Introduction
The following paper presents a marketing plan for Misfit wearable fitness trackers. The current situation on the wearables market is characterized by fierce competition between several well-established brands and ambitious crowd-funded start-up companies, so to retain competitive advantage, it is necessary to create a marketing strategy that would acknowledge the existing and expected trends in the market and differentiate the company from its rivals.
Marketplace Situation Analysis
Organizational Strengths
The current situation on the market is generally favorable for fitness wearables. The latest data indicate consistent growth of demand for consumer wearable devices, with a 3.1 percent growth in the third quarter of 2016 (IDC, 2016). Such a trend is expected to continue for at least three years with the value of the wearable market reaching $25 billion by 2019 (CCS Insight, 2016). It is worth noting that, depending on the definition, different groups of products can be included in the wearables category. However, two product categories – smartwatches and fitness trackers – are currently in the lead, with the former generating a major share of revenues thanks to the combination of popularity and price. The latter, on the other hand, are responsible for more than half of the total number of shipments (Rawassizadeh, Price, & Petre, 2015). These trends are also expected to continue for at least several years, making the wearables segment attractive for new investments.
Another important strength is the strong reliance on technology as a selling point, which guarantees Misfit’s leading position on the market in the scenario where the performance and functionality of the product remain the main focus of the audience and/or partnering entities.
Weaknesses
The biggest weakness currently observed in the market is the tendency towards a decrease in the price of certain types of wearables. The average price of the wearable device declined from $800 in 2012 to around $350 in 2016 (Maida, 2016). The tendency is observed both among the smartwatches and fitness trackers, with the latest releases by major players in the industry, such as Samsung, becoming cheaper by $50 after a hardware update. While the price drop can be partially attributed to the novelty wear, the trend is still observable, although the scale is visibly smaller.
Besides, unlike its competitors, Misfit has a fairly small market diversification, which may result in a weak position once the popularity of fitness wearable devices declines. Finally, their brand name is currently recognized for technological innovation but is not readily associated with either active sports or health and wellness, and does not guarantee customer loyalty.
Opportunities
One of the opportunities that can be utilized by Misfit is the suitability of wearables for gathering data that can be used for statistical analysis. The initial emphasis was made on the hands-on approach, with the performance of the user assessed directly and visually during the session or across several sessions. The growing recognition of big data suggests that more vendors will eventually adopt long-term analysis to determine patterns in customer behavior derived from data retrieved by wearable trackers. This greatly expands the potential area of application and opens up diverse partnership possibilities.
Another important opportunity is the growing interest in wellness and health among the population which is expected to support sales. Since wearable devices can be used both as assistance to active athletes and as means of identification as a member of preferred culture or philosophy, they are expected to be popular among professional athletes as well as a more casual customer segment.
Finally, collaboration with fitness and training vendors and coaching assistance may become an opportunity as more customers and providers become aware of the functional advantages of the technology.
Threats
The biggest threat in the market is the existence of strong competition from several categories of companies. Misfit belongs to the category of crowdfunded startups emphasizing innovative technologies and shares the niche with Jawbone and Fitbit. Other categories include established sportswear brands such as Nike and Adidas who enter the segment using their recognizable brand names, and major brands of consumer electronics such as Samsung who have the advantage of a robust R&D base. Also, the growing popularity of crowdfunding as a funding scheme makes the emergence of new competitors a feasible threat. Importantly, many of the competitors threaten a separate segment, with less expensive alternatives undermining cost attractiveness while image-oriented companies like Apple attracting the brand-conscious audience.
Mission Statement and Performance Goals Forecast
Considering the specificities of the market described in the situational analysis, the mission statement should identify innovation and assistance in achieving better health as priorities in its mission statement. As such, it can be formulated as “A company that strives to provide its customers with opportunities for attaining excellent health through a wide variety of means, including coaching, scientific analysis, precision, and reliability.” The priorities should be set for functionality, security, and technological advantage rather than appearance and corporate image, and a wide variety of activities need to be implied to support the goal of providing quality and reliability before visual appeal. Finally, the mission statement should include the focus on quality and longevity of the product and emphasize verifiable and definitive benefits for result-oriented individuals and professionals while retaining accessibility for wider audiences.
