Chapter 4 – Marketing Analysis
Marketing analysis is extremely important when developing a new product, by
understanding the situation in the existing market, we can define who are our
competitors and target customers, thus can target on an appropriate market segment
with a proper positioning.
4.1 Situation Study
To understand the situation of the current market require a lot of efforts on researching
online articles, research reports and thesis; besides, observation on news and what
happening on the market in daily life is also essential for me to have my unique
personal aspect when analyzing the market.
By knowing the current situation could help the management executive to make
decision on using which kind of strategic alternative in order to gain profits. The major
market segment with many competitors is attractive, as we can see the succeed of our
competitors, however, it might not be suitable for a newly developed product to join the
game, since we might not have enough capital to invest and compete with those giant
players, and soon lead to failure.
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4.1.1 Existing Market
The major arena of the existing home automation market is focused in the North
America, Europe and Oceania, especially in those wealthy countries, where the living
environment is broad enough, and most people lived in individual house rather than
small flat. The United State of America is the most typical example and it is also the
country with most home automation system sales.
Figure 4.1.1.a Wealthy country with broad living environment
Then, in this country with great sales result, who is the customer? Not like the ordinary
thinking that smart home system is technology stuff, which should be popular among
younger generation who are highly educated, with well financial background and willing
to accept and learn new things; the fact is, major consumers are the baby boomers.
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Baby boomers are the products of the post World War II baby boom, the period started
from the 40’s until 60’s. During the second world war, as the environment and the
atmosphere around the world is not stable, many male members of a family was
enlisted to be army, and left home; therefore, people would not form new family or born
child at that time, since their boyfriends or husbands have joined the army and left them.
Figure 4.1.1.b Posters asking male family members to join force during the
World War II
Then, after the World War II, the environment became peaceful, while the pressure
among the atmosphere released, many couples get married at that time and produce lot
of off spring as their government would encourage them to born more baby to replace
the dead population due to the war.
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Figure 4.1.1.c A stamp showing the postwar baby boom trend at that time
Babies born in that period are called baby boomers, they were born in a peaceful era,
and their parents were both there to raise them together, trying to give them a better live;
therefore, baby boomers are grown in an stable environment, without endure hardship,
some of them are well educated and tend to be easier to spend money, as they were
the healthiest and wealthiest generation at that time.
Figure 4.1.1.d The baby boomers generation of today
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However, the next generation of the baby boomers, which is the generation X does not
continue the large population features of the baby boomers, there lead to the number of
elderly started to increase in recent years and will continue in the next fifteen years,
while many of them are living alone or with their life partner.
Along the start of the year 2011, the Ear of the Golden Boomers is approaching,
referring to the period that baby boomers were retired or going to retire from their
professional occupation. Let’s take America as an example, as it is the largest market of
smart home product, according to the AARP research [1] from December 2010, most of
the Americans baby boomers have found a stabled residence and want to live in the
current home until the end of their life. The trend has created a new market of home
automation, with large demand by these older adults who needed some assist in daily
life along aging but without any youngsters to live with.
Baby Boomers
Table 4.1.1.e Population chart of California 2010
Figure 4.1.1.f Logo of MarketsAndMarkets
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A new research report titled The Global Smart Home Market [2], from the research
group MarketsAndMarkets has forecast the smart home industry would be worth
US$13.4 billion by 2014, with this golden boomers trend; many leading companies in
the industry has started their marketing plan and developing new products with high
concentration on baby boomers demand.
Table 4.1.1.g Population forecast of the Golden Boomers trend
However, the report has also mentioned that government support and initiatives on
promoting the growth and construction of smart home is essential, in order to create a
common standard among products and services from different brands and companies.
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4.1.2 New Potential Market
After the study on the current existing market, I found that there are already many
competitors in that market segment, or I might say the market is in a saturated situation,
oligopoly phenomenon almost existed, the market is playing by a few major players;
although the golden boomers trend might raise some opportunity and form another
particular market segment, but it would be encroached by those major players which are
originally in the US market; out comers or new brand like my product, would not have
space to survive when compositing in such a mature market even it is still in the growth
state or considered as in the re-growth state.
Table 4.1.2.a The product life cycle diagram
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Therefore, it would not be a good choice trying to enter the golden boomers market
segment in America, Europe and Oceania, instead, we should try to locate a niche
market segment with new potential that have not been entered by too many powerful
competitors.
From America, Europe and Oceania to Asia
By observation, I found that the rate of new luxury residential building comes with pre-
installed home automation system is increasing in Hong Kong, such as the ”Hill
Paramount“, which located in Shatin; and the “SOHO 38”, which located in the Mid
Level.
Figure 4.1.2.b SOHO 38 with full home automation system
On the other hand, Asian leading companies on electronic appliance such as Panasonic,
Sony and Samsung are developing their own smart home system; Panasonic has its
own Eco & UD (Universal Design) Concept Home opened since 2008, to demonstrate
their smart home solution which saves energy at the same time.
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Figure 4.1.2.c The Eco & UD Concept Home with sustainable energy support
Sony has launched a small household electrical appliance named Dash last year, which
is a smart home network terminal, aiming to provide a platform that user can control the
smart home system while instant news and other information can be obtained.
