Pebble's New Smartwatch Hits - Research Paper Example

Pebble Smart Watch Mike Maddux Consumer Behavior April 30, Table of Contents I. Introduction 3 II. Pebble Watch 4 III. Marketing Mix 5 A. Product 5 B. Price 6 C. Promotion 7 D. Place 7 IV. Target Market 8 V. Reaction, Analysis 9 Works Cited 12 I. Introduction This paper explores the Pebble Smartwatch from a marketing perspective. This analysis includes the marketing mix of the product and the way the marketing mix was configured to target certain market segments. From a macro perspective, this paper explores the product’s marketing strategy. The focus is on the scrutiny of data, such as stakeholder insights of the Pebble Smart Watch. This process will allow for a credible assessment of the effectiveness of the marketing mix: For example, does the marketing mix relate to the target market segments, how effective was the choice of the target markets, and how good was the marketing strategy in general (Pebble; Hern). The Pebble Smartwatch, in its latest campaign in Kickstarter, has been touted as the most funded project in the history of the site, generating close to $9 million in pre- orders during the first day of its funding campaign. Indeed, the campaign easily topped $14 million dollars a few days after the watch made its re-entry in the crowdfunding site. The massive popularity of the watch was evident in the way its first forays into crowdfunding in Kickstarter were also massively successful. This success allowed the firm behind it to launch itself into viability on nothing more than the success of this first crowdfunding initiative. Aside from the basic Pebble, which was launched earlier, the new crowdfunding initiative has the introduction of a new product variant, known as the Pebble Time Steel. This new model sells for $250 and has been well-subscribed. On the other hand, those massive numbers in sales translate to more modest number scales when it comes to ordered units, as the Pebble Time has been ordered by just 57,000 customers. To put this number into perspective, the launch of the new Apple watch product is expected to generate millions of units in sales, if not hundreds of millions. This tells us something of the target market of the watch presently, and of the way by which the evaluation of the marketing strategy and the marketing mix of the product range is to proceed (Murphy). The latest figures, meanwhile, put the total raised funds for the new watches at $20 million dollars and counting, making this latest Kickstarter foray a massive success (Weber and Babb). On the other hand, the overall levels of sales Pebble are encouraging at more than one million units at the end of 2014. To be sure, the initial distribution point of the Internet and Kickstarter had been complemented in 2013 by the entry of Pebble watches in Best Buy, but one can say that the success of Pebble was largely due to the successful crowdfunding campaign, both as a means to promote the product, drum up interest, and act as the point of sale and point of distribution for the watch (Answers Corporation; Stein). Thus, Pebble has come up with a brilliant marketing mix that has utilized emergent marketing and fundraising channels online to bypass traditional modes of raising product interest. The cult following, the unique marketing mix elements, and the favorable press all combine to create a marketing force that has become unstoppable in many ways, and these elements have bred a new brand that can rival Apple and the more established giants in consumer electronics. More about this will be said in the proceeding discussion (Limer). II. Pebble Watch The Pebble Watch is essentially a smart watch that plays nice with both Android and iOS devices, as well as cameras such as the GoPro. Pebble Watch acts as a kind of peripheral device to those main devices, interfacing with them to convey important events such as text messages, phone calls, various other tracking and notification activities, games, and the display of mapping data. In the case of cameras, such as the GoPro, the Pebble Watch also acts as a remote control for vital functions, and the same goes for Android and iOS phones. The developer of the device is Pebble Technology Corporation, which launched itself and sourced its own funding via Kickstarter because it was able to raise more than 10 million dollars in 2012. That amount, during its time, was the largest ever amount raised in the crowdfunding site, and this phenomenon hints at the massive and instant popularity of the smartwatch concept in general and the Pebble product in particular. The key person behind the Pebble Watch is Eric Migicovsky, who developed the watch as an idea in Y Combinator. He wanted to display messages from some Android devices via the watch interface. It is important to note that the product is now in its third generation, with the Pebble Time and Pebble Steel retailing both at $199, and the new product Pebble Time Steel retailing at $250 when ordered via Kickstarter and $300 when ordered retail. The latter is the market price for the product when ordered beyond the crowdfunding channel, and this product iteration hints at an expansion of modes of distribution for the product beyond its niche cult followers on the crowdfunding site. While the company takes care of design, moreover, the production itself is taken care of in Taiwan, via the Foxlink Group of Taiwan (Answers