Because the market of wearables, including the segments of fitness tracking devices, is predicted to grow, it is reasonable to expect a similar pattern for the demand of Misfit’s products. However, the focus on performance and functionality detailed in the mission statement can become an advantage that will grant the above-average performance. For instance, the predicted average growth rate of shipments of smart wearable devices is expected to reach 42 percent (Statista, 2016). At the same time, the emphasis on healthcare and data analysis for statistical purposes aligns well with the formulated mission of quality and data reliability as the company’s priorities. Next, fitness trackers are expected to comprise the majority of shipments in the industry in the following years, which can be used as an advantage by Misfit who has them as one of the primary product categories. Finally, the simplicity of its current products contributes to low production cost and affordability, which is consistent with the trend of decreasing prices across the market segment. The combination of the described factors allows us to predict a generally favorable outcome for Misfit in the nearest years. Thus, the suggested performance goals can be set at a 50% increase in sales in the next year after the marketing plan implementation, with a gradual 3 to 5 percent increase each following year. Because of the relatively low price of individual products compared to other wearables such as smartwatches and glasses, the revenues are expected to be generated by sales volumes.
Marketing Strategy
Market Research
Since the market of wearables is still in the early stage of development and is dynamic enough to introduce rapid and radical changes, it is necessary to monitor audience demographics to facilitate the success of the campaign. The current audience of fitness wearables consists predominantly of young and middle-aged individuals, are more likely to hold at least an undergraduate degree, and have an overall income that is higher in comparison to the national average (Statista, 2016). Females tend to buy fitness trackers more often than males. However, approximately half of the customers report to not use the device often, which hurts long-term revenues. It is, therefore, necessary to conduct research that would allow to identify the needs of the customers and modify the products accordingly. The most important areas of the research are the desired functions of the devices (to extend the long-term presence and utilization), the necessity of cross-compatibility (to increase value through longevity and extend the opportunities associated with additional services), and the areas which are the most attractive for partnerships (to foster collaboration early in the development and gain a competitive advantage by expanding to new segments and promoting the product from new perspectives).
Segmentation and Positioning
Two directions are recommended for Misfit to pursue to remain competitive and diversify the target audience. First, the current target audience should be disaggregated, and certain groups need to be emphasized. For instance, middle-aged individuals who find active rest and sports attractive but do not feel motivated enough to engage in sports on their own will likely comprise the minority of the audience since they tend to place brand image and message conveyed by the product more important than the actual performance of the product. Besides, they will likely utilize only a limited number of the product’s functions and, therefore, will not add to revenues generated by software services in the long run. Thus, this area should be considered secondary. On the other hand, both professional and amateur athletes who value consistency and performance are to be emphasized since they will likely be interested in the data processing capabilities provided both by the product itself as well as through supporting software.
This audience segment must be approached directly, through hardware enhancements and data processing services, and indirectly, by partnering with fitness vendors and consultancy centers. Also, support from healthcare organizations in interpreting data will secure the loyalty and trust of these customers. Finally, technological superiority can be used to attract technology-savvy customers who prioritize performance over status. Since this category consists mostly of younger individuals (as low as 18 years old), it would be reasonable to modify marketing strategies to cover younger audiences (Kumar, Bezawada, Rishika, Janakiraman, & Kannan, 2016). It should be mentioned that tech-savvy customers may display lower buying capacity due to their age, annual revenues, and decision-making strategies (Viswanathan & Jain, 2013). In particular, they tend to utilize access to information and obtain a comprehensive understanding of the product’s advantages. Such an approach combined with limited funds results in a situation where only the superior products are chosen. Therefore, the marketing strategy should emphasize the combination of affordability and technological innovation to diversify the audience and gain a competitive advantage.
