Statement of Purpose

1. Student Details

NAME Ashik Ahmed

ROLL NO. 190101032

CONTACT INFO +91 8768529123

EMAIL ID(PGP) Pgp19ashikahmed@imt.ac.in

FACULTY MENTOR Prof. Rakesh Gupta

2. Company Details

ORGANIZATION FOR SIP Casio India Company Pvt. Ltd.

LOCATION Delhi (Virtual)

JOINING DATE 27/04/2020

END DATE 26/06/2020

PROJECT TITLE Analysis of Smartwatch Market

3. Project Objectives:
To understand the major drivers of the market in terms of pricing, functionalities,
features, sales channels, etc. and to create a holistic plan for Casio in terms of Product
Development suggestions along with Channel expansion ideas related to the outcomes of
the study.

4. Project Overview:
Understanding the primary drivers in the Smart Watch mark3P'sn terms of 3P’s of
Marketing-
- Pricing
- Features & functionalities (Product)
- Sales Channels (Placement)
Product Line Extension and Channel Extension Planning

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5. About the Company:
a. Overview:
Casio India Co. Private Limited is a 100% subsidiary of Casio Computer Co., Limited,
which is a multinational electronics company headquartered in Tokyo, Japan.
Casio has a globally diversified network with a presence in all continents & the
majority of countries. Established in 1996 in India, Casio India Co. Pvt. Ltd. (CIC)
operates in product categories including Timepieces, Electronic Calculators, Label
printers, Laser-LED based green projectors and Electronic Musical Instruments
(EMI). Today, Casio is known for its reliable product quality & exemplary
innovations and is considered one of the world’s most recognized brands due to
its diverse product range.

Casio India Co. Pvt Ltd is headquartered in New Delhi, India, with branch offices
located in major city namely Mumbai, Chennai, Kolkata, Hyderabad, Bangalore,
Ahmedabad & Chandigarh. Casio Indian has established a widespread network for
distribution & product service across India. Casio's corporate creed is "creativity
and contribution." It expresses the company's commitment to contributing to
society by offering the kind of original, useful products that only Casio can.

Casio has created some innovative products based on needs of Indian customers
like Worlds first GST Calculator, Indian comma marker calculator (lakh & crore), a
musical instrument with sound of Indian instruments, smart learning keyboards
Casio'sreover, Casio’s continuous efforts in gauging consumer behaviors &
establishing consumer connect, the company has been successful in establishing
cult brands like G-Shock, Edifice, etc.
b. Status: Non-Listed
c. Legal Form: Limited Liability Company
d. Operational Status: Operational
e. Legal Address: A-41, First Floor, Mohan Cooperative, Industrial Estate, Mathura
Road, New Delhi – 110044
f. Products: Calculators, Watches, Projectors, Electronic Musical Instruments, and
Label Printers
6. Progress: The project has been divided into several parts, and necessary research and
work have been done keeping the final goal in mind:
- Secondary Research on Smartwatch Market Size, Share of Different Brands, External
Drivers for Growth and key trends
- Competitor Analysis based on Pricing, Features, Design, and Promotion
- Primary Research to understand Consumer Drivers and Price Sensitivity

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 - Smart Wearables Representation in various websites and suggestion for
improvements
- Product Design and Recommendation
a. Secondary Research: Secondary Research has been done to understand the
current market size, growth rate projections, key players, market share, and
critical growth trends of the market. The following research reports have been
consulted for the same:
- Frost & Sullivan Report on Smart Wearables Market in India
- Euromonitor International Report on Smartwatches Trends
- Gartner Report on Hype Cycle
- PWC report on Smart Wearables and Trends
- Mordor Intelligence report on Smart Wearables
- Statista
The following are the key findings from the Secondary Research:
The Smart Wearables Market in India has been broken down to three major sub-categories:
- Fitness Trackers: This is a basic device with functionalities like Step Counter, Calories
Burned, Alarm Clock, Gesture Control, and basic connectivity features like Bluetooth
for app notifications. This Wearable Device has minimalistic design features and is
considered as Middling Ranged Wearable Device.
- Smart Watch: Smart Watch is a wholesome device with all the features (Fitness
Tracking, Health Monitoring, Activity Tracking, Outdoor Compatibility, Different
Sports Compatibility, basic to advanced connectivity, i.e., Cellular, Bluetooth, GPS,
NFC, Apps Support, etc.) and all the trendy, bold and superior design features
(Multiple Watch Skins to have a feel of both Analog and Digital Watches). Smart
Watches are generally considered as premium Wearable Device.
- Medical devices: These are medical grade products such as heart patches, which
provide the function of preventive healthcare. Health monitors are meant to measure
the Physical Wellbeing of a person for ex. Heart Rate or Menstrual Cycle Tracking.

