WUDDY

Koll Roberts Erika Dulberg

Ian Melton Kat Porter

Haree Dahya Katie Conroy

Table of Contents SWOT Analysis……………………………………………………...…3-4 Segmenting, Targeting, and Positioning Part 1…………………………...5 Segmenting, Targeting, and Positioning Part 2…………………………...6 Pricing and Financials……………………………………………….…....7 Product Strategy……………………………………………………...…...8 Distribution Strategy……………………………………..………..…..….9 Promotion Strategy……………………………………………...…...10-11 Appendix…………………………………………………………….12-22 References…………………………………………………………...23-2

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SWOT Analysis Mission Statement: Wuddy (workout buddy) is a mobile application focused on providing college students with a social media resource to partner up and exercise with fellow students. Wuddy strives to inspire student-based communities to come together to achieve a healthier lifestyle and a positive support system.

Strengths : ● Wuddy’s team has strong recruiting capabilities directed towards college students. ● Wuddy is a social network for active people- networking, connecting a community. ● Wuddy promotes safety while working out. ● Wuddy’s team consists of college students (which is Wuddy’s target demographic).

The strengths of the group are the different backgrounds, experiences and character traits of each of the members. Positive aspects of Wuddy include the safety approach, and the incredible opportunity of customers who would use this application.

Weaknesses: ● As a new company, Wuddy will not appear credible in early stages. ● Work out partners are not always compatible. ● Students might prefer working out by themselves. ● Target demographic is substantial but specific.

The main weaknesses Wuddy will face is establishing itself as a credible company. Although the option of having a workout partner is still available, the partner chosen for that individual could be incompatible and have different fitness levels.

Opportunities: ● Wuddy will have a strong target market with the growing influx of new college students

who use smartphones on a daily basis. ○ College enrollment, public and private, for 2015 is 20.24 million students and

expected to increase each year through 2024 (NCES, 2015). ○ Apple estimates that users spend 30 minutes a day using applications (Steel,

2010) ○ Amount of college students with smartphones:

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■ Share of smartphone users from the ages 18-29 in the United States who use their phones to access social media as of October 2014 was 91% (Pew Research, 2014).

● Number of smartphone users in the United States in 2015 : 184.2 Million (eMarketer, 2015).

● Partnering up with FitBit provides an avenue Wuddy can pursue to gain credibility

○ December 2012 $76.73 million in revenue, December 2014 $745.43 million (Fitbit)

● The fitness recreation market needs effective marketing to successfully target customers (First Research, 2015)

Wuddy has a high opportunity of success due to the large increase in college enrollment. This creates a large population of new students that could benefit from using Wuddy to make connections at their school’s recreation center. The Wuddy team believes that the market they are targeting will be persuaded to download this application because it is easily accessible for the 91% of college students who own smartphones.

Threats: ● Competitive apps

○ Number of health-related apps worldwide as of May 2014 is 33,905 for Android and 31,737 for iOs (Universitätsklinikum, 2014)

● Personal trainers ○ Personal trainer revenue in 2012= 7.31 US dollars (in billions) (IBISWorld,

2012). ● Entering a competitive and growing market

○ Mobile health market forecasted to grow from 6.4-55.9 billion dollars by 2020 (Little, 2013-2014).

There are a few potential threats to Wuddy. The first threat is that there is an increasing number of other fitness applications that could interfere with Wuddy’s success at market penetration. Second, personal trainers are becoming popular and they could possibly take away from Wuddy’s market share. Also, the market in which Wuddy will be entering is projected to increase exponentially, resulting in increased competition and an increased need for innovation to continue to provide value to customers.

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Segmenting, Targeting, and Positioning Part 1

Wuddy’s primary customers are college students in the United States. Wuddy’s demographic target market is specifically tailored towards male and female college students ages 18-24. According to the US Census Bureau in 2013, 37.3% of college students are ages 18-19, 31.9% are ages 20-21, and 14.9% are ages 22-24 (NCES, 2013). The geographic segment that Wuddy is targeting is the US because Wuddy is very familiar with the culture of the college students in this country. Wuddy’s psychographic segment is geared towards people who want to build relationships while achieving their self-value of living a healthy lifestyle. Also, to aid the decision to combine social media and fitness, 59% of gym users are using some form of social media while working out (Facebook, 2013). Ideally, Wuddy creates new relationships based on a platform of fitness. The behavioral thought process that drives customers to purchase Wuddy is the desire to be fit and social simultaneously.