Figure 4.1.2.d Sony DASH, the smart home network terminal
While the Japanese are still on the state of conception and producing accessory product,
their Korean competitor --- Samsung has already developed a rather complete solution
called “Homevita” in 2004, although Samsung has kept silent for “Homevita” information
and its availability until today, but they has established the first smart home
demonstration area in Abu Dhabi together with the Emirates Telecommunications
Corporation --- Etisalat in mid 2006 and obtained a great succeed.
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Figure 4.1.2.e The Homevita system by Samsung
Can be observed that smart home is always linked with eco, green and sustainable
building, this is because home automation do provided some solution on energy saving,
including switch off unnecessary light or air conditioner according to timer or light sensor
signal. As the eco building is an hot topic in Asia, the 4 th Green Build Asia Pacific
Conference & Trade Show will take place in Hong Kong in May 2011, it must lead to
some breakthrough in the smart home industry.
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Figure 4.1.2.f Sustainable building always related to home automation
With above evidences, I believed that Asia is a potential market, although the living
environment in Asia is quite crowed, but due to sluggish attitude always expends when
life is wealthy, the demand on home automation is still rising; especially in those leading
countries, including Japan and the Asia’s four little dragons, where the economic growth
well and people having higher income.
Figure 4.1.2.g Asia market is full of possibility
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However, the Asian market is still limited by the luxury price, local contractor would do
the planning, installing and wiring jobs, while foreign branded product such as Crestron
and Clipsal are usually selected to construct a system; this kind of product would
existed in a B to B (Business to Business) basic, but not direct sales to the consumer,
information provided to the consumer is also limited, cost for the entire system might be
higher than the product manufacturer expectation, due to the charges on planning,
installing and wiring by the local constructor.
Figure 4.1.2.h Web site of a HK smart home constructor, the background told that its
target is focus on luxury market
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From higher social class to middle class
That is, geographically, I would set the market in Asian wealthy countries, but no longer
focus on the higher social class, who are older adults or baby boomers. Rather than that,
the growing population of middle class does draw my attention with their particular
consumption pattern.
For example, in China, the most dynamic market, according to the Fortune Magazine [3],
similar to situation of USA in the 1920s decade, when installment payments and auto
loan finances appeared, business bank in China has provides consumption credits for
middle class, which benefits on the development of consumption product.
High income middle class
families rise rapidly (40 –
100 thousands)
Low income middle class
families rise sharply (25 –
40 thousands)
Portion of poor family
drops dramatically (less
than 25 thousands)
Table 4.1.2.g The rise of middle class in China
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While there is a trend to have rapid growth of middle class in China, the data also
shown that the average age of middle class are between twenty five to forty five years
old, over 85% of families without their own property are planning to buy one in a short
period. Besides, according to the tradition thinking of Chinese, over 40% of typical
middle class families are living together with elderly, who might properly be baby
boomers, whose do needed the assist of smart home system while younger family
members are out to work.
Table 4.1.2.h Per capita disposable income of urban household in China
From the report of ADB (Asian Development Bank) in 2010 [4], a forecast of Asian
middle class might replace the traditional dominate position of consumption has been
stated, due to the rapid rise of middle class population in Asia, along with their
consumption and purchasing power, soon help to increase the internal demand on
consumer products and reduce the dependence on export of Asian countries.
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Table 4.1.2.i The rising trend of middle class can be observed in these tables
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Figure 4.1.2.j China middle class with particular life style and purchasing behavior
The report also mentioned that the population of Asian middle class has raise from 21%
of the entire Asia population at 1990 to 56% at 2008, which is more than nineteen billion
people, making Asian middle class be the fastest growing population in recent years;
also, we can forecast that the population will reach twenty seven billion within twenty
years, leading the consumption expenses of Asia to reach thirty two trillion US dollars
at 2030, which equal to 43% of the total global consumption expenditure. Therefore, the
potential of setting Asian middle class as my target consumer would be unimaginable.
Table 4.1.2.k Expenditures of Asian middle class is the highest when comparing to
other parts of the world
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From luxury product to gadget
During the research on Asian middle class, I have aware about the growing trend of
gadget type product, especially popular in places with large percentage of middle class
from earlier decade, such as Hong Kong and Japan; regarding what Lui [5] mentioned
in his report about the rise of the middle class in Hong Kong in the 1970s and what Kelly
[6] mentioned in his essay, “Japan is a “ninety percent middle class society” and has
been the consistent claim for three decades.”
Figure 4.1.2.l Examples of gadget products
The trend of gadget products among the group of people is due to the buying pattern of
Japanese, as the strongest electronic appliances and technological product producing
country, and also according to their traditional culture without the habit of saving money;
therefore, her people have a unique purchasing practice, Japanese middle class usually
get used to spend money on buying technological product which newly launched.
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Figure 4.1.2.m New model technological products launch rapidly making a hugh
electronic appliances market in Japan
In additional, kind of Japanese “art” called Chindogu has simply reflected their culture ---
interest on doing something just for fun but might not have real usage, and I believed
that is the pioneer of today’s gadget product. Chindogu can refer to some “unuseless”
inventions, the word “unuseless” means the invention are not able to be defined as
useful with common sense, while they also cannot be regarded as useless as they do
actually solving some sort of problems. In 1997, Japanese even set up an official web
site called “International Chindogu Society!”, inviting worldwide submission of Chindogu
ideas to promote the culture.
