NEW OFFERING AND THE TARGET MARKET AN ADVANCED SMARTWATCH
NEW OFFERING AND THE TARGET MARKET: AN ADVANCED SMARTWATCH
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The Product
Core Product Description
Smartwatches are becoming popular by the day and many people have accepted this technology and gotten hooked to the idea of a wearable that is as smart as their mobile phone. Some of the greatest features of smartwatches and other wearables is how they are able to monitor pulse rate, record pedometers, track physical activities, monitor the blood pressure, record sleep and sleep patterns, and couple up as time keeping gadgets (Dutot, Bhatiasevi, & Bellallahom, 2019). However, as technology advances, these gadgets have been somewhat slow to adapt new changes. Therefore, the proposed smartwatch will go a step further to include maps, voice-activated commands, full screen picture taking, and video call features to add on to the already amazing features. The idea is to make the smartwatch operate fully like a smartwatch, with the convenience of being hands-free. The problem of having so many smart gadgets can be solved by enabling the smartwatch to have similar features to a smartphone, allowing one to stay without using their mobile phone for some time when at work, in meetings, in class, doing physical exercises, on a plane, driving, and so on. By giving the smartwatch more features, the bulkiness of the smartphone will be avoided. I love the smartwatch and I am addicted to the benefits it presents. As a frequent user, I noticed that sometimes I needed to use my phone mid-activity and wished that my watch had the same capabilities. Upon researching, no company manufactures smartwatches will all of the features mentioned. Therefore, I began with a product I love and considered ways to make it even better.
SWOT Analysis
Strengths
Access to huge amounts of data relevant to one’s health and fitness including nutrition and weather information for purposes of exercising and other outdoor activities. These amounts of data will eventually be used to provide suggestions based on one’s registered weight, height, physical activities, sleep patterns, health and nutrition data, and so on.
Creates a community of individuals with similar fitness, health, nutrition, and other goals via the many apps that show you other people with similar devices around one’s area.
Many designs to choose from in relation to one’s tastes and preferences
Availability of many apps for working out and better features such as navigation, voice activated texting while using other apps, vice command picture taking, and other brilliant features unavailable in the wearables market today
Can be used to call for help for the elderly and children in case of an emergency without the need to physically dial numbers
Low cost of production
Hardware integration with other open systems such as sound systems, smart TVs, and so on.
Language control
Weaknesses
Very new in the market and may not be accepted by users
Very low profit margins
Does not have its own operating software and will need to partner with other third party providers
Inaccuracy may lead to poor decisions because the smartwatch uses sensors and estimates to make recommendations
Striking similarity to a mobile phone may not be appealing to price sensitive consumers
Opportunities
More apps are needed as people begin to embrace the idea of meeting online for comparisons
More accurate measuring apps will be needed in the near future and the use of maps may help to achieve this
Growing demand for smartwatches and other wearables
Changing customer needs and preferences
Growth of a culture of physical exercising and nutrition conscious users
More people getting into sports
Threats
Competition from already established brands such as Samsung and Apple
Acceptance from users who already own reputable brands
Rapid changes in technology
Changing needs of consumers
Desirability of the Wearables Market
The wearables market is one that is changing rapidly due to the advancement of technology versus the changing consumer needs and preferences.
Six Forces of Competition
Threat of New Entrants
The threat of new entrants into the wearables industry is high. There are many players entering the market including small startup companies to global giants like Samsung and Apple. The money is open to all players. The Chinese manufacturers have also flooded the market with cheap alternatives making it easier for new entrants to penetrate the market. The number of new entrants are increasing due to the growth of the wearables market (Nasiri, 2019). As such, more companies will continue to enter as technology improves and the cost of production remains low.
Rivalry among Existing Firms
Competition is low for the top-tier wearables including products with many features. However, for mid-level products with basic fitness and health features, the competition is very high. The changing technological advancements have made the industry very unpredictable (Ferreira et al., 2021). As a result, heavy investments into wearables are only made by well established companies. Other players invest in low cost production for the mid-level market.
Threat of Substitute Products
Threat from substitutes is very low because of the newness of products relating to smartwatches and other smart designs. Apart from mobile phones, no other gadget comes close to replacing smartwatches in the wearables industry. However, as more companies continue to enter the market, the alternatives will flood the industry (Singh & Majumdar, 2018). At that moment, the substitute products will be a major threat. Currently, issues relating to regulations, technological limitations, battery technology issues, acceptable weight, and the operating systems will dictate whether new products will reach their target markets.
Bargaining Power of Buyers
The bargaining power of buyers is at a medium level currently because of the uncertainty of new technology and the economic impact of buying another gadget with limited features compared to the smartphone. At the moment, the bargaining power of buyers is highest for wearable sin niche markets such as health and fitness tracking as well as medical monitoring (Singh & Majumdar, 2018). The industry is battling several challenges such as the accessibility of pricing, uniqueness, specialization, operating system competitiveness, battery supply, and other issues. As such, buyers are finding ways to leverage their bargaining capacity.
