Fossil’s Inc. Gen 5 Smartwatches Marketing Plan

Executive Summary 

The following marketing plan presents the marketing strategies that may be used by Fossil Group, Inc. to market its recent smartwatch technological innovation, the Gen 5 smartwatches. Fossil’s Gen 5 smartwatches offer a unique technology that allows the users to enjoy functions such as receiving and making tethered calls, receiving email notifications, tracking their health and wellness, amongst other functions. Currently, Fossil enjoys a minimal share of the smartwatch market. The company hopes to use its new products to grow its revenues and market share. 

The smartwatches are mainly used by young adults, those in the 18 to 35 years age bracket. The smartwatch market is split amongst several players, notable among them being Apple, Samsung, Fitbit, and Garmin. Apple holds the market leadership for the smartwatch market. Fossil expects to grow its smartwatch market share in the wake of the changing political environment in the US due to the upcoming regime change. Fossil also targets to benefit from the increased absorption of smartwatches due to the changing technological trends. Fossil’s brand recognition and cutting-edge technology will be crucial strengths that will assist in marketing. 

Due to the depressed economic fortunes, Fossil will use a smart pricing strategy that will involve the reduction of the pricing of the premium smartwatches will retaining the high prices for the ultra-premium smartwatches. The strategy will enable the company to respond to premium users’ needs, its largest market, whose incomes have become depressed during the COVID-19 outbreak. The company will also use the discounted pricing strategy, especially during the end-year holiday season, in order to increase its sales and revenue. The marketing strategy’s implementation is expected to grow Fossil’s revenues and market share both in the short and long term. 

The Challenge 

Global technological advancement has led to an increased appetite for smartwatches. Consequently, more companies have joined the smartwatch industry, with each one of them promising some unique smartwatch technology to its clients. Amid the increased competition, Fossil Group, Inc. has established itself as a market leader in this industry. Fossil Group continues to innovate cutting edge technology in the smartwatch industry. Its leadership in smartwatch technology is well demonstrated by Google’s decision to purchase some of Fossil’s smartwatch technologies (Fossil Group, 2019b). 

This paper focuses on the marketing plan for Fossil’s recent smartwatch technology, the Generation 5 smartwatches, which are abbreviated as Gen 5 smartwatches. Fossil’s Gen 5 smartwatches were launched in 2019 (Fossil Group). Fossil’s smartwatches use Google’s WEAR OS operating system ( US Securities and Exchange Commission (SEC) , 2020b). Despite the release of the new products to the market, Fossil’s revenues in 2020 were hurt by the outbreak of COVID-19, which led to depressed economic growth worldwide (SEC, 2020a). The implementation of the marketing strategies recommended in this plan would ensure that Fossil registers increased sales this year. According to the Fossil Group (2019a), the Gen 5 smartwatches boast of the following notable features: 

Prolonged battery life: The smartwatches have an exclusive app that allows for adjusting the battery modes to daily, extended, time-only, and custom. The extended mode allows for multi-day usage on a single one-hour charge by allowing only essential features such as notifications and heart rate. 

Voice calling: The addition of a speaker and a new app to the Gen 5 Smartwatches allows iPhone users to make and receive tethered voice calls like their android counterparts who enjoy the feature in the nextgen smartwatches. In the new app, android users will enjoy a more seamless transition between Bluetooth devices when receiving calls using the smartwatches. 

Microphone and swim-proof speaker: With the swim-proof speaker’s invention, there is no need to add a sound-dampening mesh barrier to make the watches waterproof. This feature allows users to use Google Assistant, get responses back, receive phone calls, play music, and receive audible alerts. 

Expanded storage: Gen 5 smartwatches have double the storage space of their predecessors (Gen 4 smartwatches), 8GB. Their RAM is also quite big, 1GB, allowing for the download of more apps and media and enhancing the performance. 

Enhanced experiences: The increased storage has allowed for the auto-installation of essential apps such as Spotify, Cardiogram, Noonlight, amongst others, in selected nextgen smartwatches. 

An updated processor: Gen 5 smartwatches boast of an updated processor, the Qualcomm® Snapdragon Wear™ 3100 platform, which helps enhance their performance. 

