Author: Liangliang Wang

This is a million pounds profits business, its revenue could be up to 1 million pounds in 3 years.

Start-up Stage
1. Financing Strategies

In start-up stage, the project needs fund for application development, platform maintain, overhead, employment cost, marketing campaign, etc. As there is not enough revenue to cover the operating cost at this stage, the project needs seeking seeds capital to start the business. In this stage, our targeting market is the UK

2. Profit Model

In the early stage, charging subscription fee is not a good idea. In this stage, the users are few, even you charge for them, you can get little revenue. What’s more, the subscription fee will enhance the joining threshold which would cause loss of users. Consequently, all services should be free in the early stage.Advertising would not be allowed at this stage because too much advertising will do damage to the user experience.

As the service fee,  the transaction fee in ” carrot and stick” model will be charged at this stage as well. The rate is 0.4%.

The online store is allowed at this stage as well. Healthy eating and drinkings related merchants, as well as wearable device manufactures, are welcomed to join in. We will charge them  for 8% commission of trading volume.

3. Market strategies

Digital marketing  strategy

Social media will be an effective tool for “Carrot” to communicate with customers and promote the application to the public. There are three platforms used to implement social media marketing, including Instagram, Facebook, and Twitter where the marketing team can post some brilliant video/pictures/articles which can disseminate the application well.

Furthermore, it also recommends implementing social media advertisements. Instagram allows business to put photo advertisements and video advertisements, so we can put attractive photos or videos that can be recommended to Instagram users. they can push messages and brand’s stories to the wider range of social media users according to customer behavior online. It will be efficient to reach our target audiences and communicate with them.

Growth Stage

1.Profits Model

The business is expected to get profits in the third year. The main revenue comes from the commission of online shopping and transaction fee.

With more and more users join this application the business value is gradually increasing. In this stage, we should make full use of data collected from users’ devices. The data could include intensity, time and frequency of sports, the sleep condition, etc. Based on these data, to some extent, we could know users’ partial health condition. And then recommend personality drinks and foods for them to improve their health.

App open screen and self-owned community media can accept commercial advertisements. Sponsors’ brand is also allowed to promote in matches sponsored by these companies.

2. Marketing Strategy

O2O Cooperation

Spots brand companies have a strong motivation to link their business to fitness application. It is a new channel to promote their clothes, shoes and wearable devices. We could cooperate with these companies. They could sponsor the sports match in reality. The reward will be offered by them and in order to broadcast their matches on fitness application. People will have good customer experience in the match which will also raise our brand image. .

We could also cooperate with gyms, we could introduce coaches online and open offline courses. The users could get discounts or enjoy better services in the physical gyms.

Cooperation of online and offline resources is a double-win marketing strategy. This will further enhance fans’ viscosity and complete a virtuous cycle.

Advertising

Social media will still be an effective tool in this stage, and more users participation will enlarge this effect. But at the same time, with increasing cash flow, we could also advertise on the billboard, video websites, etc.

3. Financing strategy

We should seek VC at this stage to expand our business to the whole UK and then all over the world. Although we will get more revenue at this stage, it is not enough to support expanding plan in the first three years, as a result, more fund is in demand in this stage. We have to compete with other similar application. We need to catch the market quickly to build customer stickiness to create barriers to entry this market because its business model is easy to copy.

1.Market analysis

• Increasing market size and value

According to Statista, the volume of the mobile fitness app market was $1.778bn in 2016, and it is expected to grow to $4.1bn in 2021. Thus, according to App Annie, the percentage of fitness apps in revenue was about 15% in 2016, and the share will be approximately 12% in 2021, which is not insignificant. Technavio’s market research report predicts that the global fitness app market will grow at a CAGR (Compound Annual Growth Rate) of above 29% during the forecast period.

• Fierce competition in fitness application market.

The competition in the global fitness app market is higher with over 100,000 apps dedicated to mobile health, and the global fitness app market is largely driven by a blend of global economic momentum, sporting mega-events, and rising focus on healthcare.Key vendors in the market are:

Azumio, Fitbit, Jawbone, FitnessKeeper, Under Armour

Other prominent vendors include Adidas, Daily Workouts Apps, Fooducate, Google, My Diet Coach, Nike, Noom, Polar Electro, Runtastic, Samsung Electronics, Sports Tracking Technologies, and Wahoo Fitness.

• Manufacturers of  smart wearable devices participation

Here are several famous profitable fitness apps

All of them are manufacturers of connected shoes, watches, bracelets, trackers or smart clothes. They have their application as well. These companies always have enough cash flow and lots of loyal customers to their brand. As a result, they have innate advantages compared to others. Despite the fact that manufacturers of wearable devices in volume than the fitness apps market, the pure fitness application is growing faster and is projected to catch up with the physical devices market in 2021. It means that non-manufacturers participators have many opportunities as well, but they should find a unique development path rather than compete with these companies face to face.

2. Market positioning

Fitness application is a large market, it’s segmented market include sleep tracking, sports tracking, nutrition recommendations, weight loss, home meditation, etc. Our application aims to encourage people to keep exercising. So it is in sports tracking segmented market. And based on data collected from users’ devices, our platform could offer the personalized suggestions about nutrition and training to users as well.

