Market Analysis
The Consumer Market
Cultural and Social factors influencing consumer purchasing.
Cultural and social environments can be attributed to many of the decisions people make such as what clothes to wear, what music to listen to, how competitive we are, and even how environmentally conservative we are. Kotler and Keller (2014) define cultural influences to consumer behavior as “key institutions… [governing the way] a child grows up” in one country compared to a child in another (pp. 152-153), or other specific subculture identifications such as “nationalities, religions, [or] racial groups…” (Kotler & Keller)
A vast amount of research has been done on environmental topics which “have emerged as one of the most important economic policy issues… and many view energy efficiency… [would help] to reduce greenhouse gas emissions.” (Allcott, 2011) “cultural knowledge includes implicit theories about the world we live in that are largely shared by the members of our society.” (LaPlante, 2005) Thus, the popular beliefs amongst one’s peers in conjunction with widespread word of mouth lend to similar thoughts amongst the ‘Generation Y’ demographic. The speculation of global warming and climate change has sparked many people to begin trying to make changes in the way their lives are lived, including installing devices that can make their homes ‘smarter’, and more environmentally friendly.
Energy conservation, and environmental issues are very important topics in the world today. As a result the U.S. electrical system has undergone some revolutionary social changes in the past few years (Levinson, 2010) by creating a smart grid in additional efforts to try and reduce greenhouse admissions. Designed to be significantly more efficient than the modern thermostat, Nest Labs Inc Learning Thermostats remind the owner to change the air filter, which is just one of the ways it helps the consumer save energy and money. According to New York State Electric and Gas Company, their standard Nest smart thermostat user would use approximately 20 percent less energy (Battaglia, 2014). Success in business can greatly be accredited to how well a corporation markets to their target market.

Personal factors influencing consumer purchasing.
Learning about the many factors that influence consumer purchase behavior is important for a company in order to better market their products. A company needs to understand their product and its niche market or markets. In order to be better able to grasp the reasons why a consumer favors a market good over the other option, it is required to understand the mechanism urging him/her to purchase this product.
Personal factors can be described as age, socioeconomic status, lifestyle, personality and self-concept. While smart homes are still relatively new, ultimately everyone can benefit. 70 percent of people surveyed by Lowes home improvement store said that they wished they could control a feature of their home without getting out of bed (Bogle, 2014). Nearly two-thirds of respondent said they would like to monitor their children coming home from school, and more than half admit that they frequently forget to turn off the lights, lock the doors or reset the thermostats when they leave home, making a case for simple “home vs. away” settings that can take care of those tasks, and maybe save some energy at the same time (John, 2014).
Smart home products like the Learning Thermostat also provide a sense of comfort to the consumer. Installing smart products in loved ones' homes can ease the concern of the health and safety for those individuals.

Psychological factors influencing consumer purchasing.
The key psychological factors that influence consumer purchases are motivation, perception, learning and memory. Home is a place where one can feel comfortable and safe from harm. Nest Labs Inc.’s products offer a solution to security and this feeds a basic need of people everywhere. This goes especially for parents of young children, people looking after their elderly parents, and people with valuable possessions (Schory, 2004). This is a perception achieved by ownership of smart home devices. Again, convenience is a key factor. For some it is a luxury to enhance one’s lifestyle or social status and for others it is a need. The smart home may give disabled people the ability to live a more normal life (Schory, 2004). A product such as the Learning Thermostat and other smart home products may help the disabled to feel more independent, and safe.
Consumer feedback about the learning thermostat has been positive. Feedback found on Amazon.com, Lowes.com, HomeDepot.com and various other sites shows that what others learned and believe have influenced even more people to purchase the thermostat as well. The growth of the Americas smart homes market in the coming years is expected to be remarkable, with the revenue growth estimated to reach $22.4 billion by 2020 (Tiwari, 2014).

