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Summary

There is a general consensus among market participants that the smart home industry needs a boost to reach the mass market. This is forcing market players to rethink how to sell smart home technologies and reconsider which type of marketing strategy is most effective to give consumers a reason to buy their solutions. The question that follows is whether assuming an unconventional marketing approach is key to boosting sales.

Applying innovative marketing strategies to boost the smart home industry

At present, vendors and service providers within the smart home market are adopting both direct and indirect sales strategies to reach consumers, selling through online and face-to-face channels. A vast majority offer their products and services directly through online sales channels (e.g. Nest) or indirectly through Amazon and many other e-commerce sites. Yet a face-to-face sales approach remains important because many buyers still prefer to go to a physical store to better understand what they are buying, especially considering how costly some solutions can be.

Of the vendors that sell smart home products directly, only a few have stores that offer customers the opportunity to play with a device before buying it, such as Samsung with its SmartThings product suite. Several retail stores, meanwhile, offer DIY solutions for the smart home such as Best Buy, Home Depot, and Staples, but they need to take a more proactive role if they want to see higher revenue from smart home products. At the moment, they are simply piling up products, expecting consumers to buy them without any kind of technical advice or opportunity to test them. To counteract this, many vendors are partnering with retailers to create IoT/smart home sections in retail stores as a way to generate awareness and promote sales. For example, John Lewis recently opened a 1,000 square-foot showcase section for smart home products at its flagship Oxford Street store in London. The idea behind this initiative is to allow shoppers to see the devices live in different home environments such as the kitchen, living room, or bedroom. These real-life scenarios serve to empower consumers with information and help set their expectations around installation and ease of use. It is important for the smart home industry to reduce frustration levels currently associated with smart home solutions, and allowing consumers to test-drive products seems to be the right approach here.

Educating potential consumers at store level is not the only way to lure them into the smart home world. In New Zealand, Spark is one example of a company trying to be innovative around its marketing. As part of the launch of Morepork, the company’s new smart home security system, Spark decided to sponsor The Block NZ, a reality TV show where teams compete against each other to restore old houses that are later auctioned. During the show, participants were featured deploying Morepork’s smart security solutions to increase their chances of winning the competition. This marketing approach not only created media awareness, but also showed in a real-life setting how smart technologies can positively impact our lifestyles in terms of security and comfort and so on. Such shows, if done properly, can change consumers’ perceptions and drive new purchasing trends.

Morepork also launched two online adverts where an emoji family demonstrate how smart home technology can take care of life's “oh **** moments” (e.g. leaving the back door open or forgetting to let the dog out). This advertising initiative targets digital natives, mainly millennials and Gen Xers, who are most likely to be able to identify with the situations portrayed in the videos. Ovum believes that with Morepork, Spark has been innovative in the use of unconventional marketing techniques to get the smart home message across. This has allowed it to show in a simple and familiar way what smart home technology could do for customers. Now it is time for other players to start rethinking their marketing strategies and assume a more innovative market approach if they want to see better sales results in the short term.

Appendix

Further reading

"Smart Home World 2016: Driving the adoption of smart home technologies," TE0003-000940 (July 2016)

Author

Mariana Zamoszczyk, Senior Analyst, Consumer Services

mariana.zamoszczyk@ovum.com

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