Wuddy’s team will employ a concentrated target strategy because it will allow the company to market the product specifically to those who it will offer the most value to. Wuddy’s is specifically concentrating on active college students at universities in California. Due to the constant influx of new college students every year, this target market should prove to be substantial and to provide a sustainable demand for this application. Wuddy’s service has a specific but substantial market which will continuously grow within the next couple of years. Data shows that college enrollment in 2016 will be 20.49 million and will grow to 22.84 million in 2024 (NCES, 2013). Currently 91% of 18-29 year olds have smartphones and use them to access social media (Pew Research Center, 2014). Since the service is free, students will be more responsive the application. Wuddy’s team anticipates that the market for the application will continue to grow because the number of social network users in 2014 was 172.6 million and is anticipated to grow to 191 million in 2018 (eMarketer, 2014).

Wuddy is viewed as a platform for an inexpensive, safe and social way to work out. Wuddy’s goal is to be viewed by the target market as an entirely new service in the fitness industry. The defining aspect that sets Wuddy apart from other fitness applications is that Wuddy is integrated and connects with users in a completely new and innovative way.

For active college students who value working out with a partner but have a busy schedule, Wuddy is a social networking app for fitness that allows the user to connect with other users who have similar workout interests and schedules. Unlike personal trainers or other fitness applications, Wuddy allows users to connect and workout with fellow students at a time that is best for them.

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Segmenting, Targeting, and Positioning Part 2

Wuddy’s interface combines social media and fitness, since there’s been a shown correlation between gym users and social media use. Specifically, 59% of gym users reported that they use some form of social media while working out (Facebook, 2013). Wuddy acknowledges this and helps create new relationships on a platform of fitness via social media. After doing some research, Wuddy’s team found another important factor that lead to their decision to create a buddy system that is used in fitness centers. A study from 2014 asked what prevented respondents from attending a health club and found that 17% would feel out of place and 9% didn’t know anyone else that attended a health club (IHRSA, 2014). New college students that can relate to these issues will be targeted by Wuddy through benefit segmentation. Qualtrics data revealed that Wuddy’s target market rated the application high on social and motivational aspects, meaning Wuddy can market these aspects as a benefit and a solution to the issues mentioned above by matching college students with the same fitness goals (Qualtrics, 2015).

Wuddy’s primary target market is 18-24 year old college students in California because this age demographic makes up 84.1% of all college students (NCES, 2013). Wuddy will target the students who seek relationships while achieving their self-value of living a healthy lifestyle. Wuddy aims to be viewed by it’s target market as a new social opportunity in college life. This application is capable of differentiating itself from the moderately similar application, Jaha, by marketing its emphasis on the social aspect that it will bring to exercising. According to the Qualtrics data, respondents found Wuddy to be more social than Jaha (Qualtrics, 2015).

For active college students who value working out with a partner, but have a busy schedule, Wuddy is a social networking application for fitness that allows the user to connect with other users who have similar workout interests and schedules. Unlike personal trainers or other fitness applications, Wuddy allows users to connect and workout with fellow students at their most convenient time. The defining aspect that sets Wuddy apart from other fitness applications is that it integrates fitness with a social network and connects with users in a new and innovative way. According to the Qualtrics data, male survey respondents ranked Wuddy higher than its main competitor, Jaha, for the social and practical attributes respectively (Qualtrics, 2015). In comparison, the female segment views Wuddy highly in the motivational and social attributes (Qualtrics, 2015). With this knowledge, Wuddy will establish itself as an innovative application that focuses on encouraging social interaction and increasing exercise motivation, the traits most valued by its target market. Wuddy’s goal is to be viewed by the target market as a unique new service in the fitness industry.

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Pricing and Financials Based on data derived from the Qualtrics survey, Wuddy’s price elasticity of demand is

-19.33 (Qualtrics 2015). This means that the Wuddy application is very elastic and its users’ demand for the application is extremely price sensitive. In order to keep up with competitive market prices, Wuddy is making the application available for free. Achieving a large and growing presence in the application market for Wuddy’s demographic is the priority.

