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Fitbit Case Solution

Solution Id Length Case Author Case Publisher
2887 1434 Words (8 Pages) Regina E. Herzlinger, Christine Snively, Sarah Mehta Harvard Business School : 317007
This solution includes: A Word File A Word File

Fitbit, a company that made wearable fitness trackers, was co-founded in 2007 by James and Eric. The founders presented a Fitbit prototype at the TechCrunch50 conference in 2008 and surprisingly received 2000 pre-orders in one day. Fitbit had strong competition from Xiaomi, Jawbone, Apple and Samsung, but it remained the market leader due to its huge network and social features. As competition increased, Fitbit introduced new products with more features. In 2010, it launched Fitbit Wellness and worked with employers and insurance companies in a bid to promote wellness among employees.

Low engagement and high abandonment rates were a huge concern for this industry, but Fitbit had the highest percentage of active users. It also increased its marketing efforts in Europe, Africa and Asia and sold products in 65 countries by 2016. Fitbit's mission was to use technology to make people more active and healthier. With the increase in chronic diseases, there was a great opportunity to collaborate with healthcare providers to help people avoid/manage these life-threatening diseases.

Following questions are answered in this case study solution

  1. What micro environmental factors have affected Fitbit since it opened for business?

  2. What macro environmental factors have affected Fitbit?

  3. How should Fitbit overcome the threats and obstacles it faces?

  4. What factors in the marketing environment not mentioned in this case could affect Fitbit?

Case Analysis for Fitbit Case Solution

1. What micro environmental factors have affected Fitbit since it opened for business?

The microenvironmental factors that have affected Fitbit are Suppliers, Customers, Competitors and the public. 

Suppliers:

As per analysts, Fitbit struggled to keep up with production due to the high demand. Fitbit's annual report stated that because key components were usually ordered from the same supplier, Fitbit was prone to extended lead times and supply scarcity. By 2015, Fitbit only had one supplier, which is why it looked to onboard more suppliers.

Customers:

Fitbit had the highest percentage (68%) of active users among its competitors. In 2016, 79% of additional sales were obtained from new offerings, with 40% of new product activations from existing customers. As it reached diminishing returns, it augmented its advertising efforts by increasing it to 13% of revenue. From just a strong presence on Facebook and Twitter, it started advertising on television and other channels in Europe, Asia and Africa. It also started marketing its products to corporates, healthcare providers and insurance companies.

Competitors:

Fitbit got its first real competition in 2011 when Jawbone entered the market. In 2015, its market share was 32.6%, followed by Xiaomi with 22%. In 2016, Fitbit's market share dropped to 25% after the release of the Apple Watch. Apple Watch competed on the top spectrum while Xiaomi competed on the bottom spectrum with an economical price of $14.95. The following products also gave Fitbit stiff competition: wearable wristbands, smartphones that incorporated health managing abilities and free/paid applications that operated as fitness trackers. Hexoskin and Ralph Lauren made shirts that could measure heart rate and calories burned. Under Armour's digital community of 120 million users was a huge threat to Fitbit's social networking advantage. 

The public:

Few studies exposed the inaccuracy of Fitbit products. In one study, Fitbit's output differed from the treadmill output, while in another study, it exhibited inaccuracy regarding the calories burnt. Fitbit also had to recall many devices because many customers complained about rashes and blisters.

2. What macro-environmental factors have affected Fitbit?

The macroenvironmental factors that have affected Fitbit are Demographics: age, income & lifestyle, willingness to pay and adoption of advanced technology by institutions.

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