The Indian market can be divided into four significant sub-regions based on geographic
segmentation: North, South, East, and West regions.
End-users of the smart wearables can be divided into three major subgroups based on
demographic segmentation: 15 to 24 years, 25 to 45 years, and 46 years & above.
The distribution channels in which companies operate can be broken down into two parts: Online
Channels and Offline Channels.
Key Market Drivers

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The following are the current key market drivers and their impact rating in the next 3-4 years
based on secondary research.

Key Market Drivers Impact Rating

Growing income and rising purchasing power High
of the individuals have led to an increase in
sales of consumer electronic goods
Favorable demography with a large young High
population has resulted in opting for the
smart tech-based devices such as wearables
Increase in internet penetration and boom in High
eCommerce sales will boost the market
growth
Rising health consciousness increases the Medium
urge for leading a healthy lifestyle has
increased the adoption rates for smart
wearables

The current penetration levels in India are lower as compared to its potential, and there is a
continuous increase in the demands for wearables. With a growing number of dual-income
families, health consciousness, the market presents vast potential. Another advantage for the
wearables is the compact size, and hence ease of logistics will provide the product to reach the
remotest parts of the country.
Market Segmentation by Revenue and Volume:

Percent Revenue Breakdown by

Segment , 2018
6%

23%

71%

Fitness Trackers Smartwatches Medical Devices and other

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 Percent Volume Breakdown by
Segment, 2018
7% 2%

91%

Fitness Trackers Smart Watches Medical Devices and other

Market Segment by End Users and Regions

Total Revenue Split by End Users, 2018 Total Revenue Split by Region, 2018

14%
27% 23%
39%

29%
59% 10%

15-24 Years 25-45 years 46 years and above North South East West

Smartwatches will have higher growth during the next four years as compared to other product
segments, but penetration of smartwatches need to back the demand.
Market Distribution Channels
Retail sales of Smart Wearable Devices in India are dominated by Online Ecommerce Retailing.
Following are the advantages of using Online Channel:
- There is a strong preference for eCommerce due to the discounts and deals offered
by the manufacturers, in collaboration with e-retailers.
- These eCommerce platforms provide secure financing options, which makes it
convenient for the consumers to choose any product they want

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 - The desire to experience a product in hand before purchasing is less pronounced in
this category as compared to other consumer electronics goods. This is limiting the
popularity of the physical stores, mostly in Tier-2 and Tier-3 cities.
- Reviews posted by other users who bought the products often play an essential role
in choosing wearable electronic products. Hence the popularity of online channels is
gaining traction.
Offline sales are gaining slow traction because suppliers are moving towards the retail channels
to enhance the consumer experience.

Distribution of Smart Wearables by channel: % of the volume

2015 2016 2017 2018 2019

Store Based Retailing 27.9 26.3 27.8 29.8 28.9
Grocery Retailers - - - - -
Non-Grocery Specialists 27.9 26.3 27.8 29.8 28.9
Electronics and appliances
25.6 26.3 27.8 28.1 28.9
Specialist Retailers

Other Non-Grocery
2.3 - - 1.7 -
Specialists
Non-store retailing 72.1 73.7 72.2 70.2 71.1
Direct Selling - - - - -
Home shopping - - - - -
Internet Retailing 72.1 73.7 72.2 70.2 71.1
Total 100 100 100 100 100

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Market Drivers Explained

Total Wearable Market: Key Market Drivers, 2020-25

Drivers 1-2 Years 3-4 Years 5 Years

Growing Income and Rising Purchasing Power High High High

Favorable Demography with Large Young

High High High
Population Base
Increasing Internet Penetration Medium High High
The rising popularity of Healthy Living Medium Medium High

The Impact ratings are denoted as High, Medium, and Low.

