The rise in popularity of the smart home presents exciting opportunities for marketers to better understand their customers and improve the customer experience.
Imagine you are on vacation and suddenly realize that you left the stove on. You panic for a minute, and then pick up your smartphone and switch off the stove from an app. Welcome to the home of the future, available in the present.
In my last column, I touched on the potential impact of the Internet of Things (IoT) on our lives. The interconnected or smart home is a key component of the IoT revolution. Surprisingly, our homes are more connected than we would think. A recent Forrester study shows that 20 percent of adult American Internet users already have a device at home that connects the physical environment to the Internet. The key reasons people considering using these devices are to cut energy bills (Internet-connected thermostat) and to improve home security (via webcams cameras providing a live video feed from your home to your phone or your computer).
Google's purchase of Nest Labs for $3.2 billion has kicked off a gold rush into the smart home. Apple is rumored to reveal its smart home offering this week that would allow users to turn their iPhones into remotes to control lights, security systems, or even household appliances. No wonder these mega-corporations are betting on this opportunity. The smart home market, according to a recent study by Juniper Research, is estimated to increase from $33 billion in 2013 to $71 billion by 2018!
Although it seems esoteric, smart homes offer marketers very exciting opportunities to understand their customers and improve the customer experience across a number of industries:
1) Real-Time Insights: Its every marketers dream to acquire real-time data about the use of their products and customer preferences. Smart home devices collect a vast amount of data, in order to provide information that will be immediately useful to homeowners. With a clear marketing objective, this data can lead to valuable insights about customer behavior. An example is the Screen-Fridge with an integrated bar code scanner, which can be programmed to send orders to a retailer to reorder a product. Such a device would offer a marketer direct access to individual consumers' consumption patterns, without having to wait for the next Nielsen home-scan report!
2) TiVo-ing Shopping: The integration of "smart" devices will have an impact on people's shopping habits. With preference-based automatic replenishment, the chore side of shopping will be further minimized especially for staple items. For consumers, it would mean less stress from driving to the store. However, it would also mean that visits to physical stores would decline, thus reducing the opportunities for merchandising and delivering an in-store customer experience. Today, Tesco and Duane Reade are testing Bluetooth-enabled devices that can communicate directly with your smartphone to offer coupons for products in-store/online based on your preferences and purchase history.
3) Uber-Personalization: If you thought media fragmentation was high now, in the future it will become even more extreme. That could be the final nail in coffin of mass media or the 30-second commercial. In my opinion, media fragmentation will be an advantage for advertisers since it will allow the "long-tail" concept to realize its full potential. With targeted messages to individuals, not only would the conversions would be higher, but also there would be less waste of advertising dollars.
The smart home market is just beginning to heat up. This trend will change the way consumers shop and will force marketers to relook at the existing marketing model. The question is, are we prepared for this change?
Image via Shutterstock.
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Mandeep has over thirteen years experience of building brands with blue-chip organizations like Johnson & Johnson and Pfizer across FMCG & Medical Device categories. His latest assignment is to launch a newly acquired medical technology start-up business across Asia-Pacific.
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