I am unable to install a watchOS 2 WatchKit app due to an application-identifier entitlement. This happened after turning on App Groups in the Capabilities tab.
Full
I had this problem and was not able to resolve it without deleting and reinstalling the app (messing with provisioning profiles, as some here suggested, did not help).
However, I did not lose my existing test data. Here's how to do that, for anyone having this problem in the future:
Xcode will then restore your previously saved app data. You now have your old test data back, and the app should run.