Growing Income and Rising Purchasing Power has led to an increase in the sales of Consumer
Electronics:
- India is currently the third-largest economy in terms of purchasing power parity (PPP)
and ranks at 139 out of 192 countries (IMF) & 146 out of 197 countries (World Bank)
in terms of Per Capita Income.
- The rise in the per capita income has also increased the disposable income at hand
for the consumers. The CAGR of per capita income for the Indian population is 8.6%.
- The middle-income social class will hold a higher portion of the income and currently
constitutes 62% of the population.
- All these factors provide a positive outlook on the growth of wearable devices.

Favorable demography with a large young population has led to the adoption of Wearable
Gadgets:
- India currently has the world's youngest population, with 85 crores of population fall
below the age of 35 years.
- This young population with a decent amount of disposable income and a higher
tendency towards spending will make India the fifth largest market of consumer
electronics goods by 2025.
- Gen Y or Millennials (18-35 years) will constitute 33% of the population by the year
2025.

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 - There is a growing trend towards the adoption of newer technology by the tech-savvy
population of India, which will make the wearable markets more attractive.
According to a research conducted by Rakuten Insight on 12767 respondents about ownership
of the smart wearable devices, in the year 2019, we can see that the most attractive age group
for the products will be 25 to 34 years.

We can see that smartwatch ownership is highest amongst the age group of 25 to 34 years. The
same is true for Fitness Tracker as well, although the age group of 16-24 years and 35-44 years
possess a similar potential there. For no adoption, the rate is lowest for the age group of 25-34
years (38% of the respondents answered NO to the question of ownership.)
Increase in Internet Penetration and Sales through eCommerce:

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 - Wearables are preferably purchased by the consumers online as the high discounts
provided by the eCommerce
platforms.
- The eCommerce business will be
touching 200000 Cr. INR business
valuation, with mobile commerce
presenting 73% of the value, by
the year 2027.
- High discounts and festive sales
will boost the penetration of the
products.
- The mobile subscribers in India are
set to reach 142 crores by
2025, with 85% of these
connections will be of 4G.
- The country currently has an
average data speed of 20
Mbps, which is likely to
increase in the advent of 5G
connections.

Rising consciousness about healthy living:

- India is witnessing a trend of growing health consciousness with an increase in the
consumption of healthy foods and beverages, adoption of various types of fitness
regimes, and growth in health-related gadgets.

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 - There is a rising trend in the adoption of healthy products both in urban and semi-
urban parts of India.

The same can be seen from the research conducted by Rakuten Insight on a sample of 7000
respondents, where we can see that health-related motivating factors are the most prominent
amongst the respondents.
Forecasts and Trends: Total Market
Market Overview:

Measurement name Measurement Trend

Market Stage Growth
Market revenue (2019) INR 772.4 Crore
Unit Sales/ Volume (2019) 30.3 Lakhs
Average Price per Unit 2553 INR
Base Year Market Growth rate 65.5%
CAGR 66.3%
Consumer Price Sensitivity 8
Number of competitors 15
Degree of Technical Change 9
Market concentration 48.7%
Replacement rate Two years -

Means Growth Trend, - Means Stable Trend

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Unit Shipment and Revenue Forecast:

Pricing Trends and Forecast:

Revenue Forecast by Region:

Year North (INR Cr.) South (INR Cr.) East (INR Cr.) West (INR Cr.)
2018 105.4 133.5 47.8 181.7
2019 177.6 224 81.9 288.9
2020 298.2 376.3 138.2 467.2
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 2021 501.5 632.7 230.6 751.1
2022 842.7 1061.3 384.6 1237.6
2023 1423.1 1792.2 649 2089.9
CAGR 68.3% 68.1% 68.5% 63.0%

Revenue Forecast by Vertical Market:

Fitness trackers are currently dominating the market in terms of volume and revenue. However,
the smartwatch segment is growing at a rapid pace and will continue to grow until 2023.