Wuddy not only has a better chance of penetrating the market and gaining brand awareness as a free application, but data also shows that free applications generate more revenue than non-free applications (Distimo, 2014). A way to generate revenue on a free application is through the use of in-app ads. Wuddy will be using banner and interstitial ads from a third party software such as Google AdSense. In-app banner ads have an average CPM (Cost per 1000 impressions) range of $.20 - $2.00 while interstitial ranges from $3.00 - $5.00. (Mobile, 2014)

Furthermore, Wuddy users have the option of upgrading to an ad-free version for the low price of $.99. The price for the upgraded version of the application was determined after discovering that respondents from the target market were significantly more likely to purchase the application at $.99, as opposed to $1.99 (Qualtrics, 2015). This concept of “freemium” (offering both a free and a non-free version) is not foreign to the mobile application market. Spotify is an example of a popular mobile application that utilizes this strategy. Spotify generates a majority of its revenue from users that have upgraded to paid versions (Various Sources, 2015). A 2014 study that included the United States also found that 34% of smartphone app users had upgraded from a free application to a paid version (Google, 2014). Wuddy believes that offering this paid upgrade will create a substantial amount of additional revenue.

Wuddy’s team expects to incur a substantial amount of expenses to develop and effectively achieve market penetration. The team plans on outsourcing the development of the application at an estimated price of $25,000 (Apple iPhone, 2015). App maintenance is an expense that will be less in the first year, roughly $18,000, but will increase as the amount of users on the application increases (Apple iPhone, 2015). Monthly maintenance includes fixed and variable costs, “The variable cost component leads to scale diseconomies because maintenance increases non-linearly with the number of features or requests that are implemented during maintenance” (Mookerjee, 2005). The team plans on hiring one student ambassador for each UC and CSU campus in year one. These student ambassadors will be paid $10/hour and will work five hours a week creating awareness of Wuddy. One of the ways that the student ambassadors will create brand recognition is by handing out 200 Wuddy T-Shirts per campus, costing a total of $29,952 in the first year (Design Lab, 2015). For more information on the expense breakdown, reference Table 5 in the appendix. In year 1, Wuddy will incur a net loss of around $94,000 which is usual for most mobile apps. Uber is a great example of this as it is not profitable but is valued at $50 billion. (Kosoff, 2015)

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Product Strategy Wuddy is a mobile application that fuses social media with the fitness world. Wuddy’s

main features include: a customized user profile, matching with other users who seek similar physical activities, instant messaging, and location tracking.The application will utilize the phone’s location settings and provide a list of places that users exercise in the region. After selecting the location, Wuddy will provide a list of users to match with that are interested in working out at that location along with the type of exercise that person would like to do. Wuddy aims to encourage networking and the ability to be active in different environments. Wuddy provides the motivation users seek, in user friendly capacity (Qualtrics, 2015). A number of people reported that they do not attend a gym because they would feel out of place or they do not know anyone else who exercises there (IHRSA, 2014) Wuddy solves this problem by providing companionship while motivating users to get in the gym.

Arguably the largest benefit derived from using Wuddy is the amount of safety it brings to exercising. Wuddy supplies users with a partner and spotter to prevent accidental lifting injuries and eliminate the danger that is associated with exercising alone. Between 1990 and 2007, over 970,000 people were treated in emergency rooms for weight training-related injuries (Johnson, 2014).While working out in an outdoor setting Wuddy eliminates the concern of working out alone. Nationwide, 23% percent of women on college campuses experience some form of sexual assault (Wallace, 2015). Wuddy hopes to eliminate this threat by providing a workout buddy. Additionally, Wuddy has the ability to track your workout from start to finish so that friends know you completed your workout safely. In addition to this safety feature, the application has an anonymous flagging system that allows you to notify the Wuddy safety team about potential abuses of the app.

Wuddy’s icon is a smiley face, geared to emphasize the social aspect of finding the right partner for your desired workout. The smiley face encompases a barbell to clearly demonstrate the fitness perspective that potential users are looking for. The blue icon is a serene and mentally calming color that helps people focus (Wright, 2015). The color blue is suggested for rooms people will spend a considerable amount of time in; the goal is for users to spend considerable time in Wuddy the app and in the gym (Color Psychology, 2011).

The sentiments that Wuddy is trying to convey is explicitly portrayed in the application logo. Wuddy’s logo encompasses what the application stands for. The smiley face conjoined with the barbell creates an inviting environment. Similar to its slogan “Make a buddy with Wuddy” the application makes fitness fun and meeting new people approachable.

