How 1BOG Helps Make Solar More Appealing to Mainstream Customers

We hear this topic discussed almost everyday in the solar industry. How do we reduce or eliminate barriers to adoption, and what programs or activities are needed to make solar/PV a mainstream technology?  Within this endless debate, it's interesting to see the different strategies being applied toward reaching the common goal of increased market adoption.

Two examples of recent initiatives -- specifically aimed at taking solar into the mainstream -- include groSolar's national advertising campaign and Akeena Solar's partnership with Westinghouse. In terms of strategy, groSolar is relying on building awareness whereas Akeena is focusing on brand recognition and using "home improvement" channels of distribution.  Yet in my mind the most interesting strategy is the one employed by an organization called 1BOG.

Buying solar involves a complex, information intensive and high risk purchase decision. (Note I said the purchase decision is complex and high risk, not the technology)  This is exactly the reason why the solar industry has not yet reached a tipping point.  Solar/PV is a high cost product, supplied by unknown vendors, in an industry without uniform standards or government regulation.

When faced with a purchase decision that involves high cost and/or high risk, pragmatic customers (starting with the early majority) will not buy until they see proven/leading suppliers, references from people they trust, and reliability of service.  1BOG helps mainstream customers meet these buying requirements by offering a unique combination of group purchasing/installation and objective advice.

1BOG's service organizes homeowners in a given area and allows them to purchase and install solar as a group.  In addition to negotiating a volume discount of about 15%, 1BOG acts as an independent provider of quality assurance and objective information.  To qualify as a 1BOG vendor, local solar companies must go through a rigorous evaluation of their products, installation practices, and longterm stability as a company. Customers are also provided with assistance and support in the areas of rebates/incentives, financing and permits.

While most people would point to the 15% reduction in cost or the assistance provided with bureaucracy and paperwork as the primary benefits of 1BOG's program, I believe the true power of their approach is in helping reduce the perceived risk of solar.

In the world of high risk the customer will not rely on the word of a vendor. The customer’s decision process is based on finding objective information from reliable sources, something the vendor cannot provide.  1BOG reduces the perception of risk by acting as that provider of objective information.  1BOG facilitates references from trusted sources (by organizing buyers into self-referencing groups), and then provides evidence of expertise and product quality (by vetting local solar providers).

The 1BOG strategy is by no means complete but it does a good job of addressing some of the needs of mainstream customers. Only time will tell if this, or other methods, will deliver the anticipated prize -- solar's mainstream market.

Warren Schirtzinger advises solar companies on how to: differentiate their products, grow during an industry shakeout or consolidation, and thrive without government subsidies. He has authored articles as a "Renewable Energy Insider" on RenewableEnergyWorld.com and writes about marketing strategies on the solar strategies blog.  Contact him via e-mail (warren["at"]solar-strategies.com) or follow him on Twitter @SolarStrategies.

Read More

Meet the Gatekeeper of Solar's Mainstream Market

The solar industry has been selling to an early market of innovators and early adopters for many years now. And there are still plenty of customers in the early market to sell to.

But most solar companies have their eye on a bigger prize -- solar's mainstream market -- a category that contains a whopping 84% of all customers. Because there are so many people in the mainstream market, winning their business is key to sustained profits and growth.

Customers exhibit purchase behavior over time that is different at each stage of a market's development. Innovators (about 2.5 percent of a market) are often fascinated with new technology. Early adopters (about 13.5 percent of the market) are less fascinated with technology but are often quick to see the potential benefits of something new. But the great majority of the potential market -- the remaining 84 percent -- is not fascinated with technology at all. In fact, the most substantial portion of a market are those who fundamentally dislike technology.

What are the characteristics of the customers who make up 84% of the solar market? Meet the gatekeeper of solar's mainstream market -- the early majority.

All mainstream markets begin with the early majority.  They are the gatekeepers of the business rewards that lie ahead.  These people do not want to be pioneers and will never be the first on their block to try a new technology like solar.  They like to keep a low profile and their goal in life is to make incremental, predictable progress. (quantum leaps are for Evel Knievel)

The early majority shares some of the early adopter's ability to relate to technology, but ultimately they are driven by a strong sense of practicality.  The word "risk" is a negative word in their vocabulary because it implies the chance to waste time and money.

