a marketing approach. The most important factors include population demographics, education level and skills, class and power structure, gender roles, entrepreneurial spirit, social conventions, environmental consciousness, health awareness, and leisure interests.
Technology is the fastest growing novelty that is driving the trajectory of business in various sectors. Fitbit must assess the technological landscape of the Scientific and Technical Instruments industry to cope with the changes in the industry and understand the rate at which technology is disrupting the industry’s dynamics. For instance, Fitbit should consider how recent innovations by competitors such as Apple Inc. affect technological diffusion, cost structure, value chain, and product offerings.
Different countries maintain distinctive environmental standards backed up by regulations that may impact on the overall profitability of a company. Therefore, Fitbit should evaluate ecological elements such as attitudes towards endangered species, ‘green’ environment, renewable energy, waste management, climate change, and pollution regulations in new markets.
The legal framework and institutions in many countries are entitled to enforce intellectual property rights. Therefore, Fitbit should observe health and safety legislation, discrimination laws, employment statutes, and consumer protection regulations. In addition, the company should evaluate the rules that are exclusive to the Scientific and Technical Instruments industry which include intellectual property rights, copyrights, and patent laws, antitrust laws, e-commerce, and data security.
Market segmentation entails defining consumers by the various traits that delineate them from the general population. The crucial features to be used to quantify potential segments include price, culture, accessibility, purchasing power, and education attainment (Beane, 2012). This section evaluates how Fitbit can capitalize on current trends and future estimates that depict buyers and suppliers potency in the marketplace to segment its consumers. This analysis is essential because it will boost the company’s capability to gain a stronger foothold in the wearable technology industry.
To attain financial competency in the global smartwatch market, Fitbit needs to keep up with the current trends and consider future estimates that depict impending investment pockets. The company should consider doing a product portfolio extension to incorporate smartwatches for entertainment purposes(Hestad, 2016). Also, the company can consider standalone and classical segmentation strategies to market its product.
Consumers purchase smartwatches for varied reasons including personal assistance, wellness, healthcare, sports, and entertainment. Fitbit should customize its smartwatch range to meet these and prospective demands of potential customers.
By Operating System
The intensifying competition in the smart technology industry has resulted in the development of a series of operating systems to suit the preferences of various customers. Fitbit can take advantage of the availability of several OS including Android, Apple iOS and Tizen OS to develop smartwatches that best suit the needs of its target market. Besides, Fitbit can deploy an innovation team to create an exclusive OS for its smartwatch range (Ruiz-Paya & Forero-Pineda, 2018). The OS should be affordable, modern with multiple features, lightweight, excellent life battery, high quality and suitable for fitness.
Segmentation by region is based on the geographic location of countries, cities and postal codes. Fit-Bit can geo-cluster its consumer base based on the specific profiles of each area (Ventor et al., 2015). For instance, North America, Europe, and Asia-Pacific residents have a liking for wellness and health smartwatches (Maythaler, 2016). Contrary, in Latin America, the Middle East, and Africana regions, buyers are more inclined to focus on entertainment when making purchase decisions. In addition, geographic segmentation bears an incredibly powerful force when the company intends to understand the cultures and behaviors of certain groups. Therefore, Fitbit should gather geographic information to determine the drivers, restraints, and opportunities in different regions.
Fitness trackers and smartwatches have gained a huge mainstream following among different demographic divides, and this pattern can be used by Fitbit to establish a strong presence in the wearable technologies market. Demographics will play a key role in defining Fitbit’s target market. The significant factors that will be deployed when deciding the target consumers include age, gender, income, and lifecycle.
A majority of target customers of Fitbit’s next-generation smartwatch devices will be average-income consumers aged between 35-55 years old. Half of the focus group will be women because they are more inclined to a health-conscious lifestyle (Truong et al., 2017). Also, females aged above 35 years are more vulnerable to lifestyle-induced health problems than males.
Meanwhile, going by the healthcare statistics, senior members of the society are the most affected by lifestyle problems. As a result, generation X and Y and millennial have become more conscious about their lifestyles to avert a looming health crisis. Therefore, consumers of both genders aged between 16 and 34 are considered potential clients (Kannisto, 2016). However, sportspersons and fitness freaks will constitute a majority of Fitbit’s target customers.
Other target consumers will be travelers and explorers to whom fitness trackers are an inalienable companion. Fitbit will also target marine and military personnel, and people in logistics, automotive and aviation sectors to ad them in distance measurement and in occasions where tracking, routes, speed calculations, and directions are required. The device should be comfortable enough to suit the varying needs of lifecycle consumers.
Alternatively, Fitbit can resort to contingent marketing strategies which include rebranding, introducing new features, or positioning its smartwatches as premium or value products to offset competition. Rebranding improves product differentiation and visibility and allows the company to adapt to current or impending changes in the marketplace (Pherdamrod et al., 2019). Since Fitbit is competing on a platform that is already dominated by global giants such as Samsung, Apple, and Lenovo, the company should consider revitalizing or repositioning its brand to gain a better market share and boost its profits.