Wuddy offers a money back guarantee to unsatisfied customers who paid for the upgrade. The application can simply be deleted for those who are not satisfied with the free application.

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Distribution Strategy Wuddy will be developed as a mobile application, because “the latest data shows...mobile

digital media time in the US is now significantly higher at 51% compared to desktop at 42%”(Bosomworth, 2015). To keep costs at a minimum, the application will not be accessible via desktop. Wuddy’s target demographic needs to use the mobile application for the intended use. Desktops are not compatible with the mobile aspect of the application and do not coincide with the social aspects that customers seek. (Qualtrics, 2015). Wuddy will us the Apple App Store as it’s main distribution channel in an attempt to penetrate the market. Wuddy believes that the Apple App Store is the distribution channel that offers the product the best opportunity for success; and the data validates this. The Qualtrics survey revealed that 91% of those sampled would expect to find Wuddy’s application on the Apple App Store (Qualtrics, 2015). The current trend in application development and maintenance is outsourcing. There is a 31% increase in the number of companies that are switching to outsourcing, due to reduction costs (Statista, 2015). In most cases, the cost of insourcing is usually more than the cost of outsourcing (Investopedia. n.d). While lacking skill in app development, Wuddy is using Ishir to develop the application because it is more cost effective (Hoovers, 2015). The cost of developing a small minimum viable product (mvp) application is $25,000. Costs of developing the application derive from creating the design, programming, developing application framework, IOS platform integration and application testing Monthly maintenance costs are $1500 (Apple Iphone, 2015). As a result of Wuddy being interlinked with Fitbit, the systems need to be constantly maintained. Maintenance includes fixed and variable costs, while “The variable cost component leads to scale diseconomies because maintenance increases non-linearly with the number of features or requests that are implemented during maintenance” (Mookerjee, 2005). The basic overview process to get Wuddy on the App Store involves a $99 annual fee, creation of a distribution certificate and profile, archiving the app, and waiting until Apple’s team approves the application (Apple Store, 2015).

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Promotion Strategy Wuddy will use personal selling as part of Wuddy’s push strategy by selling the value of

the product to potential partners. Effective personal selling will be essential to convince an established company, such as FitBit, that partnering with Wuddy, “an up and coming application”, will benefit both parties. In December 2012, Fitbit had $76.73 million in revenue, and by December 2014 showed a significant increase to $745.43 million (Fitbit). The partnership consists of exclusively offering Wuddy premium for free with the purchase of a FitBit bracelet. Wuddy’s advertising campaign is exclusively focused promoting Fitbit with the inclusion of Wuddy Premium. Using Wudy’s daily advertisements on Facebook and Twitter to promote the Fitbit partnership will create equal product promotion. Partnering with Fitbit improves Wuddy’s word of mouth marketing and creates a credible brand image.

Wuddy’s main promotional strategy is to create a student representative campaign for target market campuses beginning with Cal Poly San Luis Obispo. Many startup companies such as Yik Yak have successfully used student representative programs to promote their new products (YikYak, 2015). Yik Yak’s success from this strategy is evident by the fact that 98% of it’s users are in the 18-34 demographic; this is the highest percentage of all leading applications (comeScore, 2015). Using a similar strategy on all 32 CSU and UC schools in California will create substantial name recognition in the target market for Wuddy. Representatives have the ability to utilize merchandise, such as free T-shirts as well as post flyers around respective campuses and recreation centers to promote Wuddy. Advertisements highlight the safety and social aspects of the application’s value proposition.

Wuddy, a free application will offer promotional upgrades to “Wuddy Premium” for the first 1000 users who download the application. Wuddy Premium allows users to have an ad-free application experience.The non-promotional price of the upgrade to Wuddy Premium is $.99.

Wuddy will utilize a media mix consisting of advertisements on Bodybuild.com, Facebook, and Twitter, a Fitbit partnership, student representatives campaign and niche media. Of the 9.5 million members on Bodybuilding.com, 29% of members are in Wuddy’s target market (Bodybuilding, 2015). Effective advertisements on Facebook directed at college aged students have the ability to reach large numbers of the targeted customers, with studies showing that 84% of people ages 18-29 use facebook regularly (Guimarares, 2014). According to qualtrics data, 76% of respondents said they would expect to hear about Wuddy through social media (Qualtrics, 2015). Wuddy has a social-media team responsible for running Wuddy social media accounts and informing followers of updates and changes to the application. Furthermore, Wuddy will use university newspapers (Mustang News) as niche media, this advertising technique informs specific groups on the college campuses about the value proposition . Using

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marketing metrics, Wuddy is able measure its success by tracking weekly increase in downloads to see the effectiveness of its advertising efforts.

