Group Case study(Ecobee company) PDF

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Case study: Ecobee (Home automation company) MRKT 621: Marketing Management September 24, 2020

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Case study: Ecobee (Home automation company(

Company Background Ecobee was founded in 2017 by Stuart Lombard, who envisioned a company able to help with its environmental issues. He discovered that cooling and heating represent around 50 percent of the total energy consumed at home. With this in mind, Lombard programmed his own house's thermostat to conserve energy when he and his family went on vacation. When they went back toitheir home in Toronto, their house was shockingly cold. Thereby, Lombard started to visualize how to save energy without compromising comfort (Ecobee, 2020). He also stated that the products in the market were impossible to use because they were not internet-connected. After gathering a small group of experts, the company started operations. As a result of the teamwork, the company launched the first smart thermostat in history. Since then, the company has grown considerably across North America and has saved more than 10 TWh of energy through its

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customers. It is the equivalent to a year of all the energy consumed by all the houses in Las Vegas (Ecobee, 2020). Ecobee argues that through technology, the world can reduce carbon emissions by improving how people, homes, and cities consume energy (Ecobee, 2020). Since its foundation in 2007, Ecobee has participated in 6 rounds of funding. In its latest funding round in May 2018, the company raised $36M, totalling almost 150 million dollars in funding. Nowadays, the company is funded by 15 investors that have supported the vision of Stuart Lombard, being the Business Development Bank of Canada and Amazon Alexa Fund, the most recent investors (Crunchbase, n.d.). Also, Ecobee has been recognized with many awards, such as the 2011 AHR Expo Innovation Award and the Deloitte Technology Green Award for Canadian green companies (Plant Engineering, 2011). Ecobee’s Promoters Ecobee funding started in 2007, where three investors decided to support Stuart’s goals. Tech Capital Partners is a company that provides leadership, strategy, seed financing, and guidance in operations. Relay Ventures is a venture capital company that focuses on start-ups, early-stage, mid venture, late venture, seed, and growth capital investments. Furthermore, Investeco Capital, a company that has invested in more than 15 private companies. It focuses on renewable energy, water technologies, transportation solutions, and resource productivity technologies (Crunchbase, n.d.). Over time, Ecobee continued receiving investments from companies like The Ontario Capital Growth established by the Ontario Capital Growth Corporation Act in 2018. Just Energy, a company that offers green energy solutions to its customers to offset their negative impact on the

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environment. Energy Ventures, a venture capital firm that focuses on early-stage companies. Thomvest Ventures, a company that specializes in a growth stage, early-stage, start-up, and mid venture investment. AGL Energy is a firm working to create a sustainable energy future for their customers and partners (Crunchbase, n.d.). The last two companies invested in Ecobee were the Business Development Bank of Canada that offer consulting services, financing, subordinate financing, and venture capital. Moreover, Amazon Alexa Fund, which is the most exciting promoter Ecobee, could have. It is a venture capital that focuses on artificial intelligence, voice technology, robotics, and the Internet of Things across multiple healthcare, enterprise, or consumer (Crunchbase, n.d.). A Very Unique Company Ecobee created the world’s first smart thermostat to adapt to people’s lifestyles and help them live more sustainably. It means that the company is planet positive, which means that Ecobee is creating products that last. Thus, the entire population will change the way energy is consumed. Another point to highlight is the Data privacy. Ecobee aims to be a greeting guest in individuals’ homes; thus, it states that thermostat users can trust that the company will not try to sell or misuse their data or personal information to other parties. Nevertheless, Ecobee offers an option to donate their data to help scientists combat climate change (Ecobee, 2020). Also, Ecobee cares about its customers. By focusing on creating empathy, the company offers the right help at the right time with dedicated customer service. Stuart mentioned that listening to the customers and understanding their challenges has been one of Ecobee’s priorities (Ecobee, 2020). Besides, Ecobee offers seamless experiences because its products work together or alongside

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other smart home systems like Amazon’s Alexa. Ecobee understands that connection is everything nowadays, and they are thriving on it. Finally, Ecobee always wonders how its products can make a difference inside people’s houses and outside of them by paying attention to the existing environmental issues. Problems faced by the company and possible reasons One of the problems that Ecobee faces is that consumers can easily access other retailers' information when shopping online, which makes it easy and free to shift from the ecobee4 to Nest learning thermostat or Honeywell thermostat. Because there are many alternative products and online shopping allows customers to buy thermostats from competing companies. Oneisolution that can be suggested is to change the price of equipment and provide incentive promotions to consumersithat encourage them to buy Ecobee products. The second problem is competing with tech giants such as Nest, Google, Philips and Apple, which offer competing products with Internet connection technology and progress every day, and Ecobee will have a tough battle. Ecobee needs to pay special attention to three factors: 

Reduce production costs

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High access to alternative materials

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Low-cost alternatives

In the world of competition, Ecobee must use an alternative strategy to sustain long-term success in the online retail environment (Okane, 2020). Goals

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As a smart thermostat producer, Ecobee seeks to connect the digital age to creating peace and security and solving everyday home problems. In fact, this company's purpose is not only to help control the heating and cooling of the house and reduce costs but also to create a sustainable world by equipping more homes with this smart thermostat. The founder of this company says that our vision for this home assistance is to hear and learn all needs. Ecobee will do positive actions for the planet by predicting what people need and providing smart home solutions. In fact, Ecobee intends to remodel people's homes for the digital age and overtake one of its major competitors, Nest, which is one of Google's brands (Rubin, 2020).