In essence, Fitbit can achieve the brand revitalization goal through premium brand repositioning (premiumization), which means creating the perception of a higher quality. As a result, the company can charge more for its goods at any phase to increase profitability (Ouma & Ambrose, 2016). Additionally, price skimming is a viable alternative for Fitbit to elevate the smartwatch demand by increasing consumer willingness to pay more for either actual or perceived the higher value of the item during the introductory phase. Furthermore, the enterprise can introduce additional features such as body mass index and nutrition intake measurements to its smartwatch repertoire to attract diverse consumer segments.
This section presents a comprehensive discussion to elaborate on why various marketing strategies were chosen to promote Fitbit’s smartwatch. The marketing decisions will be made based on the 4 Ps of marketing mix that include product, price, place (distribution), and promotion.
When making product decisions, Fitbit will assess the benefits of smartwatch devices and how the company can leverage them to its advantage (Forbes, 2019). Product decisions will include ways to strengthen the brand name to amass the largest market share for the company. Also, the management will seek to understand how the quality of the product will give it an advantage against its lead competitors. Exclusive features such as wireless operations, multipurpose utilization as a portable phone, internet accessibility, and SIM card acceptance will be included in new generation smart watches bolster the quality of an ordinary watch (Forbes, 2019). For instance, when designing the kid’s collection of watches, the manufacturer will include a voice tracker to enhance ease in trailing infants’ location by their parents. Other unique features will consist of bendable wristbands, crack- and water- resistance capabilities, and state-of-the-art buckles, and improved display light. Also, the company will incorporate a perfectly round face on the wrist-sized screen to appeal to fashion-forward consumers.
Moreover, the scope of Fitbit’s product line should be extended to satisfy a variety of customer tastes. Therefore, the enterprise will foster product differentiation by incorporating various operating systems in different devices. Also, the company intends to make Fitbit’s smartwatch convenient, functional, and suitable for the personal style. Therefore, the next generation of smartwatches will be more personal to the consumer since they will be designed for wearing rather than being carried. Fitbit will develop wrist watches for children, millennial, youths, and seniors to attract different consumer generations. Besides, the company will permit device customization to meet the particular demands of clients that intend to showcase class, affection, and uniqueness. Fitbit will implement a consumer-friendly warranty policy that exceeds that of rival brands to gain consumers’ trust. Furthermore, the best quality packaging will be used to make its smartwatch brand genuinely unique and outstanding from competing brands.
The brand will adopt price skimming to maximize sales on the new products. It implies that Fitbit will charge at least $ 200 for newly introduced smartwatches and $ 150 for the fitness pendant or bracelet (Forbes, 2019). The introductory phase will see Fitbit make robust sales because of perceived higher quality and exclusivity of the smartwatches when they are first introduced in the market. After the company attains the target sale of one million watches within the U.S., it will gradually lower the price of smartwatches by offering discounts of up to 10 percent and a price cut for purchasing two products or bundles (Allied Market Research, 2019). The driving force is to allow the enterprise to accrue maximum proceeds during the initial stages of sales before slashing the prices to appeal to more price-sensitive buyers. Also, this approach will aid Fitbit to recover development costs.
Additionally, Fitbit will allow indirect distributors that purchase its items for resale to acquire the products at a lower price than the end consumer does. Wholesalers and chain distributors that obtain the smartwatches in bulk will be permitted to pay two-thirds of the total cost then reimburse the remaining amount within one month. Similar payment terms will apply for large-scale retailers. However, consumers purchasing directly from manufacturer outlets will buy the products at the stipulated price but with attractive discounts and offers. The items will not be available for leasing because ownership is transferred once the item is given to the final consumer. The company anticipates multi-million income from smartwatches. By the end of 2019, Fitbit anticipates doubling its current sales to 30 million smartwatches globally by volume.
In terms of distribution, Fitbit is working around the clock to ensure that its watch is available in as many countries as possible through distributors, wholesalers, luxury boutiques, healthcare amenities, gym and spa facilities, and general retailers. The brand is already doing well in cities of the United States, the United Kingdom, Canada, and several European nations (Meyhaler, 2016). However, the company intends to deepen its distribution network in emerging markets in South America, Australia, Asia, Middle East, the Far East, and Africa to make its products more obtainable for international consumers. The objective is to minimize the waiting time for clients that order the products via online platforms. Logistics policy will be amended to ensure that eligible distributors obtain the shipments as quickly as possible using air transport, shipment freight, and road consignment.
