Rita HaoValeria LambertiPatrick Stoesser

Group Case AnalysisNike+ FuelBand

MKTG 6231FEntertainment MarketingSchulich School of Business

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“Bracelets” that monitor fitness activity

– Track movement and sync results with mobile applications

Relatively new industry product invented in early 2000’s

$400MM market annually (2016)

Dominated by 3 players (97% of market)– Nike– FitBit– Jawbone

Industry Overview

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Private start-up founded in 2009

Wide variety of products

Focus on ‘health’, ‘fitness’, and ‘individualism’

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Entered market in 2006 with Nike FuelBand+ IPod Product

Heavily marketed and advertised

Focus on ‘sporty’, and ‘the Nike community’

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Nike vs. FitBit

Nike FitBit

Entered Market

2006 2009

Average Cost $149 $130

Measurements

Time, Distance, Calories, Steps, Daily Progress, “Nike Fuel”

Time, Distance, Calories, Steps, Elevation

Technology Bluetooth connectivity, 3-axis accelerometer , ambient light sensor, li-on polymer battery

Bluetooth connectivity, 3-axis accelerometer, vibration motor, li-on polymer battery

Market ShareFitBit is a start up with a fraction of the marketing budget of Nike, yet they are dominating the market

Why is this and how can Nike position themselves to increase their market

share?

10% 68%

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Ideological Field of Technology

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The Healthy Consumer Contradiction

Gap between reality and ideal(as experienced in everyday situations) Time

Identity Confirmation(discourse, practices, performances)

Ideological Field of the healthy consumer

The Pursuit of Healthy Living (through Brands)

The Health Conscious ConsumerThe Natural Athlete

Smart, “the every man”, responsible Strong, masculine, fun

Too much work, boring, not funUnrealistic, intimidating, naive

Contradictions

Implicatives Implicatives

Negations

The Healthy Consumer

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The Problem

Nike is trying to win over “The Healthy Consumer”

Marketing message focuses on “The Natural Athlete”– Contradicts message with “The Health Conscious Consumer”– Strong and sporty vs. responsible choices, everyday battles

Appealing to “The Work Machine”– Technology leads to productivity, success, efficiency

FitBit appeals to every other segment– Expressive, ease of use, empowerment, community building,

those intimidated by technology

Given this, how does Nike position FuelBand to gain market share?

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Key Success Factors

A. Strong Brand Recognition– Premium brand– High quality products– The “cool” factor/brand personality

“Nike-as-a-person is exciting, provocative, spirited, cool, innovative, aggressive, and

into health and fitness”

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Key Success Factors

B. Style and features– Different colors and design– Comfort – Silent alarm, water proof, sleep monitoring– Cross-platform wireless syncing (android device)– Social connectivity (NikeFuel community)– “One size doesn’t fit all” - Fitbit

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Key Success Factors

C. Financial sustainability – Nike was the first one into the market

• Experience and technology– Ability to develop new products in house with

minimal risk– Strong history of alliances

• Apple partnership– Selective in M&A– Extremely high marketing budget

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Ansoff’s Four Strategies

Present ProductNike+ Fuel bandNike+ Fuel band SE

New Product

Present MarketAthletes, active people

Market Penetration

Product Development

New MarketEveryday Joe who wants to be more active and healthy

Market Development

Diversification

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Alternative Solutions1. Status Quo

Pros:– Less risky– Serving the same niche market

Cons:– Losing market share (10% Nike vs. 68% Fitbit)– More players coming into the market (LG, Sony, Garmin)– Premium price with less functionality– The “fuel points” system is confusing

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Alternative Solutions

2. Acquire FitBit

Pros:– Big corporation vs. start-up– Access to FitBit’s activity tracking logarithms (trade secrets)– Instantaneous results

Cons:– Financial risk – Cannibalize sales

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Alternative Solutions

3. Market development

Pros:– Develop a new sub brand with a focus on developing a new

market– Improve software compatibility with different operating

systems– Different pricing tiers– New marketing campaign focusing on “healthy people”

instead of “athletes”– Leveraging Nike brand

Cons– Time demanding– Customer perception

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Evaluating Alternatives

Key Success Factors in the Activity Tracking Industry

Nike’s Strength Status Quo AcquisitionMarket

Development

Strong Brand Name

✔ ✔ ✔

Style/features ✔ ✔

Financial sustainability

✔

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Developing a New Association

Sport

Fun

Athletes

ShoesMotivation

Running

Just do it

Trainers

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How?

Nike+ Health sub brand is all about healthy everyday living

Sport Just do it

Sport = HealthKeeping healthy

through sport activities

Just do it = HealthKeeping healthy

through everyday simple and small efforts

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Let’s Take the Field!

Nike+ =

Health

New product features

Review Nike+ ads

Strategic sponsorshi

ps

Online strategy

New spokespers

ons

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Make Health Count! Review Nike+ ads

ACTUAL COMMERCIAL40%-50% of images related to

sportsonly few about everyday

healthy living

NEW COMMERCIAL70% of images related to

everyday healthy activitiesSport is not the only thing

that counts!

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You Know It, It Counts

Contact companies which stimulate their employees to

practice more healthy activities

Sponsor healthy programs organized by high schools and universities

Sponsor city marathons

Strategic sponsorshi

ps

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Web Counts Too

Improve the Nike+ FuelBand community:– possibility to share your “health results” with your friends– users and company generated suggestions on how to keep

you healthy

Facebook and Twitter pages totally dedicated to the new Nike+ and the health topic

YouTube channel integrated with the new commercial and spokespersons’ videos with healthy suggestions

“The Healthiest Nike person” contest

Online strategy

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Perfection Doesn’t Count

The new Nike+ should no longer be associated only with athletes and sports persons.

New spokesperso

ns

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Money (unfortunately) counts

Activities CostNew spot realization 5.000$

New spot broadcasting 400.000$

Sponsorships 2.000.000$

Social Media 200.000$

Contest 10.000$

Spokespersons 1.500.000$

TOTAL 4.115.000$

Cheaper than an acquisition!

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Referenceshttp://www.nytimes.com/imagepages/2006/12/17/business/17buzz_CA0_ready.htmlhttp://www.unilever.com/sustainable-living/betterlivelihoods/Respecting-Human-rights/well-being/http://www.coca-cola.co.uk/about-us/employment-our-people.htmlhttp://mobihealthnews.com/28825/fitbit-jawbone-nike-had-97-percent-of-fitness-tracker-retail-sales-in-2013/http://www.prophet.com/blog/aakeronbrands/135-three-models-of-how-a-brand-personality-impactshttp://www.smartwatchnews.org/top-5-activity-trackers/http://www.fitbit.com/productshttp://www.wired.com/medtech/health/magazine/17-07/lbnp_nike?currentPage=allhttp://reviews.cnet.com/wearable-tech/http://mobihealthnews.com/14884/by-2016-400m-market-for-health-fitness-apps/