A good marketing plan could make Fossil’s wearable touchscreen smartwatches take the market by storm. The goals for this marketing plan are identified as follows: 

To grow e-commerce sales by 10% by the end of 2021. 

To increase Fossil’s smartwatch brand awareness by 15% by the end of the fiscal year 2021. 

To grow Fossil’s smartwatch market share by 5% by the end of the fiscal year 2021. 

Situation Analysis 

Company Analysis 

Fossil Group Inc. was established in 1984 by Tom Kartsotis. The company’s headquarters are based in Richardson, Texas, in the United States. Besides the production of smartwatches, Fossil Group is involved in producing luxury items, including wallets, jewelry, handbags, sunglasses, traditional watches, smartwatches, belts, amongst other items ( SEC , 2020b). Fossil’s core global business is based on the sale of traditional watches and smartwatches. The consolidated net sales for the sale of watches for the years 2017, 2018, and 2019 were 78.9%, 80.0%, and 81.3%, respectively (SEC, 2020b). FOSSIL, MICHELE, MISFIT, RELIC, ZODIAC, and SKAGEN are amongst Fossil’s proprietary watch brands. In the smartwatch industry, Fossil enjoys a very limited market share. Fossil’s corporate culture is characterized by a collaborative environment in which employees are communicate freely and provide feedback to the top management. Employees are offered training and development opportunities. 

Customer Analysis 

Fossil designs its smartwatches for use by persons of all gender. However, the company creates unique customizations for males, females, and children. The use of smartwatches across genders is varied. A smartwatch market analysis conducted by the Pew Research Centre in June 2019 identified that the use of smartwatches amongst adults in the US was at around 21% (Vogels, 2020). The Pew Review research also identified that about 25% of the women in the US used smartwatches as compared to 18% amongst men. According to Chun et al. (2016), the use of smartwatches in the US varied with races. The use of smartwatches amongst the whites, blacks, and Hispanics was put at 20%, 23%, and 26%, respectively. Chuan et al. (2016) also documented an NPD Connected Intelligence report’s finding, which stated that 69% of the smartwatch market was comprised of young adults aged 18-34. According to psychographic market segmentation, smartwatches are mostly considered luxury goods. Thus, their purchase is associated with high-income earners. 

Competitor Analysis 

The increased adoption of technological innovations has led to the growth of the smartwatch industry. The increased functionality of smartwatches, including making and receiving calls and tracking health wellness, has led to an increased desire from the general populace to own smartwatches. Other than Fossil Group, the other notable smartwatch manufacturers are Apple, Sony, Fitbit, and Samsung (Chun et al., 2016). The companies have been competing based on the smartwatch design, the retail price, and the features. Fossil Group targets to differentiate itself from the competitors by offering a more comprehensive design selection, better features, and better retail pricing. 

The apple company has established its leadership in the smartwatch industry. In the first quarter of 2020, the smartwatch market share was dominated by Apple and Samsung, with 47.9% and 13.4%, respectively (Statista, 2021). Figure 1 below depicts the smartwatch market share from 2014 to 2020. Fossil Group holds a minimal share of the smartwatch market. Through the marketing of the Gen 5 smartwatches, the company seeks to grow its market share. 

Figure 1 

An Illustration of the Smartwatch Market Share 

(Source: Statista, 2021) 

Collaborators 

Fossil Group has an existing network of distributors. As of 2019, the number of independent distributors was at 80 (SEC, 2020b). Fossil’s products reach a wide market in about 150 countries. In addition to the company-owned retail stores, there are 23 company-owned sales subsidiaries (Fossil Group, 2020). The distributors and subsidiaries’ network will be essential in ensuring that the Gen 5 smartwatches hit an expansive geographic reach. 

Climate 

Fossil’s manufacturing and assembly operations are mainly based in Hong Kong and China (SEC, 2020b). Fossil sources and sells its products to various countries globally, key among them being the US. Consequently, Fossil’s business is affected by the political, legal, and economic environment in these countries. For example, the business is from time to time affected by the imposition of quotas, duties, tariffs, amongst other restrictions. 

