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BUSI 520 Group Marketing Analysis Project

Introduction

This group project looks at the Fitbit Ultra product, manufactured by Fitbit. This fitness

aid device is designed for a variety of users in mind. We will explore the company, their history,

other products they manufacture, and specifically their marketing plan. Through research, direct

contact, and growing knowledge of marketing, we will offer suggestions for Fitbit as ways they

could expand their company, be more competitive, and perhaps enjoy better profits. This project

has been a collaborative effort between 5 students who each week were assigned a different

question to research. In addition to learning about Fitbit, students researched a variety marketing

concepts to provide understanding of how concepts not only apply to Fitbit, but also the world of

marketing. The first week of the group project each student wrote a group consensus report,

needless to say, each member of the group is diverse, brought different life experiences, and the

group had a wealth of knowledge. Researching Fitbit together, we have a sense of synergy and

provide an in depth analysis of Fitbit, and their product the Fitbit Ultra.

Describe the key features or your product/service and its history, such as previous

releases/models.

Fitbit manufactures and distributes products that seek to inspire people to exercise more,

eat better, and live a healthier life style. The Fitbit Ultra is a key sized wireless computer that can

strap onto a waist band or bra strap. The clip-on device uses a 3D motion sensor to achieve its

many functions (Naditz, 2009). Fitbit is designed to track steps, activity level, calories burned,

and distance walked. At night Fitbit functions as a wrist sleeve and will provide information on

the user’s sleep pattern, including what time they went to bed, how many minutes it took them to

fall asleep, how many times were people awakened and how long the user was awake. Fitbit is

designed for the average person, not necessarily for high-end athletes, although they still could

benefit from the product. Fitbit is designed to be low maintenance; the only thing users must

remember is to wear it and press a button to indicate when they get in and out of bed.

Information collected is wirelessly uploaded to the Fitbit Companion Website, where users can

also log their food intake, getting a good view on calories taken in and being expended (Jahnke,

2010). The interface offers a variety of options; In addition to analyzing data, users can also set

personal goals, download professionally designed workouts, and see how they are measuring up.

Another benefit for the user is a long battery life. Fitbit can be used ten days between charges,

allowing the device to be worn at almost all times (Naditz, 2009). Earlier this year, Fitbit, which

is now the market leader for digital health and fitness devices, raised $12 Million in funding

from its group of investors. The goal of these funds is to further accelerate the company’s strong

growth trajectory (Fitbit, 2012).

Describe the history of your firm.

When/where founded - Fitbit was developed by business entrepreneur Jason Calacanis.

His products Fitbit and Fitbit Tracking website premiered at the September 2007 TechCrunch50

conference in San Francisco. Fitbit has a mission statement: “Fitbit is devoted to helping people

achieve everyday health and wellness” (Wilkinson, 2008).

Product line - Currently Fitbit offers two products, the Fitbit Ultra, which we are

researching for this project. They also offer a new Aria Wi-Fi Smart Scale. The idea of the scale

is to know where you stand, get where you want to be, and it provides real time measurement of

weight, percent body fat, and body mass index. Like the Fitbit Ultra, the product is capable of

being charted online and offers tools to achieve personal goals (Fitbit, 2012).

Historic Milestones - Being a relatively young company, Fitbit doesn’t have a lengthy

history. After being founded in 2007, their product line has experienced rapid growth. Fitbit is

now the market leader in the digital health and fitness device category. Their new Aria scale took

off early in 2012 and the company has hopes to develop it to the level they have developed Fitbit

Ultra. The rapid rate of growth has caused an average backorder length of three months, however

most people have said it is worth the wait (Krista, 2010)!

Describe and discuss the 4 P’s associated with your product/service.

Old 4 P’s – Product, Place, Promotion, Price

The 4p’s according to Donnelly are Product, Price, Place, and Promotion. She continues

to describe the factors as “a very simple formula to develop a marketing strategy…(that) is quite

a simple form of marketing, one that is more relevant to the traditional form of the marketing of

a consumer good” (Donnelly, 2008).

Product. Product refers to the actual item being marketed. In the case of this project, our

product is the Fitbit Ultra fitness tracker. This product is a small 3D motion sensor that tracks

your fitness throughout the day. It can be put in your pocket, or clipped to your belt and will

track your steps, walked, floors climbed, level of activity and calories burned throughout the day.

It also doubles as a sleep tracker, monitoring the “quality of your sleep by noting the time you

fell asleep, how long you are under, and how many times you wake up” (Sleep Tracker).

