Clocky – College Essay
Executive Summary The last encounter most people have before going to sleep is with their alarm clock. The first encounter most people have the instant they wake up is with their alarm clock. Yet there have been no major innovations in the alarm clock industry since the 1950s (Ofek & Sherman, 2007). The dependence of humans on their alarm clock, the drive for a creative innovation, and the technical skills provided at MIT were all contributors to the invention of Clocky by 27-year old Gauri Nanda.
Clocky is an alarm clock that jumps off the desk and starts rolling on the floor beeping, hence forcing the owner to get out of bed to turn it off. Nanda was blitzed by the media even before the product hit the markets. By generating merely a prototype and posting a couple pictures on the web, Nanda seemed to have solved the problem many people have getting out of bed early in the morning. However, considering her low budget and resources, lack of experience, and the seemingly high demand in the market place, producing Clocky and marketing the product was tricky.
Since the product needed at least another year to be fully developed, Nanda faced a challenge whether or not to keep up the hype or let it die out. She also faced multiple challenges concerning what portion of the population to target, and what type of market to make Clocky accessible to. Case Analysis Nanda’s business model for Clocky faces multiple weaknesses and inherent challenges that pose a threat to the success of the product. Considering the financial and time constraints she is already under, prioritizing her threats could play a key role in delivering the product to the market with appropriate timing.
First, Nanda needs to address the timeframe for her launch of Clocky in order to ensure that her product is readily available to the public during holiday season. In exhibit 8 of the case (Ofek & Sherman, 2007), studies show that Clocky would be a booming gift item; therefore Nanda would need to take full advantage of the timing of the launch of her product in order not to lose any share of the market. Second, choosing an image for her product is a major challenge. Nanda has multiple segments that she can target, and multiple distribution ways she can select o market Clocky (e. g. Sharper Image vs Walmart or Target). These factors will affect how Clocky would be perceived by the market and which segments of the market would be attracted to buy it. Nanda needs to ensure that that segment is the largest one she can get in order to be more profitable. Last but not least, she needs to calculate the startup costs, making sure that the right price is selected for Clocky in order to be sold in maximum volumes while making marginal profit.
The key challenges facing Nanda’s business model could also be analyzed by the Five C’s of analysis [customer needs, company skills, competition, collaborators, context] (Harvard Business School Faculty, 2006). First, Nanda needs to select and size her potential market in order to ensure the delivery of the right product that matches the customer needs. Second, collaborators play a crucial role in the success of Clocky because according to the case, different distributing strategies can have very different results; therefore Nanda must choose her collaborators, or lack of them, very wisely.
Third, Nanda must portray a consistent image for her company throughout Clocky and other products she might innovate in the future. Fourth, Nanda needs to acknowledge her potential competitors before she enters the market. She needs to do so in order to make sure she has a chance to survive and make a profit. The case mentioned that intellectual patent rights to Clocky are very complicated and if she chooses certain distribution methods, she would not be able to be in control of Clocky.
She would also run into the risk of getting her ideas stolen if she decides to produce the products in a different country where intellectual property rights are not enforced strictly. Fifth, context includes the economic environment, social cultural environment, technological environment, and political and regulatory environment (NetMBA Business Knowledge Center, 2010). The economic environment would play a role in the pricing of Clocky. The Social cultural environment could possibly dictate what product Clocky should be considering fashion and trends and desires of the customers.
The technological environment would provide the necessary tools in order to make Clocky as effective as possible according to Nanda’s preferences. The political environment would play a role in tariffs and shipping taxes if Nanda decides to produce her product in another country like China. Market Segmentation The lack of innovation in the alarm clock industry has caused the market to be fairly homogenous. Nanda has created a device that enhances the interaction between the consumer and the alarm clock.
Therefore in order to provide the appropriate marketing mix, Nanda needs to segment her market accordingly to ensure she delivers suitable values to customers. In order to segment her target market, Nanda has two general variables to take into account: descriptive characteristics vs behavior based characteristics. Considering the type of product that Clocky is (fun, innovative, technological), it is logical to adopt a descriptive-psychographic method by dividing potential customers into groups on the basis of their lifestyles values, and psychological traits.
An efficient way to divide a customer section considering psychographics is by performing a VALS survey. If segmenting in this manner, it would be appropriate to target four of the possible eight categories: Innovators, Experiencers, and Strivers (VALS Types, 2012). Innovators are most receptive to new ideas and change leaders and their tastes reflect niche, upscale products. Experiencers are attracted to new cool ‘stuff’ and their purchases reflect their image of looking good. Strivers are attracted to stylish products and they treat shopping as a social activity. Their purchases are impulsive and trendy.
