GoPro: An analysis of the competitive environment & potential IMC

strategy

Group members: Min Na Wang, Veikko Hagman, Khanh Nguyen, Thu Nguyen

Class: Introduction to Marketing

Professor: Dr. Srdan Zdravkovic

Date: 1 June 2016

Aalto University

School of Business

Bachelor´s Program in International Business

Mikkeli Campus

2

Contents Section 1: Competitive Analysis of GoPro’s global market ..................................................................... 1

1. SWOT analysis of GoPro .................................................................................................................... 1

1.1 Strengths: Unique business model facilitates competitive advantage ....................................... 1

1.2 Weaknesses: sales and financial issues ........................................................................................ 2

1.3 Threats for GoPro and its competitors ........................................................................................ 2

1.4 Opportunities for GoPro and its competitors ............................................................................. 3

2. Identifying the 4 types of competitors: brand, generic, product & total budget ........................... 4

3. Identifying and conducting a SWOT analysis for the top 3 brand/product competitors ............. 5

3.1 Product competitors: Contour ..................................................................................................... 5

3.2 Brand competitor: Sony Camera ................................................................................................. 6

3.3 Product competitors: iON ............................................................................................................. 6

4. Future potential of GoPro ................................................................................................................. 7

Section 2: Integrative Marketing Campaign ............................................................................................ 9

2.1 Focus on family orientation: Billboard & Commercial ................................................................. 9

2.2 Sponsorship choice: Roger Federer ............................................................................................... 10

Sources........................................................................................................................................................ 11

1

Section 1: Competitive Analysis of GoPro’s global market

In the light of recent events, where GoPro has faced issues with financial performance due to a

stagnating growth, we are evaluating its marketing strategies through a competitive analysis

using the SWOT technique by comparing GoPro with its main brand and product competitors.

Moreover, we will look at GoPro’s future strategies and discuss potential challenges it might face

with its new marketing strategy.

1. SWOT analysis of GoPro

Strength Weaknesses

Unique business model

Brand equity (quality, durability)

Crowdsourcing (user generated content)

Large market share

Accessories (easy to access)

Financial issues

High price

Reliance on small number of retailers

Lack of scale

Opportunities Threats

Virtual Reality technology on the rise

Drone market potential

Strong action camera market

Social network presence

Niche market (high competition)

Potential saturated market for cameras in

the future (multiple substitutes)

Shrinking global photographic equipment

market

Price competitors (cheap Chinese brands)

Seasonal fluctuations

1.1 Strengths: Unique business model facilitates competitive advantage

The main competitive advantage lies in its unique business model which allows it to facilitate

high brand equity, crowdsource promotional efforts and gain a dominant market share. This is

due to its ability to change the way “consumers capture, manage, and share engaging content”

(MarketLine, 2016). In other words, GoPro is selling an experience rather than a product as stated

“They don’t just sell a video camera, they sell the memory of the wave or the ski trip down the

2

slope,” (Lapowsky, 2014). This has created a positive image and encouraged user generated

content which GoPro has used as a tool to crowdsource the promotional efforts, thereby actively

engaging its customers which has effectively contributed to its effective Word of Mouth

Marketing strategy. This has in turn created a dominant presence in the action camera market and

a larger market share for GoPro compared with its competitors.

1.2 Weaknesses: sales and financial issues

The main issue that GoPro is currently facing is the recovery from a 7% layoff in January due to

low sales (Mac, 2016) and a 80% fall in its stocks back in February 2016 (Bryan, 2016). The high

pricing strategy could be a hindrance as GoPro is unable to sell enough of the products and

compete with the lower priced brands. In addition, GoPro’s reliance on a small number of

retailers for revenues could negatively impact the firm in terms of the lack of bargaining power

(MarketLine, 2016). Moreover, the lack of scale has also presented an issue in comparison to

competitors, such as Sony, which could contribute to higher unit costs, lack of technical and

financial capabilities and thereby hinder its ability to effectively compete with larger companies

in the video-graphic industry (MarketLine, 2016).

1.3 Threats for GoPro and its competitors

GoPro’s situation is further weakened by the niche market in which action camera firms operate

in coupled with the potential saturation of the photographic industry which is an industry-wide

threat. As according to MarketLine (2016) the global demand for photographic equipment “has

been shrinking for the past few years and expected to continue declining in the coming periods”

(p.19). This could spill over into the action camera industry in the long-run. The saturation

3

combined with the pressures of both price competitors and seasonal fluctuations means that

GoPro’s revenues in the future will remain uncertain. In addition, GoPro’s product life-cycle of

action cameras might already be near or at the maturity stage. As stated by GoPro’s CEO in an

interview with Bloomberg where “growth has slowed in the second half of the year”

(Bloomberg.com, 2016).