Bargaining Power of Suppliers
The bargaining power of suppliers is very low. The entry of more players into the wearables industry and market and the gradual entry of more products has led to the loss of their bargaining power (Singh & Majumdar, 2018). As more companies enter the market, the suppliers have also flooded the market, meaning more choices for the buyer and a loss of leverage.
Power of other Major Stakeholders
The main stakeholders include governments, the public, and the shareholders. Government have power to impact every other force (Chatfield & Reddick, 2018). Through regulations, taxation, and other legal issues, governments can directly and indirectly affect the industry, both positively and negatively. The public also dictates direction of technology through needs and preferences. Lastly, shareholders are becoming more active participants in decision making, with the potential to change the direction of the industry.
The Target Market and Positioning of the Product
For the smartwatch, the market will be segmented according to income, age, and other devices used. The product relies on the user already having a smartphone that supports it in terms of the extra features such as messaging, video calling, navigation, and infotainment. Therefore, the target market for the product will include millennials aged between 18 and 33 years in age because as noted by Dash, Kiefer, & Paul (2021), they are one of the largest groups of smartphone owners and users. However, the said group is not in the income group that favors the pricing strategy of the product. Millennials are largely low-income earners and have been classified as discount/deal shoppers (Anshari et al., 2019). Therefore, the target market will further include another group of older individuals of working class health and fitness enthusiasts looking for a device that applies for physical activities and can also be used at the office because of its convenience.
As noted above, the millennials group is worth pursuing because of how they fit the criteria of a large group of smartphone users. The segment brings huge numbers and influence on social media and other e-word of mouth avenues. The older working class fitness and health enthusiast category is chosen for the financial capability to afford the higher end models. They bring high disposable income. Combined, these two segments will create a culture and influence others to buy the product.
For the target market, the positioning of the product is based on the features available and the benefits it brings to users. The product is positioned as a time teller, a travel companion, a device to help find other gadgets, good fitness and health trackers, a nutrition companion, easy to make calls and reply messages while doing other things, a multitasking accessory, beauty and aesthetics, notifications on the user’s wrist, navigation, vice command, and full connectivity everywhere.
Product Pricing Justification
The product will have three distinct prices for the two target markets identified above: the entry level price for the basic model going for $62-$70, the mid-level model going for $94-$170, and the top tier model going for $180-$300. The first prices are for the larger market of millennials looking to own the popular gadgets but do not have enough money to buy the high end models. It is also a competition-based price aimed at penetrating the market and creating a following (Sammut‐Bonnici & Channon, 2015). The mid prices are for both the younger and older target markets with the ability to own the high end brands but are price sensitive due to income and other issues such as uncertainty. This price uses the cost-plus pricing strategy to create profits in the long term (Guilding, Drury, & Tayles, 2005). The last category of prices is for the price insensitive individual with high disposable income. Here, prestige pricing is used to create an image and capture value for the long term needs of the company (Kumcu & McClure, 2003). These strategies will ensure that the product is acceptable in the target markets.
References
Anshari, M., Alas, Y., Razzaq, A., Shahrill, M., & Lim, S. A. (2019). Millennials Consumers’ Behaviors between Trends and Experiments. International Journal of Cyber Behavior, Psychology and Learning (IJCBPL), 9(4), 45-60.
Chatfield, A. T., & Reddick, C. G. (2018). The role of policy entrepreneurs in open government data policy innovation diffusion: An analysis of Australian Federal and State Governments. Government Information Quarterly, 35(1), 123-134.
Dash, G., Kiefer, K., & Paul, J. (2021). Marketing-to-Millennials: Marketing 4.0, customer satisfaction and purchase intention. Journal of Business Research, 122, 608-620.
Dutot, V., Bhatiasevi, V., & Bellallahom, N. (2019). Applying the technology acceptance model in a three-countries study of smartwatch adoption. The Journal of High Technology Management Research, 30(1), 1-14.
Ferreira, J. J., Fernandes, C. I., Rammal, H. G., & Veiga, P. M. (2021). Wearable technology and consumer interaction: A systematic review and research agenda. Computers in Human Behavior, 106710.
Guilding, C., Drury, C., & Tayles, M. (2005). An empirical investigation of the importance of cost-plus pricing. Managerial Auditing Journal, 20(2), 125-137.
Kumcu, E., & McClure, J. E. (2003). Explaining prestige pricing: an alternative to back-bending demand. Marketing Education Review, 13(1), 49-57.
Nasiri, N. (2019). Introductory Chapter: Wearable Technologies for Healthcare Monitoring. Wearable Devices: the Big Wave of Innovation, 3.
Sammut‐Bonnici, T., & Channon, D. F. (2015). Pricing strategy. Wiley Encyclopedia of Management, 1-3.
Singh, R. R., & Majumdar, S. K. (2018). Wearable internet of things (WIoT): Opportunities, challenges and business models for digital entrepreneurs. International Journal on Recent Trends in Business and Tourism (IJRTBT), 2(4), 43-52.