Product promotion will be the most critical aspect of Fitbit’s multipurpose timepiece and fashion accessory. The company will dedicate 10 percent of its revenue to extensive media advertising of Fitbit smartwatches. This will amount to at least $1million, which will be the break-even point for additional expenditure (Statistica.com, 2019). The company will utilize all advertising platforms including electronic, print media, and the internet to familiarize potential customers with its items. The ad campaigns will underscore special features like health and fitness-oriented elements, body combinations, band styles, band visibility, and other innovative features.
Meanwhile, intensive media coverage will be allotted to popular websites, magazines, celebrity columns, blogs, newspapers, television, radio, gaming sites and applications, entertainment sites, and many others. Besides, the company will capitalize on the current social media frenzy among cross-generational tech-savvy clients to create a buzz about its smartwatch collection. Moreover, Fitbit will engage its public relations team in promotional programs to establish a close rapport with potential customers in new markets. They will conduct demonstrations and fittings of the smartwatch to break the ignorance cycle on the correct use of smartwatches. The organization expects to double its market share, triple the overall international sales, expand to newer markets, and recoup half of its lost profits in 2019.
Despite being a well-known brand in the wellness and health fraternity for producing smartwatch gadgets with sophisticated capabilities such as calorie estimation and step counting, Fitbit is still experiencing a plunging market share, dwindling profits, and reduced revenues. The new trend has persisted courtesy of strong competition intensified by high-profile product launches in 2017 and 2018 (Statista, 2019). Therefore, the company is looking for ways to reposition the enterprise as a leading brand in the industry and recoup its market share, revenue, and profits.
From the analysis, it is apparent that Fitbit’s smartwatch item is experiencing intense competition from Apple’s iWatch and Samsung’s smartwatch because the latter two are well-established brands in the smart technology industry (Forbes, 2019). Additionally, their products exhibit additional accessories, and their big brand names provide better marketing platforms than Fitbit. Nonetheless, as one of the biggest smartwatch and fitness tracker brands, Fitbit is better positioned to surpass its rivals as a leading enterprise by investing in building a stronger brand name and expanding to emerging markets. Noteworthy, Fitbit has the best upscale qualities, affordable prices, and exclusive features. The company’s major weakness is its marketing strategy, which is creating a loophole for other brands to trample over it.
Consequently, it is recommended that Fitbit should focus on strengthening its brand name through intensive marketing. The company should channel at least 10 percent of its proceeds to promotional activities (Allied Market Research, 2019). They include internet marketing, social media marketing, electronic media, print media, and famous personality endorsements. Internet and social media marketing will ensure that the company infiltrates tech-savvy consumers that rely heavily on the internet for up-to-date information. Electronic and print media are viable alternatives to reach out to consumers that are less-internet oriented but watch televisions and read magazines and newspapers for latest updates. The company should paste its ads on entertainment columns to capture the attention of entertainment readers. In addition, celebrity endorsement is the new marketing sensation due to the excessive mainstream obsession with celebrity lifestyles. All the advertisements should highlight the key features and benefits of possessing a Fitbit smartwatch or fitness tracker.
Additionally, Fitbit should amend its pricing strategy to attract customers differently from its rivals. For instance, the company can use price skimming more regularly than premiumization because the latter is popular among its main competitors. Apple uses premiumization because of perceived superior quality of all its smart products. Also, its product is exclusively designed for high-end consumers only. On the other hand, Fitbit targets middle- and high-class consumers by offering watches with a sleeker design, long battery life, waterproof, and affordability qualities. Therefore, its target audience is much broader than Apple’s meaning that Fitbit is better positioned to gain a larger market share. Thus, the company should offer its products at a higher price during the introductory phase to create a perceived superior quality, then lower the cost gradually to suit the demands of price-sensitive consumers.
Moreover, Fitbit should leverage the benefits of its products to create a stronger brand. The smartwatch has numerous unique capabilities including automatic exercise tracking, exercise reminders, sleep tracking, GPS-enabled, call and text notifications, heart rate measurement, and calendar alerts and many more. Therefore, the company should inform the consumer about these possibilities. Nonetheless, the enterprise should improve the original Fitbit Flex model to include interchangeable bands with accessories, optional pendant with necklace accessories, water- and crack-resistance, and longer battery life. Also, the watch should be able to notify the users if they are getting enough sleep. Improving the quality of Fitbit smartwatch that is currently available at the marketplace will draw a more extensive consumer audience towards the product.
Lastly, Fitbit should keep tabs of current and future trends in the wearable technologies industry to ensure that the company remains innovative and competitive. The organization’s R&D team should watch out for the latest trends in product development, marketing patterns, and promotion opportunities. For instance, more companies in the tech industry seem to understand consumer obsession with fashion and are capitalizing on this behavior to boost their proceeds. Similarly, FitBit should produce watches that are not designed merely to serve health and fitness functions. Instead, the company should incorporate more color and accessories to attract fashion-forward consumers that are interested in keeping fit as well. These recommendations will bolster the overall performance of Fitbit in the long run.
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