In terms of threats for the industry, since the action camera industry targets high- and

middle-class extreme sport players who are interested in sharing their experience, the demand for

this product might strongly fluctuate between seasons. Furthermore, cheap Chinese brands, which

can be bought online, are competitors that can outplay GoPro and its main competitors especially

during economic downturns.

1.4 Opportunities for GoPro and its competitors

In contrast to the photographic equipment market, the action camera market it is growing and

according to industry estimates, expected to grow at a compound annual growth rate at 23% until

2019 (MarketLine, 2016). For GoPro, which has 47.5% of the market, it provides a potential

advantage over its competitors in terms of growth opportunities and revenues. However, it has

been unable to capitalize on it yet as mentioned earlier the growth of GoPro has slowed down. In

addition, the emergence of VR and drone market has provided GoPro with an opportunity to

expand its product mix and diversify. However, it still remains to be seen if these areas could

provide potential growth for the company or if it has already missed its strategic window

especially in regard to the drone market where the product is still in development.

In addition, social media has made it much easier to promote products and create a buzz.

As users share their videos on social media, the product can reach considerably more potential

4

customers. GoPro has already capitalized on this trend as it has a strong social media presence,

but it can potentially improve this further by actively interacting with its customers on social

media channels and ask for feedback to ensure better satisfaction of its products.

2. Identifying the 4 types of competitors: brand, generic, product & total budget

Brand competitors Generic competitors

Sony HDR-AS100V

Garmin

Tomtom bandit

Smartphones

Canon

Nikon

Olympus

Product competitors Total budget competitors

The Yi

Drift

Contour ROAM 3

iON (cheaper)

Sports apparel/gear

Transportation

Groceries

We identified the aforementioned products and firms to be GoPro’s competitors and divided

them into four categories which are brand, generic, product and total budget competitors. Out of

the competitors, we think that Contour is the closest competitor due to the similarities in their

marketing strategies.

In addition, GoPro needs to be aware of its generic competitors as customers might want

to buy products with more features, for example a compact camera or a full-fledged Digital

single-lens reflex camera. Moreover, if the overall economic situation gets worse, people might

only afford one product which probably would be a smart phone with a good camera.

Additionally, one might also choose not to buy a video capturing device but instead buy

something else to satisfy one's needs that are not videographing related. Less attention-seeking

sporting people might want to invest their money on sporting equipment rather than on cameras,

5

but some might just satisfy their physiological needs by spending the money on groceries and

transportation.

3. Identifying and conducting a SWOT analysis for the top 3 brand/product competitors

We have identified three competitors of GoPro belonging to brand competitor and product

competitor sectors: Contour, iON, and Sony Camera. In the following section, we will analyze

these brands based on SWOT model in order to compare them to GoPro. All of the 4 companies

face similar opportunities and threats, which are explained in the first section, to some extent

because of their relatively similar products and prices.

3.1 Product competitors: Contour

Strength Weaknesses

Reasonable price

Stylish design

Have GPS

Robust patent portfolio

Small market share

Low Brand equity

Lack of scale

One of GoPro’s competitors who is in the same price range is Contour which owns both Contour

and iON cameras. The strengths of this brand lie in its quality, features and price. The cameras

are said to be stylish, durable, and of high quality, including a GPS feature. Moreover, the

company also develop apps that allow users to upload their videos, sharing them with the world.

Nevertheless, the most attractive factor is Contour’s reasonable prices for a high end product line,

which are slightly lower than those of GoPro. However, the company’s market share is still small

in comparison with that of its dominant competitor, GoPro, due to its lack of brand equity. In

addition, similar to GoPro it is unable to scale its production which increases its overall unit

costs.

6

However, Contour has a robust patent portfolio which is a major drawback to GoPro

because it does not use proprietary technology, but rather receiving it from third parties instead.

Consequently, Contour might be able to develop a groundbreaking innovation and prevent GoPro

from using them through patents and trademarks. This would be harmful for GoPro because the

market leaders are often the technological leaders (Fletcher, 2013).

3.2 Brand competitor: Sony Camera

Strength Weaknesses

Brand (Quality, popularity, durability,

image)

Flexibility in price (differentiation)

Scalable operations

Differentiated product portfolio

Lower market share (action cameras)

Less visibility in the market

Out of three examples for brand competitors, Sony is the oldest and most established player in

the market which provides it with an advantage in terms of scalability of production which

lowers the average unit costs. In addition, it has the most differentiated product portfolio, hence it

can offer the highest price flexibility to appeal to different markets, for example they sell cameras

ranging from DSLRs to action cameras. To put it another way, the width of the product mix of

Sony is much greater than its competitors. Though it is an established player in the camera

industry and has overall more customers than GoPro, the market share of Sony in the action

camera industry is relatively small. On the other hand, Sony has an opportunity to capitalize on

its loyal customers and make them buy Sony action cameras over Contour and GoPro by

appealing to patronage via personal selling (Sony, 2016).