Place. Place is the different channels the product is distributed. The Fitbit Ultra is

currently sold at Best Buy, Amazon.com, Brookstone, Target, and Radio Shack as well as

directly from the Fitbit website (Fitbit).

Promotion. Promotion refers to how the product is marketed to the consumers. At this

point, Fitbit is a grassroots marketing campaign, which is a marketing campaign strategy, which

focuses on in-store marketing, public relations, and local store marketing (Matthews, 2006).

There have also been mentions of the product in various articles, such as the Engadget review,

which talk, about the latest gadgets or fitness innovations.

Price. Price is just what it sounds like, the price of the product. The current price of the

Fitbit Ultra is $99.95, however some of the product is showing up on sites such as Ebay.com,

which are a bit cheaper. This makes it the same price as its biggest competitor, the Jawbone Up

at $99 (Pakistan, 2012).

New 4 Ps – People, Processes, Programs, Performance

People. People refer to the internal marketing and the employees working for the

company. Fitbit achieves this by their CEO and other top employees showcasing their LinkedIn

profiles, as well as the Fitbit Profiles on their company description page.

Processes. Processes are all of the planning, structure, and creativity of the marketing

management. The creativity of the marketing team can be seen with the integration of the newest

product, the Fitbit Aria scale which works in tandem with the Fitbit Ultra. In addition, the

creation of Fitness badges on the website. The badges can be an incentive for consumers to push

themselves just a bit more in order to earn the 10,000 steps in a day or the 50 floors climbed.

Programs. Programs are the consumer-directed activities, which encompass the old 4 P’s

as well as other strategies. For the Fitbit Ultra, the largest program they currently have is the

social aspect of the Fitbit. A consumer has the ability to set up a profile when first using the

Fitbit Ultra. The profile will be updated every time you sync the Fitbit Ultra to your computer.

There are also many groups that one can join in order to be challenged by others, or just to have

that sense of accountability to keep pushing yourself to exercise.

Performance. Performance is the overall outcome of the product. The Fitbit has a great

outcome as seen so far. It encourages customers to be more active, even if it is just a small

change in their current lifestyle. Due to this, Fitbit has established a high social responsibility in

terms of raising community standards of fitness. Fitbit has also been able to team up with

UnitedHealth Group in helping simplify the consumer health care experience. (United Health

Group)This brings a positive note to not only the product, but to the company as well.

Scanning the Market Environment

Describe and discuss the demographic trends associated with your product/service.

!Kathleen!

Describe and discuss the current economic trends and the influences they will have on the

sales of your product. JOSE – Do you have any data about economic trends for gym

memberships or fitness products? I tried to edit this a little but don’t feel like its hitting the

target.

Although the fitness industry is constantly changing, a market will always exist as people

want to lose weight and be healthy (Thompson, 2012). The industry however, can still be

influenced by normal fluctuations in the economy. In times of economic downturn, money put

towards gym memberships, weight watchers, or other devices may decline. With a onetime

purchase fee, Fitbit Ultra may be slightly more resistant to economic downturns. Fitbit also has

the option of making product modifications that could result in a cheaper version of the Fitbit

Ultra. Other market influences may be time of year for advertising the product. Commercials for

fitness products generally start the beginning the of holiday season through New Years. Its

affordability makes Fitbit Ultra a great gift idea, with no pun attached as the product is marketed

to improve health, be used as a motivation tool, not just to lose weight. The affordability of Fitbit

Ultra makes it affordable to lower income families looking for a way to get healthy. Fit Bit also

appeals to individuals who need to know vital health information due to a chronic disease like

diabetes.

Describe and discuss the technological changes that have affected consumer acceptance of

your product/service.

Technological changes in the market place combined with technological era we live in

today are what make this device marketable. In a wireless world and want our information now

and accurate and this is what the Fitbit Ultra gives its consumers and why Fitbit Ultra has

become a hot commodity on the market this year. Unique from anything else, it is a one of a

kind product designed with customers in mind. The technology incorporated into the device

makes it user friendly.

Describe and discuss the consumer’s tastes and preferences for your product. Jose, are

there any sources for this? Or do you have an edited version?

Fitbit Ultra is developed to be used by a wide range of people. From those who have

trouble sleeping, average users desiring healthier life style. Promotions of the Fitbit are endorsed

at many health clubs all over the world.

Fitbit is affordable at less than $100. This smart pedometer is marketed less than the competition.

People who use this product are trying to live a healthier life style. These people desiring a

healthier life may be athletes, students and or those tracking the quality sleep. These consumers

are those who go to the health club. These trends are people wanting a better life style.