Figure 4.1.2.n Classic examples of Chindogu
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Figure 4.1.2.o Japanese comic and hobby are worshipped by HK youngster and kidult
Later on, these cultures of Japanese has further expends and develops, soon form the
gadgets trend. Hong Kong is a place with the culture “to worship everything from Japan”
among young people since the 1980s, and continue up to today; therefore, the gadgets
trend is always the hottest topic among teenager and “kidult” in Hong Kong, while the
terms “kidult” refers to those adult with a playful heart, like trendy stuffs and some what
refused to grow up, which is a common phenomenon in Hong Kong.
Figure 4.1.2.p The rising trend of middle class can be observed in these tables
Nowadays, gadgets are commercialized products, some of them might be useful while
keeping the fun issue, no longer like the conceptual Chindogu that barely can mention
as useful.
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4.1.3 Segmentation & Targeting
Figure 4.1.3.a Market segmentation can help to define a target group of consumer and
develop the marketing plan according to their characteristic
After so many analysis and discussion in the last sub chapter, now I can easily define
my targeted niche consumer market by a hybrid segmentation approach which has
combined a few approaches in varies aspects, including geographical approach,
demographical approach, psychographical approach, behavioral approach and
beneficial approach.
In the following chapter I would explain each of the approach, although they might have
relation with each other and cannot be clearly differentiated, and how I would apply in
my market segmentation plan to obtain my targeted niche market; and finally, a chart
would shows the entire hybrid approach and the details of my targeting market and
consumer can be listed.
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Geographical approach
Figure 4.1.3.b Consumer in differ region would have differ needs
Geographical approach is easy to understand; I have selected the Asian wealthy
regions as my target segment, including Japan, Hong Kong, Taiwan, South Korea and
Singapore; with major focus on Japan, Hong Kong and Taiwan since these three places
are more mature for gadget market, and have higher acceptance on Japanese culture.
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Demographical approach
Figure 4.1.3.c Colors and aesthetic design can affect the product’s sales on differ
gender consumers
For demographic, first think of gender, the traditional thinking told us that smart home
system is a technological product, thus male consumer would be the main consumer as
they are more rational and like electronic stuff; however, I want to change this pre
implanted concept, as I believed that a smart home system can provide convenience to
any gender, and I would change this concept by packaging design and marketing plan.
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Figure 4.1.3.d Generations X & Y are my target consumers
Another demographical factor is the income, which can also be perceived as the social
class, while directly related to education level and age of the target consumers. As
mentioned in the last sub chapter, the highly potential middle class would be my choice,
while middle class consumer are well educated, mostly being a professional with good
income and thus a well financial background, they would be the second or third
generation of the baby boomers, who are either generation X or generation Y, their age
would between twenty five to forty five, however, I believed that the young members of
middle class family would also be interested by my product, therefore I would set the
age range from fifteen to forty five years old, this range would further trim down in later
chapter after some others information obtained.
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Phychographical approach
This would refer to how the product reflects the life style and the value system of the
consumers, as I have defined my product as a gadget type product, the product value
would shift totally from being luxury that can be show off to others to a fun device, which
contributes some fun elements to make the busy daily life of people living in city better.
Figure 4.1.3.e Middle class life style elements are simple shape and fun
On the other hand, the product would target on consumer with trendy life style rather
than luxury life style, this point would largely related to the aesthetic design of the final
product, therefore, I would design it with a more simplify outlook, monotone color but
keeping some fun elements, instead of using golden color or blinking material.
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Behavioral approach
Figure 4.1.3.f Assistive products fulfill the needs of elderly
The behaviour approach concerning on how the consumer use the product, and how
they need the product, not like the existing market segment for other smart home
system, as an assistive product for baby boomers who are getting old, besides my new
product actual function as an light switch to control lighting at home wirelessly, it also
allow user to DIY (Do It Yourself) on installation (for some country where have no
regulation on electrical wiring only) and simple programming (like the Lego Mindstorm
NXT) , and consider as a electronic hobby or even educational toy.
Figure 4.1.3.g Lego Mindstorm is an education toy that allow teenagers to construct and
programme their own robot
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Beneficial approach
As the beneficial segmentation approach is a need based approach, which is consumer
orientated, and thus be the most powerful segmentation approach among all.
Figure 4.1.3.h “Needs” are the basic living requirement, but in the wealthy world with
every “needs” fulfilled, should “wants” be a greater concern?
When comparing to the original market, the golden boomers trend do create an actual
“needs” of the smart home system, as the deterioration regarding the health and the
ability of physical movement of target consumer along the aging. Instead, the new
product as a gadget, it can only fulfil a “wants”, seemingly, its competitiveness is much
less than the golden boomers market; however, we should not only consider in such a
superficial way, but also the availability of supporting standard and accessories.
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For the golden boomers market, which still has lack of support provide from the
government is hard to promote the smart home system, due to the level of acceptance
on new technology of elder people is relatively low, and smart phone would not be a
familiar product to most of them, who only needed the call in and out function; the
consumers in that market are rather passive and relay on the pursuer by standard of
smart home product that set by the government.
Figure 4.1.3.g Smart phones are popular among young middle class
While looking back on the gadget market, target consumers are all young and love to
play with new technology, also the percentage of having smart phone is having a sharp
rise in recent years, these provided a great convenience for our product promotion, as
the smart home system can also be considered as an extend of the smart phone trend,
while smart phone is essential as the control unit.
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Hybrid approach
Hybrid approach means to combine all of the approaches mentioned before, below
table would show my chosen segment in each approach, and finally can draw a
conclusion on the details of the niche market.
