One of the latest trends to hit the CPG industry is the Internet of Things (IOT). The IoT can be divided into two categories: industrial applications for managing factories, healthcare institutions and other commercial enterprises, and consumer applications for household and individual use. The consumer Internet of Things is made up of everyday objects—light bulbs, washing machines, thermostats—made “smart” by the addition of an electronic controller. The controller wirelessly connects to the Internet via your home Wi-Fi network, receives instructions from you via a smartphone app, and tells the appliance what you want it to do on what schedule. Some smart objects such as thermostats record and transmit data back to the app, providing feedback to help you improve your own behavior.
The consumer IoT is still in the “early adopter” stage, but it will inevitably impact the way we do everything from washing clothes to managing our health and wellness. Consumer spending on IoT devices is going to be measured in the hundreds of billions of dollars, so you don’t want to be on the tail end of this. Here are four tips to help you take advantage of the IoT technology trend.
1. Consumer spending on smart IoT devices is ramping up, but it won’t hit a tipping point of mass adoption until at least three to five years from now, as there are several prerequisites that have to be met first.
One prerequisite is consumer awareness: relatively few people are aware of the range of IoT devices and their benefits.
Another prerequisite is technology: there are several foundational components that consumers have to adopt in order for the IoT to work. First, you need a home Wi-Fi set-up, something most of us already have and use daily.
Second, you need to replace your ordinary dumb objects with smart versions. Dumb objects are the light bulbs, kitchen appliances, etc. that you have to operate in person by pressing their on/off switches and other buttons, such as time and temperature settings on your microwave oven. You still have to use your own hands to plug each new smart object into an electric socket, insert its batteries, or place it on the latest-generation wireless power pad. Once that’s done, you control said objects by sending them instructions from your smartphone. It’s not much of an exaggeration to say that every electronics company in the world is working hard to get a piece of the IoT controller business, one example being the Belkin We-Mo system.
Third, you need a smartphone with one or more apps that can send instructions to your smart objects. The hot app right now is called IFTTT, which stands for “if this, then that.” This web-based app became available for the iPhone in 2013 and for Android devices in 2014, and the company is already valued at $170 million. The app lets you create directions, which they call “recipes,” to control your smart devices. For example, there’s a recipe to turn your outdoor lights on at sunset and off at sunrise as reported by Yahoo! Weather. Lawn and garden watering systems can also be automatically regulated according to weather data. Wristbands that track your steps, heart rate, sleep cycles, and so forth are also part of the IoT.
2. Each segment of the consumer market needs to find the “killer app” that gets consumers over the price hurdle, and other elements will follow, similar to the way maps apps made the smartphone an indispensable travel aid.
Not everyone is going to participate in every element of the IoT, mainly because of the value equation. A really nice Mr. Coffee coffeemaker will set you back about $80, but you’ll pay almost twice as much ($150) for the We-Mo smart version, which lets you “call” the machine and tell it to have a pot of coffee ready at the time you plan to arrive home from work. Similarly, a LIFX programmable LED lightbulb is selling for $79 versus about $15 for a dumb bulb. These items may seem like a poor value at first glance, but the more you get used to such conveniences, the more benefits you’ll likely discover, and soon you won’t want to live without them. For example, Whirlpool has designed a smart washer/dryer set that you can schedule to run during off-peak times, check on progress remotely, and if necessary turn on the FanFresh option to prevent wrinkles from setting in until you can get there to unload and fold the load. Whether your business is washing clothes or helping people meet their health goals, you’re going to need to do some research to figure out the combination of benefits that gets people past the hassle factors and into buying mode. (See our previous article on demand creation.)
3. Start looking for partners.
If you market any kind of powered device, start talking to vendors who can help you link your device to one of the emerging smart platforms, such as We-Mo, Zigbee or Works with Nest. If you market non-electrified CPG products like coffee or laundry detergent, start talking to forward-thinking marketers of related appliances like coffee makers and washing machines to uncover partnering opportunities and, if nothing else, start educating your consumers about relevant IOT products and benefits. For example, if your brand buyers are known to value energy conservation, you might want to promote smart power outlets from companies like SmartThings, which enable you to shut off power to appliances that remain plugged in but don’t need to be drawing energy when you’re asleep or away from home.
4. Clarify your target audience.
As Max Planck, the Nobel Prize-winning physicist who originated quantum theory, stated in 1936, “An important scientific innovation rarely makes its way rapidly winning over and converting its opponents; it rarely happens that Saul becomes Paul. What does happen is that its opponents gradually die out and that the growing generation is familiarized with the idea from the beginning.” While IoT devices can be expensive, you can probably aim younger than you think. Kids and teens are already being targeted with IoT products like the 94Fifty smart basketball. Home efficiency systems and high-end appliances, however, are more logically targeted to the 30+ age group. Boomers in their 50s and 60s who are downsizing can be another target for IoT conveniences, as they’ll be looking to set up their next residence for optimal efficiency and comfort.
If you start working on these challenges today, your brand will be well positioned to win in the new IoT era.