Fitbit Flow Product Proposal Team 3 Andrew Chen, Kiki Davis, Devin Jones, David Laden, Sam Wallingford, Grace Zammitti

Name PictureRole Team Leader Market Analyst Financial Analysts Engineering Lead Risk Management Meet the Team

o A smart water bottle that monitors hydration Fills a gap in the Fitbit family of fitness tech products Uses built in flow-meter and Bluetooth technology Allows user to set and track water intake goals o Required Resources Investment: $650,000 Time-to-market: One year Management approval o Value Addition $17M NPV after five years of sales Increase brand visibility Introducing Fitbit Flow

Agenda Product Description Marketing Strategy Development Plan Financial Analysis Risks

Fitbit’s Products SMARTPHONE APP FITBIT FLEX. FITBIT ARIA.

Fitbit Flow

Agenda Product Description Marketing Strategy Development Plan Financial Analysis Risks

Customer Value Proposition Key Customer: The Health Tracker Allows effortless tracking of water intake Prevents dehydration by making users aware of hydration level Integrates with existing Fitbit app to easily display stats to user

New Fitbit bracelet owners in 2014: ~5.4 Million Users 2015 Estimate for users of fitness apps: ~500 Million Users New fitness bracelet owners in 2014: ~10.8 Million Users Commercial Potential

Competitive Analysis

Marketing Strategy

Agenda Product Description Marketing Strategy Development Plan Financial Analysis Risks

Work Breakdown Structure Product Development and Introduction 1.0 Market Research 5.0 Suppliers and Systems 3.0 Prototyping 4.0 Testing and Certification 2.0 Design 1.1 Develop Costumer Profile 5.1 Accept Bids Online 2.1 Electronics 2.2 Visual Design 2.3 Component Integration 2.4 Material Selection 2.6 App Integration 3.1 3D Print Plastic Parts 2.5 3D Modeling 3.2 Wire Electronics 3.3 Integrate Components 3.4 Prototype App Integration 4.1 Focus Test Prototype 4.2 Test Durability 4.5 Obtain Certifications 4.3 Test Electronics 4.4 Beta Test App 1.2 Survey Potential Users 1.3 Synthesize Data into Conclusions 5.2 Vet Top Bidders 5.3 Choose and Build Relations 5.4 Develop Internal Capacity for Release

Development Schedule Critical Path: 12 Months

The concept of a water bottle with a turbine-based flow meter and Bluetooth integration is a novel concept. – Previous iterations (Thermos Nissan Intak Hydration Water Bottle & Sportline Hydracoach) use less advanced integrated flow meters and lack Bluetooth integration. – Complex systems (Vessyl) lack the integrated flowmeter and are not designed as a water bottle. IP Concerns Patent review yielded no IP concerns

Supply, at least initially, will be contracted out to an international partner. – Reduce financial risks of the product to ensure it is a success before scaling up to a potential fully-owned supply system. – Reduced labor and equipment costs in the short term will make the initial breakeven point more attainable. – Most materials and components will originate from SE Asia. Assembly at the source will reduce shipping costs. Supply Strategy

Agenda Product Description Marketing Strategy Development Plan Financial Analysis Risks

Product Cost Analysis Total Cost: $32.50

Product Cost Analysis - Investment

Sales Analysis Target Sales Price: $45 – Competitive profit per unit of $12.50 (27.7%) – Our customers already spend $100 on a Bluetooth-enabled pedometer Target Year 1 Sales (Units): 270,000 – 5% of estimated FitBit bracelet sales for 2014 (5.4 Million) Target Revenue: $12.15 Million

Income Statement Gross Profit Margin: 27.7%

NPV Analysis

Sensitivity Analysis – Units Sold

Sensitivity Analysis – Costs

Agenda Product Description Marketing Strategy Development Plan Financial Analysis Risks

Flowmeter accuracy – Mitigation: Testing and simultaneously pursue other types of flowmeters Difficulties in making it rugged and dishwasher- safe – Mitigation: Examine alternative sealing methods and advanced plastics Risks - Technical Turbine-type Flowmeter

Supply – Potential concerns with developing water bottle production capability Mitigation: Pursue suppliers beyond current ones. Competition – Fast followers from Nike, Garmin, etc. Mitigation: Emphasize integration with Fitbit ecosystem Risks – Supply and Competitive

Legal and Environmental – Liability for dehydration/over-hydration Mitigation: Develop iron-clad legal disclaimer necessary for use; avoid overt hydration recommendations. Marketing – Largely untested market Mitigation: Marketing through Fitbit’s current devices, focus on user feedback during development process Legal and Marketing Risks

Conclusion o Requested Resources $650,000 in capital Management approval o Risks Untapped market with unknown potential Fitness tech companies could be fast to follow o Rewards $17M NPV after five years of sales Increased brand awareness

Appendix

Current Fitbit bracelet owners: ~2 Million Users Current users of digital fitness trackers: ~3.3 Million Users Current users of fitness apps: ~46 Million Users Commercial Potential- US Market