The current economic trend is a healthier life style for all types of people. Health care in the

United States is influencing the market for the Fitbit. The health care cost for companies have

and influence on the health of their employees. To cut the cost of health care a healthier

employee allows for a more profitable company. With the first lady advocating “go out and do

something” pushing forward health for our young and adults.

Fitbit customers are able to download apps to their smart phones to track what they are doing

compared to other people who are similar to you. One Fitbit can be shared with 7 other persons.

Fitbit in 2008 received recognition by Consumer Electronic Show and runner-up at

TechCrunch50 also in 2008. Fitbit is a great product is used by many who are searching for ways

to track their body while living an active life style.

Describe and discuss the cultural factors that have the most influence on consumers

purchasing your product/service?

Cultural factors are an important aspect of marketing management. It would be wasteful

spending and bad practice to market to a group of people who most likely will not have high

demand for your product. However, wise marketing tactics can yield growth for a product and a

company. Cultural is the fundamental determinant of a person’s wants and behavior. Within each

culture, there are smaller subcultures that provide more specific identification and socialization

for their members. This may include religions, nationalities, racial groups, or other

demographical ways to separate (Kotler & Keller, 2012). In addition to subcultures, we further

break down our demographics into social classes, which are members of a society with similar

values, interests and behaviors (Kotler & Keller, 2012). Research has shown that society has

been shifting to a more sedentary lifestyle, and the lack of physical activity is taking a toll on our

health (Fitbit, 2011). Studies have shown that more than sixty percent of Americans are

overweight. Fitbit Ultra, as well as the online tracker, are each designed for the average

American user to break down barriers to physical fitness by offering a new and easy way to stay

aware and motivated about daily physical activity and eating habits. The product is not intended

for top-of-the-line athletes, or people who are already active, although the product would still

work for them (Fitbit Inc, 2008). Fitbit Ultra is an affordable item for most people; at $99.95,

most social classes can afford it. The only social class that may not be interested is that which is

under the poverty line. It is important to be aware of spending and prioritize what purchases

should be made. Fitbit is not a necessity for living, rather an aid to help people lead a healthier

life style.

Describe and discuss the social factors that have the most influence on consumers

purchasing your product/service.

--Kathleen—

Describe and discuss the personal factors that have the most influence on consumers

purchasing your product.

--Kathleen—

Describe and discuss the psychological factors that have the most influence on consumers

purchasing your product.

The psychological factors that influence an individual's decision to purchase the Fitbit

Ultra can be categorized into the individual's motivations, perceptions, learning, and consumers

emotions.

Motivation is the drive that leads the costumer towards buying a product or service. If

the motivation is high, meaning the need or perception of need it high, the individual will

actively seek to satisfy that need. This results in the consumer deciding to buy the product or

service. This factor is directly related to “Maslow’s Hierarchy of Needs” which states that every

individual will actively seek to satisfy physiological needs first, followed by safety, social,

esteem and self-actualization needs (Kotler & Keller, 2012).

Perception is defined as the processes by which people select, organize, and interpret

information to form a meaningful picture of the world.(Kotler & Keller 2012) Consumers make

all manner of associations from their prior knowledge and experiences and thus, respond to them

differently.

Learning entails consumers being products of their experiences. They catalog each

experience as good or bad for later use when a similar situation arises. These experiences

influence consumer buying behavior. If consumers have a positive experience with a product or

service they are most likely to buy from that company again. If the consumer has a negative

experience they likely will not purchase again from the same company. Fitbit Ultra is a product

that gives consumers the experience of knowing personal information about their health such as

how many steps they took that day or how many calories they burned. Fitbit Ultra also monitors

how well its consumers sleep and will even tell them how many times they were awakened. This

information can help motivate consumers to take improve or change habits.

Emotions are beliefs and attitudes that greatly influence consumer buying behavior.

Beliefs are the way people think about a particular subject or product. An attitude is the

individual’s consistently favorable or unfavorable evaluation, tendency or feeling about a

particular product or service.

Which aspects of consumer behavior should your product or service emphasize in their

marketing plan and why?

Chapter 6 of Kotler’s text tells us consumers having positive experiences leads to

consumer loyalty, and ensures company survival (2012). Fitbit should emphasize emotions of

users in their marketing plan. Emotions create memories, when consumers have good memories

of a product, they are more likely to buy from that company again. Fitbit Ultra should be

marketed as a wellness product for the body and mind, giving users the opportunity to feel proud,

excited and confident. Well placed ads can create feelings of amusement and wonder; invoking a

positive experience.

Which variables should your firm use to segment its target market?

A target market is defined as the “part of the qualified available market the company

decides to pursue” (Kotler & Keller, 2012).

