Answer To: 4000 word assignment consisting of 6 questions.(below) Total Marks: -55 Questions: Q. 1) Analyse the...
Robert answered on Dec 25 2021
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Case study analysis
Fitbit: the business about wrist
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Table of Contents
Introduction ..................................................................................................................................... 3
Porter model for FITBIT ................................................................................................................. 3
Competitive rivalry ..................................................................................................................... 3
Bargaining power of suppliers .................................................................................................... 4
Bargaining power of customers .................................................................................................. 5
Threat of new entrants ................................................................................................................ 5
Threat of substitute products or services .................................................................................... 6
SWOT analysis on FITBIT ............................................................................................................. 6
Strengths ..................................................................................................................................... 7
Weaknesses ................................................................................................................................. 7
Opportunities............................................................................................................................... 8
Threats......................................................................................................................................... 9
PESTEL analysis on FITBIT .......................................................................................................... 9
Political ..................................................................................................................................... 10
Economic .................................................................................................................................. 10
Social......................................................................................................................................... 11
Technology ............................................................................................................................... 11
Legal ......................................................................................................................................... 12
Environmental ........................................................................................................................... 12
FITBIT Differentiations strategy .................................................................................................. 13
FITBIT positioning strategy ......................................................................................................... 13
FITBIT overall strategy ................................................................................................................ 16
Market development and growth .............................................................................................. 16
Merger and acquisition ............................................................................................................. 16
Target segment .......................................................................................................................... 17
Marketing strategy .................................................................................................................... 17
Conclusion .................................................................................................................................... 18
Bibliography ................................................................................................................................. 19
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Introduction
This is a case study analysis, prepared on Fitbit. It is a US based company, founded in the year
2007 by Eric and James. It is a wearable device making company that aimed to integrate
technology with fitness and health experience. Mission of this company involves empowering
people to lead a healthy and active life (fitbit.com, 2015). This company offers wide range of
products which are sold under different categories such as everyday fitness, active fitness,
performance fitness and weighing scales. Its key product range includes Zip, One, Flex 2, Alta,
Charge 2, Blaze and Surge (www.fitbit.com, 2016). This case study analysis discusses market
scenario of Fitbit and its strategic position. This paper aimed to evaluate industry scenario of the
brand that help in understanding future scope of this industry, SWOT analysis that help in
understanding company position, PESTLE analysis that aims to evaluate the environmental
scenario, followed by company strategic analysis such as differentiation, positioning and
strategic actions that helped it in achieving its present market position.
Porter model for FITBIT
Competitive rivalry
There is intense competitiveness present in wearable device industry. Being an emerging
industry is attracting intense competition from electronic manufacturers, global sports outfit
brands and also major technology companies. Industry encounters competition from different
parts such as US, Germany, Switzerland, France, China etc. Apple also launched smart watch
and Samsung launched its gear series since 2015 (Xu & Wang, 2017). Further to add more
fashion to its products, Apple also launched new watch series by partnering with Hermes. It also
encounters competition from Withings, which is a consumer electronic company but moved
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towards wellness and healthcare management product such as watches. Further Gramin, Swiss
watchmaker and Jawbones the US based organization, also giving tough market competition to
the brand. Further, established companies in sports market such as Nike also launched its
wearable tracker. Competition is also coming from clothing and accessories industry also, for
example Fossil Group, Inc. purchased Misfit a wearable device making company. However, each
manufacturer tries to offer something unique and different to users to differentiate their offering
from other companies. Further, companies also add unique features in their product to enhance
their customer loyalty. Finally it can be concluded that competitive rivalry imposes high threat
on this industry.
Bargaining power of suppliers
Supplier power aims to evaluate ability of supplier to impact supply and cost of raw material,
which will impact final cost of production for the company. Limited number of supplier imposes
high threat on this industry; there are very few key hardware and microchip suppliers present in
the market. Further, switching cost for company to switch from one supplier to another will also
be high as it might lead to adoption of new technology and rise in total price. Another key
requirement is operating software, it can be wither company developed or open source.
Particularly for Fitbit, company has suppliers in China and Singapore, who manages
manufacturing of hardware; its key supplier is Flextronics, it is a contract manufacturer for its
majority of devices. In case of poor supplier management, it will be difficult to meet total market
demand, further depended of low number of supplier also enhance supply chain risk, therefore it
is crucial to partner with different suppliers to subsidize the market risk.
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Bargaining power of customers
As rightly said, customer is the king of industry and business, there behavior can impact product
pricing significantly, loyalty and preference can help brand in charging premium pricing and
vice-versa. Factors impact bargaining power of customer include technology awareness, higher
information about technology advancement and new products might impose high threat on
brands as customer expect to give low price for less features. Another key factor is ability to
substitute; there are various technologies that might help in reducing the need for wearable
device; for example using smartphone apps to record various activities. Further, switching cost
for customers is very low, therefore high threat from various market operators. This industry
cater customer group which is segment 25 + of age, is comfortable with technology, frequently
uses social media, has an expendable income; this group include switchers, low brand loyalty,
high price sensitivity and inclination towards trying new products. Therefore, bargaining power
of customers in this industry is high; company continuously needs to innovate and offer
something unique to gain customer attention.
Threat of new entrants
Since Fitbit entered the market, there has been several new players entered the market. This
industry is lucrative and at emerging stage therefore it will attach new players in the market. Still
the threat from new entrant is medium due to presence of big players in the market. There is high
barrier to market entry such as huge investment is required to operate successfully. To
manufacture smart wearable device, huge set up and capital is required, further global
distribution is also required to tap the market. Further, there are also high requirements in terms
of technological expertise and experience; as it is very crucial to differentiate one product from
other to gain customer loyalty (Mcqueeney, 2015). Technological giants such as Apple,
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Samsung, Motorola, Pebble makes it more difficult to operate for medium or small operators.
Key factors that cause hindrance for new entrant include time, cost, technology and expertise.
Further, several technologies are patented to remain protected and government also imposes
certain limitation to market access. Therefore low to medium threat is imposes through this
factor.
Threat of substitute products or services
Substitute products are the one which have the ability to replace demand for wearable device
tracker in the market. Factors impacting substitute of the product include its uniqueness,
wearable device trackers are simple and comfortable; however there is risk from smartphone
market also, and intense development and addition of new features might jeopardize the market
demand for wearable device. It is also important to be remaining fashionable as new fashion
trends might cause low market demand.
This industry is competing with several direct and indirect competitors, which include smart
watches, smartphones, traditional pedometer, free healthcare activities such as running and
cycling. Due to...