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Smart Watch Market Segmentation

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Smart Watch Market Segmentation

INTRODUCTION

Intel is a computer chip company that began its advertising campaign for its large, powerful processors. The Intel Company dominated the market for its processor by placing high prices on its device, creating a competitive advantage for other similar companies. However, Intel failed to realize the market gap in the development of smartphone chips dominated by Samsung and Qualcomm Companies. Intel took advantage of the emerging internet of things market segment that consists of ordinary machines fitted with sensory devices connected to the internet, such as factory machines and refrigerators.

The advent of smartwatches in saw the rise of technology giants Apple and Samsung enter the smartwatch market segment. Apple and Samsung targeted their smartphone consumers hence increasing the sales for smartwatches. Additionally, Toshiba, Sony, Google companies have also created a market for smartwatches. Market opportunities for smartwatch include fitness tracking, medical and diagnostic health reporting devices. In 2014, the Intel Company adopted the development of the Basis peak smartwatch to monitor and track sleep patterns though the utilization of heart rate sensors. However, due to the overheating of the Basis peak batteries, the Intel Company withdrew it from the market.

If the Intel Company fixes the overheating problem with the Basis peak watch, they can consider partnering with Google, Amazon, and Aetna Company. However, the Intel Company should consider conducting a market survey to determine the consumer characteristics of various market segments. Therefore, the Intel Company should select the best consumer segment and decide the Smartphone feature to omit or include matching the market segment. Also, the partners the Intel Company chooses must correspond to the selected target market. The Intel Company should also segment the consumer market according to their differing needs by offering unique benefits. After segmenting the consumer market, the Intel Company should draw its customers from the target market and position itself firmly with its partners.

Determination of Distinct Market Segment

The first step in the Market analysis is to create the first set of questions that describe characteristics of the population, such as segmentation data (Wagner, 2005). The segmentation data also explains the differences in the customer group. The second set of questions consists of discrimination data, which helps us identify members of each segment, for instance, whether they possess a particular device such as the I Phone. Hence discrimination data is essential for determining the competitive advantage of specific brands. After generating variables defining the segmentation data and discrimination data, the next step is to perform cluster analysis, which groups like-minded customers and separate customers into different groups.

The determination of the customer segment in the market utilized the Enginius statistical software, which populated nine parsimonious clusters. The nine clusters had numerous and different characteristics between groups. Therefore the customer characteristics were compared between the segments to identify similar responses that could inform on the decision to select a given segment. For instance, in the nine cluster dendrogram segment five, segment six and segment seven had the highest average scores for innovation, wellness, athlete, and price variables and therefore chosen as distinct segments.  The innovation average for segments 5,6 and 7 is 4.48,5.28 and 3.91, respectively, while that for wellness is 6.35,4.99 and  5.24. The price average for the three selected segments is  4.68,4,67,6.12.

The nine clustered dendrograms cannot be a market segment representative because of the huge distances between the clusters hence the need to divide the clusters for easy decision making. As the clusters get divided to form supergroups, the consumer information gets lost. For instance, 20% of information is lost after simplifying 9 to 8 segments and also simplifying from 8 to 7 segments, 20% of information is lost. Also, 25 % of information gets lost upon simplifying form 7 to 6 segments. Moreover, 30 % of information gets lost from simplifying 6 to 5 segments, while 33% gets lost from 5 to 4 segments. By simplifying from 4 to 3, the information lost is 36 % while simplifying from 3 to 2 the information lost is 55. When the segment gets simplified from 2 to 1, the information lost is 70%.

Describing the Segments Based On Segmentation and Descriptor Variables

The Fit bit offers the health fitness kits and partners with insurers to help consumers save on their premiums. Therefore, concerning the saving money variable, the Fitbit  Company can help consumers save for their health and, hence, receive a rating of 6 out of seven. The output for the four-segment description of the market indicated a significant difference in the characteristics between the groups in comparison with the five-segment market representative. Therefore, the four-segment description of the market is relevant and is used to compare the characteristics of the individual members.

The three segments determined for analysis include segment 5, segment 6, and segment 7. However, since we are using the fourth market description, there is a need to describe their descriptor and segmentation variables. The average score for innovation in the four segments is 3.76, 3.97, 4.73, and 3.9, respectively. However, the scores improve when the group merges with groups 5, 6, and 7 hence creating market attractiveness for selling the basis peak smartwatch.

The constant communication variable for the four segments is 4.05, 5.35, 5.32, and 4.3, respectively; hence the difference is significant for creating a market position since the member in this group value communication. The creative communication variable for the four-segment is 4.21,2.35,5.37and 4.76. The differences between groups for creative communication are significantly above the population average hence indicating that the consumers of this group value creativity. The timely information variable for the four segments is 3.57, 5.62, 4.49, and 4.11. The differences in the group for timely information variables are above the population average and significant. Therefore members in this group need timely information.