When they buy they care about the company they are buying from, the quality of the product they are buying, and the reliability of the service they are going to get.  They like to see competition and prefer to buy from the proven market leader.  Members of the early majority tend to be vertically oriented, meaning they communicate more with others like themselves. References and relationships are very important to these people which presents a "catch-22" for solar vendors: the early majority won't buy from you until you are established, yet you can't get established until they buy from you.

In order to break into the mainstream market, solar vendors will need to re-orient their business practices to match the pragmatic and conservative characteristics of mainstream buyers. This means: facilitating referrals and references from someone the customer trusts, establishing then adhering to industry standards, emphasizing financial stability and product "intangibles" rather than technical specs, selling through channels that mainstream buyers are comfortable buying from, and offering turnkey systems that are designed for vertical markets.

Meeting the needs of the early majority is a strategic way of intervening in the solar market to create lasting change. There are many ways to affect markets on a short term basis -- advertising campaigns, government policy, subsidies, etc. -- but these techniques have no long-term positive impact on the market. Understanding mainstream buyer behavior and adapting your business practices accordingly will permanently change solar markets in ways that are sustained by natural market dynamics.


Related Articles:
Product Adoption Fundamentals
Solar in the Mainstream

Read More

Reducing the Risk of Solar

Solar energy is considered a long decision-cycle purchase. Due to the complexity of the sale and its financial components, consumers educate themselves thoroughly before buying. As such, vendors cannot move a customer through decision stages to close the sale.

With products that are more costly, complicated or high-risk, the customer has more at stake.  If a solar installation goes bad, the customer is looking at losing thousands of dollars, the potential of roof damage/repair, time without basic necessities (electric heating, cooling, refrigeration, etc.), and a significant disruption to his or her life.

Adding to this perception of high risk is the nearly risk-free alternative of buying electric power from the local utility, a proven supplier with an unmatched record of safety and reliability.  Relative to a utility, solar appears extremely risky.

In the world of high risk the customer will not rely on the word of the provider. The customer’s decision process is based on finding objective information from reliable sources, something the vendor cannot provide.

Think about the last time you had to select a surgeon, a family doctor, a lawyer, or an investment broker/advisor -- all high-risk purchase decisions.  Would you entrust your life savings to a financial advisor or broker because of an ad or brochure?  Would you select a surgeon based on his "messaging?"

The only way to increase adoption of a high risk offering is with methods that reduce risk in the mind of the customer -- references from someone the customer trusts, professional credentials/affiliations, a supporting infrastructure, industry standards, evidence of expertise, product quality, and ongoing service.

The solar industry needs to wake up and realize that the McDonald's-happy-meal approach to promotion is useless when the product is high cost and/or the purchase decision is high risk.


Related Articles:
Marketing High Risk Products

Read More

Solar Forces a Change in Behavior

I think it was Nathan Lewis of the California Institute of Technology who first said that solar energy-generated electricity does nothing "new." People already have electricity.  And that is true.  Solar doesn't offer an improvement in capability.  But that's not the real barrier to the public's adoption of solar power.

Most emerging technologies are introduced when their performance is not as well developed as established products.  And in order to become competitive over time, technologies like solar must be refined and improved by a sequence of users (starting with innovators and early adopters).

The key issue here is not that solar is an under-developed technology or that solar provides something people already have.  The key issue is that solar, like many technologies, forces a change in behavior.  With solar you must have panels (or PV material) installed, rather than use a built-in connection to the grid.

A recent survey by the Solar Energy Industries Association (SEIA) as reported on Renewable Energy World indicates people are in favor of solar power but would prefer that it is supplied by their utility.  Why would 75% of people surveyed want their utility to install solar?  Because that way they can realize the environmental and renewable benefits of solar, without changing their behavior.

As long as everyone agrees that centralized solar electric power delivered through a grid is the best path to a sustainable future, then our objectives are clear.  We need to focus on utility-scale solar and improve our centralized system of delivery.

However, if distributed generation and residential solar are a better way to go, we need to find a way to get people to change their behavior.  And getting people to change their behavior requires more than just cost reduction and government subsidies.  Encouraging people to change their behavior requires the influence or involvement of preceding groups of people in the marketplace


Related Article(s)
Product Adoption Fundamentals

Read More

The Easy Solar Segments Are Gone

Today's solar markets have exhausted the "easy" segments. Typically, customers exhibit purchase behavior over time that is different at each stage of a market's development. Innovators (typically about 2.5 percent of a market) are often fascinated with new technology. Early adopters (about 13.5 percent of a market) are less fascinated with technology but are often quick to see the potential benefits of something new.

