What microenvironmental factors have affected Fitbit since it opened for business?
It was 2009. James Park and Eric Friedman were at a breaking point. They’d been flitting around Asia for
months, setting up the supply chain for their company’s first product, the Fitbit Tracker. Having raised
capital to launch the product with nothing more than a circuit board in a balsa wood box, they were now
on the verge of pushing the button to start the assembly line. But with thousands of orders to fill, they
discovered that the antenna on the device wasn’t working properly.
They stuck a piece of foam on the circuit board and called it “good enough.” Five thousand customers
received shiny new Fitbit Trackers just in time for the holidays. Getting a start-up company off the
ground is challenging. Getting a hardware start-up to succeed is near impossible, especially when you’re
the pioneer. But with so many changes in the marketing environment, Park and Friedman knew they
had something special. Pedometers had been selling for years, following personal fitness and wellness
trends. But those devices were low-tech and limited in the information they provided consumers. And
with the seemingly endless demand for high-tech gadgetry, Park and Friedman saw big potential for
using sensors in small, wearable devices.
Coming up with a product that delivers the right benefits to consumers at precisely the time they need
them is the key to any new product launch. In Fitbit’s case, consumers were hungry for this small device
that could not only track steps taken but calculate distance walked, calories burned, floors climbed, and
activity duration and intensity, all from an unobtrusive spot— clipped on a pants pocket. What’s more,
the Fitbit Tracker could track sleep quality based on periods of restlessness, the amount of time before
falling asleep, and the amount of time actually sleeping. Even more enticing to consumers, the device
could upload data to a computer and make them available on the Fitbit website. At the site, users could
overview their physical activity, set and track goals, and keep logs on food eaten and additional activities
not tracked by the device. To top things off, the explosion of social media and sharing personal
information went hand in hand with what users were uploading. By design, Park and Friedman put more
into Fitbit’s software than its own hardware, recognizing that other hardware device companies like
Garmin had shortchanged the software aspect.
But Fitbit’s success can also be attributed to new models. Recognizing that gadgets have a limited life
span and that competition would attempt to improve on its offerings, Fitbit has made development a
constant process. From the original Tracker to its current Blaze smartwatch with GPS, heart-rate
monitor, and the ability to display smartphone notifications for calls, texts, calendar alerts, Fitbit has
stayed ahead in giving consumers what they want.
Coming up with a product that delivers the right benefits to consumers at precisely the time they need
them is the key to any new product launch. In Fitbit’s case, consumers were hungry for this small device
that could not only track steps taken but calculate distance walked, calories burned, floors climbed, and
activity duration and intensity, all from an unobtrusive spot— clipped on a pants pocket.
What macroenvironmental factors have affected Fitbit?
As Fitbit talked to companies, it discovered that most were struggling to enroll even a small proportion
of employees in their workforce wellness programs—many had less than 20 percent compliance. One
problem was that—even as the latest fitness wearables from Fitbit and its competitors were showing up
around offices everywhere—participation in corporate wellness programs often required the use of a
bulky corporate-issued tracker, better known as an analog pedometer. “Can you imagine asking
engineers to wear a janky old pedometer and write down their steps?” mused Amy McDonough, Fitbit’s
corporate point person. Fitbit, of course, offered a much more high-tech option, letting individuals easily
track more complex data and letting HR departments easily compile and analyze the data as well. Fitbit’s
bulk sales to corporations started rolling in. Much to Fitbit’s pleasant surprise, Fitbit products sold
through corporations versus those sold to individuals had noticeably higher retention rates. Fitness
trackers in corporate wellness programs were often used in wellness challenges—maintain a minimum
of 10,000 steps a day and get free vacation days or a discount on health insurance premiums. It might
seem logical that people would stop using their devices once a challenge ended. But when IBM gave out
40,000 Fitbits to employees over a two-year period, it found not only that 96 percent of employees
routinely logged their health data and eating habits but that 63 percent of employees continued to wear
their Fitbits months after the challenge concluded. Other companies noted even greater tangible
benefits. Cloud-services start-up Appirio bought Fitbit devices for 400 employees. Armed with data from
the wearables, Appirio was able to convince its health insurance provider, Anthem, that the increased
health benefits were translating into lower health-care costs. This gave Appirio the leverage to negotiate
lower premiums, shaving $280,000 off its annual bill.