Corporation; Limer). III. Marketing Mix A. Product As discussed above, there are now three generations of the product, and the line has expanded into three watches, Pebble Time, Pebble Steel, and the new version Pebble Time Steel. The latest version has a 1.26 inch screen and it is manufactured by Sharp Corporation, with a pixel density of 144x168 pixels, and equipped with a backlight. Alongside this, the watch is packed with a motor for vibration, a magnetometer, an accelerometer, and sensors for ambient light. The modes of communication are via Bluetooth, including the low energy variant known as Bluetooth 4.0. Bluetooth allows the watch to communicate with other devices, for example, Android devices and iPhones, as well as cameras and supported gadgets. Charging is via a USB interface, and battery life is about a week. New features include water resistance up to 40 meters in both saline and clear water, allowing for diving and daily activities like showering. In terms of software, the watch has its own software OS, known as Pebble OS, that currently has support for more than 1,000 applications and growing, including tracking financials and stocks, tracking personal activities such as sleeping and calories consumed while moving, appliances control, smartphones control, camera control, GPS navigation including turn by turn GPS support, and many others. The OS platform allows for communication with thousands of devices that support the communication interface in use by Android and iOS, and technically this compatibility is the only barrier to effective communication with the Pebble Watch (Answers Corporation; Limer). B. Price As already discussed above, pricing is straightforward for the existing and new products, with $199 dollars for the existing models at retail and a tiered pricing for the new Pebble Time Steel. It is $250 dollars for the Kickstarter channel and $300 everywhere else (Answers Corporation; Limer). This pricing strategy is consistent with what appears to be a broadening of the product portfolio in the Pebble watch line, mimicking somewhat the tiered product and pricing offering of Apple Watch. Also, the pricing for the new Pebble Time Steel reflects movement up the value chain from the staple offerings, and this has implications for company margins (Answers Corporation; Limer). C. Promotion The key promotional activity is via the Kickstarter campaign, from which the company massively interacts with its target market in terms of features, design, price, availability, and the like. Word of mouth, social media, and the crowdfunding site are the means by which the company has promoted its products to the masses (Answers Corporation; Limer). One can say that press coverage and the growing popularity of crowdfunding itself can be construed as indirect means of promotion for the firm given that these have boosted the company image as well as lifted theprofile of the Pebble smartwatches. The growing interest in smartwatches too in the popular media can be considered as a kind of positive promotional force for Pebble (Answers Corporation; Limer). The way forward for Pebble seems to be too to leverage social media and the positive buzz around Apple Watch as means to piggyback Pebble and make the brand and the watches more popular (Answers Corporation; Limer). D. Place The main distribution channel is online, although Best Buy has been a brick and mortar extension of the Kickstarter primary distribution channel. The tiered pricing hints at a potentially larger role for the development of alternative brick and mortar distribution channels for future iterations of the product in order to rival Apple and others (Answers Corporation; Limer). Retailing seems to be an area, in particular, where Pebble can gain a lot of ground extending the distribution reach of the watches. The move up to Pebble Time Steel can translate to branching into higher end retailing and distribution channels commonly identified with more luxury-oriented watch brands (Answers Corporation; Limer). IV. Target Market In the early stages of the product cycle, the key means to raise funds was Kickstarter, and its initial success at fundraising hints at the kind of target market the company aimed for; that is, not mass market, but early adopters of the technology. Kickstarter itself is known to early adopters mainly, and the modest order numbers, while enough to raise record amounts of funding, suggest that indeed early adopters were the primary target market for the initial versions of the product. On the other hand, moving forward, the buzz around the Apple Watch and the way the new watch targets mass market luxury consumers suggest that Pebble may be branching away from early adopters with the new Pebble Time Steel. The distribution and tiered pricing also suggests this, as well as the obvious effort to match Apple’s offering with the new product (Answers Corporation; Limer). Moreover, one sees that this initial target market of early adopters has some relevant characteristics. One is that they are technology geeks and enthusiasts. The unprecedented success of Pebble in Kickstarter is evidence of an unaddressed market consisting of these tech enthusiasts. These consumers appear not easily impressed with established brands and they appear to appreciate truly original innovation. In this case, the target market saw the promise of smartwatches and the unique value