Introduction
In 2009, Fitbit changed workout regimens with the release of the Tracker wearable fitness sensor. Exercise monitoring sales climbed from 5,000 units in 2009 to 21.4 million linked wellness gadgets by the end of 2015 (Debter, 2017). Nonetheless, Debter (2017) insinuates that the organization sold 2,956 fewer gadgets during the first quarter of 2017 than in 2016. The growing decline of Fitbit’s competitiveness and economic condition precipitated a catastrophe for the institution’s founders, Eric Friedman and James Park, who were now tasked with rapidly defining a corporate strategy to preserve the business. Responding to the case study’s main question, Can Fitbit, Inc. Revive Its Strategy and Reverse Mounting Losses?, using Porter’s five forces model, this analysis first examines the factors influencing competitiveness in the fitness trackers business. Second, evaluated are the critical success elements that would provide Fitbit with a competitive advantage in the wearables trackers market and survive competition. Third, the report does an assessment of Fitbit’s current competitive tactic. Finally, the paper provides suggestions for the company’s most pressing strategic challenge.
Factors Affecting Competitiveness in the Fitness Trackers Industry
Fossil, a newcomer to the sector, helped boost customer attention in blended smartwatches and other apparel with workout tracking solutions by introducing effective design categories inside the exercise tracking marketplace. Non-wrist-worn monitors, such as earpieces and clothing components with task-tracking detectors, are among the advances of a second host of new competitors. The wearable technology market is anticipated to continue a favorable outlook, although a significant portion of this development is due to supplier pressure rather than customer preferences.
Threat of Substitute Products (High)
There is a range of devices manufactured by various firms that include a similar functional monitoring feature as Fitbit’s. This is because many fitness enthusiasts use iPods as activity monitors. Even though they function in particular businesses, Garmin and Under Armor pose significant rivalry to Fitbit. There are also firms, like Apple, whose wearable technology function better than Fitbit’s offering. At times, particularly in the last quarter of 2016, the key factor for the drop in revenues could be the pressure from substitutes in the market.
Bargaining Power of Suppliers (Low)
Fitbit can take advantage of the limited bargaining strength of suppliers by obtaining electrical components for its gadgets from multiple sources. This reduces the vendors’ market dominance in the wearable activity business, preventing them from increasing the prices of their products. This provides Fitbits with the ability to select from several sources. In addition, vendors will be able to supply quality goods at reasonable prices.
Bargaining Power of Buyers (High)
Since there are at least four to five identified rivals and a big pool of consumers with considerable negotiating power, Fitbit purchasers have a considerable bargaining advantage. The presence of replacements and adversaries will allow consumers to negotiate a lower price for Fitbit’s merchandise. Fitbit must be distinctive in its performance and operational attributes to avoid such occurrences; otherwise, it will damage the corporation’s marginal profit earnings.
Competition Rivalry (High)
Samsung, Apple, and Garmin are the primary contemporary rivals of Fitbits. Xiaomi is a new adversary against which Fitbits must be vigilant. Xiaomi, for example, shipped 15.7 million pedometer monitors in 2016, providing the business with a 15.4% worldwide consumer base, second only to Fitbit, with Apple, Garmin, and Samsung trailing behind the two market leaders (Svertoka et al., 2020). Others, like Under Armor, which formerly manufactured underwear for men, are also regarded as Fitbit’s opponents in the smart wearable industry.
Key Success Factors for Competitiveness
First, Fitbit may increase the battery performance of wearables to enhance their lifespan. Fafoutis et al. (2018) enumerated that a solitary coin battery functioning in a Wireless Smart-enabled gadget can last at least two years. Some chip manufacturers have utilized Bluetooth Smart to manufacture goods with long-lasting battery lives. Second, the company may reduce the expense of developing smartwatches. Bluetooth transistors are incredibly affordable, and it is anticipated that expenses will continue to decline as upgraded chip designs become available in larger amounts. Third, Fitbit could also keep up with the market’s need for ever-compact smart technology. Bluetooth Smart is designed to maintain its management role in the wearables market due to its energy conservation. The protocol is especially compatible with the new System in Package concept, which is becoming highly prevalent in the architecture of fitness trackers (Zhang & Mao, 2019). Ongoing advancements in the processor and component layout for Bluetooth Smart guarantee their continuous effectiveness in progressively smaller packages.
