Zero or Hero? - An Analysis on GoPro
Whether it was strapping a camera to a helmet to capture a skier’s latest trick or being attached to the handlebars of an extreme biker’s bike cycle, GoPro has opened up a niche market in camera technology. GoPro’s skyrocketed success over the years can be attributed to a need in the market that was almost entirely unmet. As the years have progressed GoPro has made a name for itself in the market and continued to grow calling for new competition to the brand. Even with that competition GoPro continued to dominate the competition until recently. (Landau, 2014.)
At its inception GoPro the owner had humble aspirations of creating a camera that would be geared to extreme fanatics. (Landau, 2014). A camera that would allow athletes and novices to capture the authentic point of view of their particular sport. GoPro excelled at their original objective. GoPro has, recently, struggled in some ways to excel at sustaining the perceived value of their cameras that they the initially promised. As time passed and the market prevailed GoPro grew into a different company with a more diverse and complex set of offerings and those changes also changed the corporate culture of the business and the market and the organization placed new expectations on the company. Moreover GoPro changed from a privately held company to a public. (Hoium, 2017)
GoPro unfortunately has struggled to meet the changing needs of the market and has not, recently been able to sustain the perceived value recently promised with their new product line. It seems that GoPro projected higher success that they actually were able to achieve. This trend is evidenced by the decline in the Company stocks, the slow turn of inventory and increased inventory days on hand on their balance sheet. The large level of inventory became unmanageable as the product line was diversified and products were not sold at a sufficient rate. Additionally the company operating expenses drastically increased resulting in less profit than anticipated. GoPro has made an effort to address these issues for the future but fell short of recent projections. (Hoium, 2017)
GoPro saw a niche market for a product that would be small, durable, study that could be held as still a possible and capture extreme footage. GoPro has had success maintaining their initial physical camera model from a shape, size and design perspective without losing much consumer attention as the product was geared to a particular target market and focused on a niche the needs a camera with those attributes. This has kept the attention of buyers. (Landau, 2014)
Aforementioned GoPro aspired to a clientele of extreme athletes, while this has been exemplary of their market GoPro has also broadened their scope beyond the narrowness of only that target market. GoPro has benefited from using user-generated content in their advertising (Murphy, 2015). They have succeeded at building a camera company that caters to extreme sports and camera enthusiast but with the downward shift in demand for their product GoPro has been forced to look at the market from different angles to continue thriving as a business. In November of 2016 they changed their main advertising strategy from user-generated content to scripted television ads (Beer, 2016). With their revenue down 40% and the unexpected failing and recall of their Karma drone the company was backed against a wall and forced to reach out to a demographic they hadn’t considered previously. (Beer, 2016). The ads would be seen by families with children, young couples on trips and anyone else who wasn’t ready to jump out of a plane but wanted to have a detailed 4K visual account of their experience. The company went as far as noting the CEO captured the live births of both on his sons on camera. Most of these people may have seen their YouTube videos and understood that the camera was for extreme sports but not their child’s little league games. GoPro also understood this and researched and tried to understand how to market the need of their device to those people (Beer, 2016). Knowing the capability of their product they were able to rebrand themselves and sell their declining product in a target market they had previously left untouched by switching their target market.
It is pertinent that other major brands look at GoPro to learn from the Company’s mistakes and also to learn from their strengths. The first and most notable strength of GoPro was that they had a good understanding of their client base and niche market. When the business started they proved they were great at meeting the needs of these cleints. (Richter, 21017) GoPro also showed consistent growth in their net income year over year until the company became a public company by issuing an Initial public Offering in 2014 and had a slight amount of growth following that but later had a troubling 2016.
It is important for other companies to realize that GoPro had a continual growth in gross and net income but it wasn't until the IPO that net income didn't show a growth from a previous year for the first time in the company history. (Richer 2017). Moreover Gross revenues didn’t see a decline until 2016. The reviewer would have to acknowledge that the decline in net income could be partially attributed to the new strains working as a public rather than a private company. With the change the business model was changed and there was and is a plethora of outside influence. GoPro also hired 582 new employees since the merger, which was drastic since before the offering in 2013 the company only employed 646 individuals. Salaries and wages can take a toll on a company’s net income when that same company’s sales revenues have not increased. But in many cases a company may initially inject employees and products into a business to push forward for future growth. In this case GoPro seems to have failed to live up to their projections. (Richter, 2017).