It is expected that Fossil’s business will not be negatively affected by the political environment in the US in 2021. The anticipated transition of power from Trump’s regime, which was seen to advance anti-china trade policies, to Biden’s regime could be holding better fortunes for Fossil’s businesses. Fossil’s products imported to the US are subjected to customs duties that may be increased from time to time by the US Customs Service due to trade disputes between countries, amongst other factors (SEC, 2020b). These political and legal uncertainties will persist in 2021. Legally, Fossil’s business operations will be bound by the laws relating to taxation, customs, employment, privacy, consumer product safety, advertising, amongst other business-related laws in different countries where it sells its products. 

Fossil’s growth will be impacted by the global economic downturns occasioned by the COVID-19 outbreak. Fossil’s products are considered non-essential. They are regarded as luxury goods that are mainly purchased by high-income earners. Most nations are still reeling from the economic impacts of COVID -19, the loss of jobs for their citizens. Since most consumers’ incomes have been depressed, they are less likely to budget for luxury items, including smartwatches. A low-pricing strategy for the Gen 5 smartwatches will help increase their uptake in the market. 

The social and cultural environment is anticipated to impact Fossil’s smartwatch business positively. Smartwatches’ health and wellness monitoring feature has received a positive reception in various social and cultural settings. The worrying obesity trends globally, including the United States, have made more people conscious of their health. Fossil’s Gen 5 smartwatches offer consumers an opportunity to track their health. Thus, it is anticipated that more individuals will consider purchasing smartwatches. 

The technological environment continues to receive various innovations. Markets, especially young adults, have been receptive to the technological advancements. Given that Fossil’s Gen 5 smartwatches offer one of the most advanced technologies in the market, it is expected that the market will be receptive to these products. The outbreak of COVID-19 has underscored the importance of technological innovations. Employees were forced to work from home, and technological innovations such as teleconferencing came in handy. In the wake of these events, more individuals could consider purchasing smartwatches so that they may receive email notifications, calls, or text messages on the go. 

SWOT Analysis 

Strengths 

Fossil Group boasts of a number of strengths that may help in marketing the Gen 5 smartwatches. Some of the notable strengths include: 

Innovative and cutting-edge technology. Fossil Group has consistently developed fashionable and innovative watches that meet customer preferences. Fossil’s Gen 5 smartwatches make use of the most advanced smartwatch technology. This feature is likely to attract potential customers, especially the impulse buyers who want to keep up with the most recent technology. 

Brand recognition and reputation. Fossil Group has established a strong brand with its unique luxury items, including watches, jewelry, amongst other items (SEC, 2018). Fossil’s strong brand will be essential in marketing the Gen 5 smartwatches since there is already a group of loyal customers who associate with the brand. 

Weaknesses 

Some weaknesses in Fossil Group’s businesses might hurt the new Gen 5 smartwatches’ marketing. Some of the weaknesses are elaborated below: 

Decreased financial growth. Despite the positive cash flows generated by Fossil Group’s businesses, the gross profits have been decreasing over the past few years (SEC, 2020b). The unfavorable financial situation might hamper the rollout of an aggressive marketing strategy for the Gen 5 smartwatches. 

Increased labor wages. The cost of labor has been rising over the years, consequently impacting the cost structure, especially the margin expansion and profitability. In order to decrease the effects of the increased labor wages on the marketing of the Gen 5 smartwatches, the company will increase its utilization of e-commerce sites. 

Opportunities 

The external environment analysis shows that there exist some opportunities that can be utilized by Fossil Group. Some of the opportunities are discussed below: 

Increased number of tech-savvy consumers. There has been an exponential growth of individuals who use the Internet and various technological devices, especially amongst the millennials and generation Z. Fossil Group will use this opportunity to market its Gen 5 smartwatches using various social media campaigns and online promotion (Maiorescu et al., 2020). Coincidentally, the 18-34-year olds who are the biggest users of smartwatches are also the largest users of social media sites (Bashir & Bhat, 2017). Thus, the use of social media sites in the marketing campaigns will help reach the right audience. 