Our targeting users are people who want to keep fit but do not have strong enough perseverance. It is also designed for sports enthusiasts who what to find a kindred spirit.

Our business will start from the UK, and then the English-speaking world and then Europe, and the whole world. But we should make it clear that seeking healthy lifestyle is a fashion in developed countries, so our targeting market is these countries and individuals have demand for keeping fitness by doing sports.

3. Competitors Analysis

There are several similar sports tracking apps (are Nike+, Runkeeper, Garmin, Run with Map My Run, Endomondo, Cadence Trainer, Runtastic, miCoach, Codoon and Sports Tracker). Their products have similar design and functions.

• Most of these apps allow multi-system and various brand wearable devices access. Some only allow Apple devices.
• Most are designed for both amateur and professional participators.
• Online community and offline sports competitions. People could join some online groups or clubs to train and race. People could also join offline challenges.
• Activities mainly include running, bicycling, swimming, etc.
• Some have reward function(usually sponsored by sports company) but no charge for users.
• The similar track, record, and analysis function
• The record could be shared to third-party social media or in the app
• Advising, online store, and membership subscription are main profits model.

Our application will have these functions as well, but its most obvious feature is “carrot and stick” model. The reward and punishment model make it different from other application, its a new try to motivate people to keep exercising and have a healthy lifestyle.

4. Social / Ethical considerations

• Social and cultural trend

There is a trend that people are more and more taking care of their health. However, people are easy to give up and keeping exercising is a hard thing. Competition on social media could be used to motivate people to do sports. Reward and punishment model contribute to solving this problem.

• Gamble trend risk

Reward and punishment function, to some extent, might be regarded as lottery business by some people. Actually, according to related Act, it is not gamble. But since it is revolved in reward and loss of money, We should also set necessary rules about pledge limit and reward distribution, it should be fair and reasonable to make sure people’s attraction is doing sports for health rather than money.

• Privacy protection

The healthy industry is with huge development potential in the big-data era, so data collected from wearable devices or other smart devices is important and has potential commercial value. As a result, it might be sold to healthy institutions or used by themselves without individuals’ permission. So related laws or regulation should be made to protect people’s privacy. Necessary technologies should also be used to protect users’ interest.

There are many profit models in fitness application start-ups:

Advertising-App open screen, home page banner cooperative topics, and self-owned community media can all accept commercial advertisements. Some accept content marketing in the application. There could be some products or service recommendation in articles about health. If the application has a social function, advertising is also allowed in the social community just like Facebook.

Value-added Service-Many applications have membership subscription service, if users want to enjoy more functions or services, they have pay to upgrade to membership. Some fitness application have online fitness course or online consulting service, if users want to enjoy these services, they have to pay for them.

Online store-Some manufacturers sell their smart wearable devices on the online store in their application. According to iResearch, the largest part of China’s current consumer spending on fitness is shoe accessories, which account for more than 70% of total expenditure on sports consumption, which is much higher than the expenditure on stadiums, membership fees, and private education fees.

The problem of advertising is that it may bother the users and damage customer experience. The irrelated and frequent advertisement is an ordeal to users’ patience.  It may cause the loss of users. The membership fee is not suitable for start-ups with the limited amount of users. We are not the manufacturer of wearable devices, so we don’t have the e-commercial gene. As a result, we should rethink these profit model and take a further excavation to them.

Our Profits model

Online store

Wearable devices such as shoes, clothes, watches, and bracelets could also be sold to users in the online shop. We are not manufacturers, but we could gather cost-effective products from all kinds of brands. In this way, our platform could be fairer and give more choices to customers.

Commercial Cooperation

Spots brand companies have a strong motivation to link their business to fitness application. It is a new channel to promote their clothes, shoes and wearable devices. We could cooperate with these companies. They could sponsor the sports match in reality. The reward will be offered by them and in order to broadcast their matches on fitness application,  they should pay for us to enlarge the public participation. This will benefit both sports companies and us. It is a double-win marketing strategy. We could also cooperate with gyms, we could introduce coaches online and open offline courses. They have to pay for us or cooperate with us if they want to expand their business. This will further enhance fans’ viscidity and complete a virtuous cycle.

Transaction fee

In “carrot and stick” model, we could charge 0.4 percent transaction fee from total amount pledge of a race. The percentage should be as low, if charging too much, it will be regarded as an exploitation tool which will have a bad impact on expanding the business. Furthermore, transaction fee model can make a huge contribution when the application has oceans of registers and users. At the early stage, the revenue from the transaction could be neglected since the amount is so little.

Advertising

If the advertisement is useful to users, users will have less antipathy. The application could collect users’ sports data from their wearable devices. These data could reflect users’ heart rate, exercise intensity, sports rhythm and even their blood pressure and quality sleep. These data have high business value. Based on user’s personalized data, our system could recommend related products.  For example, healthcare products, nourishment drinks or food.  Our platform will charge for advertising from these companies. We could give suggestions about eating-habits or training skills to users for free as well according to their sports data.