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Appendix Tables Table 1- Attribute Importance

Table 2- Male Attribute Importance

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Table 3 - Female Attribute Importance

Table 4 - Age 18-24 Attribute Importance

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Table 5 - Income Statement

Year 1 Year 5

Sales and Revenue

1) Unit Sales 149,676 977,592

Cost per unit $.99 $.99

Sales Revenue $148,179.43 $967,816.08

Impressions 5000 50000

Impressions/1000 5 50

2) Banner CPM $.20 $2.00

3) Interstitial CPM $3.00 $5.00

Total CPM rates $3.20 $7.00

Revenue per day = (Impression/1000)*Total CPM

Rate

$16.00 $350.00

Advertising Revenue $5,840.00 $127,750.00

Total Revenue $154,019.43 $1,095,566.08

Expenses

1) Twitter Ad -Cost per Engagement

$36,500 $73,000

2) Facebook Advertisement $36,500 $91,250

3) Total Wuddy Team Salaries $0 $240,000

4) App Developer $25,000 $0

5) App Maintenance $18,000 $48,000

6) Student Ambassadors $57,600 $246,960

7) T-Shirts handed out to Colleges $29,952 $45,178

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8) Virtual Real Estate $198 $198

9) Apple App Store Payout (30%) $44,453 $293,277

Total Expenses $271,145 $1,037,864

Net Income (-$94,184.40) $57,702.48

Revenues 1) Unit sales determined by multiplying purchase rate by college student enrollment (NCES,

2015). 2) Banner CPM (Cost per 1000 Impressions) rates ranges from $.20-$2.00 (Mobile, 2014) 3) Interstitial CPM rates ranges from $3.00-$5.00 (Mobile, 2014) Expenses 1) Spending $100 a day for Twitter advertisements (Alleger, 2013) 2) Spending $100 a day for Facebook advertisements (Facebook for Business, 2015) 3) Wuddy’s founders will start receiving a base salary once Wuddy becomes profitable. This number will grow as the company grows. 4) Cost of developing the application (Apple iPhone App Developement, 2015) 5) App maintenance will increase as the application grows (Apple iPhone, 2015) 6) Student Ambassadors will be paid $10/hour to work 5 hours a week for 36 weeks a year (52 weeks minus holidays and summer). 7) 200 shirts per campus in California for year one and 100 shirts a campus nationally for year two. Price of designed T-shirts using CustomInk design lab (Design Lab, 2015). 8) Annual fee for the free and paid for application to be present on the app store (Mackenzie, 2012). 9) Apple App store collects 30% of the amount paid for non-free apps (Mackenzie, 2012)

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Position Map (STP 1)

MyFitnessPal: https://www.myfitnesspal.com (Price) http://www.theverge.com/2015/5/4/8542487/myfitnesspal-premium-paid-service-under-armour FitBit: (Price) https://www.fitbit.com https://www.fitbit.com/store (Social) https://www.fitbit.com/app Personal Trainer: (Price) http://www.webmd.com/fitness-exercise/finding-personal-fitness-trainer?page=2 UP Jawbone: https://jawbone.com/up

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Positioning Map (STP Part 2)

MyFitnessPal: https://www.myfitnesspal.com (Price) http://www.theverge.com/2015/5/4/8542487/myfitnesspal-premium-paid-service-under-armour FitBit: (Price) https://www.fitbit.com https://www.fitbit.com/store (Social) https://www.fitbit.com/app Personal Trainer: (Price) http://www.webmd.com/fitness-exercise/finding-personal-fitness-trainer?page=2 UP Jawbone: https://jawbone.com/up

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Qualtrics Image 1

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Qualtrics Image 2

Qualtrics Image 3

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Qualtrics Image 4

Qualtrics Image 5

Qualtrics Image 6

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Qualtrics Image 7

Qualtrics Image 8

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Qualtrics Image 9

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