EXECUTIVE SUMMARY <200 words>
This assignment illustrates an analysis of the marketing strategy employed by GoPro Inc. on their camera line called HERO. It is divided into two parts one of which shows the full marketing audit of GoPro in the US that includes an evaluation of the current market performance presenting the way GoPro devices have been able to uphold competitive advantage in 2019 despite a significant fall in 2018 that is through course corrective strategies i.e. appropriate cost-cutting, product differentiation and user-generated content marketing.
The second part presents coherent rationale for the introduction of the new product. Recommendation on the suggested marketing strategy includes:
- Appealing to a new audience and targeting new customer base apart from GoPro’s present target market (athletes, thrill-seekers, outdoor activity enthusiasts) to develop conversions
- Expanding distribution channels to increase product awareness and establish customer relationship
- Incorporate collaborative marketing with renowned brands to break into new markets and strengthen brand credibility
- Integrate well-crafted product placement on films to gain concentrated product attention and gain positive association with the movie
INTRODUCTION <150 words>
The rise in smartphones has been affecting the camera industry, both traditional and contemporary. “We failed to make GoPro contemporary and failed to align GoPro to the smartphone movement,” stated by CEO Woodman in 2017. The focus of this research is on the marketing strategy of one of the leading action cameras, GoPro, whether or not is it able to remain competitive despite rise in rivals within the US market. Primary aims include identifying factors materially influencing GoPro’s operations, the marketing strategy currently adopted and providing suitable recommendations regarding the marketing strategy for the brand in the future while presenting rationality and effectiveness.
I. PART ONE
1.1. Environment Analysis
1.1.1. Macro-environment (PEST)
Political: Several political factors influence GoPro such as the level of bureaucracy in global affairs and political stability. This stability exists when the US government is favoured by the majority of the population in which when problems arise in various countries such as international terrorism; the nation can effectively deal with and withstand such potential difficulties that may occur (Powers & Choi, 2012). This also includes the controls of international trade i.e. protectionism, which generally concerns government policies that guard GoPro from overseas competition, also tariff schedule and customs union therefore allowing it to acquire greater level of income (Huempfer, 2016).
Economic: These factors are connected in the overall changes in global economy such as products, services and financial state locally and internationally. A survey administered by NABE in Q3 2019, almost 40% of economist respondents anticipated a recession in 2020 (National Association for Business Economics, 2019). This expected decline has the potential to adversely impact GoPro’s overall profitability in the US. For this reason, GoPro consumers will want to shift to relatively low-cost alternatives. More economic factors include globalization, which refers to the rapidly growing interdependence of economies globally, that is caused by the increasing scale of cross-border trade of goods and movement of international capital (Power, 2018). This rapid growth is mainly centred on the quick advancement technologies, which has then caused by the globally steadfast extending market economic system and by its growth on the basis of mounting cross-border division of work that penetrated down to the quantity of goods production among GoPro’s operations globally.
Social and Cultural: Related to changes in socio-cultural structures, these elements give visions of knowledge into the potential consumers’ behaviour, which particular GoPro HERO version do they prefer best, their constantly changing tastes and patterns of way of living. Purchasing habits are hugely affected by the changes in the structure of the population and all customer lifestyles (Kotler, et al., 2016). It’s vital for GoPro to structure their business strategies in accordance to the socio-cultural differentiations in the US as this affects product sales and profit earned. Increasing levels of multiculturalism may also cause misunderstandings due to cross-cultural differences that may lead to negative effect on the overall performance of GoPro.
Technological: Attributable to the rise of technology, transportation and communication has grown considerably, which enabled easier communications with the customers not just in the US, but also globally and eventually resulted to more efficient business operations for GoPro, an organization that deals with global markets (Gharabegian, 2018). In 2019, consumers expect higher resolutions of photos and videos. Technological factors impact GoPro by giving opportunities to come up with innovative action-cameras that captures an entire 360-degree perspective, which allowed the brand to remain competitive.
1.1.2. Micro-environment (Porter’s Five Forces)
Threat of New Entrants – High
Low Barriers & Product Differentiation: Although GoPro is one of the initial players in the market, other reputable brands are coming to set up themselves in a once perceived niche space like GoPro’s top generic/replacement competitor, Apple. High level of threat is caused by low barriers to entry for prominent brands to develop similar kinds and features of technology and imitate GoPro’s product offerings which makes it difficult for GoPro to set strong differentiation basis (Porter, 2008).