Today, Fitbit’s well division offers tools specifically designed for employers, such as dashboards,
dedicated service support, and webinars. Corporate clients include BP America, KimberlyClark, Time
Warner, and Barclays. Target offered Fitbit Zip trackers to 335,000 of its employees. Corporate sales
currently account for 10 percent of Fitbit revenues. But the corporate share of the sales will increase, as
adoption in that sector is growing at a faster rate than in consumer markets. Founder Park claims that
the use of Fitbits in employee wellness programs is having an impact not only on health and well-being
but on job safety as well. Companies have also experienced improvements in office cultures as a result
of the unified effort among coworkers to achieve fitness goals together—a factor that is also likely
boosting retention numbers in the corporate setting.
To what extent would you agree with the claim that Fitbit’s marketing management orientation is a
marketing concept? Justify your standpoint with relevant points from the case study?
With high growth rates and plenty of market potential, it would seem that the sky is the limit for Fitbit.
But Fitbit still faces numerous obstacles. For starters, privacy issues have increased as technology
creates new ways to gather and share information. In Fitbit’s early days, information logged by users
was public by default. That meant that as users integrated their information into social networks, their
fitness, eating, and other activities were being posted for all to see. That was easily remedied by making
“private” the default setting. But general concerns about what happens with uploaded personal data
remain, even amid assurances from Fitbit that it does not analyze individual data or sell or share
consumer data.
Fitness trackers and the data they generate are not regulated. That means that any organization bound
by compliance with the U.S. Health Insurance Portability and Accountability Act (HIPAA) has had to tread
lightly when adopting a digital tracking device. Fitbit has always been proactive on privacy and
information security issues, leading the industry by working with Congress on legislation in this area.
Fitbit recently achieved HIPAA compliance, which goes a long way toward putting employers’ fears
about privacy and security to rest.
Even as Fitbit and its corporate customers do all they can to allay privacy concerns, many employees
have expressed concerns that companies will misuse the data. Cheaters are also a concern. Yes, some
participants in wellness programs have found ways to fool their Fitbits. For example, a dog can trigger
13,000 to 30,000 steps per day with a Fitbit attached to its collar, easily exceeding the standard 10,000-
step goal. Social media sites have erupted with shared practices. Beyond these concerns that stand in
the way of more widespread acceptance and use, perhaps Fitbit’s greatest challenge is competition.
With a dominant market share in the rapidly growing product category that it created, you might think
the Fitbit has it made. However, as digital technologies advance on all fronts, it has become apparent
that a fitness tracker is not a product.
And on the software and analytics side, Apple Health and Google Fit seem poised to corner the market
with compatibility across mobile platforms. But Fitbit is hard at work differentiating its wares and
positioning itself as more than just a maker of fitness trackers. It has already introduced its own
smartwatch. And its “next big leap” is to move beyond fitness tracking into medical diagnosis. By
partnering with organizations that can link Fitbit’s products with more detailed clinical research, Fitbit
devices could soon replace blood glucose meters and even alert users to dangerous health conditions
and disease. If Fitbit can successfully position itself on strengths that competitors have a hard time
replicating, the sky may be the limit.
What are the key actions taken by Fitbit which show that the organization is following the changing
marketing landscape?
, Fitbit’s path to success has been challenging. One big challenge the company has faced from the start is
customer retention. Like many diets and pieces of exercise equipment, users are drawn to the “wow”
factor of something that can improve their health and wellness but quickly fizzle out. And if users stop
using a device, they are far less likely to purchase the “new-and improved” version, much less
recommend it to anyone else. But an interesting thing happened as Fitbit got things rolling. The
company received a flood of calls and messages from corporate human resource departments.