According to Kotler, there are five variables to segmenting the consumer markets, which

are; Geographic, Demographic, and Psychographic. For the Fitbit product, there is not much

emphasis placed upon the Geographic market segment, as it is marketed on a global scale

through the various distributors, (Fitbit) so we will focus on the Demographic and Psychographic

market segments.

Demographic Segmentation Demographic market segmentation means dividing the

market based on “age, family size, family life cycle, gender, income, occupation, education,

religion, race, generation, nationality, and social class” (Kotler & Keller 2012). Many of these

demographic variables can be used to segment a target market for the Fitbit product as a variety

of consumers can be benefactors of the product. However the main focus is age. One target

market we are focusing on is Generation X, as this generation is characterized as wanting to

balance family, life, and work (Williams, 2011). Generation X is defined as consumers born

between 1964 and 1978. To target this age market, Kotler and Keller suggest making them feel

self-sufficient and that technology remains an enabler and not a hindrance, as this is what makes

their generation more willing to changes. Therefore with the Fitbit product, the product should be

emphasized that, though it is a piece of technology, it is very easy to use, as well as helps

integrate fitness into everyday activities.

Psychographic Segmentation This type of segmentation is “using psychology and

demographics to better understand consumers…buyers are divided into different groups on the

basis of psychological/personality traits, lifestyle, or values” (Kotler & Keller 2012). The main

variables in this segment are ideals, achievement, and self-expression. People motivated by

ideals are concerned with knowledge and principles. Consumers motivated with achievement are

looking for products that demonstrate their level of success to their peers. Finally, those

motivated by self-expression are looking for social or physical activity, variety, and risk. The

consumers that would most benefit from the Fitbit product would be the consumers motivated by

self-expression. As more consumers desire both a social and physical activity, (Fitness Trends)

the Fitbit product services both of those needs through not only the product, but also the social

aspect of the online groups and profiles of the other users.

How can your firm evaluate the attractiveness of each identified segment?

According to Kotler, there are fire key criteria for effectively segmenting the target

market. These criteria are; Measurable, Substantial, Accessible, Differentiable, and Actionable

(Kotler & Keller 2012).

Measurable

Measurable means “the size, purchasing power, and characteristics of the segment can be

measured” (Kotler & Keller 2012). Looking at Generation X as the target segment, the segment

is very measurable. There are roughly 46 million people designated as Generation X (Keegan,

1995). Some characteristics about this market segment are; they tend to spend more time alone,

they are a diverse group, they do not have a high sense of loyalty, they are techno literate, they

like to have fun, they do not like to take orders, and they have unrealistic and materialistic views

(Loysk, 1997).

Substantial

A segment being substantial indicates it is a segment with the “largest possible

homogeneous group worth going after with a tailored marketing program (Kotler & Keller

2012). This criteria is easily met with Generation X as it is not only a large group of people who

share similar experiences and have similar lifestyles and beliefs, but the target segment can be

targeted with a tailored marketing campaign because of the before mentioned characteristics.

Accessible

An accessible segment is one that “can be effectively reached and served” (Kotler &

Keller, 2012). Due to the Generation Xers being more involved on the internet than previous

generations, they have become easier and cheaper to reach with marketing efforts (Keegan,

1995).

Differentiable

A differentiable criterion indicates “the segments are conceptually distinguishable and

respond differently to different marketing-mix elements and programs” (Kotler & Keller, 2012).

According to Loysk, Generation X is very different than previous generations. “What motivated

past generations is far different from what motivates them” (1997). Based upon this analysis, the

target segment will be affected by different marketing strategies than other generations.

Actionable

Actionable means “effective programs can be formulated for attracting and serving the

segments” (Kotler & Keller, 2012). As stated previously, Generation Xers have a different

mindset of the world and respond to marketing efforts differently than any other generation.

However, this does not mean they are immune to all marketing efforts. Keegan mentions the best

way to target Generation Xers is to advertise on the Internet as more Xers are online.

Should your firm pursue full market coverage, market specialization, product

specialization, selective specialization, or single-segment concentration? Why?

--STILL NEED INFORMATION—

What are your firm’s target market(s)? Explain

After a company selects their market segment, they decide the markets that present the

greatest opportunities; these are called its “target markets” (Kotler & Keller, 2012). We have

identified four target markets for Fitbit Ultra. Generation X, obese people, and ordinary people.

Generation X described as Americans born from 1965 to 1976. Overall, 55 percent of Americans

age 18 and older say their health is excellent or very good. This peaks at 64% with people aging

25 to 34. Obesity is a problem in America, many people are trying to lose weight and enjoy a

healthier lifestyle, Fitbit Ultra offers that opportunity. Ordinary people, people that may not be

athletic, but want to ensure good health. This device offers them a chance to track their health

habits, and ensure they are achieving their fitness goals.