Revenue Forecast by End Users:

Year 15-24 yrs (INR Cr.) 25-45 yrs (INR Cr.) 46 yrs and above (INR Cr.)
2018 126.1 274.4 67.8
2019 197.2 455.3 119.8
2020 320.1 748.5 211.2
2021 496.2 1241.7 377.9
2022 787.7 2052.9 685.5
2023 1226.9 3468.8 1258.8
CAGR 57.6% 66.1% 79.4%

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Market Dynamics
Key Buying Factors:
- Price, features, and aesthetics are the critical purchase criteria for any Indian
consumer
- There is a considerable price gap between the primary and smart wearables currently
in the market
- Although the devices are mostly tech-centered, style plays an essential role for the
consumers. They seek the beauty, status, and peer approvals for these products.
- Brand and technology are secondary criteria for choosing a device
- Serviceability and after-sales cost are not that important factors in the purchase of
the wearables

Factors Importance
Price Very High
Features Very High
Aesthetics Very High
Technology High
Integration/ Compatibility High
Brand Name High
Serviceability Medium
After Sales Cost Medium

Market Share and Competitive Analysis

Market Share:

Percent Revenue Breakdown by Company, 2018

24%

41%

17%

2%2%
3% 3% 8%

Xiaomi Titan Apple Samsung Fitbit GoQii Lenovo Others

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Market Share Analysis:
- The top three participants in the market contributed 49% of the market revenue in
2018. Xiaomi led the competition by the sale of 109.8 Crore INR.
- Titan as a whole spent around 20% of its marketing budget on digital marketing,
especially with brands like Fastrack. It has an online presence through in-house
eCommerce platform and also through other platforms like Amazon, Myntra, Tata Cliq
- Apple is a crucial player in the market with the commendable fanbase in India. The
brand also enjoys strong brand loyalty amongst its consumers. It has lower volume
sales as the price range it operates is very high.

Revenue (INR
Company Wearable Tech Devices awareness India
Cr.)
Xiaomi 109.8 2018 by brand
70
Titan 80.2 60
AWARENESS %

50
Apple 37.7 40
30
Samsung 15.1 20
10
Fitbit 14.3 0
Apple Samsung Xiaomi Fitbit Huawei Titan Others
Watch
Others 211.2
BRANDS
Total 468.3
If we compare Brand Awareness and Revenue generated in the year 2018, we can see that Apple
had the highest awareness, but it captures only 8% of the market. A similar phenomenon happens
with Samsung. Another way, Xiaomi has relatively lower Brand Awareness, but it has a higher
sales value.
Competitive Factors and Assessment:
- Xiaomi spends very little on marketing and advertising. The company relies more on
WOM based advertising
- Samsung is more of a value-centric brand. Its smartwatches are embedded with high-
quality touchscreen
- Titan has a network of 700 exclusive brand outlets across 250 cities and a much higher
multi-brand outlet presence in India. The company also has more than 8,000 retail
outlets, a production facility in Hosur, Tamil Nadu, and assembly facilities in
Dehradun, Roorkee, and Pantnagar in Uttrakhand and Majitar in Sikkim.
- Fitbit is an essential player in the global market for wearables. The company has faced
competition from other brands after a strong market dominance during FY13-17, and
its reliance on only simple wearables has contributed to a dramatic decline in its
market share.

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 - GOQii started by focusing on crucial metros. It has also found a significant momentum
in tier 2 and 3 markets over the past few years, however.
- Traditional watchmakers such as Fossil have also been famous in selling
smartwatches, with a large customer base for mechanical watches. The main benefit
is the visual appeal that these players have.
Competitive environment:

b. Competitor Analysis: For Competitor Analysis, 6 Major Competitors of Casio in the

Smartwatch Segment were chosen and detailed excel sheet was prepared based
on the following attributes of each of the products offered by the competitor
brands:
- Target Age Group
- Target Lifestyle
- Overall Design
- Normal Clock Features
- Daily Smartwatch Features
- Sensors
- Fitness Tracking Features
- Activity Tracking Features
- Health Monitoring Features
Based on these features and price comparisons, each brand was placed on a
competition map where the above-mentioned features were mapped against price to
know which brand is placed where and what will be the opportunity area for Casio to
venture into.

