While founders think hard about how to meet the changing demand of the new wellness market, investors struggle to evaluate how scalable and sustainable will be new businesses in today’s uncertain environment. In the meantime, customers intensely look for innovative wellness products and services that meet the requirements of the post-COVID epoch. Start-ups employ technology including smart algorithms, AI, and IoT solutions to shape new boundless WellTech ecosystems. Some of them have the potential to become new big brands, and investors are eager to recognise the best projects. The earlier, the better. An annoying obstacle is that old approaches for marketing research, feasibility studies, and customers’ motivation do not quite fit the WellTech ecosystems. New practices are necessary to solve new problems. This article is one of the few attempts to clarify in what way technology applications woven into innovative business solutions can give birth to new WellTech brands.
WellTech: Welcome to a Digitally-augmented Healthy Lifestyle
Before beginning it is necessary to clarify what WellTech is. WellTech is an ecosystem that embraces the growing global wellness movement and technology to transform consumers’ lifestyles.
Media use the terms ‘health wave’ and ‘health tide’ to emphasize that is a global phenomenon directing people to a more healthy life. It is not just for esoteric groups, fitness activists, and few early innovations adopters. It is mainstream, but it is still a frontier where old approaches no longer work, and new ones have not yet taken shape. Meanwhile, WellTech projects are mushrooming, and investors puzzle over to recognize potential big brands.
One should not confuse wellness as a lifestyle with wellness as the prevention of diseases. The latter is in use within the contemporary healthcare system. And lifestyle wellness consumers are different. Like others, they are digitally savvy, connected around the clock, and spend an essential part of their lives in social networks. However, wellness customers not only buy novel products online, but they also incorporate these products (sometimes together with accompanying digital services) into their daily routine in a changing lifestyle way.
Like this, wellness consumers create a digitally-augmented lifestyle, including:
Forbes noted the following lifestyle wellness trends for 2020:
WellTech projects that try to ignore the specific features of wellness customers and the main trends of this market will be neither technically nor economically viable. Its founders have no chance to build big brands.
Technology vs Brands: VCs Point of View
As Cameron McLain of Giant Ventures noted, many VCs undervalue brands and overvalue technology. These VCs have an outdated point of view that the brand is too intangible to measure.
McLain says that both founders and investors have to develop a new mindset to understand the role of brands in technological early-stage start-ups. Why branding is so important? Because technological moat does not provide enough defence: nowadays technology is available for everyone as well as angel and venture capital. At the same time, branding forms a reliable long-term moat. Besides, branding has a remarkable backward influence on start-ups’ businesses.
While talking about how important is a strong network for brands, do not forget that any brand itself derives fun clubs and networks. Looking at customer engagement, we can see the same backward effect: with brands, customers are more engaged. We know how trust is important for brand building, but a brand itself generates trust. In this way, we may think that big brands have technology organically woven into all ‘branding’ activities for better business performance. In other words, we have to recognise the new features of technologically-empowered brands instead of opposing these concepts.
How to recognise future giants? Three questions made from Cameron McLain’s ‘5 takeaways to find the next unicorn’ may be a useful checklist to recognise a prospective WellTech brand early while its price is relatively low:
While the last but not least item is about founders, it is equally important for investors to recognise early prospective start-ups. Dan Simmons, CEO of Propelia, explains the shift from ‘Product Market Fit’ to ‘Founder Market Fit,’ and demonstrates how early funding works in the venture practice. There is an article in TechInvest as an attempt to apply a quantitative PROFITTM method to estimate what results early-stage WellTech companies can achieve with wisely spent funds. As regards platforms, Andrew Chen of Andreessen Horowitz forecasts the glorious future of new services marketplaces that have lagged behind goods marketplaces today due to the offline essence of most services.
Fortunately, wellness services have the potential for efficient delivery online. Affirmation and meditation programmes, physical exercises, and anti-aging practices form an incomplete list of new opportunities. The only problem for WellTech start-us is cleansing these methods and practices from tons of occult husks. Yesterday these methods were parts of ancient Vedic, Zen, Chinese, and other spiritual practices intended for initiates only, today it is mainstream.