Hybrid Approach
Geographical Approach Wealthy Asia country
(Japan, Taiwan, Hong Kong)
Demographical Approach All gender, well educated, middle class,
generations X & Y, age 15 to 45
Phychographical Approach Trendy and simplicity life style, kidult value
Behavioral Approach Serve as light switch, light control, electronic
hobby and educational toy
Beneficial Approach Fulfill the “wants” of “everything automation” with
strong support by smart phone trend
Table 4.1.3.h The hybrid segmentation approach
That is, to conclude, the target consumers of the smart home lighting control system
would have below characteristic.
- Asian middle class from Japan, Taiwan and Hong Kong
o 15 to 45 years old
o Both gender
o Well educated
o Well financial background
o High acceptance to new things
o Have initiative to buy trendy product
o Love to play and have fun
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4.2 Consumer Behavior
Consumer behavior would refer to the study on Who, What, How, Where, When and
Why a consumer buy or use a product. Therefore, a questionnaire followed by some
analysis and discussion would show these attitudes of our target consumers. In this part
I would only focus in the Hong Kong market that help to estimate the entire market
segment of Asian wealthy countries, this is due to the difficulties when doing survey with
the Japan and Taiwan market, such that I cannot reach the target consumer directly,
and the language problem.
Figure 4.2.a city’super in Tsim Sha Tsui Harbour City
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The questionnaire survey was designed with focus on the group of my target consumer
mentioned in the last sub chapter, therefore, in order to locate my target consumers,
besides asking friends who are from the group to fill in the questionnaire online, I also
asked for the hand of my friend and his colleague to collect data in their work place
secretly, which is the most popular store in Hong Kong for gadget and trendy products,
representing the typical middle class identity --- city’super and LOG-ON from the same
group; after collected, data would installed into the online survey system for easier data
analysis and chart generation. This can consider as a mall survey, in which extra
information on the view of consumer can be obtained, such as “how they will use the
system once they buy?” and usually show me some aspect that never imagined before.
Figure 4.2.b LOG-ON in Tsim Sha Tsui i-Square
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有關家居自動化燈光控制及小玩意的問卷調查 Survey about home automation lighting control and gadget
作 者 : Kee Ng
智能家居系統可容許用者經由智能手機無線控制家中的燈光, 空氣調節, 影音設備及保安系統等, 除有助節省
電力外亦可方便長者或行動不便人士的起居。香港理工大學現正進行一項有關家居自動化燈光控制小玩意
的產品研發, 希望藉此問卷對該市場有更深入理解。
Smart home system allow users to control their home’s lighting, ventilation, entertainment equipments
and security system, etc. wirelessly with their smart phone, it can help to save energy and also can
assists the daily life of elderly and disabled. The Hong Kong Polytechnic University is executing a home
automation lighting control gadget product development, and hope to have deeper understanding about
the market with this survey.
1* 家中有否個人電腦?
Have a personal computer at home?
有 Yes 否 No
2* 你家中有否鋪設無線網絡?
Has you setup a wireless network at home?
有 Yes 否 No
3* 你有否使用智能手機 (如iphone,Android)?
Are you using smart phone (e.g.iphone,Android)?
有 Yes 否 No
4* 你認為自動化燈光控制對你的生活會否帶來方便?
Do you think automation lighting control would make your life more convenience?
會 Yes 否 No
5* 你認為現時市面上的自動化燈光控制系統 (如Clipsal,Crestron等) 給你的印象或是價格會否太
高昂?
Do you think the image or price of automation lighting control system
(e.g.Clipsal,Crestron,etc.) in the market is too high?
會 Yes 否 No
6* 如果要在一個兩房一廳的家居 (約四路燈,三組燈制) 安裝自動化燈光系統,你認為那個價格比
較合理?
What price you think is reasonable to install an automation lighting control system in a
household with two rooms and a sitting room (around 4 gangs of light and 3 sets of light
switch)?
$29999
7* 你有否留意電子產品的資訊?
Would you pay attention to digital product information?
有 Yes 否 No
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8* 你會否購買一些電子的小玩意作自娛或送贈朋友?
Will you purchase some digital gadgets for your self entertainment or gift of friends?
會 Yes 否 No
9* 你每月約花費多少在購買小玩意及電子產品上?
How much would you spend on purchasing gadget and digital product each month?
$1199
10* 你居住在那種樓宇?
Which kind of building you are living in?
公屋 Public Rental Housing Flat
居屋 Home Ownership Scheme Flat
私人單位 Private Flat
私人獨立屋 Private House
11* 請問你每月的收入?
May I know your monthly income?
$29999
12* 請問你的性別?
May I know your gender?
男 Male 女 Female
13* 請問你的年齡?
May I know your age?
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必 須 回 答 有 '*' 記 號 的 問 題
Table 4.2.c Survey about home automation lighting control and gadget
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The survey has cover one hundred and twenty one interviewees, the pie charts or bar
charts would show the result of each question; however, this cannot reflect much, since
it cannot shows the consistencies between question, while it is hard to put all of the
filled questionnaire in the report, therefore, I would mention some essential observation
regarding this and the extra information obtained during face to face interview.
Table 4.2.d Data of question 1
From the pie chart above, it is easy to found that majority Hong Kong household are
having at lease one set of personal computer for connect to internet, showing the fact
that, internet has became a indispensable service in modern life.
