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 the same error until I restored the watch to factory defaults as per https://forums.developer.apple.com/thread/17948
"Apparently if you have and existing WatchOS 1 app and try to update it to WatchOS 2 the bundle identifier changes and causes this error. If you update your watch you will need to do reset it if you had installed WatchOS1 app before updating that app to WatchOS2."