External Environment Analysis (PESTEL) A PESTLE analysis is a system or method used to evaluate and track external variables that can influence the procurement and performance. 

Political

As the Government of Canada is responsible for environmental and business policy, this trend has led companies to thrive in environmental products production. The Government of Canada pursues this goal by setting environmental performance standards to promote innovation in goods and services (OECD, 2008). Ecobee is a company that is active in the field of resource efficiency and energy saving, so the government supports it.

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Figure 1: Canada political stability ("Canada Political stability - data, chart | TheGlobalEconomy.com", 2018)

In support of companies that are green inventions and innovations, the government usually reduces the income tax rate on developed green technology by 5 percent. The current tax rate for jobs in Canada is 15 percent, which is reduced to 5 percent for green patent revenue ("Green Technology, Not taxes - A Real Plan to Protect Our Environment,", 2020). 

Economics The economic factors(Economic growth, interest rates, exchange rate inflation, etc.) of a

country have a significant impact on the business and the profitability of a company or organization. In fact, GDP is a reliable tool that shows the economic conditions of a country. Figure 2 shows the GDP of Canada from 2009 to 2021. In 2020, due to the special conditions of the Covid-19 pandemic,

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all countries' economic conditions grew negatively, and Canada is no exception. These economic conditions have harmed all jobs. The GDP of Canada in 2020 is -6.23 %, which impacts all businesses negatively.

Figure 2: Canada: Real gross domestic product (GDP) growth rate from 2009 to 2021 (IMF, 2020) Canada is one of the world's leading trading countries and exports about three-quarters to the United States, and this trade relationship has been very profitable. Canada is one of the leading suppliers of foreign energy in the United States. Therefore, these business relationships will be very beneficial for pioneer companies in Canada's energy-saving (Plecher, 2020). 

Sociocultural factors

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To know the Social situation of Canada assists businesses to be more successful. The social information bout Canada is listed below: -

Population: 37.59 million ("Population and Dwelling Count Highlight Tables, 2016 Census", 2019)

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Life expectancy: 82.25 years (world Bank, 2017)

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Population growth rate: 1.4% annual change (World Bank, 2018)

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Gross national income (GNI per capita: 47,590 PPP dollars (World Bank, 2018)

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Official languages: French, English

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Technological Based oniCompTIA’siCyberprivacies 2019 Report, about 250,000 new technology jobs have

increased in Canada since 2010. And the report shows that about 1.66 million Canadian employees were employed in the technology sector in 2018, which is a growth of about 3.8% compared to the previous year. There are approximately 70,190 technology organizations and companies across Canada. The report also shows that the job growth rate in this field in 2019 has surpassed the United States, and technology companies are expected to have double-digit growth between 2018 and 2026. This shows that knowledge-based companies in the field of technology have good quality business conditions ("Cyberprovinces 2019,", 2019). 

Environmental In addition to its natural beauty and scenery, beautiful lakes and glaciers, yet Canada face

many environmental challenges. For example, many Canadians are concerned about air pollution,

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which has recently threatened the Canadian environment. Pollution is related to factories, acid rain and fog, and climate change. The Government of Canada has taken many initiatives to reduce pollution and eliminate greenhouse gas emissions (carbon dioxide) and has been somewhat successful in controlling it (David & Rahman, 2018). 

Legal Legal factors in Canada include equal job opportunities, labour standards, occupational

health and safety, marketing standards, customer rights and laws, product labelling and product safety. In fact, in order to be successful in business, companies must be aware of all these legal issues and avoid doing illegal business. If a corporation wishes to work internationally, it must also recognize the rules and regulations set by the government participating in the deal and conform with them. ("Guide to Canadian Legal Information", 2019). SWOT of Ecobee Although the company has developed products such as Ecobee 3 and Ecobee 3 Lite, it can be said that the strength of the company is Ecobee 4. According to (Wollerton, 2017), the company's strengths can be examined in terms of product features, functionality and connectivity. Features: The Company has created the first thermostat compatible with Amazon Alex called Ecobee4. At the same time, this device can be used as a speaker and connected to the Internet, and as a thermostat can regulate the humidity and temperature of its surrounding. The device performs its tasks accurately and correctly. As a thermostat, speaker, and Nest, this device can simultaneously perform all its functions through its sensors and wireless devices. Ecobee 4 is designed and built to be compatible with most smart systems. This device is also compatible with Android and iOS.