Increased number of online buyers. Recent years have witnessed an increase in the number of customers who opt to buy through online platforms. Fossil’s investment in its e-commerce segment has yielded new sales channels. Fossil will leverage this opportunity to drive the sales of Gen 5 smartwatches. 

Threats 

The external environment is not devoid of threats that may hurt the marketing of the Gen 5 smartwatches. Some of the notable threats are discussed below: 

The ever-changing smartwatch technological landscape. The smartwatch industry is characterized by rapidly advancing technological innovations. Thus, in as much as Fossil’s Gen 5 smartwatches bear the most advanced smartwatch technology, the technology could be overtaken by more recent and advanced technologies from Fossil’s competitors. 

Increased competition. The smartwatch industry has a number of competitive players, notable among them being Apple, Samsung, Fitbit, amongst others. A high number of entrants also characterizes the industry. The increased competition is likely to hurt, Fossil’s efforts to grow its market share. However, the Fossil will ride on its unique smartwatch technology to grow its market share. 

Market Segmentation 

The primary target market for Fossil’s Gen 5 smartwatches will be in Texas, US. The main target group will be the 18-34-year-olds who have been shown to account for the largest percentage, about 69%, of smartwatch users. According to the United States statistics as documented by Johnson and Lichter (2016), Texas has a high population comprising of young female adults in the 18-34 years age bracket. A slightly higher percentage of women use smartwatches, about 25%, than men, about 18%. There is also a significant proportion of Hispanic ethnicity individuals, a group regarded as high potential wearers of smartwatches (Johnson & Lichter, 2016). According to these statistics, Texas presents a strategic market having a large pool of potential customers, where Fossil’s Gen 5 smartwatches could find a market. The large number of potential customers could lead to the growth of Fossil’s market share. Fossil’s Gen 5 smartwatches will also be sold in all the countries where its products are sold. 

Alternative Marketing Strategies 

A number of marketing strategies were considered for the marketing of the Gen 5 smartwatches. Given that Gen 5 smartwatches offer unique and advanced technology, value-based pricing or position as a premium was considered. The strategy would have been useful, especially amongst the ultra-premium users who do not mind the smartwatches’ high pricing. 

Predatory pricing or the price undercutting strategy was also considered. The undercutting strategy would involve pricing the Gen 5 smartwatches at prices lower than those of the competitors. Although this marketing strategy would have allowed the company to acquire significant market share, its risks to its financial health were just too high; hence it was abandoned. 

Selected Marketing Strategy 

The selected marketing strategy involves the use of promotional discounts alongside a smart pricing strategy that involves reducing the pricing for the low premium smartwatches while retaining the pricing of the high-end, ultra-premium smartwatches at a high price. Ordinarily, premium smartwatches retail for $200 to $400. In our smart pricing strategy, the premium smartwatches will retail for $150 to $200. The premium market segment accounts for a significant proportion of smartwatch users (Mesarina, 2017). Thus, with reduced pricing, we anticipate to increase our sales. The decision to use the smart pricing strategy was guided by the recent devastating economic impacts of the COVID-19 outbreak, which has ravaged most individuals’ finances. According to Lumen Learning (n.d.), a smart pricing strategy involving reduced pricing for low-value items and retention of high pricing for high-value items allows companies to acquire a competitive advantage. 

Product 

Our Gen 5 smartwatches utilize the most recent and advanced smartwatch technology. Fossil has notable brand recognition in the smartwatch market. Consequently, we will leverage this advantage to drive the sales for the Gen 5 smartwatches. The smartwatches will bear various designs, and customizations will be available for the male and female gender. The smartwatches are produced under a quality control program in which they are inspected by quality control staff at the manufacturing plants to ensure that they meet the set technical design specifications. Besides, the products are further inspected for any defects upon receipt at the distribution centers and before they are shipped to the customers. We guarantee that our products are of top-notch quality and their reputation is beyond reproach. The Gen 5 smartwatches come with a 5 years warranty during which customers can have their devices repaired or replaced upon confirmation of malfunction. The smartwatches will be packaged in uniquely designed tin cans and wooden boxes bearing the Fossil Group logo. The packaging is intended to create a sense of nostalgia, enhance customer retention, and brand loyalty. 