The iPhone average descriptor variable for the four segments is 0.364,0.566,0.746 and 0.543, respectively. The average CompBuy descriptor variable for the four groups is 0.075,0.534.0.211and 0.077, respectively.The average Health descriptor variable for the four segments is 0.035,0.042,0.099,and 0.116 respectively.The average advertisement descriptor variable for the four segments is 0.104,0.088,0.032,0.169. The average Amazon product descriptor variable for the four groups is 0.564,0.0415,0.508, and 0.658, respectively. The average income descriptor variable for the four groups is 3.29, 2.75, 3.80, 3.51, and 3.74. The difference in average descriptor variables for iPhone, CompBuy, health, advertisement, amazon product, and income is significant. Therefore and Intel company should focus on the consumer needs of these market segment

Name Creation for Segments Selected

The naming of the selected groups includes characteristics that describe the members in particular segments, including segmentation and descriptor variables. The first group is named practical savers since they had a high score for saving money transactions. The second segment is designated “the localized and social” since members of this group spend more time on social media than other groups. The third group is named “friends to machines ” since they spend a significant part of their income on buying iPhones.The fourth group is named as the “health-conscious group” since they supported any innovation that would improve their health status.

 

The Attractiveness Score and SmartWatch Segmentation.

The smartwatch segment attractiveness rating consists of the segment size, the differences across consumers in the segments, the strength and weakness of the basis peak smartwatch, and the competition of other smartwatch companies(Wagner& Decker,2005). For instance, the basis peak watch advantages include automated detection for different activities, waterproof, temperature and heart rate readings, swappable band, excellent web applications. The disadvantages for the basis smartwatch include lack of touch screen and buttons, lacks a calorie counting system, has no stopwatch, requires wireless synching with an android and IOS device. The Fit bit company is a competitor to basis smartwatch since it offers additional value to its customer through personalized coaching and guidance. Moreover, Fitbit has partnered with many insurance companies and also provides fitness trackers to its consumers.

In a rating of 1 to 7, segment 1 receives a rating of 6 because it has a 40% relative size, which is high compared to other segments. Also, the innovation average variable slightly lower than that of the general population. However, the innovation variable is significant since members of this segment can adapt to technological advances of the basis leap smartwatch(Dehghani& Kim, 2019). The rating for segment two is four out seven since it has a relative population of 19%  also the wellness average variable is 3.62, meaning members do not value a healthy lifestyle. Segment 3 receives a rating of 6 since it has an average wellness variable of 5.93, which implies the group supports a healthy lifestyle. Segment four receives a rating of 5 since it has a saved money for the life-average variable of 5.83, which means Intel company can partner with Fitbit to offer health savings to this segment.

 

The Strength of Competitors Offerings and Their Marketing Position

The Apple smartwatch has car key and payment features which are not found in the basis peak smart. Moreover, the apple watch has actionable notifications, a feature in the market segment for the basis peak watch. Therefore the apple smart watch receives a rating score of five.  Fit bit charge 2 has an OLED display, splash-proof, and has a breathing feature. Therefore since it has additional features compared to the basis peak watch, it can partner with Intel Company to position itself in the market(Chen& Uysal, 2002). Therefore, the rating for Fit bit charge 2 is 6 out of 7. The Samsung Gear S 3 has voice recognition commands, super AMOLED display, gyro sensors, accelerometer, and barometer sensors.due to additional capabilities the Samsung receives a rating of 7 out  7. Therefore Samsung should partner with Intel to position itself in the consumer segment that values innovation(Krey et al., 2019).

Ratings for Amazon Watch, Aetna, Google and Basis Peak Watch

The previous Intel basis peak watch had no buttons, and its battery used to overheat. The Intel watch also had a poor display; therefore, it receives a rating of 3 out of 7. The Amazon watch fits the innovation segment variable since it has a voice recognition command feature; therefore, it gets a score of 6 out of 7.TheThe Google pixel watch is waterproof has a fingerprint scanner and also can make payments. Thus, the Google pixel receives 7 out of 7 since it saves money on transactions and focuses on innovation market segment variables. The Aetna watch features include calorie watch monitors, health reminders, and health support programs. Therefore the Aetna watch receives a rating of 6 out seven since it supports the saving for life, market segmentation variable. The market positioning for Intel smart should consist of a partnership with Google, Aetna, and Amazon since they offer a competitive advantage for innovation and price.

 

References

Chen, J. S., & Uysal, M. (2002). Market positioning analysis: A hybrid approach. Annals of tourism research29(4), 987-1003.

Dehghani, M., & Kim, K. J. (2019). The effects of design, size, and uniqueness of smartwatches: perspectives from current versus potential users. Behaviour & Information Technology38(11), 1143-1153.

Krey, N., Chuah, S. H. W., Ramayah, T., & Rauschnabel, P. A. (2019). How functional and emotional ads drive smartwatch adoption. Internet Research.

Wagner, R., Scholz, S. W., & Decker, R. (2005). The number of clusters in market segmentation. Data analysis and decision support (pp. 157-176). Springer, Berlin, Heidelberg.

Wile, D. J., Ranawaya, R., & Kiss, Z. H. (2014). Smartwatch accelerometry for analysis and diagnosis of tremor. Journal of neuroscience methods230, 1-4.

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