Marketing Strategy Exam Report

 
 
 

Clocky:

The Runaway Alarm Clock  

Marketing Strategy Exam Report 
 

Gleb Nikitin          

EMBAG 2012                                                                                                                                                
 
 

 
 

 

“I’m sitting here listening to the alarm clock in the bedroom where my husband is ignoring it… guess who’s getting a Clocky for Christmas!”

Nanda’s potential customer

http://www.nandahome.com

 

Table of Contents 

 
 
 
 
 
 
 

 

Question I.

After Clocky’s and Nanda’s wide appearance in media and wining Ig Nobel Prize, a unique situation for marketing Clocky was created, that is significant interest to the product, readiness to buy and some predictable demand (awareness about product and forming attitude to it even before its launch).

If Nanda leverages this, it will give her a great chance to create a successful and sustainable business. Obviously to have overall success the consistent strategy has to be defined. The key elements of which are market segmentation and positioning.

Market segmentation implies split of the market into relatively homogeneous parts with similar characteristics and inherent customer behavior patterns. According to the case Nanda has identified two segments – “Need” and “Fun”. I would also point out one more segment  - the corporate clients (“Corporations”), who could buy Clocky as a gift for their employees. From my point of view corporations as customers:

• are not homogeneous with other customers buying Clocky for their specific needs and
• have significant potential, since such a gift not only simply cover the niche of Crismass gift, but also refer to some corporate specific needs in terms of their employee’s behavior. Corporations segment primarily comprises companies whose business assumes that employees report to work on schedule. The studies showed that adults in Western nations sleep, on average, 2-3 hours less than human biology generally demands. Sleep deficiency translates into increased difficulties to wake up, which, in turn, translates into workers being late, being less efficient at their work. This affects corporation’s productivity. Therefore, corporations have motivation to give Clocky to its employees as a gift.

Furthermore, as Clocky is a nice, friendly and cute as a household pet these positive feelings also have positive effect in employee’s perception of his company.

But besides defining this additional segment I’d also prefer to undertake a sort of deeper approach into the main broad segments, which are defined by Nanda, and come up with more detailed segments and its drivers. I would divide the potential customers for Clocky as follows:

1. By bases for Need / Sought-for benefit (broad “Need” segment)

a. The people who strive to change the life pattern. The main drivers for the person here are the perception of punctuality as an appealing trait; dissatisfaction oneself due to late awakening, considering it the sign of personal weakness, low self-esteem and self-satisfaction; the understanding of snooze button consequences for health and the way one feels during a day;

b. The potential customers who vitally need to solve their problem for living (risk of being fired or expelled from university for being late).

c. The customers who need to solve the problem due to family issues (need to wake up to cook for husband going to work, for kids going to school, for toddlers for whom food has to be cooked by certain time).

d. People who have serious sleep disorders (e.g. narcolepsy).

e. The customers who care about the needs of friends or family members (divided as above).

f. People driven by necessity to gift something interesting (no matter what exactly).

The importance of such segmentation is defined by the fact that the first (a) segment could be influenced by the need activation process. The main tools are:

• intensifying the perception by articulation, resort to social learning (showing the exemplars);
• articulation the health issues, in particular that snooze button leads to feeling drowsy during a day; meanwhile, fast and confident awakening equals to the good shape during a day.

2. By strength of the need:

1. Weak (in general satisfied with conventional alarm clock, may want to use the unique function of Clocky occasionally). For such customers itis useful to provide the possibility to use Clocky as conventional alarm clock.
2. Strong (seek for the constant remedy the problem).