On the other hand, Nanda has segmented her market using the behavior based method by dividing the customers based on the benefits they seek from Clocky. She has identified two main groups: Need market and Fun market. The Need market consists of all the customers that have a seriously difficult time waking up in the morning, hence need Clocky to be an innovative and effective method to get them out of bed. The case mentions that the human body incorporates the alarm clock as a pattern and most people use the snooze button to get extra sleep, making getting out of bed a tough task.
The Fun market consists of the customers that are looking at merely having a cool technological alarm clock and a potential household robotic pet. These two market segments are substantial enough to make significant profits and are accessible because they can be measured via purchasing power. The two segments are differentiable since the benefits they seek from the product are significantly different and they require diverse marketing approaches. According to the information provided in the case, Nanda should target the Fun segment of the market because it provides a larger market size.
The Fun segment essentially contains customers with or without difficulties to wake up in the morning, thus potentially resulting in larger sales and higher profits. The reason Nanda should not target the Need market is because it would mean that Clocky needs to be a revolutionary product which guarantees a change of the pattern that customers wake up from. Therefore the expectations of Clocky to have a high-performance would be extremely high and any minor malfunction would prevent consumers from buying the product. Moreover, Clocky is still merely a prototype and there is no guarantee of its functionality.
Consequently, Nanda should start up Clocky as merely an innovative and exciting household pet toy. In the future, if Clocky turns out to be a hit in the market, and once Nanda gets the extra resources and capital she needs, she could possibly launch a different version of Clocky targeting the Need market. The only concern Nanda has about targeting the Fun market is the possibility of Clocky turning into a fad. Fads have a short life-cycle acceptance and do not satisfy a strong need for the customer and tend to die out in a couple months.
However, being a fad could result in not being such a negative thing. Some fads have boomed and resulted in very high profits; if Clocky performs well in the market, the profit Nanda makes from it could be dedicated into perfecting the product and adding new features to it that improve its functionality. Positioning After segmentation comes positioning, which is how consumers perceive a specific product with relation to its competitors. Positioning deals with the image occupying the mind when the customer thinks of the product.
The facts are that Clocky is still a prototype, and Nanda’s main goal is to launch the product as soon as possible with limited resources. The innovative nature of Clocky leaves room for improvement and addition of finer features in order to keep the market interested. Depending on the target market, Nanda has two possible positioning statements: 1)Clocky is an alarm clock more efficient than all others because it will force you out of bed. (Targeted to the Need market) 2)Clocky is a funny and hip gadget that is similar to a robotic pet which also happens to be an efficient alarm clock. Targeted to Fun market). Clocky is in the introduction stage and the most important goal should be to launch it to the market by picking the second positioning statement for the time being. As a result, doors open to expansion and addition of new product features. The evolution of Clocky will result in the attraction of a new segment of customers that may not have been interested in buying the product merely for its fun aspect. Spending time and money on developing a perfect Clocky would be less successful than launching the product immediately.
As stated in the case, the initial hype and media attention that Nanda is getting will result in high sales of Clocky, giving Nanda extra time and resources to be able to develop a better generation Clocky. Therefore her positioning statement would concur with her capital and time constraints, resulting in a good and fast profit. She would not just be considered the inventor of the product but also a business entrepreneur that had succeeded in evolving a simple cool gadget into a functional alarm device.
The case mentions multiple times that Nanda desires to have control over manufacturing Clocky and to be able to change the design according to her vision of the product. Nanda also seems concerned to sacrifice the quality of Clocky due to the restraints of her low budget, ensuring that her product does not end up as merely a fad. She wants to reinvest her gains from sales in enhancing the product. Therefore her marketing plan should be parallel to her goals and the market she is attempting to target.
The Marketing Mix provides four sections that Nanda should focus on: Product, Place, Promotion, Pricing (Harvard Business School Faculty, 2006). The Marketing Mix: 4 P-s Product: According to the case, Nanda is attempting to create a brand similar to iRobot. iRobot was first launched as Roomba which, through multiple improvements, evolved to be the high-selling product that it is today. Nanda has a interest in developing innovative ideas and her background in technology being an MIT grad gives her the ability to be a successful entrepreneur by differentiating her product in the market.
This strategy is based on quick new improvements to Clocky. She will need to increase the learning curve in factories in order to reduce the time it takes for the product to be designed, manufactured, and distributed to the market. When first developing Clocky at MIT, Nanda had a technology-based approach and did not take into consideration manufacturing the product at a higher scale and distributing it; therefore she is faced with the dilemma of how to bring a college experiment to the real world without any experience in the market.