It turned out that corporate America was going through a push to enroll employees in wellness
programs. The reasons for this push extended far beyond concerns about employee health and well-
being. Healthy employees provide major benefits for a company. They call in sick less often and are
generally more productive.
s, it discovered that most were struggling to enroll even a small proportion of employees in their
workforce wellness programs—many had less than 20 percent compliance.
Fitbit’s corporate point person. Fitbit, of course, offered a much more high-tech option, letting
individuals easily track more complex data and letting HR departments easily compile and analyze the
data as well. Fitbit’s bulk sales to corporations started rolling in.
Much to Fitbit’s pleasant surprise, Fitbit products sold through corporations versus those sold to
individuals had noticeably higher retention rates. Fitness trackers in corporate wellness programs were
often used in wellness challenges—maintain a minimum of 10,000 steps a day and get free vacation
days or a discount on health insurance premiums. It might seem logical that people would stop using
their devices once a challenge ended. But when IBM gave out 40,000 Fitbits to employees over a two-
year period, it found not only that 96 percent of employees routinely logged their health data and eating
habits but that 63 percent of employees continued to wear their Fitbits months after the challenge
concluded.
Today, Fitbit’s well division offers tools specifically designed for employers, such as dashboards,
dedicated service support, and webinars. Corporate clients include BP America, KimberlyClark, Time
Warner, and Barclays. Target offered Fitbit Zip trackers to 335,000 of its employees. Corporate sales
currently account for 10 percent of Fitbit revenues. But the corporate share of the sales will increase, as
adoption in that sector is growing at a faster rate than in consumer markets. Founder Park claims that
the use of Fitbits in employee wellness programs is having an impact not only on health and well-being
but on job safety as well. Companies have also experienced improvements in office cultures as a result
of the unified effort among coworkers to achieve fitness goals together—a factor that is also likely
boosting retention numbers in the corporate setting.
With high growth rates and plenty of market potential, it would seem that the sky is the limit for Fitbit.
But Fitbit still faces numerous obstacles. For starters, privacy issues have increased as technology
creates new ways to gather and share information. In Fitbit’s early days, information logged by users
was public by default. That meant that as users integrated their information into social networks, their
fitness, eating, and other activities were being posted for all to see. That was easily remedied by making
“private” the default setting. But general concerns about what happens with uploaded personal data
remain, even amid assurances from Fitbit that it does not analyze individual data or sell or share
consumer data.
But other privacy matters haven’t been so easily managed. Fitness trackers and the data they generate
are not regulated. That means that any organization bound by compliance with the U.S. Health
Insurance Portability and Accountability Act (HIPAA) has had to tread lightly when adopting a digital
tracking device. Fitbit has always been proactive on privacy and information security issues, leading the
industry by working with Congress on legislation in this area. Fitbit recently achieved HIPAA compliance,
which goes a long way toward putting employers’ fears about privacy and security to rest. But other
concerns remain on the part of both employers and employees. Even as Fitbit and its corporate
customers do all they can to allay privacy concerns, many employees have expressed concerns that
companies will misuse the data. Cheaters are also a concern. Yes, some participants in wellness
programs have found ways to fool their Fitbits. For example, a dog can trigger 13,000 to 30,000 steps
per day with a Fitbit attached to its collar, easily exceeding the standard 10,000-step goal. Social media
sites have erupted with shared practices. Beyond these concerns that stand in the way of more
widespread acceptance and use, perhaps Fitbit’s greatest challenge is competition. With a dominant
market share in the rapidly growing product category that it created, you might think the Fitbit has it
made. However, as digital technologies advance on all fronts, it has become apparent that a fitness
tracker is not a product. It’s a feature.
But Fitbit is hard at work differentiating its wares and positioning itself as more than just a maker of
fitness trackers. It has already introduced its own smartwatch. And its “next big leap” is to move beyond
fitness tracking into medical diagnosis. By partnering with organizations that can link Fitbit’s products
with more detailed clinical research, Fitbit devices could soon replace blood glucose meters and even
alert users to dangerous health conditions and disease.
