The fashion industry has long been at the forefront of applying technology in the design, manufacturing and marketing processes. The industry has taken this one stage further in the last few years by incorporating technology into the product itself. Fashion is now meeting technology in the form of wearable technology. Wearable technology or wearable gadgets are technology devices that can be worn by a consumer. These clothes frequently include tracking information related to health and fitness. Wearable technology has traditionally been dominated by fitness devices such a Nike’s FuelBand and the Armour 39 Fitness Belt, which tracks data like the amount of calories a person burns or distance walked. Fitness devices are by far the most mature market, making up 97% of the projected value in 2013. Other wearable technology gadgets incorporate devices that have small motion sensors to take photos and sync with your mobile devices.
However, with the market for wearable technology estimated to grow from $5 billion in 2013 to over $42 billion in the next three to five years according to Credit Suisse, companies are racing to be first to market with a range of innovative products and combinations. Technology giants Samsung and Google have already entered the market with products, such as smartwatches and smartglasses, but some technology experts and analysts are questioning whether these early attempts to set the trends are just ‘form over substance’.
Futuresource projects a combined wireless watch and smartwatch market of around 900,000 units in 2013, with more than 60 per cent of this accounted for by smartwatches.” The Smartwatch buzz began in February when rumours swirled that Apple had an iWatch in the works. Though Apple has yet to deliver, the company is reportedly “aggressively” hiring engineers. Critics have questioned whether a viable market for smartwatches exists, but that hasn’t stopped manufacturers like Samsung from jumping in with early products. When it comes to the smartglasses segment, though, not a lot will happen until 2014 when Google’s hyped Google Goggles device is released.
A study by Juniper Research found that as the attraction of wearable technology increases, the market place will become increasingly competitive. However, manufacturers have to entice users with functionality and assurance about privacy, which has become a much concerning issue with modern-day technology.
Nitin Bhas, senior analyst at Juniper Research, told CNBC in a TV interview, that
“Wearable devices as of now…represent a ‘nice to have device’ not a ‘must have device’. This is the future…but more functionality needs to be added.”
Juniper also discovered that significant legal and privacy hurdles remain in the adoption of the devices, with several US jurisdictions already restricting the use of Google Glass.
Developers of new wearable clothing need to add to the user experience by complementing and enhancing what other devices already offer, but at the right price. In the race to be first to market firms must not lose touch with the basics of marketing. In particular, there are considerable risks in the product. Like any other product, a technology device has to have the functions that consumers want. So before developing any product, designers should list the core benefits the product needs to provide.
Customers choose products based on their perception of the value at the time they purchase the product. A customer is satisfied only if the actual value is the same as, or exceeds, the perceived value.
According to Kotler Philip, there are three levels for a product/service:
- The core level or the core product addresses the question, “what is the buyer really buying?”
- The actual level, which comes from design, aesthetics, branding and packaging. There may be competitor products offering the same benefits so the aim is to design a product that will persuade people to purchase a particular brand. This will be influenced by the quality, product and service features, styling, branding and packaging.
- The augmented level includes additional features, benefits, attributes or related services that serve to differentiate the product from its competitors. Competition at this level is based around after sales service, help lines, warranties, free/cheap delivery etc. In other words, it is things that the product does not do, but customers may find useful. Non tangible benefits, such as product warranties, offer customers peace of mind and demonstrate the manufacturer has faith in the quality of its product.
Theodore Leavitt drew attention to the fact the consumers don’t just purchase the product itself, but rather, the product and other expected and augmented attributes, which are often intangible. The total product was Leavitt’s vision of how less tangible elements could be added to a product that had certain physical attributes, providing additional dimensions that are often more valuable than those physical attributes.
However, if a product is does not provide the functions consumers desire at the core level, then no level of branding andor after sale services cannot provide a long term success. Combined excellence in design and branding are the foundations of product leadership. Kotler noted that much competition takes place at the Augmented Product level rather than at the Core level or, as Levitt put it:
‘New competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.’
Perhaps, for the fashion industry, the most relevant product level identified by Kotler is the concept of the Potential Level. These are all the transformations a product might undergo in the future. Cutting edge wearable technologies are very high risk and innovative firms, which do not fit into the Google or Apple category, will find it hard to find suitable funding for research and development. One option is to seek crowdfunding. A recent example of this funding route is the MJ v1.0; the first jacket that allows the user to create music through motion and touch sensors with a mobile app. Funding for R&D was found through the crowdfunding site ‘Kickstarter’.
There have already been some bizarre innovations in the wearable technology market. Sony’s engineers have recently filed a patent for a new form of wearable tech, only this one differs from the watches and glasses currently doing the rounds. Sony has come up with the idea of a smart wig, with embedded rumble tech to tap the wearer on the scalp when they get a message on their smartphone!
IB Style questions
1. Define the following terms:
2. Explain Kotler’s product levels using relevant examples.
3. Analyse the factors affecting innovation in the wearable technology industry.
4. Evaluate the appropriateness of sources of finance for high technology industries.