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Table 4.2.d Data of question 2
This pie chart shows that almost two third of Hong Kong household have setup a
wireless network, this would be a positive impact to my smart home system, since it is
an essential part to connect and communicate between the iPhone and the work station
computer, so if the consumers have already setup the wireless network at their home,
the basic cost for them to have a smart home system would decrease by removing the
wireless network setup cost.
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Besides, the trend of residential Wi-Fi has rising rapidly in recent years, this
phenomenon is due to two reasons, first is the widespread of smart phone and portable
game console, users needed the Wi-Fi in order to connect the internet anywhere and
anytime, for updating from social network such as facebook or play games via the
network with friends.
Figure 4.2.e Wi-Fi needed anytime, anywhere
Secondly, many internet service provider would has the Wi-Fi router as a free gift when
consumer sign a long term contract with them, lead to the number of household having
the wireless network rise, while it is convenience for consumer who has no knowledge
to set the Wi-Fi by themselves.
Figure 4.2.f Wi-Fi is essential for modern life
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Table 4.2.g Data of question 3
The result has announced about the rising trend of smart phone, which would benefits
my new product as smart phone will act as the wireless light switch in my smart home
system; the use of the smart home system has a basic requirement of having a smart
phone, that is, the more population using smart phone, the easier for the promotion of
the smart home system, such that the consumer would not required to invest on a smart
phone.
Figure 4.2.h Smart phone act as wireless light switch
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Table 4.2.i Data of question 4
Hong Kong is a small city, where people living environment is very crowed, while the
“Atomisation” phenomenon also occurring in these years, many young professional are
early sovereign and independent lived due to the increase of education level and thus
the income of middle class, forming many single or couple household that lived in even
smaller flat or room. Even though, majority of interviewees still think the automation
lighting control system would be convenience for their daily life, and much reflect the
sluggish attitude of contemporary generation has raise along the way they get wealthy.
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Table 4.2.j Data of question 5
The result has reflect the fact that, home automation is a luxury product, designed for
higher class rich people to show off their wealth rather than having a real usage; or
even the necessity of this kind of luxury product is quite low, it would not be a must have
item when considering the high price. For example, a smart home light switch of Clipsal
might cost over HKD$1000, while an ordinary light switch from the same brand only cost
around HKD$15, and a designed light switch cost around HKD$80.
$80
$1000
$15
Figure 4.2.k Clipsal light switch with wide price range
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Table 4.2.l Data of question 6
According to a web site of an Australia smart home contractor “mysmarthome.com.au”
[7], an estimated price of lighting control system has been shown as the table below. In
the table, we can see that the price for an smart home lighting control of a three
bedrooms home would be AUD$7770, which is equal to around HKD$62500; with the
price for the three bedrooms case, the price for the household set in my question can
also be estimated, it would be reasonable to cost around HKD$50000 for a household
with two bedrooms and a sitting rooms, which is a typical small size household in Hong
Kong, or else this can also be a good starting system size for bigger household, as the
product would sells in individual package, letting consumers to select the size of the
system to start with, while addition parts can be added later.
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Table 4.2.m A guide to smart home lighting control costs
However, regarding the survey, interviewees would prefer the cost of such a small scale
smart home lighting control system would be less than HKD$5000, while more than one
third of respondents think it is reasonable to have the system with price less than
HKD$1500; all these tell us, our target consumers would want the product with lower
price and the price might affect their buying decision.
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Table 4.2.n Data of question 7
The pie chart shown that many of our interviewees do pay attention to news about new
technology and digital product, showing the sharp characteristic of the Asian middle
class with the love to chase the trends and new product. When considering also the
gender of respondents to this question, it was found that the percentage of both gender
who answered yes on this question is quite balance, therefore, male is not our only
target consumer.
Figure 4.2.o Female consumer is a large share group of smart phone sales
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Table 4.2.p Data of question 8
This question shows that many people would consume digital gadget products, since
the range of digital gadgets could be very wide, from toys to tablet computer can all
consider as digital gadgets. Especially the trend of Japanese gadgets do contribute a lot
in this rising industry, popular toys manufacture including Bandai and Tomy Takara
have continuous R&D on gadgets with toys’ price, making digital gadgets became a
better choice for gift rather than those useless photo frame and mug.
Table 4.2.q Low price digital gadgets are nice choice for gift
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Table 4.2.r Data of question 9
According to the bar chart above, products with price lower than HKD$500 are easier to
sell, since less consideration would needed whilst the target consumers are capable to
the price. This recall back to the price of my product, although it is impossible to have a
smart home system under HKD$500, but a marketing strategies of having individual
packaging for each component would works well in the case, consumer can buy
component with price under HKD$500 according to how large the system they want to
have, result as a more flexible and fair sales.
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Table 4.2.s Data of question 10
The first findings from the result above is the fact that living environment is very crowed
in Hong Kong, although there are a few respondents are living in private house which
are more spacious, but the house are usually packed near the neighbors, according to
the review of respondents; this would form the problem of using some of the
competitors brands product, such as X10’s wrong signaling to close neighbors problem.
Figure 4.2.t Closely packed private house in Hong Kong
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The second findings is that, those lived in public rental housing flat would not directly
relate to lower income, the income level are the same as respondent from other kinds of
building, while this group of people even willing to spend more on gadget product, as
they are not required to bear for the high rent or mortgage.