3. By age:

1. 18-25 years (the highest sleep deficiency, the least length of sleep 6,8 hours, the most problems with awakening; 7% of mailing list);
2. 26-45 years - working people, the main segment of self consumers (who’s buying for themselves), motivated both by needs and by fun (70% of mailing list). I consider that segment to be  main of those who buy for own use.
3. 46 years and more – people buying mainly for gift (21% of mailing list). That segment is main of those buying for others. However, these customers rather wouldn’t buy through the Internet, require special distribution channel, and if it would be wide and intense it could in some way debilitate the positioning within other segments (the arguments related to the distribution channels are below).
3. By  other social characteristics: students, housewives, working people.
1. By behavioral patterns: business travelers changing jet lags often; business people dealing with extensive projects, connected with temporary decrease of sleep duration (situational need), causing the problems with awakening.

Here the implementation of the possibility to use Clocky as conventional alarm clock also may be useful, since the need to use its full potential could appear occasionally

1. By entertainment options (big “Fun” segment): design option, robotic pet option, for gift without strong correlation to the real need of the gift recipient (potential for development of “fad” status).

4. By shopping behavioral patterns

1. habitual shoppers (need driven, no research, passive)
2. high value deal seekers (need assistance, wait for right time, look for sales)
3. variety loving shoppers (entertainment, willing to try, buy on impulse, have minimum standard).
4. high involvement shoppers (driven by life goals,  seek advice, consider numerous attributes).

Among the latter segment the target is the segment a. (form the “Need” side) and c. (form the “Fun” side). Analysis under the last division should allow to adopt the right distribution channels and promotion approach to reach every segment.

To integrate all described above I suggest that Nanda puts the main focus on people aged 18-45 within the broad  “Need” segment for the following reasons:

1. Age segment. As studies show people aged 18-29 sleep the least of all age categories. Also, studies show that 57% of people aged 25-34 hit the snooze button daily, which  means that snooze button alarm-clocks are not a very efficient wake up device for this age category.People aged 35-45 normally have a family and a job which means they have strong commitments to meet time deadlines. Therefore, the category of people aged 18-45 should be regarded by Nanda as the main target category (76% of Nanda’s mailing list).
2. Of these people only 23% said they would buy Clocky as a gift. This gives us a reasonably accurate approximation of the percentage of the fun segment, as customers who buy Clocky for themselves are most probably seeking to change their wake up process and therefore may be regarded as “need” segment.
3. Focusing on “Fun” segment instead of considering it supplementary increases the risks of falling into fad category.

Question II.

1. Positioning is the process of forming an image, identity of product and product’s own association row in the minds of their target customers. I’d outline the following positioning options for Clocky:
1. Cute household pet which HELPS you wake up at the time allowing you to achieve everything you have planned.
2. New technological alarm-clock that does get you out of bed.
3. New era alarm-clock (since snooze button alarm-clocks).
4. A fun wake up robot.
5. A toy which has useful functionality (can wake you up).

And combinations of the above.

I suggest that Clocky be positioned as a conceptually new device (not alarm-clock!) that changes customers’ wake up process, which allows them have enough time to achieve everything they have planned. The following ideas are crucial for the positioning as I see it.

2. New era of wake up devices

Conceptual novelty of Clocky should be announced in that it starts new era in wake up devices (innovative wake up devices chronology in this case: 1810-1877-1910-1956-2006).

With GE’s introduction of its snooze button in 1956 a new era in alarm-clocks had started. No significant innovation has taken place in the wake up process during the last 50 years. And now the device which fundamentally changes the wake up process – Clocky – is arriving to start the new era.

Positioning of Clocky as a new era in wake up devices after the “snooze button 50-years era” helps Nanda smooth the potential negative perception of Clocky becoming commercially available only a year from 2005. Waiting for about a year for a device which starts a new 30-50-years era percepts much easier by customers. They can sign up for the product a few months in advance through Nanda’s web-site. Today that is largely happening with  iPhones, for example.

The new era argument also goes well with perception of Clocky as a technologically advanced product, as nowadays starting a new era in something is normally directly linked to high-technology. Therefore, a desirable mix of humanity and technology is achieved.