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As a weakness of the company can be said that because the company currently produces Ecobee 4, these products have a higher price than similar products of competitors such as Nest and Honeywell. Besides, despite the product features, the device does not have a significant advantage over its predecessors (Wollerton, 2017). The company has opportunities such as the development of new Internet-based technologies around the world. It can be claimed that reducing energy consumption and paying less for energy consumption is the desire of governments and households in all countries. Therefore, another of the company's strengths is the growing demand for smart thermostats. For example, by 2025, smart thermostat demand will reach more than 24 million US market (Delaware, 2019). Some things can be considered a threat to the company: Since Ecobee 4 is a digital product based on Internet technology, due to the rapid growth of this technology, the condition for the product to endure in the viable market is continuously updating. This increases the company's R&D costs. Another threat to the company is the existence of substitute products in the market. Since the company's product is practically a multi-purpose product, there are products on the market that offer each of these Ecobee 4 tasks alone with better quality and greater efficiency to customers. Similar technology is used in Ecobee 4 and other competitors' products, as well as the fact that its price is similar to the price of competitors' products. Therefore, the product market is like a completely competitive market where new competitors enter the market, and the customer can choose from various products. Thus, the arrival of new competitors is also a threat to the company.

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Ecobee’s Competitors Analysis According to the website (Owler, n.d.), Ecobee is a home automation company of smart thermostats for home and business. Ecobee is located in California, United States. Ecobee has 194 staff and estimated annual revenue of about $40.0 million. The company's two main competitors are Nest and Honeywell. The company's competitors analysis is as follows: Nest Company, under the brand name of Google Nest, is one of the brands of Google LLC whose field of activity is the design and production of products related to smart homes, products such as thermostats, speakers, etc. (Statt & Bohn, 2019). Strengths: 

Their produces install easily and are compatible efficiently

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Innovative technologies and well-connected computers are used through the Internet.

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In Just over 200 countries, Nest offers its goods.

Weaknesses: 

Their produces are restricted to some smart home's products

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Service disruption in some sells cases.

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The long process of replacing defective goods by company agencies

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The high price of products

Opportunities:

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Purchase and ownership other companies such as Dropcam

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Introduction of new smart products

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Home automation extension and increased demand for smart home goods.

Threats: 

There are several companies selling much better goods.

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Alphabet Inc. may sell it because the standards are not fulfilled.

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The technology of open source.

The US-based Honeywell Company currently has 44,000 employees in the United States and about 110,000 worldwide. The company operates in four different fields, including building technology (Sec, 2019). Strengths: 

It has an extensive delivery network

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Infrastructure and application skills are above perfection

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The company relies on success from its key stakeholder.

Weaknesses: 

The company invests in the R&D unit below the standard of leading companies.

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The company's financial profile is influenced by debt.

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Because in backlogs in order, order cancellations occur.

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Opportunities: 

Diminished shipping costs will minimize the costs of Honeywell 's goods because of cheaper premiums for exports.

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There have been raising concerns about safety and protection.

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The way business is done will have a significant effect on future taxation policies.

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In another area of goods, the core competencies of this business will be effective.

Threats: 

A lack of trained labour will impact the steady growth of income in these industries in some international markets.

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Lower pressure on earnings was exerted by strong rivalry.

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Customer shopping is transforming into an online environment that will influence the conventional supply chain paradigm powered by physical infrastructure.

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The increase in demand for raw materials may be influenced by profitability. Marketing Mix

Product/Service Ecobee is an electronic device that represents more than a smart thermostat; it has a built-in Alexa voice feature so it can hear your voice commands and respond to the indications you give to it. It can also read the news for you, adjust the temperature using its thermostat, and have a timer. It can help manage hot or cold spots inside your house with its room sensor that delivers comfort in

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the rooms you care about or use the most. Ecobee has a square cylinder design with curved borders that gives comfort, and also the way how it is designed is pretty convenient at providing safety for the small ones in the family. Its screen overflow and 3D configuration make tracking parameters easier to use. Talking about its measurements, they are width: 109 mm and 109 mm as height as well. The quality level of Ecobee is shown as one of the most worth thermostat products in the marketibecause it is made withihigh quality technology, and its design is perfect to fit with every house size. Inside the box, you get the Ecobee device, a mounting plate, a room sensor, a detachable stand, an installation guide, a room sensor manual, wire labels, a voice card, screws and drywall plugs, a power extender kit, and a trim plate. Pricing The Ecobee is an entirely new product in the market. Within our company, Snowie is the only distributor of our product. We have no competitors within the market yet. As the Ecobee is the first smart thermostat to appear in the market, we are going to implement the Market Penetration Pricing setting a lower price than the price at first so that Ecobee can be known and accepted widely within the local market. Until we reach that point, we are planning on raising the prices by 10%. We are targeting our customers as any gender whose age is in between their 30s to 50s years old, controlling the product of their homes. The customer targets are commonly middle to upper-class individuals; as it is not considered an inexpensive device that costs approximately $250, income is considered a significant factor when looking for potential product buyers. Moreover, the company is offering handling and shipping services for free to the customer who is purchasing the gadget; in order to do that, we are implementing the geographical pricing

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