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The Fitbit corporation, which specializes in wearable fitness production, follows the model of market-oriented pricing strategy. According to this standard, the management targets the requirement of the primary customers of the company (Frenz par. 1).
Thus, before fixing the prices for the Fitbit products, the firm sustains a complex estimation of the financial opportunities of the business and verifies them against the prices, which can potentially be allocated by a target market. In this way, Fitbit balances the population segments and profit-oriented characteristics of the corporation.
If one compares the clients of Fitbit to the customers of its major competitors such as Nike and Jawbone, it is easy to deduce that the former focuses on the relatively low-income society. The reason for that is stimulated by the idea that wearable technology from Fitbit has much lower quality than the production of the rival corporations.
Specifically, the users of Fitbit claim that devices are guided by distraction characteristics such as background music for physical training. However, the innovation-oriented goals of Fitbit ignore the quality of the production. Therefore, the pricing strategy might be reformed and transformed in a successful one if the management of Fitbit changes customer orientation (Seitz par. 5).
New Product Pricing
Recently, Fitbit company embraced a new product line of fitness clothes. Fitbit corporation took up the strategy of product development as the tool for frawing the attention of uninterested population groups. Concerning the cost estimation of the clothes, the company aligned the quality products to the basic pricing strategy of Fitbit.
Specifically, it was decided to follow market-oriented scheme so that to retain the major customer group. However, the company had to take in consideration the fact that the target client group of Fitbit clothes was shifted and embraced the cohort of young adults, teenagers, and students, who are involved in sport activities.
Therefore, the pricing policies had to be changes as well. It might be recommended for the corporation to take up a contingency pricing with new or revised products. According to this renovation, the firm would be able to align the production with the market situation rather than with the basic company tendencies.
Thus, if the introduction of a new clothes line attracts the variety of clients despite the new production is relatively costly, the company might gradually gain the provisions for the general quality renovations, which would improve the brand positioning (Ingenbleek, Debruyne, Frambach, and Verhallen 300).
The main rivals of Fitbit corporation include the world leaders in the sphere of wearable technology such as Nike and Jawbone. The pricing strategies of the company’s competitors target premium production and establish much higher market prices than Fitbit.
The pricing success of Nike is predetermined by its efficient brand positioning. Since the latter belongs to the top sport products manufacturers. According to the statistic data, Nike introduced several subsequent price increases during the last three years.
However, it did not hinder the market sales since the company has a stable customer category. Therefore, the recognized quality standards stipulate Nike’s absolute success (Soni par. 4). Concerning Jawbone brand, it follows odd pricing strategy, which stipulates psychological marketing effects. Thus, the major cost formats follow such formats as $13,99, $12,49, etc.
The strategy draws the attention of the clients due to the pretentious low pricing. In general, however, the prices for Jawbone technology are higher than the prices for Fitbit products. Still, the market shares of the former supersede Fitbit.
The basic cost estimation of the initial company revenue as well as the materials pricing embraces an orientation on the low-cost production investment. Thus, the company uses many plastic materials in the course of technology production.
However, the strategy stipulates the diminished quality of the products. The correlation brings stable profit to the firm since the technology market regularly requires a distinct amount of small-cost sport ware. Still, the market growth is hindered, for there is no space for cheap production extension.
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Alternatively, the technology market focuses on the high-quality standards with improved functional qualities and sustainability parameters. This tendency may be exemplified by the global success of Apple brand. In contrast to it, Fitbit production gets shaded by the efficient competitor technologies (Elgan par. 1).
Correlation between Brand Positioning and Pricing
Brand preference is a direct stimulator of the production success. Thus, if the company has a firm ground on the market of wearable technology, it has a specific cohort of loyal customers, which will shape the demand for the specific products despite pricing increases.
In the case of Fitbit company, it is significant to emphasize that the brand positioning of the firm is weak since. The business lags behind in terms of both production quality and the product positioning. Thus, Fitbit does not embrace any successful advertising initiatives (Krishnamurthi 173).
Moreover, the low-price cost investment and materials’ inefficiency predetermine the failing platform of brand positioning. Therefore, the primary challenge for the management of Fitbit is to impose some critical renovation of production and marketing strategies, which will stimulate the further sales increase.
Elgan, Mike. Why Apple Is the Most Successful Company in History? 2014. Web.
Frenz, Roslyn. Management & Market-Oriented Pricing Strategy. 2012. Web.
Ingenbleek, Paul, Marion Debruyne, Ruud Frambach, and Theo Verhallen. “Successful New Product Pricing Practices: A Contingency Approach.” Marketting Letters 14.4 (2003): 289-305. Print.
Krishnamurthi, Lakshman. “An Empirical Analysis of the Relationship between Brand Loyalty and Consumer Price Elasticity.” Marketing Science 12.1 (2002): 172-183. Print.
Seitz, Patrick. Fitbit on Target with Corporate Wellness Sales. 2015. Web.
Soni, Phalguni. The Growth Factors Spiking Nike Revenues and Earnings. 2014. Web.