What to Wear? Wearables Market Segmentation

The wearables technology market comprises a broad and diverse set of products, services and related technologies.  It is therefore necessary to develop a taxonomy for segmenting the market into meaningful groupings to assist with: sizing the market opportunity; identification of sales/distribution channels; better understanding the relationship between technology enablers and growth potential for specific categories; and for messaging to the intended target audiences.

Existing Wearable Technology Market Segmentation Models

Here are a few of the different types of market segmentation that are currently being used to describe the wearables technology market:

Segmentation by: "How the product is worn"

• Wrist Wear
• Eye Wear
• Ear Wear
• Smart Clothing
• Modular (e.g. attached via pendant)
• Other (e.g. embedded)

IDC predictions for Wearables Technology market based on how the product is worn

You will find more statistics at Statista

Segmentation by: "Product Function/Feature"

• Smart Watches
• Wrist Bands
• Glass Wear
• Wearable Cameras
• Tokens, Clip-ons, Jewelry
• Other

CCS Insight Wearables Forecast August 2014

Segmentation by: "The primary purpose / main context of use"

• Fitness and Wellness: e.g. Activity monitor wrist band
• Health and Medical:  e.g. Wearable patches and monitors
• Infotainment: e.g. Smart Glasses
• Personal Productivity: e.g. Smart Watch
• Personal Safety: e.g. Alert monitor pendant
• Industrial:  e.g. Hand worn terminals
• Military: e.g. Augmented reality head sets
• Fashion: e.g. Ger Mood Sweater by Sensoree

The above segmentation is similar to the classification system used by Transparency Market Research (TMR) in 2015.

Segmentation by: "All of the Above"

Some researchers are segmenting the wearable computing device market by a mix of product and market type as illustrated by the following ABI Research Global Market Forecast:

ABI Research World Market Forecast, February 2014

An improved segmentation model has been published by Beacham Research Limited in collaboration with Wearables Technology AG in their (2014) "Wearables Technology: Towards Function with Style Report".  This report introduces a new way of segmenting the applications that represent the Wearable Technology market into 7 key sectors (Glamor, Communication, LifeStyle Computing, Sport/Fitness, Wellness, Medical, and Security/Safety). The authors claim that this is a ... "more rigorous approach than has previously been available" ... that ...  "gives the proper weight to all application areas currently in prospect and shows the true market potential".

Developing a better model for wearables segmentation

The preceding examples illustrate the need for a more refined market segmentation model for wearable technology; one that explicitly accounts for the inter-dependencies of product function, form and usage contexts.

To address this need I propose the following (multi-dimensional) market segmentation model:

Dimension #1:  Market context

• Consumer
• Industrial
• Military
• Health Services

Dimension #2:  Primary purpose of the product

1. Fashion - Empathetic
2. Communication - Infotainment
3. Lifestyle - Productivity
4. Health - Medical
5. Sport - Fitness
6. Safety - Security

Dimension #3:  How the product is worn

1. Wrist Wear
2. Eye Wear
3. Ear Wear
4. Foot Wear
5. Smart Clothing
6. Attached (e.g. pendant or ring)
7. Embedded

Dimension #4:  How the product functions

• Passive
• Active
• Dependent
• Independent (i.e. stand alone)

• Sensor
• Responder

The above model explicitly recognizes the fact that a particular wearable technology device or product may exist in multiple segments, and that its (market) behavior may be very different in each of the different segments (for example the growth prospects and value proposition for Smart Glasses in the Consumer market will be very different from that of the Military market equivalent).

This new approach  implicitly results in a very large number of segments (Dimension x Dimension x Dimension etc.).  However, with well chosen (orthogonal) dimensions each dimension can be evaluated separately, resulting in a more manageable segmentation analysis (Dimension + Dimension + Dimension etc.).

In a follow up post, I will explain in more detail how this multi-dimensional model can be used to classify and to better understand the market characteristics of the current set of wearable technology devices.