Price 

The pricing for the Gen 5 smartwatches will be varied. The watch designs have been varied to cater to various smartwatch users’ needs and preferences who are classified into four broad categories as ultra-premium, premium, standard, and fitness and wellness users. The ultra-premium users are sensitive about the style, and the pricing for products is not much of an issue to them. The ultra-premium smartwatches will retail at $1000+. The premium users have a ceiling of how much they are willing to spend. The premium smartwatches will retail between $200 and $400. The buying decision of standard users is greatly influenced by the pricing (Mesarina, 2017). Consequently, the pricing for the standard smartwatches is set to be below $100. The fitness and wellness users are also sensitive to the pricing in addition to expecting smartwatches to have essential wellness and fitness features. Consequently, the pricing for this segment should be set to be below $100. The premium market is the largest, and we anticipate that it will generate about 70% of our target smartwatch revenues. 

Customers are always quick to embrace some cost-saving as a result of discounting strategies. In order to increase the sales of our smartwatches, Fossil Group will offer discounts and promo codes for customers to redeem, especially during the holiday season when most customers are looking to make their purchases. The discounts for the smartwatches will range from 15% to 25%. In addition to the price discounts, the company will offer free shipping for all smartwatch purchases to any country that we sell our products. 

Price bundling helps promote the purchase of several items. Smartwatches will be bundled with other unique fashion and luxury items such as belts, handbags, and wallets. The bundled products will be offered at a discounted price, lower than the singular items’ combined price. Price bundling will help in increasing the sales of smartwatches. Customers will be allowed to make their purchases through credit and debit cards. 

Distribution (Place) 

We will utilize the extensive distribution channels that Fossil Group has already put in place to ensure that Gen 5 smartwatches achieve a wide geographic reach. The distribution channels will comprise the company’s department stores, mass-market stores, consumer electronic stores, specialty retail stores, specialty watch and jewelry stores, company-owned retail stores, licensed and franchised Fossil stores, and Fossil operated retail concessions and e-commerce sites. Given that there has been an increased number of buyers opting for online buying, e-commerce sites will act as our distribution’s backbone. The logistics, including the smartwatches’ transportation, will be made possible by the use of cruise ships and airlines. 

Promotion 

Our promotional and advertising strategy will combine traditional marketing and digital marketing (Fricker & Deshayes, 2018) . Traditional marketing will comprise of the use of mass media and print. Digital marketing will be the backbone of our promotional strategy and will incorporate techniques such as online advertising, the use of social media, search engine optimization, influencer marketing, and affiliate marketing. The use of digital marketing will allow us to offer customer-centric services (Fulgoni, 2018; Quinn et al., 2016). Customer-centric services are essential in fostering customer retention and brand loyalty. The advertising budget, both traditional and digital marketing, for the Gen 5 smartwatches has been set at $500,000. The promotional programs are anticipated to rake in over $50 million in additional revenue. 

Short and Long-Term Projections 

The selected marketing strategy will help drive the company’s revenues for the short and long term. In the short term, the marketing strategy is expected to increase the company’s 2021 quarter 1 results by 5% compared to the previous year. The purchase of smartwatches is seasonal, with most of the purchases being done during the holiday season. Thus, it is anticipated that the marketing plan’s implementation will help boost the company’s 2021 fiscal year results. The marketing strategy is expected to increase the company’s 2021 annual revenues by 20%. The company’s market share is expected to grow by 5%. The marketing strategy has mainly been adopted due to the prevailing economic downturns. The marketing strategy will remain in place until a time when the global economic wellbeing will improve. For the long term, about 5 years, the strategy is expected to increase Fossil’s market share by 20%. 

Conclusion 

Fossil’s Gen 5 smartwatch innovation is a masterpiece that could propel the company to significant growth. The proposed marketing strategy involving a smart pricing strategy and discounted pricing could ensure that the company secures significant market share in an industry that is currently dominated by Apple and Samsung. The success of the strategy is dependent on its full implementation. 

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