But the great majority of a potential market -- the remaining 85 percent -- is usually not fascinated with solar technology at all. In fact, the most substantial portion of any market may be those who fundamentally dislike technology.

Solar organizations that understand the shift in potential customer focus will recalibrate their marketing. They will concentrate more on the complete (intangible) product and less on the technical specs or "tangible" features.

Developing a complete product means helping the customer focus on how the product will improve his/her future. It requires detailed knowledge of the customer's life and direction, not merely an understanding of the efficiency of a solar cell.

Companies that do not understand this fundamental change will experience an abyss in their growth curves. Once the easy segments of their markets are exhausted, additional sales will come only at the expenditure of substantial resources, and the returns on sales and marketing will decline rapidly.


Related Article(s)
Product Adoption Fundamentals

Read More

In Pursuit of Solar's Tipping Point

A recent call to action in the solar industry reveals a common misunderstanding of the term "tipping point."

An initiative, called National Solar Quote Month, is an effort to encourage lots of people to request quotes from solar suppliers in order to bring solar power to a tipping point in 2010.  Unfortunately, the presence of a large number of people does not translate into a tipping point.

A "Tipping Point," as described by Malcom Gladwell in his book by the same name, is when an idea, product, message or behavior spreads like a virus.  It is the name given to a dramatic moment in an epidemic when everything changes all at once.

On page 33 of the book, Gladwell describes the need for more than just large numbers of people to create a Tipping Point.  It requires the participation of so-called connectors -- people with unique social gifts who have an uncanny genius for being at the center of events.  In other words, connectors are "influencers."

To illustrate the need for connectors, Gladwell tells the story of how Paul Revere's midnight ride started a word-of-mouth epidemic, while a virtually identical ride by fellow revolutionary William Dawes did not.  Paul Revere was a connector and William Dawes wasn't.

So fundamentally it doesn't matter HOW MANY people are spreading the message…it matters WHO is spreading the message.

Parts of the tipping point concept have been used successfully in the electric power industry in the past.  Thomas Edison used the power of influencers to accelerate adoption of electric light when he selected financial institutions in lower Manhattan as his first customers.  Seeing the windows of the financial district aglow by night demonstrated electric lighting technology to the metro population living across the Hudson River in New Jersey.  And because the financial community was considered to be an influential source of new techniques and ideas, Edison jumpstarted a word-of-mouth epidemic that had a tremendous impact on the rest of the country.

Interestingly, a group of researchers just reconfirmed the tipping point concept by studying the social networking site, Twitter.  They found that "follower count" is a meaningless metric when it comes to determining influence.  It doesn't matter how many followers you have.  It only matters who is following you.

Concepts like the Tipping Point, the Principle of Disruptive Innovation, and the Technology Adoption Lifecycle are extremely valuable in our efforts to expand the use of renewable energy around the world.  But it's important to first understand what these concepts really entail, and how they can be applied correctly.

Related Articles:
Product Adoption Fundamentals

Read More

Solar in the Mainstream

There is an unfortunate fact about emerging technologies and markets that can cause great frustration for anyone offering something "new." The solar industry is a perfect example.

Most people do not view something new as "in the mainstream" until they see someone exactly like themselves using it.  So a homeowner in Iowa with a 2000 sq. ft. house located on a hill, wants to see another homeowner in Iowa with a 2000 sq. ft. house located on a hill using solar before he describes solar as available here and now. You can have millions of people using solar in other parts of the world, on many types of different buildings, and it means NOTHING to the guy on a hill in Iowa.

This peculiar market-behavior pattern applies to anything new or innovative that is introduced into a marketplace. In every case, the secret to achieving mainstream market acceptance is: focused vertical marketing. In other words, focus on one vertical market segment at a time because mainstream buyers/users will only accept information from people who are identical to themselves.  And it's impossible for solar suppliers to serve the vertical needs of all segments at once.

Any technology that is considered mainstream today, had to go through a phase of focused vertical marketing to get there. And with maybe one or two exceptions, I'm not seeing many suppliers do this yet in the solar industry.


