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.
App installation failed
This application's application-identifier entitlement does not match that of the installed application. These values must match for an upgrade to be allowed.
I had this problem with an iPhone app, and fixed it using the following steps.
After I did that, my app rebuilt and launched just fine. Since your app is a watchOS app, I'm not sure that you'll have the same result, but it's worth a try.