What specific needs does your product/service address for each target market?

Target Market Market Needs

Generation X This age group is concerned with their health

and will spend money to ensure it is in tip top

shape (Strategist, 2004). Fitbit Ultra is a gadget

designed to assist this generation in being

healthy.

Obese people Everyone is trying to fit the American dream

and have an amazing sculpted body. Fitbit can

help track their progress and set goals.

Ordinary people Fitbit was designed to help people be aware of

their fitness level, and achieve their goals. It is

designed to be simple, user friendly, and show

users their fitness trends and help in setting

fitness goals.

What is an appropriate positioning statement for your product? Explain the statement.

- Kathleen -

How is your product positioned in the market place? Provide examples and a detailed

explanation.

-Kathleen-

Which firm is the market leader in your industry, what are its strengths and weaknesses?

Competitors

Competitors are defined as “companies that satisfy the same customer need” (Kotler &

Keller, 2012). A market leader is a company who “has the largest market share and usually leads

in price changes, new-product introductions, distribution coverage, and promotional intensity”

(Kotler & Keller, 2012). The current market leader is Fitbit however, the Fitbit’s largest

competitor is the Jawbone UP produced by the Jawbone company (Bright Point, 2012).

The Jawbone company is long known for its Bluetooth headsets. Along with their jambox

speakers, and the headsets, they have introduced a health product called the Jawbone UP. This

product is designed to “help you move, exercise, sleep, and eat better” (Pakistan, 2012). The Up

is a device worn around your wrist, which is compatible with the Apple iPhone to help you

“control the device, set reminders, track your exercise, monitor your sleep and food intake”

(Pakistan, 2012). The product is currently being sold for $99 (Pakistan, 2012).

 Strengths

The Jawbone company’s biggest strength over Fitbit is its established history with

consumers. Starting with their successful Bluetooth headset, which has won the company

recognition (Jawbone ICON), the company has more recently released the jambox speaker

family, which is already receiving great reviews (big jambox). Now, with the addition of a

health-conscious product known as Jawbone UP, Jawbone has a foothold in another market

segment as well as already having an established customer following.  

Weaknesses

Jawbone’s weakness comparatively to Fitbit is most consumers will hear the company’s

name and immediately associate it with the Bluetooth headsets or even the Jambox. Until the UP

wristband was released, Jawbone developed products for music and cell phones. This can cause

users to only associate the company with the music and cell phone industry instead of following

in the branching of the company’s products and marketing.

What brand elements would be most useful for differentiating your product brand from

the competition?

Product branding for fitness equipment can be a quite tricky scenario if marketers are not

careful. The key is getting a product to appeal to the public in general and not to a specific

demographic. The question is how do you get your product to appeal to everyone when people in

general are so different and have different fitness goals, levels and beliefs? What elements can be

used that will be attractive to everyone yet, not have a generic feel?

A logo will help Fitbit Ultra be recognized by consumers and set it apart from the

competition. Visual images contribute in distinguishing products from its competitors all the

time. Having a strong company name and image can be reinforced with a good well thought of

logo. Logos often contain a name or initials to identify a company or product. The logo

establishes a visual identity for the company. Company logos can be emotive and can inspire

loyalty and so, are terrific brand builders (Evans, 2000).

Another brand element that could be used in differentiating Fitbit Ultra from the

competition is use of slogans. Right now would be an ideal time for Fitbit to use this element as

it is being introduced into new markets in many different areas in a few countries. This is another

great brand building element that requires a certain criteria that, when applied correctly can make

Fitbit Ultra’s name recognized on a global scale.

A good slogan for Fitbit Ultra should have meaning, be able to appeal to a broad

audience, and be careful of being too generic. A good slogan should to be memorable so

consumers can recall and recognize Fitbit Ultra at purchase and during consumption or usage.

Perhaps building on the inherent meaning in Fitbit Ultra’s name could be the way to go. The

company’s marketing team has already given advertisers a head start in inventing likable

aesthetically pleasing ideas on creating such a slogan. With careful usage of words and a play on

Fitbit Ultra’s name, a great creative slogan can be produce. Building a brand name will solidify

Fitbit Ultra’s name in the fitness industry.

As time goes by Fitbit Ultra’s challenge will be to defend and preserve its brand equity

against the challenges the industry and the brand will face. A good logo and slogan can be

transferable into new products or services in the same or different category. Choosing the right

brand elements and careful research will help Fitbit Ultra make their brand name stick out in the

sea of the fitness world.