Related Articles:
Product Adoption Fundamentals

Read More

Edison was a Marketing Strategist

Most history books say 1882 was the year the light bulb was invented. This is incorrect. The basic technology had existed for almost 100 years. The reason 1882 is important is because that's when Edison extended the adoption of electric power and light to the early majority. And the methods he used are strategically very important to the solar industry.

Edison’s strategy for accelerating the adoption of electric light was based on minimizing disruption to people's lives. Since gas lamps were the dominant method of indoor lighting, Edison designed his electric lights to look and operate almost identically. His initial electric lights provided 13 watts of light, almost the same as the 12-watt gas lamps he wanted to replace. The new electric lamps looked almost exactly like those same gas lamps.

Recognizing that many commercial and residential landowners in New York had invested considerable capital in gas infrastructure to light their buildings, Edison chose to run his first electrical wires through existing gas lines, fitting directly into the system people already understood for the delivery of light.

Edison’s technology was new, but the form and function were decades old.

But Edison's most ingenious strategy was in selecting the location of his first customers -- financial institutions in lower Manhattan. Seeing the windows of the financial district aglow by night demonstrated electric lighting technology to the metro population living across the Hudson River in New Jersey.

Because the financial community was seen as a credible source of innovative building technology, Edison helped meet the reference requirements of early adopters, who then shared the idea with their local communities. This endorsement of electric power and light, by demonstrating its use in a visible location, had tremendous influence on the rest of the country.

Who should the solar industry be using as a credible reference?


Related Articles:
Product Adoption Fundamentals

Read More

Solar Customers are Changing

The Technology Adoption Lifecycle and the Principle of Disruptive Innovation share at least two fundamental attributes.  First, both models describe market development in terms of the changing nature of the user rather than the product.  Using similar terminology, both suggest that products are initially used by early customers who base their purchase decisions primarily on the product’s functionality.  Then, once the demand for functionality has been met, vendors must begin to address the need for reliability that is demanded by an initial wave of mainstream buyers.  A third phase of growth occurs when market followers and conservatives require that vendors meet their needs for convenience.  The final group is mostly concerned with price.

Another shared attribute is, despite a track record of proven success, both models are counterintuitive to most business managers.  When struggling for survival, a solar organization will find it incongruous to focus on the peculiar or specialized needs of a small group of potential buyers, before addressing the more common needs of larger groups.  Too often managers attempt to serve an entire market all at once, and unintentionally delay the market transformation process.

The inescapable task of winning over a sequence of buyer types, combined with the necessity of promoting intangible benefits tailored to the user’s point-of-view, form the cornerstones of market transformation.  These principles have repeatedly guided new products and companies to the achievement of mainstream market acceptance and commercial success.  Much of the history and experience behind these models can be translated into helpful guidance for the solar industry.


Related Articles:
Product Adoption Fundamentals

Read More

The Illusion of Cost Per Watt

We have seen many times that a reduction in price often accompanies the acceptance of a product in the marketplace. But it is incorrect to assume that lower price will lead to mainstream market acceptance, or that any technology-based product would be widely used and adopted if its cost was low enough?

Price reduction alone does not guarantee mainstream acceptance.

Take for example global positioning systems or "GPS." Most observers would say a dramatic reduction in average selling price during the late 1980's was responsible for the increased acceptance of GPS in the marketplace.

However, several other factors were equally important in leading to the transformation of the GPS market. For GPS, the intangible drivers of market acceptance were:

• the U.S. government's decision to make GPS available to the public
• Magellan and several other manufacturers started shipping commercially available GPS products (1989)
• the U.S. government announcement that GPS will be "free" for 15 years (1991)
• addition of a 24th satellite to complete the GPS support infrastructure (1995)
• the announcement that GPS will be free for the foreseeable future (1996)

Every one one of these events lowered the risk of purchase/adoption for prospective customers.

Pragmatic and conservative buyers in a market wait for: the availability of a standard product designed to specifically meets their needs, that is made by a leading supplier who sells the product through someone familiar. Despite evidence to the contrary, low price does not exclusively drive market transformation.

This misunderstanding is especially common in solar power and renewable energy. There is no guarantee solar power will become mainstream when it costs approximately the same as conventional sources.

Read More

Is Solar in the Dead Zone?

A simple graph of customer gain (x-axis) vs. customer pain (y-axis) highlights a dangerous place for technology-based products like solar/PV.

