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The GoPro brand is synonymous with action cameras as the Nick Woodman-led company essentially created this market by launching the first commercially available action camera back in 2002. There is no significant factor for politic and economic in this sector, However for the social factors it make this company business become bright in the recent days or in the future. This is supported by current phenomena where more and more people use social media to express their daily life, therefore the need for an action camera is blooming. This kind of camera incredibly popular with sports enthusiasts, practice water sports, ski, snowboard, motorcycling and other extreme sports, or anyone wanting to record cool videos then upload in social media.
The technology factors that affect this industry is moderately affected since the commoditization of the action camera market has caught up with GoPro as the leading company. However, the company has some disadvantages since some other competitors try to imitate the feature-loaded devices and sell their product with lower price. The market for these cameras is still in its nascent stage and is gaining a lot of popularity through media, advertising and social networks. Identify the industry that you company belongs to and the company’s place in the industry (e.g. top performer, middle range, bottom)GoPro has come a long way since then as its technology has grown by leaps and bounds. However, the market for this industry is highly competitive and characterized by frequent product introductions and rapid technological advances. A lot of new players are being attracted to this industry which will likely have an impact on price, features and quality of action cameras. Identify a competitor company that belongs to the same industry and occupies similar position in the industry.
The GoPro company has to compete against established, well-known camera manufacturers such as Canon Inc., Nikon Corporation, Olympus Corporation, Rollei GmbH & Co. KG and Vivitar Corporation, as well as large, diversified electronics companies such as, Panasonic Corporation, Polaroid Corporation, Samsung Electronics Co., Sony Corporation and VTech Technologies, and specialty companies such as Garmin Ltd, but also have to compete with new emerging company in the industry. Such as from Chinese companies are working their magic in action cameras by coming up with cutting edge devices and offering them at affordable prices. For instance, Chinese action camera maker like SJCAM and AKASO. These new companies offer competitive products directly in this category. Conduct Porter’s five forces analysis, conclude with assessment of industry’s current profitability and growth potential.
Rivals – Several rivals have entered the wearable action camera market, which has increased the intensity of the space; however, the quality and performance of the GoPro product allows them to maintain an edge over the competition. As competitor products approach the quality of GoPro this rivalry will intensify. The primary direct competitors include Sony, JVC, and Garmin. These products are designed in a similar nature to GoPro – able to be mounted to a surface to capture footage from a multitude of perspectives. The rivalry will continue to increase as new players have entered the market focusing on a subset of the space. The ‘wearable cameras’ have become increasingly popular, and increased the number of competitors in the space. The rivals have forced GoPro to forego its premium positioning and reduce prices in order to move its action cameras off the shelves. In fact, GoPro is now following the competition to save its standing in the market.
New entrants – Because GoPro has many incumbent advantages being first to market such as brand identity, distribution network, and a lot of patent protection, the threat of new entrants is fairly medium. However this threat can quickly evolve stronger, especially coming from consumer electronic giants. Companies with strong expertise in consumer electronics (and large R&D budgets) have the resources available to quickly enter this space (as demonstrated by Sony, Panasonic, JVC and Garmin). Additionally, smaller players are using Kickstarter (which is a popular crowdfunding source) as a means of obtaining the capital required to fund new companies that have breakthrough competitive potential (ex: 360 Camera by Giroptic). Tools such as Kickstarter have enabled new entrants to overcome the financial obstacle that would otherwise protect GoPro from the threat of new entrants.
Buyers – Currently GoPro is the leading brand in a nascent industry, allowing them gain more profit for their action cameras. However, the industry is experiencing rapid growth, attracting a lot of new companies with competitive products. The market for this industry is highly competitive. There are many camera manufacturers out there, with their speciality for the market share competition. In this market buyers are price sensitive as there is low differentiation among devices and a lack of diversity of choice. The price of Gopro product is well known for high price compare to other competitors. This condition will force eventually following the competition in a bid to increase sales. But the success by reduce price of this move is not guaranteed, because the basic Hero is still expensive compared to what competitors are offering.
Suppliers – There is a high depend on third party suppliers, due to the limited amount of suppliers that offer capable electronics that are rare and exclusive, particularly in this area the power of suppliers is high. This condition will make industry profitability become lower as companies are subject to supplier’s prices. For example, GoPro has sole source suppliers among its third party suppliers. The following excerpt is from the company’s recently released S-1: “In particular, we incorporate video compression and image processing semiconductors from one provider, Ambarella, Inc., into all of our cameras, and we do not have an alternative supplier for these key components.” Profits could also be hindered if competitors in this market do not possess manufacturing capabilities.
Threat of substitutes – One of the threats to the recording device industry is the substitution of smartphones, which can perform similar functions and are widely owned with some estimates putting smartphone ownership at 22% of the global population. The value of a smartphone in the form of convenience and availability could work to reduce buyer’s cost of switching as smartphone video quality and durability improve, this in turn will increase the force level from low to high. The rapid development of technology in smartphone should be take into account. In the next future availability of smartphones and their capability to capture video to create an accessory that transforms smartphones into underwater dive cameras probably will appear. Even though, smartphones and tablets with photo and video functionality have significantly displaced traditional camera sales. However this GoPro capture devices enable differentiated use cases from mobile devices.
