Page 2 - CIMA SCS Workbook February 2019 - Day 2 Suggested Solutions

SUGGESTED SOLUTIONS

tracker into the portfolio offered and controlled by Vita. Economies of management could be
produced by, for example, working out of just one premises instead of two. There should also be
economies in terms of research and development, as the two companies could combine their
design and software skills to produce efficiencies in investment.

Product Development (Existing Market, New Product)

In the case of Vita, adopting a Product Development strategy would mean making a new type of
fitness tracker, for example one that is waterproof aimed at those who participate in water sports
such as swimming or water polo, with the aim of selling it to consumers who traditionally have
bought fitness trackers but have not been able to use it in all activities. This would presumably
require quite a degree of investment in both research and development and also marketing, but
would increase the overall range of Vita models offered.

Alternatively, the company could invest its knowhow in producing trackers that focus on the
diagnostic side of a user’s health. For example, a Vita tracker can already measure heart rate via
its ‘VitaPulse’ technology, and there is speculation that Gopher-IT are looking to launch a product
that could help detect signs of diabetes; could Vita develop a tracker that considers other aspects
of a wearer’s health? For example, there is much discussion in the medical world of the dangers of
high cholesterol – would a fitness tracker be able to detect such a condition via a wearer’s blood
flow?

Market Development (Existing Product, New Market)

In this sense, Vita would be looking to venture into new markets, which would either be in a
geographic or a consumer segment sense.

Vita sells its products in retail stores located in over 40 countries; this means that there are plenty
of territories where the opportunity to sell through traditional ‘bricks and mortar’ retail has yet to
be exploited. It should look to see if further expansion could be achieved. For example, the global
economic position is constantly changing, and there are many emerging economies that will
continue newly-made degrees of wealth. For example, India has a rapidly growing middle class
that would seem perfectly appropriate for a Vita product; if Vita does not already sell to retailers
in India, it should evaluate the suitability of doing so. Vita should ensure that it has links with
retailers in all viable parts of the world, where the infrastructure exists to support the complete
Vita product, in terms of mobile connectivity and broadband.

Alternatively, a new market could refer to a new type of consumer. It would appear that the
corporate customer is becoming popular, as opposed to just the individual. This is apparent in
both the private and public sectors, where employers who are keen to promote healthier staff
purchase fitness trackers in bulk to distribute to staff. This is likely to represent a large sales
opportunity to Vita, and may need the creation of a new sales team whose skills are better suited
to large contract negotiation.

Diversification (New Product, New Market)

This growth strategy carries the greatest degree of risk, as invariably every aspect of it is new,
both the product and the market. For example, Vita could look to manufacture its own product as
opposed to outsourcing to HJM and Force. Our company would then be fully integrated – design,
rd
manufacture and retail, and therefore not need to share overall profit margin with 3 parties.

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