Table 4.2.u Data of question 11
The bar chart shown that the monthly income or respondents are usually over
HKD&10000, with the face to face interview to the two lower income groups, and found
that most of them are students, who got their income from their parents or part time job,
usually coming from wealthy middle class of even higher class family, without any
requirement to bear family household expenses, some of them would even have extra
support from parents when purchasing educational toys or gadgets.
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Figure 4.2.v Middle class parents are willing to pay for educational gadgets of their
teenager children
After the analysis, I found that the target consumers groups can be divided into two
groups, while one group are elder in age, being a professional, having higher income
and affordable to spend on digital gadgets which help to upgrade their lifestyle which
they are seeking for. Another group is young adult, who are being a student or freshman
in their occupation, enjoying strong support from their wealthy middle class family, since
the number of children in the generation X & Y is much lesser, and thus the resources
of the family would be more concentrated, this group of people usually can get whatever
they want by just requesting their parents.
Figure 4.2.w Middle class young adult always supported by family
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Table 4.2.x Data of question 12
The result of this question do support the estimated result, during the interview in the
trendy stores’ gadget selling department, we can observed that the number of male and
female customer are quite balance.
This is because shopping is the most favorable activities for female customers at any
time, while some of the gadgets are having theme of cutie cartoon characters and funny
packaging that attacked female customers a lot. On the other hand, male customers are
more rational and love to explore new technology; most of them are ready with some
targeted product, before they go to the store.
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Table 4.2.y Data of question 13
This bar chart do help to further trim down the age range of the market segment, so can
have more appropriate and focusing product and packaging design, according to the
survey result, the final targeted age range would be from fifteen year old to thirty five
year old; people in this age range should have closer growth environment, influenced by
similar culture and having same values, thus it is able to make design matching their
united characteristics.
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Besides the results obtained from the survey, there are chances that interviewers can
chat with the interviewees in a face to face form as this is a mall survey, some valuable
extra information could be gained in these processes. One of the major findings is that,
some of the consumers would like to buy the product, but they are not the one to pay,
like what I mentioned before, parents would be the one to pay while the teenagers are
the one who want the product; in some other cases, consumers are not planning to use
the product in their own home, most of them want to install the home automation system
in the home of their elderly family members, for assisting purpose and hope to have
extra function like monitoring, so they can avoid accident occur on elderly. Therefore,
the buying roles of consumers though out the purchasing processes should be defined.
Figure 4.2.z Each family member would have different buying roles
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Buying Roles Case 1 Case 2 Case 3
Initiator Kidult Teenagers Teenagers/ Kidult
Influence Kidult Kidult Teenagers/ Kidult
Decider Kidult Parents Parents
Purchaser Kidult Kidult Teenagers/ Kidult
User Kidult Teenagers Elderly
Table 4.2.aa The buying roles of family members through out the purchasing processes
In the table above, there are three typical cases, in case 1, the entire process is done by
the same people, from having interest on the product until the payment, then use by
himself or others as a gift.
In case 2, the younger family member is the one who interested in the product, then the
kidult would be his elder brother or sister who has more knowledge or being a
professional in the aspect that can give suggestions, the decider would be the parents
who is the actual buyer, then the elder brother might be the one to purchase, since he
got more knowledge to communicate with the salesmen, and the final user would be the
initiator.
In the final case 3, young family member such as the son would suggest buying the
home automation system providing information to pursue their parents to purchase the
product, then the parents are the one to pay for the system, the purchaser would again
be the one who suggested buying the product since he is most familiar with it, the final
user would be the elderly, such as the grandparents who needed the system to assist
their daily life.
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4.3 Competitor Analysis
In this chapter, I would first have an overview on the whole home automation market,
there are two types of competitors in the smart home market --- service providers and
product manufacturers, whose have different business background, and they provide
different kinds of home automation solutions, including some hardware provider and
project base professional planner.
Figure 4.3.a Clipsal light switches product line
By simple observation, most companies in the market comes with a background of
manufacturing electrical accessories such as electrical plugs and light switches, which
are essential components for either an auto or manual lighting control system.
Representatives of these companies are Clipsal that based in Australia and Lutron that
based in the USA.
Figure 4.3.b Lutron system has been employed in the Burj Ai Arab Hotel Dubai
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Besides the lighting control brands, there is also company with background that
specialist in controlling the entertainment systems inside a home, which brand name is
Creston; an entertainment system might involve in music and movie playing, they need
to coordinate those hi-fi equipments, such as television, projector, electrical screen,
amplifier, CD player, DVD player and even HTPC (Home Theater Personal Computer);
however, while all hi-fi equipments are under control and ready to play in just a press,
the environment where the house owner can enjoy the music and movie is also
important, since no matter how expensive your equipments are, if the environment is
not suitable, you would never get a good image quality, that is why the brand further
develop and include the control of lighting and curtain into their system.
Figure 4.3.c A home theater using the Creston system
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Finally, there are some local dealer of different brands that provide professional
planning, design and wiring service, most of them would make use of different brands of
system, mix and match to create a more complete home automation system that include
the lighting control, entertainment control, ventilation control and security control. A
typical example in the Hong Kong market is the Nixon Technology Company Limited,
which specialist in security system; they have a long list of technology partners that
manufacture control system for different needs.