Her drive needs to change in order to turn Clocky into a successful business. Nanda’s approach needs to be more market-oriented. The potential of succeeding in this area is there because, as mentioned above, she would need to come up with a new generation of Clocky to appeal to consumers in a different segment. Place: In order to find the suitable channels of distribution, Clocky must target consumers that are less sensitive to price rather than those who are willing to sacrifice quality for a lower price. Clocky needs to be sold to consumers who are willing to buy technological gadgets.
Therefore it would make sense to place Clocky in boutiques, guaranteeing its exposure to a rather narrow segment of consumers looking for technological products. However, since the recommendation for Nanda to target the Fun segment was the most appropriate, it is not efficient to limit the exposure from thousands of consumers that could potentially want to buy a Clocky at large retail stores. The case mentions Target as being a possible partner; in 2007, there were 1591 Target stores all over the US (Fast Facts About Target, 2011).
Considering the budgetary constraints and Nanda’s lack of experience, it would be extremely difficult to partner with Target at such a large scale. The case mentioned the possibility of partnering with Brookstone. Brookstone has around 300 stores in the US (About Brookstone, 2012). Smaller stores such as Brookstone and The Sharper Image, an online shopping place with no retail store locations, would offer Nanda a broader range of consumers than small boutiques and a set of consumers who are familiar with the brand and have shopped there before.
Promotion: With the extensive media hype that Nanda has been attaining, she should be careful in promoting her product in a manner that enables her to build the brand that she visions for her product. For the beginning stages, Nanda should focus only on product line extension: more colors, different shapes, different pet styles. In the future she could possibly consider brand extension such as developing wristwatches that vibrate when the alarm is set, or remote controllers that start rolling and beeping if one loses it.
Nanda should make sure she promotes her product through TV, newspapers, and web media right before holiday season in case the hype dies down by then. She should focus on building a brand name in order to follow the footsteps of iRobot. As a result, consumers would have immediate association with the brand name CLocky and the innovative quirkiness and usefulness. In order to promote her product, it would be advantageous to promote herself. She should never cut the ties between her and MIT since MIT has a stellar research lab and the brand is recognized and valued highly by tech consumers.
Price: The cost to make one Clocky is 15+1+1+1=$18 (Harvard Business School Faculty, 2006). Considering the retail markup price and Nanda’s desire to own a profitable business, her estimate of $50 seems legitimate and reasonable. The price will eventually drop as Nanda gets closer to launching Clock 2. 0 which is the more enhanced version with improvements. However, in order to fully test the new Clocky, Nanda needs to sell in the beginning stages at the price and quantity that would provide her with the necessary resources to research, develop, and launch Clocky 2. in the stores. Her budget is $45,000 currently and she should spend a good portion of the capital in launching Clocky asap. Since the target is the fun market, there is no need to waste more time trying to perfect Clocky when most people would merely buy the product for fun. Moreover, consumer expenditure on lamps, clocks and furnishings have increased in recent years leading up to 2006. By starting small and grabbing a share of the marketplace and building a respectable brand image and reputation, Nanda can set the background for a much more expensive potential new Clock 2. since those would target the Need based market. Nanda should not stop producing for the Fun market since a huge amount of the population falls into that segment. Nanda could have the power of price customization eventually. She could control the availability of lower prices by making advanced Clockys available in certain select stores taking into account the demographics and consumer behavior of the region. She could control the price of upgrades by offering a lower price for trading an old Clocky for the newer Clocky 2. 0; doing so would enrich the relationship between her brand and her customers.
Keeping up the Media Attention Before her first TV appearance, Nanda had already given over 50 radio interviews to talk about her invention. She managed to gain publicity without really spending money on advertisements. The flip side to all the media hype is that it resulted in customers writing to her asking about her product and its launch date. Hence she faced a challenge to keep the customer waiting experience respectable and somehow manage to not lose the buildup people all over the country were gaining for her product.
It is obvious that the line between wanting and avoiding attention was thin. A solution to the media problem could be to set up a Facebook and/or Twitter page where she could communicate with her future consumers and update them on the status of the development of Clocky. Innovators, Experiencers, and Strivers (targets of the Clocky market segmentation) would seem to have the habit of checking new online and frequently being on the web. Hence Nanda could carve the image in their minds constantly without losing the hype needed for the product to boom in the market once launched. Bibliography