What is the brand promise for your product? If there is a similar brand promise that

another product uses please discuss. –Maurice—

What are the attributes and benefits of your product/service? How do they relate to your

target market?

Total customer benefit is the perceived monetary value of the bundle of economic,

functional, and psychological benefits customers expect from a given market offering because of

the product, service, people, and image (Kotler & Keller, 2012). Fitbit Ultra is dedicated to

delivering simple, innovative health and fitness products and services that help people lead

healthier, active lives by giving them the tools to become more aware, motivated and fit every

day (Fitbit, 2011). A small device, customers can spend $100.00 to have a fitness aid, that allows

users to continue their active lifestyle and monitor benefits achieved from day to day activities.

Benefits can be physical, psychological, or motivational. The following table identifies product

features and benefits, and how those benefits apply to their target markets.

Features Benefits

Diet tracking Fitbit Ultra’s website allows users to design a

diet, or use a preloaded diet. Users can track

quantitatively their weight, calories burned,

and other health statistics. Seeing numerical

results can be motivational to users. Groups

can be motivational to help others achieve

goals; Fitbit’s website has that feature to

benefit customers (Fitbit INC, 2008). The

target market this feature applies to is obese

people; a diet change is often the first step in a

healthier lifestyle.

Workout tracking Fitbit’s website offers users different workouts

to select, or users can create their own

workouts. (Naditz, 2009). The device will also

track how far one runs, one’s pace, and calories

burned. Generation X and ordinary people are

the primary target markets this feature is aimed

towards. Users can gain consistency to their

workouts and know where they stand in

achieving their goals.

Sleep tracking Fitbit Ultra logs what time users go to bed, fall

asleep, how many times they wake up and how

long they stay awake (Jahnke, 2010). The data

can be used to find trends, aid in diagnosing

insomnia, or setting a sleep schedule. Ordinary

people, as well as those who have trouble

sleeping can benefit from this feature.

How can your firm use packaging and labeling to support its brand image?

Fitbit’s packaging is designed with potential customers in mind, designed to convey

customer benefits, simplicity, size, and product durability. Fitbit Ultra comes in see-through

packaging allowing users to see how small and convenient the device is. Their brand logo is at

the top, and on the bottom of the box is a list of some easy-to-understand benefits the product

provides. This list includes activities tracked, as well as features of Fitbit ultra such as wireless

uploads and online graphs. Fitbit’s design allows it to be clipped to a pocket, wristband, or any

article of clothing for simple and inconspicuous transportation. If the user decides to take off the

product, it comes with a USB dock that will recharge the batteries while data is synchronized to

the user’s personal website (Fitbit Ultra, 2011).

What support services do buyers of your product/service want and need?

--Kathleen—

What support services does your firm’s main competitor offer? How do those efforts affect

their sales?

--Maurice—

What post-sale service arrangements must or should your firm provide to handle

repairs/services?

According to the company website, if your Fitbit product is no longer working due to a

defect “In materials and workmanship under normal use” (Fitbit) their Limited Warranty will

cover it. The limited warranty that comes with the product “warrants the Fitbit electronic device,

and only the Product, against defects in materials and workmanship under normal use for a

period of one year (365) days from the date of retail purchase by the original purchaser.” (Fitbit)

If the warranty is not used within the 365-day time frame, then the product is no longer covered

by a warranty through Fitbit. The original retailer might have am additional warranty that can be

placed on the product during the initial purchase, which will cover additional defects and

damage, or for a longer period of time. Turrentine with the Washington Post recommends when

you have a limited warranty on your product, that you know exactly what the manufacturer will

cover with your product (Turrentine, 2006).

If the product needs to be repaired, the consumer must first contact the Fitbit customer

service via the provided email and they will respond with a RMA (or return material

authorization) number. The user must then deliver the product in a prepaid freight envelope to

the address Fitbit will provide in their response email.

To improve their customer service as far as returns are concerned, Fitbit needs to make

sure the emails responses to customers containing the RMA number and the prepaid address

label are prompt. There is no current indication from customer stories (Clapp,2011) where they

fail in responding timely, however customer support needs to ensure this standard is maintained.

How will repair/service efforts affect customer satisfaction?

Customer feedback on what breaks on the product most often is the dock connector, the

plastic backing, (Gdgt,2012) the digital screen breaking and syncing problems (Clapp,2011). As

stated previously, there is no indication by the customers (Amazon, 2012)regarding the quality of

customer service received by the company. In fact, some users say they dislike the product due to

continual malfunctions, but keep using it due to the effective customer service (Amazon, 2012).