and product mix proposition of the Pebble smart watches, and it is a case arguably of the right product coming in at the right time to ignite the cult-like following of a unique and underserved target market. This so-called “nerd crowd” is a perfect match to the exceptional value proposition and the marketing mix for Pebble (Nickinson et al.; Svensson). This is established in no small part because of the fundraising success that Pebble has had on Kickstarter. Innovative marketing, it appears, has created new, more mainstream target markets (Sharma; Olivarez-Giles). Consequently, the introduction of higher-end models in the wake of the launch of the Apple Watch should further expand the target market of Pebble beyond this early niche market of tech geeks and early adopters. Pebble can then become more of a mainstream brand that caters to the same market segments as Apple, with corresponding profit growth.This is a wide-open market, and judging by the even more massive success of its latest crowdfunding effort at Kickstarter, where it raised more than $11 million for the high-end Pebble Time Steel, there is room for growth in pursuing these mainstream customers (Olivarez-Giles). V. Reaction, Analysis There is no arguing that the Pebble marketing strategy has worked: The huge and on-going success of the crowdfunding drive and the substantial number of orders, at more than one million units, suggest that the company has done well to engage early adopters and to use Kickstarter as the main avenue to market, distribute, and engage with customers on vital aspects of design. The Pebble watch is the perfect product for crowdfunding and for reaching out to this enthusiastic and technologically savvy crowd, and the way the different elements of the marketing mix were configured to cater to this target market has been nothing short of brilliant. Moving to the future too, one can see that Pebble is poised to branch out to a larger target market, as smart watches go mainstream with the launch of Apple Watch and the entry of more competitors into the arena. This pivot is brilliant too, because it builds on the already massive early success of the brand and the current crop of products (Answers Corporation; Limer). On the other hand, it is clear that with the launch of Apple Watch and a slew of other competitors in this new product category of smart watches, the market itself will evolve and transform in ways that may or may not be conducive to Pebble Watch’s continued success. As the market becomes more sophisticated and more products are introduced into that market, the initial appeal of Pebble watches to early adopters and to technological geeks may fade altogether. The Pebble watch may end up becoming a niche and marginalized product once the big boys, namely mainstream manufacturers of consumer gadgets such as Samsung and the big Chinese giants in smartphones, come in and focus on this nascent market in earnest. It may be that Pebble may not have the scale economies, the financial muscle, and the research and development and marketing resources, to continue to keep pace with the giants. These are risks that Pebble faces, especially since, even with its record haul on Kickstarter, the total number of preorders for the new watch was not even in the hundreds of thousands, whereas the Apple Watch is expected to sell in the tens or hundreds of millions. Moreover, this does not count the massive resources that the other Android players are expected to pour into this market, with the correspondingimmense numbers of orders generated. Ultimately, the challengefor Pebble, from a marketing point of view, is to surmount competition from the biggest tech companies on the planet and build on its early success in order to thrive in the long term (Stein (b); Vincent). Works Cited Answers Corporation. “Pebble Watch”. Answers.com. 2015. Web. 26 March 2015. Hern, Alex. “Why brands like Pebble keep coming back to Kickstarter”. The Guardian. 24 March 2015. Web. 25 March 2015. Limer, Eric. “Pebble’s fantastic smartwatch is growing up”. Gizmodo. 2015. Web. 26 March 2015. Murphy, Mike. “The new Pebble smartwatch is now the most-funded project in Kickstarter history”. Quartz. 2015. Web. 26 March 2015. Nickinson, Phil et al. “Android Central Roundtable: Pebble Smartwatch”. Android Central. n.d. Web. 5 April 2015. Olivarez-Giles, Nathan. “One Week Later, Pebble Launches High-End ‘Steel’ Model of Time Watch. Wall Street Journal Personal Tech. 3 March 2015. Web. 5 April 2015. < http://blogs.wsj.com/personal-technology/2015/03/03/one-week-later-pebble-launches-high-end-steel-model-of-time-watch/> Pebble. “Pebble Smartwatch ”. GetPebble. 2015. Web. 25 March 2015. Sharma, Rakesh. “Sold Out Pebble Smartwatches: Artificial Scarcity or Consumer Demand?” Forbes. 11 July 2013. Web. 5 April 2015. Stein, Scott. “Pebble Watch Review”. CNet. 10 February 2014. Web. 26 March 2015. Stein, Scott (b). “Apple Watch vs. Android Wear, Pebble, and Samsung Gear“. CNet. 8 April 2015. Web. 17 April 2015. Svensson, Peter. “Review: Pebble watch is a great way to be bugged”. Phys.org. 17 July 2013. Web. 5 April 2015. Vincent, James. “Apple Watch pre-orders surpassed 2.3 million units, claims new estimate”. The Verge. 16 April 2015. Web. 17 April 2015. Weber, Harrison and Fletcher Babb. “Pebble’s new smartwatch hits $20 million in Kickstarter preorders”. VB News. 26 March 2015. Web. 26 March 2015. Read More