Our client, a >$10B manufacturer in home improvement identified an opportunity to enter the home automation segment. Capitalizing on emerging IoT trends to tie together a substantial portion of home functions together into a single platform. A system that could better monitor, analyze and manage home systems and, as a result make it easier and less costly for homeowners to manage their most expensive asset. However, the client lacked experience in the segment, was wary of larger and more technology-focused players (e.g., Apple, Amazon and Google) and wanted deeper insight into whether and how to enter the space.
Tower Strategy Group worked with the Innovation team, the Engineering team and a cross-section of Division leadership to:
- Map the market opportunity for home automation, segmenting it by solution type (e.g., lighting control, utility monitoring, etc.) across the US, UK and India
- Evaluate and define the innovation (hardware vs. software vs. hardware + software) needed to enhance client’s existing portfolio in line with market trends
- And the relative difficulty / complexity of such a play Relative to the competitive landscape and new solutions coming on line from both the largest players as well as scrappy new upstarts
- Sized the market opportunity based on number and type of households and their willingness to pay
- Define a pricing strategy, including evaluation of various pricing and financing models
- Evaluated channel options, including innovative, alternative design choices designed to substantially bring down TCO for the homeowner
- Developed the framework for a market demand generation strategy for transitioning from niche, early adopter market to mass market
- Provided multiple market entry and commercialization options ranging in scope from bold, aggressive and transformative to incremental and risk-contained
- With a recommendation, based on client’s positioning, for the latter
Despite the client’s existing presence within home improvement, we determined that the client did not possess a “right to play” within this segment broadly. Though it could make a niche play. As, for it to deliver a compelling value proposition to the market, it would need to invest substantially in building horizontal capability and partnerships, vertically, within its value chain. Unwilling to make such a substantial leap, the client chose to forego its more ambitious, stand alone plans. And, instead, to integrate its solution into the offerings and platforms upcoming through the three most dominant incumbents primed to own home automation as a space.