Consumer behavior aspects.
The aspects of consumer behavior that Nest Labs Inc should focus on most in their marketing strategy of the Learning Thermostat are the personal lifestyle and values of their consumers. Nest Labs Inc should market to the consumer's needs of comfort, safety, energy efficiency in order to sell their product. "The Nest thermostat and software are enabling energy and cost saving programs, especially for using less electricity in times of peak demands." ( Lohr, 2013) Marketing to personal lifestyles and values is the perfect strategy for Nest Labs Inc because their products are focused on creating comfort in the home and energy efficiency. The idea to re-invent household products so they are simple to use helpful and environmentally friendly is all about helping the consumer live a more comfortable lifestyle, so it only makes sense that the marketing strategy should have that same type of focus. Nest Labs Inc attracts their customers by providing a compelling reason to buy the Nest Labs products. The product eases the frustrations of the consumer it "saves money, reduces peak loads and helps our environment" (Salzman, 2014)

Market Segments
Variables used to segment the target markets.
The Learning Thermostat should use variables such as privacy risk, ease of use, usefulness, attitudes towards smart thermostats, motivations, and behavior control to segment its target markets. The risk to ones privacy can be described as “potential loss of control over personal information” by the product or service (Wunderlich, Sarker, & Veit, 2012). Ease of use refer to how user friendly a product is. Usefulness refers to how consumers feel the product is enhancing their lifestyle. Attitude towards the Learning Thermostat is “positive or negative feelings” by consumers towards the product or service (Wunderlich et al, 2012). There are two type of motivation intrinsic and extrinsic. Intrinsic motivations are internal rewards that consumers get when they use the product or service. Extrinsic motivation is just the opposite, instead of internal rewards the consumer is rewarded externally. The last variable to use is behavior control by consumers. Behavior control is described as the “autonomy of an activity”, in which the consumer feel a certain level of independence (Wunderlich et al, 2012).

Segment attractiveness evaluation.
The risk of invasion of one's privacy is unattractive. However, in the study by Wunderlich, Sarker, and Veit (2012) they revealed that the risk of privacy had little influence on whether consumers accepted the Learning Thermostat because of the tradeoff of benefits the product has to offer such as energy saving and being programmable. The attractiveness of ease of use is threatened when consumers find that they cannot easily operate the device and become frustrated. Positive attitudes about a product often form when the consumer feels rewarded both internally and externally. In the study by Paetz, Dutschke, and Fichtner (2011) consumers reported “ the two main motivations…were the possibility to save money and conserve electricity” (Paetz, et al, 2011). From this study the internal reward was saving the environment while the external reward is saving money. When it comes to behavior control the Learning Thermostat is attractive to consumers when the consumer is able to “monitor and control their electricity consumption” (Curtius, Kuenzel, & Loock, 2012).
Should your firm pursue full market coverage, market specialization, product specialization, selective specialization, or single-segment concentration? Why?
Nest Labs Inc is still a relatively new company, they have only been around since 2010 but have gained quick recognition because of the innovation of their products. The market for Smart homes is growing and Nest Labs Inc is definitely a company that will continue to expand and grow in this market. Nest Labs Inc should pursue the market specialization approach as a marketing strategy to market their products. The market specialization approach refers to catering to the needs of a specialized consumer group with a suite of products. Nest labs Inc has done just that by creating products that account for all of the needs of the energy conscious and tech savvy consumer buy developing products that save energy, are user friendly, have a simplistic sleek design and bring a sense of comfort to the home. Nest Labs Inc currently advertises their suite of products by using the strategy of marketing a different product to the same market; this includes the learning thermostat, smoke and carbon monoxide detector and the drop cam. (Salzman, 2014) As a fairly new company with a goal of expansion, starting with market specialization strategy as a starting point to market their product would help to gain awareness.
Target market(s).
Nest Labs Inc offers a suite of products for the smart home. These products are unique, offer energy-saving features such as remote access and wireless capabilities make it a must buy among tech-savvy homeowners, energy companies, and energy conscious consumers. Nest Labs Inc identified their target market as "energy conscious consumers seeking a better alternative to home comfort and who value design and simplicity." (Salzman, 2014) Almost any home owner can be seen as a potential customer, its price of $249 “compared with the industry average of $79” may put off some price-conscious customers (Karlgaard, 2012). Since many power companies offer rebates and some offer it free i.e. Electric Ireland which “1.6 million households in Ireland now can get a free Nest,” high cost of a Nest is not as much a hindrance to many people (“Nest's new business model,” 2014).
Nest Labs Inc has partnered with power companies and with utilities to offer rebates, Rush Hour Rewards (RHR) and Seasonal Savings programs. RHR helps “people earn money or credits from their energy providers by using less energy” during peaks times when energy is most expensive for energy companies. Participants in the Seasonal Savings program have the option to update their preferences as a means to conserve energy. “To date, Rush Hour Rewards has helped achieve an incredible 55% reduction in energy use during peak times” (Para, 2014, p. 20). Efficient energy management not only saves money, it can also can curb electricity spikes reducing “electricity consumption during times of peak demand, to lessen the threat of rolling blackouts and postpone the need to invest in new power plants” (Anesi, 2013, p. 2). “According to Energy Star, an average household spends close to $2,200 a year on energy bills — half of which goes toward heating and cooling unoccupied spaces.” Nest Thermostats prevent the obvious waste of energy allowing “users to adjust their temperatures anytime, anywhere, granting home and building managers ample opportunities to take energy efficiency into their own hands” (Krawcke, 2014, p. 1). Nest Labs Inc also markets their products to target tech savvy individuals. “In marketing, perceptions are more important than reality, because perceptions affect consumers’ actual behavior” (Kotler & Keller, 2012, p. 161). Nest carefully markets and designs its product and packaging as an art. It has won many design awards i.e. the Gold International Design Excellence Award from the Industrial Designers Society of America and featured in the Smithsonian Institution in the 2014 “Beautiful Users” exhibit (Fadell, 2013).
Target market needs addressed.
The features of the Learning Thermostat can help to address the needs of convenience, comfort, ease of use, energy saving and money saving needs of the energy conscious and tech-savvy target consumers. Nest’s Thermostat helps regulate the temperature providing for optimal living and sleeping conditions for one’s physiological needs. It can be connected to Nest Protect smoke and carbon monoxide detector and the newly acquired Dropcam to help meet their safety needs. Nest Learning Thermostat is a cool product and a status symbol which helps meet the needs of the tech savvy consumer.