Marketing Mix
Product
Currently, Misfit has two products that fit within the described target audience – Misfit Flash and Misfit Ray. The former offers a good range of hardware capabilities and features design solutions focused on simplicity and functionality. The lack of excessive decoration is expected to be a decisive selling point for customers who are repelled by the glamorous exterior. Misfit Ray is a logical continuation of this design philosophy and features several improvements over the previous model. In particular, it expands the functions to include altitude metrics, which allows it to measure the number of stairs ascended. More importantly, it improves synchronicity with the software and adds several meaningful statistics and notifications. Finally, it adds the led display to enhance user experience. The product also retains the simplistic design philosophy and does not compromise battery life, which results in positive reviews from experts. Both trackers are extremely reliable, mostly due to the lack of complex electronics, and have a two-year voluntary warranty from the manufacturer, although the actual lifespan is expected to be much longer.
Both products come in several colors, with six available for Misfit Flash and four for Misfit Ray. While both are easily superseded by competitors in variety, it aligns well with the minimalistic aesthetics is expected to attract the audience.
Price
In comparison with the closest competitors, both Misfit’s products have a fairly affordable price. Misfit Flash is currently available at around $20, which comes close to the low end of the price range of the fitness wearables market. Its nearest alternative is Xiaomi’s Mi Band, which comes at approximately the same price. Nevertheless, it should be mentioned that Xiaomi is a much less recognizable brand and is associated with budget pricing models rather than quality (Dissanayake & Amarasuriya, 2015). The Misfit Ray has a higher price tag of $70, which places it at the low end of the pricing of the newest models and just above the average price on the overall market. It remains the most affordable current-generation tracker, and its price is twice as low compared to competing products positioned as premia, such as those by Apple and Nike.
Place
Considering the focus on customer decisions backed by online information and independent inquiries, the distribution should shift entirely to online platforms and minimize presence in brick-and-mortar vendors. Since only a small portion of sales can be anticipated from the latter, such an approach would allow to further cut prices of the product and in such a way align the strategy with the predicted developments in the market.
Promotion
The promotion material needs to focus on a meaningful and comprehensive representation of the product’s features. It can include short reviews and lists of advantages which accurately represent the trackers’ characteristics, excerpts from performance assessments done by sports agencies and associated with products’ use, and recommendations from healthcare professionals and fitness consultants that may be used in conjunction with the products’ functions. In accord with distribution strategy, the focus of the campaign should be entirely on the online media, with little to no presence in physical media to minimize expenses.
Recommendations
In addition to the focused marketing campaign and increased affordability of the products, the awareness of the product’s advantages can be raised through partnership strategies. For instance, fitness centers can be approached with the offer of lending equipment for improved performance of their clients. This will expose the product to a much wider audience and introduce a “trial period” effect. Next, healthcare organizations can be approached to enhance the analytical capabilities of the software. The buildup of the data gathered by the trackers will eventually lead to a situation where it can be interpreted to discover meaningful patterns. However, deriving recommendations from this data can be challenging for end-users, so the involvement of experts will add to the reliability of the information and trust from the customers. Besides, these partnerships may open the possibility of scientific analysis of favorable health outcomes that will increase the loyalty of performance-oriented individuals.
Finally, the patterns determined by the analysis of data can be used for marketing purposes. For instance, the effects of each adjustment in marketing will eventually be observed as a shift in product use (or lack thereof). If approached correctly, such information can be used to create more effective marketing decisions over time and modify the existing functions of the products (Kshetri, 2014). While such an approach garners more accurate information than traditional means of market research, it also contains the risk of a personal privacy breach. Therefore, it should be approached with caution to ensure that customers stay informed regarding the intended use of their data and that the process of transfer and analysis does not result in unintentional data leaks or a deliberate breach (Kshetri, 2014). Therefore, this step should be implemented gradually and on after careful technical and legal preparations.
Conclusion
The fitness wearables market is expected to remain lucrative for at least several years, with fitness trackers remaining one of its primary products. Currently, Misfit demonstrates the significant potential of aligning with the predicted trends of lowering prices and increased interest in a scientific approach to health and wellness. At the same time, the market is densely populated with major players in the industry who have much more recognized brand names as well as design and technological assets. The suggested strategy of appealing to technology-savvy audience and performance- and result-oriented individuals are expected to create a competitive advantage for the company, differentiate its approach from industry giants, and offer additional marketing opportunities in the long run.
References
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