Figure 4.3.d Nixon Technology suggested smart home solution has involved of few
different brands smart home products in varies control discipline, using a tailor made
back bone to link ever system
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Perhaps, as the aim of this project is to develop a new smart home system product
instead of invents a new service; therefore, the major competitors who would has direct
impact on our product would be those smart home lighting control product provider
rather than service provider or contractor. In the mind map below I would include the
major smart home product in the Asia market.
Smart
Home
Existing System
Brands
Figure 4.3.e Mind map showing the major brands in Asia smart home market
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4.3.1 Level of Competition
In order to define who our major competitors are, the competitive set which involved the
level of competition should first be defined. There are four competitive levels, including
product form competition, product category competition, generic competition and budget
competition.
Product Form
Competition
Product Category
Competition
Generic
Competition
Budget
Competition
Figure 4.3.1.a four levels of competition
The product form competition would occur among different brands product with similar
product form, in which the task of each brand is to convince their target consumers that
the brand is better than the others on the same level competition. In this case, my
product form is the smart home lighting control gadget (allow DIY), and only has one
competitor in this level of competition, which is the X10 system. Competition within the
level would not be too exciting, as the two brands are targeting different market, target
consumers are varies in life style and also region.
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Figure 4.3.1.b X10 smart home system is simple for DIY
The second level is the product category competition; competitors in this level provide
products with same features --- home automation lighting control, while the life style or
the values the products reflect might be varied, as they are targeting consumers with
different lifestyle and thus different wants. In the level, the brand needs to convince
consumers that the product form is the best among the category. The competition in this
level would be much more intense since all of the smart home system product would be
included in the product category.
Figure 4.3.1.b Professional DMX stage lighting control system
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Generic competition is the third level of competition, which involve of products with
different functions while satisfying the same needs from customers. For example, the
basic needs of a smart home system might include lighting control system,
entertainment system and etc., all of these needs could be fulfilled by other devices,
such that a professional DMX stage lighting system can do even more than what the
smart home lighting system can do; a universal remote in no matter high or low price
can perform all in one control for entertainment system, some infrared add on unit for
iPhone can even turn the iPhone into a universal remote. The competing brands should
convince the consumer that their product category is the best way to satisfy needs.
Figure 4.3.1.c Wide range of choice for universal remote
The final level of competition is budget competition, which refer to competition among
any product or service that compete for the same money spend. Brands needs to
convince consumers that the generic benefit gained from spending on their product
would be better than any other way to spend the money. That is, competitors in this
level might be totally no relation with the smart home industry.
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Lighting Control Products
Automation Solutions
Smart Home System
Smart Home Gadget
Figure 4.3.1.d Competitors in each level of competitions
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4.3.2 Define Major Competitor
After the analysis, it has shown that the second level of competition which is the product
category competition would be the most intense level among the four levels, while the
competitors in the level are major brands in the smart home market. Therefore, further
definition is required to highlight major competitors of the level who are active in the
Asian region.
There are six product series that should be considered as major competitors of my
newly developed smart home lighting control system, they are ULTI and C-Bus by
Clipsal, HomeWorks, AuroRa and RadioRA2 by Lutron, and the Crestron residential
lighting control system --- Green Light. Below are their basic specification and
background, while the detailed information and brochure would include in the appendix.
Figure 4.3.2.a The three major competing brands of the new product
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ULTI --- Clipsal
Figure 4.3.2.b ULTI refers to the ultimate switch
ULTI was launched in 2003, using radio frequency to enable the freedom of wireless
lighting control; installation of the light switch of the series have no difference to ordinary
high voltage light switch, making it the easiest to install among the six competitors. The
system mainly consist of stationary light switch, free locatable light switch and remote
controller, while smart phone is not possible to work with the system as a input device
making it less convenience and tighten its possibility to work with other system and form
a more complete smart home system. Cost of ULTI system for a two bedrooms
household would be around HKD$15000.
Figure 4.3.2.c ULTI light switch and remote unit have stylish outlook
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C-Bus--- Clipsal
Figure 4.3.2.d C-Bus system might be too powerful for the crowed environment in Asia
Not similar to the ULTI as a simple lighting control system, the C-Bus would have a
further extend on smart home coverage, with a complex back bone system which
communicate with the input and output devices by mean of low voltage network, while
those output device would control the high voltage electrical appliance by the local
household power line network. Although the complex system do provides a more stable
operation for large scale residential which selfdom have in Asia, the total price of
installing such a system is very high, by summing up the planning, wiring, programming,
installing and hardware costs; besides, room space for the large size back bone system
and maintenance cost should also be considered.
Figure 4.3.2.e Both light switch and touch screen are input devices of C-Bus , while
large number of output device modules required large space to store
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Figure 4.3.2.f C-Bus has wide range of device, covering different aspect of smart home
system
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HomeWorks --- Lutron
Figure 4.3.2.g HomeWorks is one of the well established smart home control system
HomeWorks is a rather old system for luxury light control market since over a decade,
similar to C-Bus, as a wired system, many planning and installation charge would result
as high total cost. The product has two series, HomeWorks 4 series and HomeWorks 8
series, providing economical and premiere system respectively (the 4 series is more
economical when compare with the 8 series, but still having luxury price) , with an
additional wireless series that could be combined with and allow expansion at anytime
even after installation. The system comes with the Lutron signature main units ---
GRAFIK Eye, which is a control penal allowing preset scene controls for group of lights,
letting the HomeWorks became the best choice for luxury hotels, including the Four
Seasons Hotel Hong Kong and the Burj Ai Arab Hotel Dubai.
