Industry analysis & segmentation (CAGR & category segments)

Healthcare expenditure has always been eating a big pie out of total GPD for any
country. Most of the countries spend roughly 10-15% of their GDP on health
expenditures and hence controlling the rising cost of health care has become
national agenda for many countries. This self-care or personal health devices
market totalled US$ 10.5 billion in 2012 and estimated to grow to US $ 16.9
billion in 2019 with a CAGR of 7%.iPersonal healthcare can generally be
categorized in three different domains as per its application namely
disease diagnosis, disease treatment and disease prevention.

Scope of project
We have chosen to study the disease prevention segment due to
increase focus of the world in this category since it is cheaper to
prevent a disease than to diagnose or treat. The most popular device in
personal healthcare devices are activity monitoring devices. By 2018, the
market for wearable health is poised to grow to $2 billion in revenue with
almost 130 million devices shipped to consumers. ii Activity trackers are
wireless enabled devices keeping a tab on users fitness data. The category is
not new and continuous improvements have taken place in 20 th & 21st centuries
to provide for automation of measurement & recording of activity data and
provide for a comprehensive analysis of the fitness of the employee.
Since Fitbit commands a 79% market share by sales in America, we have
focussed our analysis specifically on Fitbit 1.

Evolution of Technology for activity trackers

Fitbit launched in 2008 with a steps tracking product. Fitbit activity trackers have
a 3-axis accelerometer at the heart of the gadget. Accelerometers convert body
movements & acceleration data and provide information on frequency &
movement patterns. The 3 axis implementation allows accelerator to measure
the users motion more accurately.
With several hit & trials Fitbit developed algorithms for counting steps accurately.
The algorithm looks for patterns of motion which indicate walking motion of
people. If the motion is large enough the motion is recognized as a step. Based
on a threshold the cutoff is decided to consider a motion to be a step. If the
motion & its subsequent acceleration measurement data meet the threshold, the
motion will be counted as step. The sleep tracking feature takes into account the
hours of inactivity of the band and may not be as accurate.
Apart from fitbit there a range of products which are trying to provide different
features are also available in the market now like Jawbones Up, the Basis band
which comes loaded with sensors to track heart record and stress levels using
galvanic skin response. Lark sleep sensor, Zeo os a dedicated wearable device
for sleep monitoring. Moov Now has brought a wearable device with in-built AI to
motivate users for better fitness.

1 http://vator.tv/news/2016-02-02-fitbit-accounts-for-79-percent-of-activitytracker-sales

STP analysis
A plethora of companies are trying to enter into this mushrooming digital
transformation of healthcare value chain. The vendor landscape in this space
include established athletic based apparel brands (Nike, UnderArmour), mobile
app driven companies (MapMyFitness, Runtastic, Runkeeper), technology based
start-ups (Fitbit, Misfit, Jawbone, Basis) and horizontal general purpose wearable
device manufacturers (Pebble, Samasung). Fitness and activity monitoring
devices account for more than 50% of the wearable tech market personal
healthcare devices.iii
In the present scenario the wearables available in the market are
addressing both the hedonic for some and functional needs for some
individuals. On the prelude of this the industry, though in its infancy, can be
segmented as follows

Demographic segmentation

Lifecycle
Stage
Infants
Children

Product
Mimo- used for breath monitoring while sleeping iv
KidFit sleep tracker for children in the range of 5-13 years v

Youth
Aging

Fitbit Alta complete solution for activity trackingvi

Fitbit Zip activity monitoringvii

Market entry strategy

Fitbit started as a small tech company and its product didnt gain much traction
till it raised funds to funnel its advertisement. The company during its initial days
used WOM as their marketing tool and from then has evolved to a brand that
competes directly with NIKE. Fitbit website gives us an idea as to what their
marketing strategy is. They have a blog on their official website where users
could have their experience shared with the community. It also has a buzz area
where every news article related to Fitbit is posted so that it gives insights to a
potential customer about the usefulness of the product. Their strategy is to
educate the people about fitness and providing a solution to track the progress
made. Fitbit modelled their marketing in a way that it not only provides
a tracking mechanism of a persons fitness but also motivates them to
achieve set targets. There were a couple of campaign that Fitbit initiated in its
early days that created a lot of hype over the niche product in a niche segment
(fitness). Some of the campaigns
1. Fitbit had a campaign that partnered with Feeding America to 1.5 mn free
meals. This campaign tied fitness to charity and had a huge WOM
associated with this campaign and made the brand have a good image.
2. Fitness as a game: Fitbit made fitness a social thing where one user
could challenge another to a fitness game. This made the boring act of
workout enjoyable and keeps motivating so that the product doesnt
become just a fad.
3. Social media: When a task is completed Fitbit posts the achievement on
social media motivating the person and providing him with a sense of
achievement.

Fitbit is available in over 45000 retail stores to sell its product to the customer
across the globe as of 20152. It also bought tie up with the online retailers so that
its reach is maximized.

Problems & Future Outlook

The main worry concerning Fitbit or any other tracking device is the blurring of
the fine line between watches and fitness tracker. The simplest example could be
the Apple watch which provides almost the same features to capture the
essential fitness data to be used by the user. In such case a device such as Fitbit
that provides only fitness information would turn out to be an outdated
technology soon. Fitbit in this case tries to bundle its product to other devices
such as a smartphone and is made available across platform. The price of an
Apple watch would stay as a deterrent at least for some people but with growing
number of low cost smart watches entering the market every year it is hard to
concentrate on a small niche would be a risk for the company to take.

i http://www.tmrblog.com/2014/09/self-care-medical-devices-market.html
ii http://time.com/2938202/health-fitness-gadgets/ &
http://www.huffingtonpost.com/entry/wearable-technology-the-c_b_5263547.html?
section=india
iii http://www.gartner.com/newsroom/id/3198018
iv http://mimobaby.com/
v https://xdorialife.com/products/kidfit?variant=786956621
vi https://www.fitbit.com/in/alta?utm_source=Google&utm_medium=Search_&utm_campaign=IN-Model-AltaExact#features

vii http://www.imore.com/which-fitbit-best-seniors