Answer 1
The target market of Fitbit
The target market of Fitbit includes those people who want to spend healthier lives. The company has shown its ability by employing the advanced technology in its operations to address the needs of the people.
Increase in Demand
On its first debut the company when the company launched its product named exercise tracking bands, the share price rose tremendously which lead to the increase in the demand from the investors.
Challenges faced by Fitbit
Increase in competition:
Apple Watch emerged as the first competitor, offering multifunction devices. The biggest threat to the company was posed by a firm from China named Xiaomi. It is because of the low price offered by the Chinese company that Fitbit became pressurized to expand. The company changed its business strategy and experimented with “focused differentiation.” For this, it first introduced Fitbit Blaze. This first move of the company was a measure to counter the shift caused by the competition. Later, the company introduced Fitbit Alta to capture the female market. Still, the stock price and the market share of Fitbit declined as the company’s competitors tended to grow. The company also acquired Coi to facilitate payment forms.
In 2009, the company Fitbit became the market leader when it launched its first device. The range of its products varies from simple to complex, such as the Flex doorstep tracking band and smartwatch. The detailed filings of the company show that the sales of the company have increased by 350%. However, the slow-down and declining trend appeared for the company as it realized that the results would deteriorate with the launch of a new product due to increased levels of spending. To curb this, the company rolled out certain features. It led to further deterioration when the company encountered multiple products, such as the Alta fitness tracker and Blaze, that were not meeting the targets. The condition slightly improved, and the company claimed that its product Blaze performed well and surpassed the internal sales forecasts made by the company.
Answer 2
With an increasing decline in sales, the company struggled to launch a corporate strategy altogether. The company tried to position and produce its products as health gadgets. This move was taken to take steps to improve the company’s long-term condition. The company estimated that if this product succeeded, the doctors would prescribe it to the patients, and it would be beneficial for the patients of physical therapists. The company also acquired Coin to facilitate payment forms. It has also announced its purchase decision for the smartwatch startup Pebble. However, both steps taken in terms of diversification did not result as successfully as they were thought out. The strategic resource gap analysis which measures the deviation between the actual and desired outcomes suggests in the case of fit bits that the company want to remain a market leader, however, the sales are declining. Thus, in order to fill this gap, the company needs to evaluate its current strategies carefully so that it can achieve its goal. As Fitbits has encountered the entry of two strong competitors in the market, the gap has tended to increase. In its current situation, the company relies on borrowing, which means that it is partnering with other resource partners such as Coin and Health Professionals, hoping that it will give the company leverage over its competitors. The company cannot adopt the BUILD pathway, as its competitors, such as Apple and Xiaomi, are more technically advanced and do not produce single-use products as Fitbit does. In terms of BUY, this resource pathway suggests the company must build deep and broad relationships with its resource providers, which fit bit can only capitalize once it gets settled with the resource partners with whom it is going to experiment with a pathway called BORROW.as the trend of the company suggest that the arrangements of Fitbit with COIN (a financial service provider are not prospective yet).
These moves suggest that the company understands that in order to survive, it needs to identify the strategic resource gap and act on an appropriate pathway to re-vitalize the dominance it once had in the market.
Answer 3
The changes in the corporate-level strategy did not prove to be adequate. The acquisitions were made at a time when the market was showing signs of weakness. Further, the tech companies refused the company to release its product named smartwatch. Further, Microsoft also stopped buying the company’s products. However, Fitbit did not stop itself from the acquisition.
In order to ensure a successful turnaround, the company first hired a tech expert to help the manufacturing and operations be sorted out. Secondly, it targeted the growth in sales of the product called the core fitness line. Thirdly, the company realized that the slump occurred because the market became saturated for the early adopters, and there was still room for the company to capture the later adopters. For this, it worked on its Fitstar app. Finally, Fitbit understood the fact that it would be very difficult to compete Apple and other smart tech software, thus it decided to combine the health and fitness with the user connectedness. Fitbit faced various challenges, some of which included difficulty in making the smartwatches as a third-party app experience, the launch of its own app store, and the plans to target the market of elderly people with any new product. Twine Health, a program that provides health coaching, has also been announced. Fitbit has collaborated with various businesses, such as Barclays. Such an organization emphasizes employee fitness. Thus, Fitbit has captured this segment. Finally, the new watch launched by the company, the Versa, shares the characteristics of a smartwatch and has been priced competitively.
In the future, the company should follow the resource pathway Framework. The figure of the framework is displayed as follows:
The framework suggests that in order to fill the strategic resource gap, the company must first identify its position. The position of the Fitbit is in the right quadrant, and then it must devise its strategy. The previous discussion reflects that Fitbit falls under the category of a cash cow as the relative market share of the company is high, whereas the market growth of the company is low. There are other frameworks such resource pathway framework and make or buy continuum by which the company can identify that how it can reduce its strategic gap, only then it shall be able to face the challenges that it is currently facing.