Figure 4.3.2.h The Lutron signature GRAFIK Eye
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AuroRa --- Lutron
Figure 4.3.2.i AuroRa is a wireless system
With the name AuroRa, in which Ra representing this is a wireless system using radio
frequency, so it is similar to the ULTI system that the total cost to install would be much
lower whilst there is no back bone devices needed to install and free from wiring; also
its outlook design and material used presenting it is not focusing on luxury market.
Moreover, the AuroRa system has a fatal limitation, that the size of the system cannot
be expended to whatever number according to the consumer needs, the system can
only control five gang of lights for maximum, which might not even be enough for an
small size Asian two bedrooms household.
Figure 4.3.2.j AuroRa entry package with limitation up to 5 switches only
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RadioRA 2 --- Lutron
Figure 4.3.2.k The new era of smart home system --- RadioRA 2
The RadioRA 2 is the new era of Lutron home automation product, and it is
continuously under development, new features such as adding various kinds of sensors
let the system can react with the environment change and thus help to save energy and
contributing in sustainable building. A new RF technology called ClearConnect has
deployed in this system, which is highly reliable and can ensures seamless
communication among devices; ClearConnect would also work well with the new main
unit --- GRAFIK Eye QS, keeping the unique scene control features of Lutron system.
The RadioRA 2 comes with everything wireless, helps saving cost of planning and
installation, while its Lutron integration protocol allows the system to form two way
communication with non Lutron control interface, such as universal remotes and smart
phones, it is the only system among the six major competitors that provides the
convenient of integration with smart phone, like what my system aim to do.
Figure 4.3.2.l RadioRA 2 is fully controllable by iPhone or iPad
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Green Light --- Crestron
Figure 4.3.2.m Green Light is emphasizing on energy saving by means of smart home
Not like the Clipsal and Lutron, which are originally leading players in light switches
industry, Crestron is the master on entertainment system control discipline, there
lighting control system was developed according to the needs of environment control in
home theaters and later cover the entire lighting aspects of both residential and
commercial. Green Light is a wired system like the C-Bus and HomeWorks, therefore, it
also required large space for the automation enclosures which house all the control
modules.
Figure 4.3.2.n Crestron has manufacture their unique automation enclosures for
housing the Green Light system
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In earlier era, Crestron system is the most full function smart home system instead of
lighting control, it was intergrading with ventilation, curtain as well as AV system to
construct a completed smart environment for home theater, targeting the highest social
class consumer with the most expensive price among competitors.
Figure 4.3.2.o Family of Crestron control unit
Touch panels are the major control unit of crestron, also being a reason of its high price
as the touch screen technology is not that popular in earlier era. Although it should be
done the professional contractor, but Green Light has the software --- Crestron D3 Pro,
available in case the consumer has interest on programming and planning of their own
system.
Figure 4.3.2.p Screen shot of the Crestron D3 Pro software
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4.3.3 Market Positioning
Figure 4.3.3.a Highlighted are the selected marketing strategic alternatives
As the project is not a corporate cooperating project, therefore, I have estimated that the
product would launch to the market under a new brand, without any industrial
background and the smart home system would be the brand’s first product; therefore,
the competiveness would be weaker that those well established brands, while selecting
a right marketing strategic alternatives would help to strengthen the brand, the table
above has highlighted the chosen strategic alternatives; the reasons of the decision
made are going to discuss, first, I am doing a new product development, and having aim
to growth in sales or market share; then, a new brand must need to develop the market
instead of penetrate it as my brand has no existing product in the same kind; finally, my
selected market segment is brand new and without other competitor exploring it, while
the product is going to convert nonusers, who has no immediate needs on the product
to try the smart home system; according to these, a marketing strategy of penetration
pricing would be employed.
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In the final part of the marketing analysis, the market position of the newly developed
smart home lighting control system should be defined, as I already listed out the
characteristics of each major competing brands and products in the last sub chapter,
two perceptual map for the brand and the product respectively would be used to
visualize their position, and thus locate the marketing gap, in which my new product and
its brand should be posited.
Association
(Luxury)
Product
(Narrower) Coverage
(Wider)
The New
The New
Brand
Brand
(Affordable)
Figure 4.3.3.b Brands perceptual map
There are two axes in the brands perceptual map, the vertical one is for the brand
association, which is the image associated to the brand, but not the actual product price;
the horizontal axis is for the product coverage, means the product availability of other
aspect of smart home system. The new brand would position as an intimidate imaged
brand to suit for the middle class, and would have a further plan on development of
other smart home system, such as ventilation, entertainment and security control
systems.
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Price
(Higher)
Installation
(Easier) Friendliness
(Harder)
The New
The New
Product
Product
(Lower)
Figure 4.3.3.c Products perceptual map
The products perceptual map has two axis, the vertical axis is stand for the price, while
the horizontal axis is stand for the installation friendliness, can be observed that all of
the existing major competitor products are tend to focus on higher price market, with the
wired systems harder to install (needs professional constructors), while the wireless
systems are easier to install (can be done by any registered electrical worker in Hong
Kong or can be done by the consumer in other country, where have no regulation on
this aspect). The existing market has created a wide marketing gap on the lower price
side, and that is the position I would like to enter, the new product will be easy to install
like the ULTI while the price will be much lower.
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