This simple four-by-four grid compares value derived from a product, to the pain of acquisition and ownership. The Dead Zone is defined as the area where a product provides value that is good but not great, which can be adopted with discomfort but not excruciating pain. This combination usually convinces the customer to delay purchase because the gain isn't really high enough to justify the amount of pain required.

Technology-based products generally thrive in areas of medium to very high "customer gain" and low-to-medium "customer pain." (see areas shaded in green) And a product or technology is said to be "in the mainstream" when it provides high or very high gain while imposing only modest discomfort.

Sustainable markets exist around the edges of this graph. Very high gains can overcome almost any amount of pain, and in the absence of pain, even modest gains look good. But what happens to an offer (such as solar) that falls in the middle?

A company or an entire industry can escape the dead zone by moving down and/or to the right, away from the center of the graph. And it's interesting that almost universally, the solar industry has decided that increasing gain via lowering cost per watt is the best way to move solar out of the dead zone.

However reducing pain would actually be a faster, long-term solution. In nearly all cases, customer pain is minimized by intangible factors supplied by the vendor rather than tangible or technical attributes of the product itself.

Examples of reducing solar-customer pain might include: selling preconfigured systems/packages through major retailers, eliminating the interconnection application process for small systems, introducing standards for equipment ratings, or making solar-product warrantees transferable.

Focusing on product intangibles would be a much more effective way of lowering pain, reducing the perception of risk and leading solar out of the dead zone.


Related Articles:
Solar Market Leadership

Read More

Solar Market Development

The strategies historically employed to spur expansion of the solar (PV) market are almost always product oriented. They are typically based on the progressive lowering of prices through economies of mass production, combined with subsidized “buy-down” programs or "feed-in tariffs" for residential and commercial users. Lowering “cost per watt” is seen as the key to unlocking a vast potential market for photovoltaics.

Numerous past studies and development efforts have promoted this “product path” to solar (PV) market expansion. PV products are subsidized or supported with the primary goal of achieving economies of mass production and eliminating barriers to use. Examples include:

• federal and state buy-down programs
• coordinated government procurement of PV
• elimination of barriers to capital formation
• legislative packages supporting distributed energy
• legislative and regulatory assistance to states
• prohibition of restrictive covenants and ordinances

At the same time, steps are taken to make the product (PV) more “attractive” to the consumer. These include: legislation that encourages deployment of PV systems, sales tax exemptions, interconnection standards, net metering laws, and other programs designed to ease or eliminate barriers to adoption.

Here's a classic example as stated in a research report by the Renewable Energy Policy Project (REPP):

The product path requires government involvement to increase the diffusion rate of consumer [PV] products through setting market rules, making strategic purchases, and other innovative support.

This product-centric approach emphasizes pushing photovoltaics into various applications or markets under the assumption that lower prices, attractive financing options, and the absence of barriers to implementation, will automatically lead to consumer demand.

In contrast, the underlying belief in free-market enterprise is that people do things for their own reasons. So low price and ease of implementation do not exclusively drive market expansion. People must want to buy what is being offered. And motivating people to want something -- especially if it’s technical in nature -- requires the influence or involvement of preceding groups of people in the marketplace.

Most “for profit” organizations working to accelerate market adoption focus on winning over groups of buyers in sequence according to their psychographic profiles. This involves identifying a group of early buyers who initially value a product offering, and then communicating or promoting a combination of tangible and intangible benefits in ways that lead to the sale of product. After capturing the first group, the organization refocuses its collective attention on the unique needs of the next group, and so on. In this way, a succession of customers act to pull the market forward as the product is adapted or “positioned” to address their varying needs.

From the standpoint of pure capitalism, it is important to realize that there is no guarantee solar power will automatically become widely adopted when it costs approximately the same, or even somewhat less than conventional sources of electricity. Many other factors influence market adoption.

Related Articles:
Product Adoption Fundamentals

Read More

Measuring Word-of-Mouth

Measuring word-of-mouth (WOM) results is not really very hard. It only becomes difficult if you try to use quantitative methods.

That's because WOM is a "qualitative" technique. Putting numbers on word-of-mouth communication is like using an apple to check the color of an orange.

To [qualitatively] measure the results of WOM marketing, just ask and answer the following questions:

1. Do prospective customers know: what makes your solar business different than all the others, and when you're the best supplier for the job?

2. Do members of the press (including bloggers) accurately reflect your competitive positioning and lend 3rd party credibility to it?