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 c. Primary Research: To conduct primary research to know about consumer drivers
and price sensitivity, an online survey was conducted where the survey
questionnaire contained questions on the following:
- Demographic Questions (Age, Gender, Marital Status, Education, Occupation,
Income, and Residence)
- Psychographic Details (Most Connected Lifestyle Brands, Life Style, SmartPhone
Brand Usage)
- Smartwatch/ Fitness Trackers Brand Awareness (Name of the brands, Awareness
Source)
- Perception and Scope of Improvements of Existing Products
- Attribute Preference of New Smartwatch
- Brand Purchase Intention
- Product Purchase Intention after Stimuli (Respondents had to choose a product
among Fitness Trackers, SmartWatch and Hybrid Watch)
- Price Intention for the New Product
Apart from the online survey, in-depth-interviews of 10 potential customers were
conducted to know the qualitative assessment of the drivers presented in the survey
questionnaire. 281 responses were collected within 14 days, and the following overall
insights were drawn from the primary analysis:
- Most Connected Lifestyle Brands are Nike, Adidas, Puma, and Skechers, with a score
of 66.5%.

- 2nd and 3rd Most Connected Lifestyle Brands are Zara, H&M, Louis Phillipe,
Raymonds – Formal Clothing Brands with Connected & Formal Trek'syle. Pro Trek’s
current Target group focuses on office goers, but with a semi-formal lifestyle. Smart
Watches/ Hybrid Watches need to be introduced with a focus on Formal Office
Lifestyle.

- The importance of Health Consciousness across all the Age Groups is much higher as
compared to the Average Value. So, the target audience is looking for a product with
Health & Daily Activity Monitoring Features. Product serving as a daily assistant will
be most enticing for all the age groups.

- Technology Savviness across all the Age Groups is Average. Target Audience is Neutral
about the technological sophistication of the products being offered. So, the
importance of Technological Sophistication inside the product can be considered as
low.

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- Sports Enthusiasm is higher than Average only in the case of 45+ years. So, Indoor
Sports features with activity tracking should be introduced for the products targeted
towards this age bracket. However, for the current smartwatch, which is mostly
targeted towards the age group of 25 to 45, Indoor Sports features are not that
needed, as respondents in this age bracket are neutral about Sports.

- Fashion Trends Enthusiasm is below average for all the Age Groups. So, minimalistic
design features are required smartwatches.

- Walking, Running & Workout are the Most Preferred activities to keep body and mind
fit; fitness features should be the essential features to be incorporated into the
products.

- Meditation is the 2nd Most Preferred activity to keep body and mind fit.

- Apple has the Highest Awareness amongst the population, folloApple'sFitbit. Apple’s
awareness penetration is 84%, and for Fitbit, it is 74%. Also, the highest amount of
awareness comes from Social Media (Social Media Awareness Source has the highest
value across all the sources).
- eCommerce is the Most Preferred Purchase Channel for a new Smartwatch

- While creating marketing communication, the following features should be focused

on the most as these features are mostly looked for while purchasing a new brand of
Smartwatch
- High average battery life and better battery performance
- Ease of usage is better as compared to competitors (Most comfortable to use)
- Price is lower as compared to its competitors (or, more benefits in terms of
features as compared to competitors are provided at a premium price point)
- Benefits in terms of the utility of the apps provided are the highest amongst the
smartwatch players.

d. Smart Wearable Representation: Smart Wearables across different websites (A

particular Brand and eCommerce) were consulted to see the representation and
level of engagement with the users. Based on the current representation and gaps,
the following recommendations and their detailed plan of implementation were
given for Smartwatch Webpage:

- For each feature, interactive background video should be played showcasing what the
current problems target customers are facing are and how the feature presented
can be used to solve that problem.

- Virtual Trial Should be introduced for all the products

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 - There should be a separate section on Product Recommendation. This section will
ask a few multiple-choice questions to the users, and based on his/her answers, the
products available will be recommended.

- Social Media Reviews from users should be there at the end of the page for all the
products. Apart from that, Expert Recommendation like from Medical Practitioners
will be there for Smartwatches with Heavy Health/Medical Features. Also, Tech
Magazine Reviews on each of the smartwatches should be there to engage the
customers about the genuineness of the products.

- Medical/ health-related subscription services notifications should be there for the

Smartwatches targeted towards 45+ years.

- The co-creation Page should be introduced as a separate section.

- Product Usage GuideExperts'sed on Experts’ Opinion should be introduced

- Product Customization based on design features should be introduced

Mentor Details

MENTOR NAME Mr. Kumar Vaibhav

DESIGNATION Senior Assistant Manager – Strategy &
Planning

CONTACT +91 9561766933

EMAIL ID kumarv@casio.co.in

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