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 a 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, Fitbit became pressurized to expand. The company changed its business strategy and experimented “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 the Fitbit declined as the company’s competitors tended to grow. The company also tended to acquire Coin, in order to facilitate the forms of payments.
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 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 shall deteriorate with the launch of a new product due to increased levels of spending. To curb this, certain features were rolled out by the company. It lead to further deterioration when the company encountered that multiple products such as Alta fitness tracker and Blaze are not meeting the targets. The condition slightly improved and the company claimed that its product named Blaze performed well and surpassed the internal sales forecasts made by the company.
With an increasing decline in the sale, the company struggled to launch a corporate strategy altogether. The company tried to position and to produce its products as health gadgets. This move was taken to take steps in order to improve the company’s long-term condition. The company estimated that if this product succeeded the doctors shall prescribe it to the patients and it will be beneficial for the patients of physical therapists. The company also tended to acquire Coin, in order to facilitate the forms of payments. It has also announced it purchase decision of smartwatch startup Pebble. However, both steps taken in terms of diversification did not result as successful 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 a strong evaluation of its current strategies so that it could achieve its goal. As fitbits has encountered the entry two strong competitors in the market, the gap has tended to increase. In its current situation, the company is relying on borrowing which means that it is partnering with the other resource partners such as coin and health professional and is hoping that it will give the company a leverage over its competitors. The company cannot adopt the BUILD path way, 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 shall get settled with the resource partners with whom it is going to experiment 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 of the company suggest that the company understands that in order to survive it needs to identify the strategic resource gap and must act on an appropriate pathway to re-vitalize the dominance it once had in the market.
The changes in the corporate level strategy did not prove to be adequate. The acquisitions were made at the 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 so that the manufacturing and the operations could be sorted out. Secondly, it targeted the growth in sales, of the product named core fitness line. Thirdly, the company realized that the slump occurred due to 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 them include, difficulty in making smart watch 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 and partnered with various businesses such as Barclays etc. Such organization emphasizes on employee fitness. Thus Fitbit has captured this segment. Finally, the new watch launched by the company named, the Versa, shares the characteristics of smart-watch and has been priced competitively.
For 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 first must identify its position. The position of the Fitbit in the right quadrant and then must devise its strategy. From the previous discussion, it 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.