Integration of physical wellness products with digital services creates great opportunities for future brands. There are three types of digital services in the wellness market:
Integrated version is especially important within the wellness market in which digital services create customer awareness and form their healthier daily routine with physical wellness products.
Fresh Look at a Wellness Customer and Competition
Putting customers into segments by demographic factors is a ‘classical’ marketing approach based on the idea that participants of a particular demographic segment exhibit the same behaviour.
Unfortunately, it does not work properly today, especially in the wellness economy. People from different income groups tolerate inflated prices of CBD products. Men are interested in beauty products. Boomers behave like Millennials and vice versa. The archetypical approach allows overcoming the limitations of classical marketing.
The term ‘archetype’ was coined by the German psychoanalyst Carl Jung a century ago. Today this term becomes fashionable with marketers. The archetypical method of customer segmentation focuses on behavioural facets rather than on demographics, operating with human intentions and motivations. The end goal of the method is the definition of customer groups based upon their distinct patterns of behaviour. New Frontier Data has used this method successfully, identifying a spectrum of CBD consumer archetypes in the European Union, including both current CBD consumers and no consumers. Via archetypes it becomes clear who purchase and consume CBD products, how and why they do it, how much customers spend, and so on. The archetypical approach can be in use together with elements of ‘classical’ segmentation to discover customers’ pain points and motivations to improve their experience.
The second pillar of classical marketing is competition analysis. And there is the second difficulty of employing classical marketing methods in the wellness economy. The boundaries among all economic sectors are shifting. McKinsey notes that digitization is causing a radical reordering of traditional industry boundaries, creating the potential to work along the value chain, reducing costs, and providing customers with new experiences. To succeed in the new borderless wellness economy, three things are necessary to adopt:
Competition in the wellness market has some specifics. Founders cannot fall into the trap of focusing only on rivals with similar products. There are other possible opportunities and threats. The former is cooperation that can be discovered among the ecosystem’s suppliers, distributors, and even competitors (especially, when comparable products have different value chains or can complement each other). The latter is an indirect competition with some players of the wellness market that employs disruptive digital technologies. This type of competition demonstrates which company is more innovative within the same market niche.
Anatomy of a WellTech Project
The HealthWave.Center platform is a new type of e-store integrated with a global fun club. The Health Wave is the registered trademark – presumably, a future brand.
The HealthWave.Center platform focuses on the actual global wellness problems:
The HealthWave.Center’s digital services are integrated with physical Rub n’ Roll®, the series of applicators/stimulators/massagers, a revolutionary device to improve the skin, body, and mental conditions with essential oils including CBD. The founder, Innovation Wave Pty Ltd, has acquired the exclusive right to the patented Rub n’ Roll® and trademarked HealthWaveTM technology and business solutions. Rub n’ Roll® on the HealthWave.Center’s platform is a current case, but there will be other wellness products.
HealthWave.Center focuses initially on three target customers groups (archetypes):
The HealthWave.Center’s sector of Wellness is routed in four markets with three different forms of competition/collaboration:
The HealthWave.Center platform employs technology to be different and low-cost operations to be competitive in the wellness market. Founder has achieved spectacular results with minimal initial resources, leveraging own contribution to create MVP. They exploit opportunities of all four markets and are ready for its monetisation. The capital structure of the project consists of intangible assets, including patents, trademarks, copyrights, and technology know-how. Leveraging the intangible capital applications to scale-up, the HealthWave.Center project forecasts generating more revenues without significantly increasing costs due to:
Nowadays, the health wave is rising across all segments of the global wellness market. What brands will run the wellness world tomorrow? The brands that demonstrate specific abilities in the world in which boundaries between sectors are blurring and technology transforming customers’ routine dramatically:
In a very short summary, it is can help to spot the potential brand’s features. Curious? Reach out a White Paper to see more details.