3. Do industry influencers understand your business strategy and support it to the press?

4. Does the target market see you as a reference source expert/counselor in the solar industry?

5. Do your business partners support your products and strategies?

6. Do your resellers (or channel partners) know where to spend their time, who to call on, and what to say?

7. Are key customers actively involved in testimonial marketing and serving as references?

I've been successfully using this 7-point checklist to evaluate WOM programs for many years. It's really not that hard. Really!

Read More

Word-of-Mouth Communication

The most likely way that information about a solar product can be effectively communicated is through word-of-mouth.

Word-of-mouth has these advantages:

• The source is seen as credible, particularly in comparison with advertising since the source is a person known to the recipient. Ads are known to be created by the advertiser. Today, even editorial endorsements have the "taint" of being created by "public relations" tactics and therefore have less credibility than word-of-mouth communication.

• Word-of-mouth often deals with awareness, interest, the source's trial experience and product benefits all at the same time. This can move the recipient rapidly through the stages of purchase decision making and often even creating a reason for purchasing, all in one "exposure."

• It appears to have a more permanent effect than most other communications channels

As a result, second only to the task of creating intangibles for solar products and companies is the challenge of finding the most effective way to generate positive and relevant word-of-mouth.

But because word-of-mouth communication is out of the "senders" control, the requirements for developing essential messages, positions and reasons for purchasing is substantially different than it is for, say, advertising.

Advertising is as direct as standing across a small creek from the prospect, and signaling via messages of the advertiser's design, based on assumptions about the recipient's needs. Advertising is direct, controlled and immediate.

Word-of-mouth, on the other hand, is like swimming 40 miles underwater in a decaying swamp, with the mandate that the swim must be completed by a large group of other people under no control of the starting swimmer, via strokes that cannot be prescribed, and on a time schedule that cannot be forecast. And to add more reality to the metaphor, none of the swimmers can see each other.

With an advertising campaign, the marketer determines message, positioning and purchase reasons only weeks or at most months in advance. If a particular advertisement or campaign does not work, it can be pulled and redesigned.

With word-of-mouth communication, however, the initial positioning and messages once started through the word-of-mouth channel (swamp?) are completely outside the sender's control. They are also outside easy measurement. Consequently, they must be designed at the outset to survive the trials of time decay and the communications quality deterioration through a series of people who invariably have motives other than the marketer.

It is for this reason that the initial positioning and message development effort in a solar company is so critical: the risk of failure is so high, coupled with the need for a "hardened" yet buoyant position and set of messages that will work continually.

Read More

Creating Intangibles

Creating intangibles in an emerging market is -- by definition -- a creative marketing and a creative communications task. It is also a "steering" task, comparable to steering an ocean liner where feedback is limited and time is a critical variable. It requires the ability to think through what the customer needs are likely to be in the future, and to begin positioning the emerging product based on expected needs. Hence, it is both exhilerating and risky.

Often, the company's first attempts at bringing a new product to market will seem unsuccessful. Sales will not appear to increase. The messages will appear to be too early, the channels used to send messages inappropriate, or the intangible messages will be received but not correlated to a product.

Each of these apparent "failures" is, however, often a normal part of the process of learning that a potential customer goes through.

The process concept of learning is an vital one with regard to marketing planning. In most product markets characterized by some customer risk (in other words, most markets where the price is higher than a few dollars for a disposable commodity), customers will require three to twelve positive exposures to messages -- during the purchase cycle -- about a new product before they purchase. At the same time, we know that the same message reaches a saturation point after it has been noted three times. The way in which these two apparently contradictory findings - the need for up to twelve exposures and the saturation at three exposures - are fused helps explain the extraordinary power of word-of-mouth communication in an emerging business.

There are also some important caveats here. First, is there a purchase cycle? From the standpoint of perception, if there is no interest in purchasing, there is little chance that a message sent by mass communications channels will be received -- instead, it will merely be disInissed as clutter.

Second, is the message relevant? Even in situations where a customer is disposed toward purchase, if the messages are not on-point, they are likely to be discarded.


Related Articles:
Solar Product Perception

Read More

Determining Intangibles in Emerging Businesses

Determining intangibles in an emerging business is a special case within the disciplines of marketing and communication.