Positioning/Competition/Branding
Positioning (See chapter 10)
What is an appropriate positioning statement for your product/service? Explain the statement.
How is your product/service positioned in the market place? Provide examples and a detailed explanation.
Competition (See chapter 11)
Which firm is the market leader in your industry, what are its strengths and weaknesses?
Product Branding (See chapters 9 and 12)
What brand elements would be most useful for differentiating your product/service’s brand from the competition?
What is the brand promise for your product/service? If there is a similar brand promise that another product/services uses please discuss.
What are the attributes and benefits of your product/service? How do they relate to your target market?
How can your firm use packaging and labeling to support its brand image?
Services/Pricing (Module 6)
Services (See chapter 13)
What support services do buyers of your product/service want and need?
What support services does your firm’s main competitor offer? How do those efforts affect their sales?
What post-sale service arrangements must or should your firm provide to handle repairs/services?
How will repair/service efforts affect customer satisfaction?
Pricing (See chapter 14)
What price adaptations should your firm include in its marketing plan? Be specific.
Describe and discuss any changes your team would make in the pricing of your product. Be specific and provide examples where applicable.
Promotions/Marketing (Module 7)
Promotions (See chapter 17-18-19)
Describe, discuss and analyze all of the various Integrated Marketing Communication (IMC) mix components your product/service uses.
Describe, discuss and analyze the internet marketing possibilities for your product/service.
Describe, discuss and analyze the use of social media in marketing your product/service.
Surveying the current promotional efforts for your product/service, what specifics could you provide that show your firm is delivering value for their customers? Remember, value is what customers get in return for paying the retail price for the product. Customers are not buying features and benefits!
Socially Responsible Marketing (SRM)
What examples could you provide of firms (any firm, in any industry) that successfully engaged in socially responsible marketing?
What specific suggestions could you provide for your firm to follow in order to be more socially responsible?

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