Users say the customer service department has been extremely helpful in various requests, and

strive to make the consumer happy regardless of the situation. (Gdgt, 2012) Another problem

that can occur with the Fitbit, is the user forgetting it on clothes and running it through the

washing machine, or getting the product wet via the pool or otherwise. This is a downside to the

product as the Limited Warranty will not cover the product damage in these instances, which

makes it unlikely you will receive a replacement product from the company. I recommend that

the Fitbit company look at the design of their product and change the design to ensure it is

waterproof. This way the users do not have to worry about damaging the product with water.

What price adaptations should your firm include in its marketing plan? Be specific.

Pricing a product is potentially the most important decision a manufacturer needs to make

when selling a product. Price is the one element of the marketing mix that produces revenue; the

other elements produce cost. Prices are perhaps the easiest element of the marketing program to

adjust; product features, channels, and even communications take more time (Kotler & Keller,

2012). Companies usually do not set a single price but rather develop a pricing structure that

reflects variations in geographical demand and cost, market-segment requirements, order levels,

and other factors. This results in companies rarely realizing the same profit from each unit of a

product sold (Kotler & Keller, 2012).

Demand for a product is potentially the biggest factor in setting the price of a product.

Companies want to maximize profits, customers want to save money, and price ultimately is set

to achieve profits and customer satisfaction. Demand for Fitbit Ultra is likely to be inelastic;

lowering the price by a small amount will most likely not drive up demand. In America,

perceptions of the physical aspects of ourselves are integral parts of our self-concept and have

become associated with our choice of health related behaviors and exercise (Liemohn, 1997).

This can help increase demand for Fitbit, as people will go to great lengths to present a positive

self-image; Fitbit is designed to help them achieve that. There are a few opportunities discussed

below for Fitbit to use pricing adaptations to maximize their profit.

Quantity discounts are useful for distributers who want to sell Fitbit Ultra in their chain

of stores. This creates a win-win scenario for Fitbit as well as a distributor; the more they

purchase, the higher their profit margin. Fitbit achieves a higher profit margin as they are able to

sell more of their product, and transfer some of the selling costs to distributors. Distributors are

able to purchase Fitbit Ultra for less than manufacturer suggested retail price, and sell them at a

higher price. For Fitbit, this discount is only useful for large quantity purchases, individuals

purchasing directly from the company should likely pay the manufacturer suggested retail price.

Promotional pricing can be used by companies to stimulate a purchase. Fitbit Ultra has a

variety of promotional pricing strategies it could deploy. Special event pricing would be useful

towards the late spring and early summer, when physical activity is typically higher and users

expect to see more results. Selling for a lower price while demand is high is an opportunity to

achieve higher profits. In the fall and winter, when demand is likely not as high, special pricing

may be useful around holidays to stimulate sales for gift-giving. This may increase customer

satisfaction, as their product is helping consumers reach their goals. Cash rebates could be used

in pricing as well, either by offering a small rebate on the Fitbit Ultra or offering a larger rebate

to purchase the Fitbit Wi-Fi scale with the Ultra. This offers customers an incentive for buying

one product, and an even bigger incentive for purchasing both Fitbit products. Sold together,

Fitbit can save on packaging cost and shipping cost while satisfying customers with a lower

price. Finally, providing warranties and service contracts would create a more attractive package

for buyers. Customers are typically going to be on-the-go with this product, and it could be

exposed to elements like sweat, rain, or other adverse conditions such as being dropped. By

Fitbit offering a warranty, buyers know they are not wasting their money on a product that will

immediately malfunction, and if it does, Fitbit will provide a replacement.

Differential pricing is a form of adjusting a basic price to accommodate differences in

customers, products, and locations (Kotler & Keller, 2012). The value of Fitbit Ultra is most

likely the same regardless of where someone purchases the product. One area Fitbit could use

differential pricing may be to customer segment pricing. This strategy could be used at colleges

and universities throughout the nation to promote a healthy lifestyle. Offering special pricing to

students who are away from home for the first time can encourage healthy living. While

everyone should be active, students often have a lower discretionary income than adults.

Offering differential pricing gives students a chance to purchase Fitbit products they otherwise

may not be able to afford.

Describe and discuss any changes your team would make in the pricing of your product. Be

specific and provide examples where applicable.

What are pricing objectives?

Pricing objectives are goals that a business hopes to achieve when deciding on the cost of

its products or services. In order to be effective, the pricing process must be connected to the

overall marketing mix as previously discussed. Decisions made on price points and costs of

goods to buyers, have to fit within the marketing strategy.  Companies must be profitable and

maintain a positive return on investment to stay in business. To be profitable, companies must set

pricing objectives to be competitive to buyers.