Fourth, the firm was capable of integrating effortlessly with millions of gadgets. Bluetooth has incredibly high brand awareness and is nearly a household name. The protocol is already preloaded on multitudes of tablets and smartphones, and almost all handsets are Bluetooth Smart-enabled. This relieves programmers of a substantial amount of strain, letting them focus solely on producing new goods and assurance that they would function flawlessly with the consumer’s existing gadgets. Fitbit could finally offer the level of protection users seek for linked gadgets. Bluetooth Smart’s 128-bit AES algorithm is consistent with the Federal Information Processing Standard, a computer-protection requirement used by the US jurisdiction to certify cryptographic hardware (Adomnicai et al., 2018). In addition, it provides a secure alternative for builders eager to install their unique authentication scheme and the capacity for producers to integrate anti-tracking technologies that will attract confidentiality-aware consumers.
Analysis of Fitbit’s Competitive Strategy
The assessments of Fitbit as a company and its macro-environment provide a comprehensive grasp of its current primary strategy. The wearables sector has decreased, but stronger incorporation into the medical system can revitalize the market. From a business perspective, smartwatches can operate independently by producing more additional income through the health sector. By providing consumers with discounted software applications, Fitbit enables them to administer their workforce hospital system. This creates a chance for a larger continuous income stream. Moreover, the transition from fitness to a second new business landscape, namely health, does not indicate that Fitbit is abandoning its consumer industry. Fitbit must maintain its customer brand to navigate the health environment successfully.
Despite such a hypercompetitive strategy, the company lost in 2017 and fell behind companies like Apple and Xiaomi. To achieve competitiveness, a company must identify its aim and analyze its strategic advantage (Wang & Nie, 2019). Due to its pioneering edge in the activity tracking sector, Fitbit remains one of the best famous companies, ranking third in worldwide market dominance behind Apple and Xiaomi. However, this viewpoint may be untenable. Fitbit’s most valuable assets are either imitable or replaceable, putting its market leadership in danger.
Recommendations for Fitbit’s Strategic Challenge
The main competitive issue affecting Fitbit is operating as a one-product company. Its rivals like Apple and Xiaomi, who have specialized in different segments, command larger consumer bases. Fitbit should implement the following suggestions to revive its strategy and reverse mounting losses. Fitbit should pursue a differentiation approach with an enlarged market emphasis, leveraging luxury features and capabilities to boost users’ willingness to spend. This strategy includes manufacturing smartwatches to generate value by differentiating characteristics, business-to-business (B-to-B) expansion and health system penetration.
Additionally, Fitbit possesses many assets, capabilities, resources, and expertise that it may leverage to achieve a more lasting competitive edge. First, Fitbit’s leadership position and brand are key assets that enable it to mitigate the danger of new rivals. However, the brand is interchangeable, as fashion houses like Apple and newcomers like Kate Spade produce identically elevated items. Luckily, Fitbit is using its registered trademark to command the medical sector and its corporate identity to establish itself as a trusted source in the B-to-B market.
Second, the techniques of Fitbit introduced new and unique technology to the marketplace, and its attractive looks and Bluetooth synchronization features appeal to shoppers. However, rivals have already caught up, and this invention is no longer uncommon. Similar technologies are present in other items on the market, demonstrating that this is not an expensive resource to replicate. There are other alternatives to it on the market. Nevertheless, Fitbit’s pioneering technology is currently being developed and utilized for the company’s new venture in the health industry.
Conclusion
In conclusion, from Fitbit’s case study analysis conducted above, it is clear that competition and its one-product tactic were the leading causes of its reduced profits in 2017. Rivalry from diversified firms like Apple Inc. and Xiaomi has made it difficult for Fitbit to contend in the current marketplace. In addition, newcomers like Kate Spade, who produce equally premium goods like Fitbit, have intensified the competition. On the other hand, Fitbit’s single-line strategy has worked to its disadvantage as it lacks further avenues to compete. The assessment suggests that Fitbit utilizes differentiation in its business operations to remain competitive in the market. The firm may also use its resources, skills, and capabilities to outsmart newcomers like Kate Spade.
References‌
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Debter, L. (2017). After dismal holiday season, Fitbit doesn’t see things getting better in 2017. Forbes. Web.
Fafoutis, X., Marchegiani, L., Elsts, A., Pope, J., Piechocki, R., & Craddock, I. (2018). Extending the battery lifetime of wearable sensors with embedded machine learning. In 2018 IEEE 4th World Forum on Internet of Things (pp. 269-274). IEEE.
Phelan, D. (2022). Fitbit launches 3 new Fitbits with advanced health features. Forbes. Web.
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Wang, X., & Nie, Y. (2019). The strategic choice: Specialization or diversification? Based on case analysis. In International Academic Conference on Frontiers in Social Sciences and Management Innovation (pp. 165-170). Atlantis Press.
Zhang, Y., & Mao, J. (2019). An overview of the development of antenna-in-package technology for highly integrated wireless devices. Proceedings of the IEEE, 107(11), 2265-2280. Web.