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NEVADA MKT 210 - MKT210 Individual Assignment

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Question: Company Case Fitbit: Riding the Fitness Wave to Glory.MKT210 Principles of MarketingIndividual Assignment (20%)Question: Company Case Fitbit: Riding the Fitness Wave to Glory. Company CaseFitbit: Riding the Fitness Wave to GloryIt was 2009. James Park and Eric Friedman were at a breaking point. They’d been flitting aroundAsia for months, setting up the supply chain for their company’s first product, the Fitbit Tracker.Having raised capital to launch the product with nothing more than a circuit board in a balsa woodbox, they were now on the verge of pushing the button to start the assembly line. But with thousandsof orders to fill, they discovered that the antenna on the device wasn’t working properly. They stuck apiece of foam on the circuit board and called it “good enough.” Five thousand customers receivedshiny new Fitbit Trackers just in time for the holidays. Getting a start-up company off the ground ischallenging. Getting a hardware start-up to succeed is near impossible, especially when you’re thepioneer. But with so many changes in the marketing environment, Park and Friedman knew they hadsomething special. Pedometers had been selling for years, following personal fitness and wellnesstrends. But those devices were low-tech and limited in the information they provided consumers. Andwith the seemingly endless demand for high-tech gadgetry, Park and Friedman saw big potential forusing sensors in small, wearable devices. The two entrepreneurs were correct. In just seven years,Fitbit has marketed more than a dozen different products and sold mil-lions of units. Last year alone,the company shipped 21 million devices—almost double the previous year’s number—ringing up$1.86 billion in revenues and $116 million in profits. Fitbit created what is now a fast-growingsegment—wearable tech. Amid its best year to date, Fitbit went public with an initial public offering of$4.1 billion. How did the company go from a balsa wood box to sitting atop an exploding industry? Tohear Park tell it, “It was the right product at the right time at the right price point.A Magical Device Although Park’s response may seem simplistic, it’s right on. Coming up with aproduct that delivers the right benefits to consumers at precisely the time they need them is the keyto any new product launch. In Fitbit’s case, consumers were hungry for this small device that couldnot only track steps taken but calculate distance walked, calories burned, floors climbed, and activityduration and intensity, all from an unobtrusive spot—clipped on a pants pocket. What’s more, theFitbit Tracker could track sleep quality based on periods of restlessness, the amount of time be-forefalling asleep, and the amount of time actually sleeping. Even more enticing to consumers, thedevice could upload data to a computer and make them available on the Fitbit web-site. At the site,users could overview their physical activity, set and track goals, and keep logs on food eaten andadditional activities not tracked by the device. To top things off, the explosion of social media andsharing personal information went hand in hand with what users were uploading. By design, Parkand Friedman put more into Fitbit’s software than its own hardware, recognizing that other hardwaredevice companies like Garmin had shortchanged the software aspect. But Fitbit’s success can alsobe attributed to new models. Recognizing that gadgets have a limited life span and that competitionwould attempt to improve on its offerings, Fitbit has made development a constant process. From theoriginal Tracker to its current Blaze smartwatch with GPS, heart-rate monitor, and the ability todisplay smartphone notifications for calls, texts, calendar alerts, Fitbit has stayed ahead in givingconsumers what they want.An Unexpected Opportunity Still, Fitbit’s path to success has been challenging. One bigchallenge the company has faced from the start is customer retention. Like many diets and pieces ofexercise equipment, users are drawn to the “wow” factor of something that can improve their healthand wellness but quickly fizzle out. And if users stop using a device, they are far less likely topurchase the “new-and-improved” version, much less recommend it to anyone else. But aninteresting thing happened as Fitbit got things rolling. The company received a flood of calls andmessages from corporate human resource departments. Perplexed as to why businesses wouldwant to buy Fitbit devices in bulk, the company assigned a point person to find out. It turned out thatcorporate America was going through a push to enroll employees in wellness programs. The reasonsfor this push extended far beyond concerns about employee health and well-being. Healthyemployees provide major benefits for a company. They call in sick less often and are generally moreproductive. They also cost less in terms of health-care benefits. And although diet and exercise can’terase every poor health condition, they can have a big effect on health factors such as bloodpressure, cholesterol levels, and blood sugar levels—conditions related to common diseases such asheart disease, stroke, and diabetes. So it’s no wonder that companies have an incentive to dowhatever they can to motivate employees to take better care of themselves. As Fitbit talked tocompanies, it discovered that most were struggling to enroll even a small proportion of employees intheir workforce wellness programs—many had less than 20 percent compliance. One problem wasthat—even as the latest fitness wearables from Fitbit and its competitors were showing up aroundoffices everywhere—participation in corporate wellness programs often required the use of a bulkycorporate-issued tracker, better known as an analog pedometer. “Can you imagine asking engineersto wear a janky old pedometer and write down their steps?” mused Amy McDonough, Fitbit’scorporate point person. Fitbit, of course, offered a much more high-tech option, letting individualseasily track more complex data and let-ting HR departments easily compile and analyze the data aswell. Fitbit’s bulk sales to corporations started rolling in. Much to Fitbit’s pleasant surprise, Fitbitproducts sold through corporations versus those sold to individuals had noticeably


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