One type of pricing objective is creating a "buzz" about a business and making news. For

example, a new bread company may base a marketing campaign around the concept of supplying

quality grain products at low prices to help people during an economic recession. Since the

marketing angle and pricing objectives would be different than competitors', a positioning that

can attract the target market's attention through what is known as a unique selling proposition

(USP) results. USPs are strong, persuasive marketing messages that pull in large numbers of new

customers by giving them a hard-to-resist reason for buying that particular brand over

competitors' offerings (Cyprus, 2012).

Fitbit should follow suit and market the Fitbit Ultra like the new bread company

marketed their products. With diabetes being at an all-time high and the need for people

everywhere to get into shape, Fitbit could create a buzz and market the Fitbit Ultra as a low cost

health tracker that will give users the motivation to get into shape and track their progress. The

product could also be used as a tool for physicians, and physical therapists to track the fitness

levels of their patients. Fitbit grasps a wider target audience by using cost-efficient technology

such as the Fitbit Ultra, effectively making it available to everyone. This concept hopefully

makes it hard –to- resist reason buying Fitbit brand products over their competitors.

Fitbit’s current pricing objectives, according to their 2011-2012 Marketing Plan, are very

simple and aggressive. Their first year sales volume objective was to reach 500,000 for the year.

Their pricing strategy includes retailing Fitbit Ultra at $100.00 per unit. These prices reflect a

strategy of attracting customers, and also taking share from their competition; Nike+, Apple, and

Bodybugg. This is reflective of our textbook’s definition of maximum market share, whereas

many companies want to maximize their market share by acquiring higher sales volume that will

lead to lower unit costs and higher long-run profit. They set the lowest price, assuming the

market is price sensitive. This market-penetrating strategy is based on three concepts: (1) The

market is highly priced sensitive and a low price stimulates market growth; (2) production and

distribution costs fall with accumulated production experience; and (3) a low price discourages

actual and potential competition (Kotler & Keller, 2012).

Fitbit is on the right track and should remain on course concerning pricing objectives.

Their planned course has great potential to gain market share and make a strong impact on their

competitions’ bottom line.

Recommendations and Conclusions

Fitbit is off to a great start in their first 5 years of business, the products they have

designed, and the way they are marketed show a lot of promise for this young company. The

company has a strong mission of “helping people achieve everyday health and wellness.” The

products that Fitbit manufactures, the interactive online interface, and product support they offer

indicates Fitbit is achieving their mission and has the customer in mind. Fitbit Ultra can be

purchased directly from Fitbit, or is sold in a variety of stores; Best Buy, Amazon.com,

Brookstone, Target, and Radio Shack. A recommendation would be to expand the stores Fitbit is

sold in to include more chain stores like Wal-Mart, K-Mart, or Cosco. Health and fitness stores

such as GNC may offer Fitbit the chance to penetrate that type of market and increase sales.

Fitbit Ultra is not the only product of its type on the market, Nike+, Apple, and

Bodybugg also offer similar fitness products. Fitbit has done a good job with differentiating itself

and creating a lower price point then other products. A unique feature Fitbit has is the ability to

track user’s sleep. This feature combined with a lower price point than competitors, Fitbit is in a

great position to beat out competition. Fitbit has the unique feature of syncing data wirelessly,

where as other devices need to be connected to either a computer or iPod. One area Fitbit is

behind competition is in the functionality of their mobile application. This application allows

users to see their fitness progress, goals, and offers the chance for users to input data such as

meals, and sleep tracking. Competitor’s applications allow users to scan barcodes of food

consumed to log calories. Even the database of foods consumed is relatively small and does not

allow users to make a manual entry of the foods they ate. In order to input sleep, or make

modifications, users need to go online to input data. Fitbit Ultra wirelessly syncs to the online

interface, but does not automatically sync with the mobile application.

As a relatively new company, Fitbit should continue to exercise social responsibility, and

become more active in the community. To achieve this, Fitbit could sponsor events such as road

races, sporting events, or community events. Offering a group of users the chance to test out the

Fitbit Ultra, or chances to win a device not only increases product exposure, it provides Fitbit the

opportunity to showcase themselves. In comparison to their competitors, there is less information

about product and company information in the news. Being active in the community is a way to

change that, and create more of a widely known positive reputation.

It is exciting to see where Fitbit will go as a company, with two products on the market,

an online interface that has worlds of possibility, they are well on their way to encouraging

healthy living for a modest product cost.

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