Threat of Substitutes – Moderate to High
Relative Performance of Substitutes: GoPro’s 2016 HERO4 unsuccessfully appealed to the consumers who depend more on smartphones than action-cameras to film outstanding-quality visual media (Wells & Nicas, 2016). A high threat of substitutes has limit GoPro’s ability to establish prices through putting a ceiling. This is due to the increasing demand of Apple smartphones and their ability to fulfil customer needs. Granting GoPro’s leverage on video quality, its price is comparable to Apple’s that offer unique integrated features such as Cellular, Wi-Fi and GPS. As smartphones have the ability to perform the same function as GoPro cameras, consumers might settle for this alternative.
Bargaining Power of Buyers – Moderate
Relative Price Performance of Alternative & Low Switching Cost: The presence of competitors that offer similar products for lower prices strengthens consumer bargaining power (Kunc, 2019). GoPro’s top direct competitor DJI Osmo Action retails at £229 in comparison to GoPro Hero7 Black’s price of £279 wherein both acquires similar features and enables creativity of impressive outstanding-quality visuals. Once GoPro tries to further increase its product prices, price-sensitive buyers could easily walk away due to low switching cost and minimal price difference. Nevertheless, although the consumers may simply withdraw from GoPro to DJI Osmo, as it’s cost-efficient to do so, the consumers still acquire a moderate sensitivity in GoPro’s leverage of capturing moving stabilised sequence that DJI Osmo couldn’t provide (see Appendix A. for further product comparison).
Bargaining Power of Suppliers – High
Presence of Alternative: This high degree of suppliers’ power is due to GoPro’s heavy reliance on them. GoPro’s camera designs integrate meticulous processors, sensors and lens solutions from Ambarella Inc. which vitally affect the products’ functionality. The said supplier acquires unique mechanisms that prevent GoPro from getting from other sources for such critical components as it is, too, commercially impractical. Presuming Ambarella isn’t able to supply parts necessary to meet demand, GoPro would be considerably and adversely affected (GoPro Inc., 2016).
Competitive Rivalry – High
Monopolistic Competition: The market for cameras is vastly competitive as prevailing players have introduced new and more differentiated offerings. Competition growth and varying consumer preferences bring about pricing pressures, diminished profit margins and might hinder GoPro’s capacity to boost sales which eventually results to a drop of market share and materially harm the business. GoPro’s strongest brand rival, Canon Inc., is slowly acquiring a part of GoPro’s share considering both brands target alike audience. Canon’s leverage comes in terms of longer operating history that meant broader distribution channels and establishments of loyal customer base that challenge GoPro. (Market Line, 2019)
1.2. Evaluation of Current Marketing Strategy and Performance
Current Marketing Strategy: Product Specialization
Neither GoPro was the first to introduce cameras nor were they the forefront of technology. Woodman, GoPro’s founder and CEO, decided to build a specialised product which thoroughly fulfil a particular audience rather than a non-unique gadget that barely appease to anyone. As opposed to following the trend of digital cameras, GoPro understands their thrill-seekers audience and created action cameras with head-mount gears and capable of capturing underwater and point-of-view footages instead of incorporating extravagant megapixel smartphones have.
Current Market Performance
Over the years, an effective marketing strategy which depended on user-generated content to improve customer engagement generated GoPro popularity with thrill enthusiasts, adventure seekers and those desiring to film cool recordings. However, the commercialisation of the action-camera market has overtaken GoPro. The brand has lost its innovativeness as rivals started manufacturing feature-loaded technologies at competitive prices in 2018 resulting to sales down by 7% compared the year-ago quarter. And in Q2 and Q3, GoPro’s revenue dropped by 5% and 13%, respectively. 2018 revenue was approximately $1.15 billion, down to almost 3% year-over-year (GoPro Inc., 2019).
Metric 2018 2017 % Change
Revenue $1,148,337 $1,179,741
(2.7%)
(GoPro Inc., 2019)
GoPro struggled in the beginning of 2018 however, their course corrections was effective. The brand rationalised its operating overheads to less than $400 million during the year. Consequent to downsizing, GoPro currently has 891 employees (MarketWatch Inc., 2019).
It’s been anticipated that the introduction of water-resistant smartphone photography entails to GoPro’s demise. Apple’s iPhone XS delivers outstanding snapshots and can be used to a depth of 2 meters for not more than 30 minutes (see Appendix B for camera comparison specification comparison). On the contrary, the growth in demand for social media content and the desire driven by smartphones caused an occurrence where GoPro devices outdo the sales. In Q4 2019, GoPro launched HERO8 Black prevailing record affirmative social response. The new product acquires the best initial month of sales of any action camera in GoPro’s history Aggregated camera unit sales on website in the first month of Q3 2019 increased by over 50% compared to Q3 2018. In the US, GoPro captured 93% dollar share of the action camera category in Q3 2019 (GoPro Inc., 2019).
Metric Q3 2019 Q3 2018 % Change
Revenue $131,169 $285.936 (54.1%)
(GoPro Inc., 2019)
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