Some have argued that GoPro needs to come up with something new and the Hero 6 Black may be an attempt at this request. The issue is however that the major issue that GoPro is facing is not behind the need for more employees, more inventory and new ideas but of perfecting the issues with their current product line. While the Hero 6 is a new product consumers have complained that the product exhibits problems similar to its predecessor Hero series cameras. Most notably consumers have mentioned the issues with the camera freezing when recorded media is saving to the device, the camera not connecting to Wi-Fi, the screen going black. Youtubers have long found remedy to these issues by shutting the camera off and starting with a few tricky steps to resolve the issue. While users often lose artistic capital erased or never saved by the flawed Hero series some users still remain loyal to the brand. Evidencing the usefulness of the product. (Beer, 2016)
Narrowing down their product offerings, rebranding and resolving glitches to the Hero line would better serve GoPro. I will use IPhone to compare against. One of the issues that GoPro experienced is that they had too large of an inventory. This inventory is a result of over production so GoPro needs to be more conservative and realistic about the pace at which their products will sell. They need to keep in mind also why products sold at a smaller rate than anticipated. It is important to pinpoint the source of their over projections and their inflated perception of themselves in the market. Next GoPro has continued to sell cameras with new features but have not resolved prior issues. If you look at a product like the IPhone when a new phone is released the phone always has had new technology but has fixed glitches such a the battery that died quickly or the phone face being to small to text and email. This is what makes IPhone changing the numbers of the series have a reputation of excitement. GoPro misses the mark, as the issues with Hero are not resolved when a new technology innovation is added. GoPro must make a public commitment and marketing strategy to articulate and initiative to fix glitches while simultaneously innovating. If GoPro doesn't its non-loyal customer base will resort to competitors with innovation minus glitches. Offering a new product line only creates a product with the same reputation and will be ignored by former customers that have purchased “better” products elsewhere. (Beer, 2016) The product doesn't need to be perfect but GoPro must move in a direction of repair. IPhone customers have notoriously attacked the company for the easily breakable screens, while all the issues haven’t been resolved some have been resolved and the brand continues to garner the trust of consumers.
GoPro’s investor public relationship page still speaks of growth for 2017 and optimism behind new product offerings. (Prober, 2017) Even so GoPro has recently been lambasted for its failing sales in 2016. Its important to refrain from the impetuous assumption that the company will fail in 2017 based on one bad year. There is strain from the recent change from public to private but there is not a long history of declining sales from the company. It could be fruitful to look at the next decade to a more qualified conclusion about of GoPro’s future. Even so GoPro needs to have a more humble view of their self in the market and address the issues with their current product offerings before moving into new product lines. (Prober, 2017)
Beer, J. (2016, November 21). Why GoPro Changed Its Marketing Strategy To Go Beyond The Action. Retrieved October 22, 2017, from https://www.fastcompany.com/3065745/whygopro- changed-its-marketing-strategy-to-go-beyond-the-action
Hoium, T. (2017, October 21). The Motley Fool. Retrieved october 21, 2017, from The Motley Fool: https://www.fool.com/investing/2017/10/20/is-gopro-inc-stock-a-buy-under-10
Landau, J. (2014, July 22). NY Daily News - GoPro's viral video marketing campaign turns it into top YouTube brand in the world. Retrieved October 19th, 2017. from NY Daily News http://www.nydailynews.com/news/national/gopro-marketing-turns-top-youtube-brandarticle- 1.1875573
Murphy, M. (2015, December 17) What GoPro needs to do in 2016 if it wants to survive retrieved October 16, 2017, from https://qz.com/575404/what-gopro-needs-to-do-in- 2016-if-it-wants-to-survive
Prober, C (2017, September 17) GoPro Expects Third-Quarter 2017 Revenue And Gross Margin Will Be At The High-End Of Guidance. Retrieved October 18, 2017 from https://s21.q4cdn.com/291350743/files/doc_news/GoPro-Expects-Third-Quarter-2017- Revenue-And-Gross-Margin-Will-Be-At-The-High-End-Of-Guidance
Richter, F (2017, March 17) Can GoPro Bounce Back After a Difficult 2016? Retrieved October 20, 2017, from https://www.statista.com/chart/8560/gopro-financials/
Stoutenberg, K., & Edwards, B. (2016, February 19). Are You A Hero? An Analysis of GoPro's Marketing Strategy. Retrieved October 21, 2017, from http://modernmediamix.com/areyou- a-hero-an-analysis-of-gopros-marketing-strategy/[edited by Brittany Edwards Feb 22, 2016].