3. Intimacy

The emotional dimension of proper positioning of Clocky could be described through the specific associations (metaphors) connected with it. I’d numerate the following: alive, friendly, capricious, close, persistent, irresistible, about entrepreneurship (Nanda), American Dream (Nanda).  And also itis proximity, reflection, interaction, attractive design, my personal attitude to the product, efficiency, trust (I know he’ll wake me up!!!!). The best word to aggregate the main out of these probably is intimacy. Anyway, just that very word I’d suggest as a single unique association for Clocky, that is differentiating it form other alarm clocks on the market.

CLOCKY – Alarm clock =            

4. Positioning relative to competitors.

Key competitors are given in the table 1 below:

   Table 1

 

Chart 1. The multidimensional positioning relative to competitors

The Perceptual Map of Clocky and competitors in the perspective of two most important traits – efficiency and intimacy (as approximation of all the features, which create personal attitude to the product) is plotted on the chart 2.

Chart 2

5. Possible changing of positioning over time

I consider the above positioning as broad enough for Clocky not to change in the mid-term. However, Clocky’s positioning may evolve over time to appeal to new market segments, e.g. additional version of Clocky may appear which will stress Clocky’s hi-tech aspects over household pet perception. This may particularly appeal to younger (18-25 and 26-35 years old) male audience (of Nanda’s mailing list people aged 18-25 and 26-35 comprise 45%, and 55% of the list are male). Also, given the share of male potential customers Nanda should consider a “she” Clocky in addition to “he”.

Given Nanda’s aspirations as an entrepreneur the most valuable positioning options to Nanda are combination of 1.1 and 1.2.

Question III.

1. Marketing launch plan

Before going to the formulating the marketing plan itself I’d built the matrix for SWOT analysis (table 2) of the Clocky’s and Nanda’s positions in the market.

The main concern is not to be on time to leverage all the strengths and realize the opportunities. Nanda already has AWARENESS of the target customers and even their ATTITUDE in some extend. She needs to exploit it.

Analysis shows also that it’s better for Nanda to continue to focus on end consumers and realize Pull but not Push strategy in distribution (since there is a huge interest to Clocky already).

1. Product design features. To create intimacy according to my understanding the product should be interesting, personalized and zoomorphic BUT it still has to be a CLOCK and look also like a CLOCK. Due to the fur it doesn’t look like a clock but like a toy. But we sell the tool NOT A TOY!

Being considered a toy could mean for Clocky that:

• a considerable part of customers falling into the “need” category (who takes the product seriously) may be pushed away
• among the rest (fun) customers the product may fall into fad category.

Thus, I suggest either to reject fur, or to create several different models of Clocky with the basic model without fur. 

At the same time from my point of view it should be easily harmonized with the most common contemporary interior (e.g. IKEA)! So I suggest - high tech but personalized, bright in colour, looks like a clock, has buttons which resemble eyes, soft. May be like a cute little robot.

2. Production location. The cost is an issue. So I prefer to outsource production not to USA based plant. In the same time it shouldn’t undeveloped country, since we need to reduce risks. Thus I’d offer to move production in Asia but to the relatively developed country where the legal recourse could be pursued (with the high extent of investors protection). I suggest Taiwan.
3. Pricing. The variable costs of production for Clocky is $15. Adding other costs (shipping of $1, warehousing and packaging of $1, credit card processing fees of $1 and return (15% of $18) of approximately 3$ we have total variables equal $21.

Regular alarm-clock is priced at $10-15. Puzzle alarm clock is priced at $50. Therefore, Nanda should target the vacant market niche of $30-40.

As statistics shows, money spent by customers in the US on alarm-clocks grew from $42,5 mn in 1992 to $46,6 mn in 2002, while money spent on customers on all clocks went down from $843 mn in 1992 to $638 mn in 2002. This suggests that customers buying alarm-clocks tend to and are prepaired to pay more for an alarm-clock that meets their needs.