Factors Leading to Fitbit’s Success In the Market for Fitness Trackers

Abstract

There are many ways in which a person is motivated to stay healthy and keep fit. Health activity monitors have become one of the biggest factors leading to these motivations. One such brand that produces activity monitors is Fitbit, and it has been an industry leader from the day it was released until the present day. This paper explores the reasons and strategies to how Fitbit managed to stay at the top, briefly comparing its success to that of its competitors like Jawbone and Nike. The paper gives a comprehensive investigation on product placement, pricing, collaboration, and marketing strategies leading up to Fitbit’s success.

 

 

 

 

 

 

 

 

 

 

Acknowledgements

Special thank you to Professor Suzanne Richard, Ramone Vives, Lauren from the Writing Center, Eric Win, Kathy Lin and Yi Yi Maung for their feedback and advice on this paper.

 

Introduction

People have noticeably become more aware of their personal health and fitness, and the explosion of marketing and technological advancements has played a large role. Digital marketing on television and on the Internet have reached out to people about weight loss techniques and devices to make them more mindful about what they are doing to their own bodies. One such technology is the health activity monitors — or wearable fitness trackers. There are a variety of competitive health activity monitors on the market and a few stand out in comparison to others, but one company in particular that has been gaining a lot of recognition for their wearable fitness technology is Fitbit. Fitbit’s strategies on marketing, pricing, product offerings and collaboration with other companies have been very effective as it has been a stable industry leader in the market for fitness trackers.

A Brief History on Fitbit Health Monitors

Fitbit is a privately held company that was founded in 2007 and released their first product in the same year. However, due to insufficient funding, they did not succeed as they hoped they would (Groves, 2014). Unlike the Nike+ Fuelband, Fitbit did not have the connection to an already-established sports brand to attract consumers on their first try. After their second release in 2009 with a larger amount of funding, their products have been competitive in the market alongside their biggest competitors.

Product Offerings

Fitbit launched its first successful product, the Fitbit Classic, in 2008 and at the time neither Jawbone nor Nike had released their wristbands yet. Fitbit had clearly thought about what customers wanted most in a modern fitness tracker, which differentiated itself from traditional pedometers. Fitbit’s main goals were to keep the tracker discreet, easy to use, and track activities accurately. By offering both a clip-on version and a wristband version of the trackers, Fitbit also attracted the group of customers who would still like to keep track of their activities, while using a discreet device. Jawbone and Nike both only offer wristbands, and actively missed out on the market share of the portion customers who sought for alternatives.

Over the years, Fitbit stayed in the competition with new challengers by steadily releasing new products with additional features in about every two years. Another advantage for Fitbit users is that the company rarely discontinues models of the Fitbits, and continually release updates for their software. This eliminates the company’s concern about their products becoming obsolete which encourages users to purchase Fitbit products over its competitors. The latest models of the Fitbit even have additional functions that the Jawbone UP band and Nike+ Fuelband have not been able to provide to their users. Below is a table from the Fitbit website of all the devices that the company currently offers.

Fitbit models comparison

With offerings of such wide ranges of products, users who are interested in specific features have the option to pick and choose the model they prefer, instead of buying from one of its inferior competitors.

Pricing Strategies

The first Fitbit Classic was launched with a price of $99 U.S. dollars into the market. (“Fitbit Classic”, 2013). It was a price that customers were willing to pay as one of first new technologies available to the consumer in the fitness tracker market. When Jawbone’s UP band and Nike’s Fuelband were released in 2011, the selling prices were set at $130 and $150, respectively. The Fitbit strategic model that was in direct competition with UP band and the Fuelband was the Flex that came out in 2013. Compared to its competitors, the Flex only cost $100, which was a much better deal because it had better product offerings such as the superior water resistant feature that neither the UP band and Fuelband possess. In addition, Fitbits variety of products such as the Zip has a lower price point than other devices in the Fitbit family – approximately $60 –, which enabled Fitbit to capture the section of the market interested in health monitor products but were not able to afford the more expensive counter part. The Zip serves the purpose of a fitness tracker but does not include additional functions like sleep tracking and silent wake alarms. And now, the newest device – the Surge – is being released at the price of $249.95 for more tech-savvy and fashionable people who would prefer the advanced features and are willing to pay a higher price for these features. Fitbits strategy of offering a range of different devices with various price points enabled Fitbit capture a larger market of users. The multiple products that Fitbit offers easily surpasses the limited two to three choices of health monitoring products that the Jawbone and Nike Fuelband offered.

 

 

Collaboration

The CEO’s and cofounders of Fitbit – James Park and Eric Friedman – have consistently been confident with the pace in advancements and releases of Fitbit’s devices. Without a doubt in their own application and devices, the company knew that it was still important “to embed the company into the infrastructural ecosystem of fitness tracking” (Wang, 2012). Thus, Fitbit offered an open API – Application Program Interface – in which Fitbit users can synchronize data from the Fitbit application with other applications such as Lose It!, RunKeeper, MapMyFitness, along with other devices that were almost in direct competition like the Withings Wi-Fi body scale. Working together and cooperating with other applications increased interest of new and old users as Fitbit extended the ease of use between multiple applications. In addition, Fitibit also partnered up with organizations like the Massachusetts General Hospital to use their devices in clinical studies, and other platforms that promote employee engagement and well-being like ShapeUp and Limeade (Wang, 2012).