Moving forward the POV segment will command more market share from the overall capture device market. The most important force to overcome in developing strategy is the threat of new entrants. It is because this segment will continue attract more entrant increasing the risk for profitably to the company. Companies will need to make an effort to develop strategies to combat the incumbent rivals. Companies could then deal with reducing the power of the buyers and limiting the threat of substitutes. The power of suppliers will diminish as this market segment matures.
Company’s competitive and corporate strategy:
Internal Analysis Summary, How activities fit together (or not fit together) The biggest challenge for this company is their capabilities interact with 5 forces with the threat of new entrants presenting the greatest potential to negatively impact GoPro’s market share, GoPro’s strategy of promoting a lifestyle, rather than just an electronic good, will contribute to GoPro’s sustainability as a premium product with dominant market share. Concurrently, GoPro will need to continue investments in research and development and partnerships which will allow GoPro to maintain its position as a leader in next generation technology.
Partnerships will also play an important role in retaining potential substitute products as complementary allies, rather than competitors. Internal development of complementary technologies which fit with their market positioning, such as a movement towards becoming a more comprehensive media company with content management and sharing competencies, will also allow GoPro to maintain its dominant position, mitigating impact of competitors on market share.
Evaluate growth potential of the company: discuss how the company’s sustain their strategic advantages and explain risks associated with the company’s business model. GoPro has successfully carved a new niche in an otherwise mature and competitive industry. As the established leader in versatile camera equipment for extreme sports, GoPro has established its unique position. Moving forward, GoPro is faced with strategic challenges which will be brought by new market entrants, incumbent competitors, and substitute products which may offer new disruptive technologies. The electronic device industry is rapidly evolving, and sensitive to consumer trends. To maintain its position, GoPro will have to deepen their strategic position through content generation and management and continuously develop their technology to meet the needs of tomorrow’s generation today. How they figure out new revenue streams by morphing into a media company will be an interesting case study of the future.
Discuss company’s resources AND capabilities (strategic advantages)
With the advent of the internet comes new ways to reach customers. GoPro has established itself as one of the best at taking advantage of this medium by using a unique and powerful technique. Where many companies are trying to produce that perfect “viral” video that reaches millions of viewers, GoPro “is releasing multiple videos every day after stumbling on a technique that leads to thousands of hours of free publicity a week”. From the company’s S-1 filing they describe a YouTube marketing strategy as the Virtuous Cycle: The company now has more than 7.2 million “likes” on Facebook, more than 2 million Instagram followers, and more than 1.8 million subscribers on YouTube, where the company is ranked as the No. 1 consumer brand.
Content generation – GoPro’s capabilities in content management are still very much in their infancy, however their vision includes “alleviating pain points associated with capturing, managing, sharing and enjoying engaging content”. Development of their desktop application, GoPro Studio, and their mobile application GoPro App represent their early foray into the strategy of content management. In addition, in October 2013, the company acquired General Things Inc., a web development firm, for their software competencies with the intent to accelerate development of these tools. they intend to further develop GoPro into a media company with content management a key pillar of this strategy.
Technology – GoPro has differentiated themselves by having the highest quality video in the most durable body at an accessible price point that blurs the line between amateur and professional video equipment. Their small and lightweight footprint, combined with superior durability allow the camera to be used where traditional cameras and mobile devices can’t. GoPro has “42 issued patents and 68 patent applications pending in the United States and 15 corresponding issued patents and 12 patent applications pending in foreign jurisdictions” protecting their technology . Unique accessories also open up a new channel for content generation.
Because of the low price point, customers are able to purchase multiple units to gain different perspectives of the event they are trying to capture. The inherent risk with their technology is that it is susceptible to imitation, and many new entrants are already trying to duplicate their success. To deepen their Strategic position, GoPro will need to leverage their equipment and brand presence to move into content management to be successful.
Distribution – GoPro has developed many exclusive relationships with specialty retailers (Surf, ski, and motorsports stores) which established their products as the premier camera in the industry. Being sold in these extreme sport stores immediately portrays an image of durability by association. With these early relationships, they have developed a brand identity and sales channel to the extreme sports enthusiast (estimated at 25,000 stores globally) that is difficult to replicate.
Company culture – Nick Woodman-led company essentially created this market by launching the first commercially available action camera back in 2002. The company prides itself on hiring people that share the same vision as their founder Nick Woodman. He built the company as a sports enthusiast who wanted an easy and superior way to share his passions through video. It is with this mindset that they tap into their own employees’ experience, and pain points, when attempting their own self capture pursuits, no matter what they might be. They feel this culture and experience of its workforce gives them a powerful competitive advantage.
Positioning – GoPro is positioned as a wearable action camera. They have aligned their product positioning with professional athletes, sports enthusiasts, and anyone that wants to capture themselves performing a physical challenge that they can in turn show to the world. This positioning has enabled GoPro to rapidly become the leader in their space with the athletic consumer. However, there is a subset of the wearable action camera market that may feel isolated from GoPro’s positioning and, in turn, select a product with less ‘sport’ promotion. This choice to align with athletics was an active positioning decision made by GoPro, which can result in a trade-off of alienating the ‘non-athlete’ consumer. As part of the further development of their brand identity, GoPro sold a 9% stake in their company to Foxconn. The funds from this business decision were used to expand their marketing campaign and position themselves as the top action camera. This action was at the expense of expanding upon research and development of the product line, a trade-off often faced by technology companies.
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