3.3 Product competitors: iON

Strength Weaknesses

7

Quality: video quality and waterproof

Design: Compact

Relative large market share (2nd after

GoPro)

Reasonably priced

Built-in battery and short battery life

Small market share compared to GoPro

Lack of scale

Even though iON is a cheaper alternative to GoPro, it is in a way more versatile. It is waterproof

without any accessories but in order to reach the same outcome with traditional GoPro cameras,

you need to buy attachments, such as cases or get the newly released GoPro HERO Session

which is designed to be your second GoPro camera, hence it might not provide the video quality

that the most demanding action camera users want. Furthermore, the iON offers a wider range of

action camera designs and sizes than GoPro, for example you can get an iON that can be snapped

onto your clothes but there are also cameras that resemble the well-known GoPros. On the other

hand, consumers can spot where the company has focused extensively in order to keep the price

down, for example the battery life of an iON camera is considerably less than the one of GoPro.

4. Future potential of GoPro

Although the market for action cameras is growing, in the future due to intense competition and

niche market, it might become saturated. Furthermore, demographic variation and economic

situation might provide unstable prospects for both GoPro and its competitors. In terms of GoPro,

its high-end brand and pricing might prove to be an issue due to low sales and a relatively big

loss in sales if a recession happens. In order to prepare for a saturated market, GoPro decided to

turn it into a media company by planning to launch its own channel on Xbox Live and

cooperating with Virgin America to license videos for in-air entertainment (Lapowsky, 2014).

Moreover, GoPro pays attention to marketing through its social accounts such as

YouTube channel, Instagram or Vimeo by allowing consumers to upload their videos and share

8

them with others who have the same interest. This consumer-generated-content model will

probably keep GoPro’s revenue stable through its brand visibility in the market. However, GoPro

plans to change its marketing strategy in terms of advertising by being more “product centric and

do a better job of communicating the product itself and the benefit of GoPro cameras themselves

and less about the big branded visuals” (Bryan, 2016). It is therefore moving from a focus on a

niche market such as action cameras towards a market for cameras for everyday use in order to

expand its customer base (Bryan, 2016), and focus on being “connected and convenient” by

launching the GoPro Hero5 later this year.

Furthermore, it can be argued that the shift in focus towards convenience indicates that

the company is looking into the “Internet of Things” industry. The company is also addressing

the previous issues with video uploading by releasing its own desktop software (Hollister, 2016).

However, in our opinion regarding the target market, the company should be focusing

more on profitable consumer groups and try to improve its marketing mix in the future as

opposed to using its current strategy. This is based on its high price points for HERO4 series

which does not match the strategy of appealing to the wider public. Especially in regard to its

previous decision of stopping sales of its cheapest cameras which seems contradictory to its

changed strategy. If GoPro wishes to carry out its new marketing strategy, it should consider

lowering its prices on the HERO4 series as well. However, the issue is that if it chooses to

compete on price it might lose the brand equity and potentially lose market share due to more

efficient competitors which has achieved higher economies of scale.

In order to diversify against market risk, GoPro is also joining the growing industries of

drones and virtual-reality cameras later in 2016. The issue is that other companies have already

been able to monetize existing GoPro products in those industries. As an example, a company

called 360heros is already offering a “synced virtual reality 360° video gear” (360Heros, 2016)

9

but GoPro’s alternative is still in the pre-order stage (GoPro VR, 2016). The lack of

innovativeness and originality can be an existential risk to the company which needs to be

addressed in a timely fashion if it wishes to operate in the action camera and video-graphic

industry in the future.

Section 2: Integrative Marketing Campaign

Using our analysis of the competitive environment of GoPro and its current marketing strategies,

we have created suggestions for possible billboard, commercial and sponsorship plans for GoPro.

2.1 Focus on family orientation: Billboard & Commercial

We chose to make the billboard more family oriented due to GoPro’s recent change in marketing

strategy for appealing to a wider audience. We chose a photo taken with a GoPro camera, which

captures the playing time of a child and his father so that the billboard is consistent with the

daily-life-camera strategy. Moreover, the happy expression of the child and lively colors of the

photo are likely to appeal to parents. Lastly, as people will be moving when they see the

billboard, this channel capacity is limited. Therefore, we decided to make the message as concise

as possible, including only: GoPro logo, the slogan ‘Capture your moments’, and a camera to

indicate that GoPro sells cameras.

In terms of the commercial, clips from YouTube were used from families that had filmed

their vacations using a GoPro. This was to create a cohesive commercial that looks more

authentic which consumers can more easily relate to. Our commercial is also consistent with

GoPro’s own commercials of featuring families such as its 2016 and 2013 Super Bowl

commercial. The clip starts with GoPro’s logo and a HERO camera model to help viewers know

10

what GoPro does. The clip ends with GoPro’s logo again and the slogan ‘Capture your moments’

to help viewers remember the brand. Additionally, the music is tender and its content suits the

family theme well. Lastly, a QR code was created to make it easier for consumers to access the

promotional material.