Marketing Strategies

Fitbit first publicly announced their release of a new fitness tracker to a wide audience at TechCrunch50 conference in 2008. However, due to insufficient funding, the tracker was only released in 2009 a delay from its scheduled to release in 2008. Park, one of the founders of Fitbit said, “[w]e did announce onstage we were going to ship at Christmas, but we didn’t say which year”. He created an artificial hype over a product that did not exist on the market and received many pre-orders before its official shipment date in 2009 (Hof, 2014). Fitbit has been known to be “shy” with their marketing, and has been criticized for their lack of media and commercial presence. They relied on word-of-mouth marketing and invested their funds on software development rather than hardware development and expensive media marketing (Groves, 2014). Park announced that 30 out of Fortune 500 Companies are currently on board for Fitbit’s program to give Fitbit trackers to their employees. This program in general allows the employers to use the data collected to get better benefits from insurance companies, while Fitbit increases its user percentage and sales (“Fitbit Committed to Keeping your Data Secure”, 2014). This increases the word-of-mouth marketing as these employees talk to their friends and families about Fitbit, who will in turn spread the word to their colleagues and
employers. This is Fitbit’s main model of marketing, and is quite successful because it occupies 69% of market share in the fitness activity tracker market and is currently the market leader.

fitbit annual sales

Source: NPD Group, BI Intelligence Estimates

At the end of 2014, Fitbit realized they were extremely weak in the international sector; therefore, it began enter the global market and launched its first global advertising campaign. The company did not specify the exact amount of their investment but using Argonaut, who produced the 2014 Superbowl advertisement for Volkswagen, Fitbit spent eight figures on the global marketing campaign (Morrison, 2014). From previous data collected from the trackers, they are planning to use different ads to cater to different demographics of consumers (Agomuoh, 2014).

Conclusion

Fitbit has come a long way from their first fitness tracker launched in 2008. In seven years, they have managed to create a brand name for themselves and gain more market share yearly without using conventional marketing techniques that their big competitors practice. Fitbit actively decided to expand into the global market after they have secured their market share in the United States by using a combination of strategies. Some of their strategies include wide range of product offerings, smart pricing strategies, collaboration with other organizations and unique marketing strategies. These strategic decisions can be directly attributed to Fitbits success to grow as a company and establish a vivid brand presence.

Looking Ahead

Fitbit has the ambition and various opportunities to grow and become more successful. One potential market that Fitbit can invest in is the development fitness-tracking technology that accommodate to dogs and their owners. Another possibility for Fitbit to increase its capital for investments is to enter the IPO and be a publicly traded company. Recent news has indicated that Fitbit is working with banks to enter the IPO and Morgan Stanley, himself is leading this initial offering operation (Saitto and Picker, 2014). However, with great ambition, comes great skepticism; many are not encouraged about the projected success mainly due to the product recall of the Fitbit Force and the threat of an another tech-giant, such as Apple and its Apple Watch, entering the relatively premature market.

 

 

 

 

References

Agomuoh, F. (2014, November 19). Fitbit Dominates The Wearables Market, But Can It Survive The Coming Onslaught Of Smart Watches? Retrieved February 24, 2015, from http://www.ibtimes.com/fitbit-dominates-wearables-market-can-it-survive-coming-onslaught-smart-watches-1725780

Fitbit Committed to Keeping Your Data Secure: CEO. (2014, August 1). Retrieved February 26, 2015, from http://www.bloomberg.com/news/videos/b/ed59637f-60cf-44b1-a2e6-098c2cb4e940

Groves, S. (2014, March 27). Marketing lessons from Fitbit: Right product, right time, right price point – Cognition Agency. Retrieved February 24, 2015, from http://www.cognitionagency.co.uk/articles/marketing-lessons-fitbit-right-product-right-time-right-price-point/#.VPOFGLPF9O

Hof, R. (2014, February 4). How Fitbit Survived As A Hardware Startup. Retrieved February 24, 2015, from http://www.forbes.com/sites/roberthof/2014/02/04/how-fitbit-survived-as-a-hardware-startup/

Miller, G. (2014, December 30). Fitbit Is Not in Shape for an IPO: Don’t Fall for the Hype. Retrieved February 26, 2015, from http://www.wallstreetdaily.com/2014/12/30/fitbit-ipo/

Moorhead, P. (2013, November 19). Nike, FitBit, Or Jawbone: Who Is Best Positioned To Win In Fitness Wearables? Retrieved February 25, 2015, from http://www.forbes.com/sites/patrickmoorhead/2013/11/19/nike-fitbit-or-jawbone-who-is-best-positioned-to-win-in-fitness-wearables/

Morrison, M. (2014, November 16). Fitbit Starts First Global Campaign. Retrieved February 24, 2015, from http://adage.com/article/cmo-strategy/fitbit-starts-global-campaign/295858/

Saitto, S., & Picker, L. (2014, December 19). Fitbit Said to Plan 2015 Initial Offering Led by Morgan Stanley. Retrieved February 26, 2015, from http://www.bloomberg.com/news/articles/2014-12-19/fitbit-said-to-plan-2015-initial-offering-led-by-morgan-stanley

Wang, J. (2012, July 27). How Fitbit Is Cashing in on the High-Tech Fitness Trend. Retrieved February 24, 2015, from http://www.entrepreneur.com/article/223780

 

 

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