2.2 Sponsorship choice: Roger Federer

A sponsorship deal with Roger Federer will have high reach globally since he is a well-known

and respected tennis player and public figure. Moreover, he is a safe choice since he has not been

involved in any major scandals and is therefore a relatively “stable” celebrity to front GoPro’s

campaign.

In addition, the fact that he is a father and still professionally active makes him a good fit

for GoPro’s new marketing strategy of appealing to the average consumer who is active. We

believe this could be a good opportunity for GoPro to appeal both to active and family oriented

consumers. Especially considering that he is relatively active on social media platforms such as

Facebook, Instagram and Twitter regarding his personal life and training regime. In addition, due

to his many followers it provides a good opportunity for GoPro to market its product to a wider

audience directly to its target market.

11

Sources

1. 360Heros, (2016). 360Heros. [online] 360Heros. Available at: http://www.360heros.com/

[Accessed 27 May 2016].

2. Bryan B. (2016) “GOPRO CEO: We're not a 'camera' company — we're an 'activity

capture' company” Retrieved from: http://www.businessinsider.com/gopro-ceo-were-not-

a-camera-company-2016-2?r=US&IR=T&IR=T [Accessed on 27 May 2016]

3. Company - Resource Magazine. [online] Resource Magazine. Available at:

http://resourcemagonline.com/2015/12/gopros-lack-of-innovation-and-rise-of-

competitors-is-killing-the-company/61144/ [Accessed 27 May 2016].

4. Contour, (2015). iON Cameras and Contour Announce Merger - Contour. [online]

Contour. Available at: http://contour.com/ioncamerascontour [Accessed 27 May 2016].

5. Etherington, D. (2016). Contour And iON Cameras Merge To Help Take On GoPro.

[online] TechCrunch. Available at: http://techcrunch.com/2015/05/14/contour-and-ion-

cameras-merge-to-help-take-on-gopro/ [Accessed 27 May 2016].

6. Fletcher, M. (2013). GoPro vs Contour: Choose Your Perfect Action Camera Step-by-

Step. [online] GoPro vs Contour. Available at: http://goprovscontour.com/ [Accessed 27

May 2016].

7. GoPro VR, (2016). GoPro VR. [online] Vr.gopro.com. Available at: https://vr.gopro.com/

[Accessed 27 May 2016].

8. GoPro CEO says Competition Not behind Slow Growth Rate. (2016). [video] Retrieved

from: http://www.bloomberg.com/news/videos/2016-02-03/gopro-ceo-says-competition-

not-behind-slow-growth-rate Bloomberg: Bloomberg.

9. Hillen B. (2016) “GoPro to discontinue three cameras and exit entry-level market”

Retrieved from http://www.dpreview.com/news/6451740776/gopro-to-discontinue-three-

cameras-and-exit-entry-level-market [Accessed on 27 May 2016]

10. Hollister, S. (2016). 4 things we just learned about the future of GoPro. [online] CNET.

Available at: http://www.cnet.com/news/4-things-we-just-learned-about-the-future-of-

gopro/ [Accessed 27 May 2016].

11. Lapowsky I. (2014) “Why GoPro’s Success Isn’t Really About the Cameras” Retrieved

from: http://www.wired.com/2014/06/gopro/ [Accessed on 27 May 2016]

12. Jennings, A. (2016). 10 best GoPro and Action cameras 2016. [online] TechRadar.

Available at: http://www.techradar.com/us/news/photography-video-

capture/cameras/gopro-generation-the-ultimate-guide-to-action-cameras-1274790

[Accessed 27 May 2016].

13. Mac R. (2016) “GoPro To Cut 7% Of Workforce After Poor Holiday Sales“ Retrieved

from:

12

14. http://www.forbes.com/sites/ryanmac/2016/01/13/gopro-cuts-7-of-workforce-as-it-

anticipates-poor-2015-financial-results/#3be553193e2c [Accessed on 27 May 2016]

15. Schneider, J. (2015). GoPro’s Lack of Innovation and Rise of Competitors is Killing the

16. Snider, M. (2016). Action camera makers Ion, Contour team up to compete with GoPro.

[online] USA TODAY. Available at:

http://www.usatoday.com/story/tech/2015/05/14/ion-camera-contour-merge/27278525/

[Accessed 27 May 2016].

17. Sony, (2016). Action Cam | HD POV Action Cameras & Waterproof Cases | Sony US.

[online] Sony.com. Available at: http://www.sony.com/electronics/action-camera

[Accessed 27 May 2016].