For an emerging business, the base of customers is small, and many customers represent innovators and early adopters, buyers whose characteristics are not typical of the majority of the future market. Indeed, attempting to build a business based on innovators is often a course that leads to bankruptcy. Even if the company does not fail, relying on innovators leaves the majority of the market open to new competitors who focus more effectively on the intangibles important to other adoption segments. It is this phenomenon that results in pioneering firms doing all the early eduction and market development, only to find the lion's share of the market falling to a later entrant.

Building intangibles for emerging businesses remains a special art, particularly in markets where the majority of customers are still classified as innovators. In this situation, traditional research techniques usually do not provide adequate insight into potential intangibles. Instead, management is often wiser to embark on a course of creating intangibles rather than searching for them in the customer base.

Related Articles:
Solar Product Perception

 

Read More

Determining Product Intangibles

In an existing solar business, with established products, customers and competitors, the process of determining the intangible factors that influence purchasing decisions is relatively simple. It means asking customers (and others who influence the purchase decision) two basic questions:

1. What factors in the purchase and use of solar power are important to you? and,

2. How does our solar offering compare on these factors to other alternatives (including related but not directly competitive products)?

This type of research is easy to describe but difficult to do. In my experience, many research efforts fail to achieve adequate answers to the two questions.

When it does, however, the results can be dramatic. In one recent case, interviews with 200 solar/PV customers and potential customers found that users valued the reputation of the supplier, the service and support provided, prior interaction with the supplier, and industry standards or certifications as the most important intangible attributes of the product. In fact, the tangible characteristics (i.e. PV system specs) ranked no higher than sixth in the customer's ranking.

However, this company had based the majority of its marketing and sales messages on tangible product attributes: conversion efficiency, crystalline vs thin film, panel specs, inverter specs, and maximum power.

The research was commissioned only after a period of frustration and declining sales, and after two new competitors had made substantial early inroads into the company's customer base.

After the product perception research was completed and after the company's sales and marketing messages changed to reflect the results, revenues reversed their decline and climbed twenty-four percent the first year, gross margins tripled, and the market value of the company doubled. All of this occurred with only a slight increase in marketing expenditures, and with no change in the tangible product.

Not all cases are this positive, of course. But enough of them are to demonstrate the power of marketing product intangibles.

Simple in concept as this type of customer focused research is, it rarely appears in discussions about the solar industry. Determining product intangibles and converting the knowledge into messages and programs is easiest in an existing market where competition is strong, such as the example cited above.

The process also works in emerging businesses and in turn-arounds, but the situations are different.

Read More

Solar Market Leadership

There seems to be wide spread agreement that solar power is well on its way to becoming a commodity. And when it does, there will be a consolidation of the industry with only a handful of solar suppliers left standing.

So how does a company survive an industry shakeout? And what does it take to build a lasting position of leadership in an industry that makes and sells a commodity?

The answer is: those companies that effectively market their solar offering (using a mix of tangible and intangible product attributes) and are always in step with the changing preferences of the market.

The relationship between product tangibles and intangibles shifts dramatically as different stages of the adoption process are achieved. This shift in customer emphasis from tangibles to intangibles can be demonstrated as:

As products move through the adoption process, intangibles assume more importance. Often, pioneering new products or "first movers" lose their initial prominence because a new entrant is more successful in product positioning based on a more effective mix of intangibles. This can be the case even if the second product is not technically superior.

Apple was not the first microcomputer company, nor was the Apple II the first microcomputer. It was the first product to be called a personal computer, but much of the success of Apple, at a cost to MITS, Tandy and others, was the result of emphasis on intangibles.

Similarly, International Business Machines was not the first mainframe computer company. A number of others were ahead of IBM (generally, Univac is credited as being the first moderately successful mainframe company). But IBM was ultimately successful in dominating the mainframe market. The main reason was an appropriate emphasis on intangibles in the early stages of market development. Univac and the others continued to compete mainly on the tangible aspects of the product, even though the situation had changed.

The power of the tangible / intangible mix of the perceived product is so strong that it can be used to identify markets and segments where pioneers can be superseded.

This seems to be a persistent weakness in the marketing practices of solar suppliers today. Most solar companies are not working to build intangible attributes into their offering, and instead seem to be focused on just the tangibles (module efficiency, price, technical specs, etc.)

A number of solar/pv market segments exist, for example, where the major focus of suppliers should be intangibles. The solar installation business is also ripe for the effective marketing of intangibles.

Related Article(s)
Solar Product Perception

Read More

Solar Marketing Transformation

To many business owners, a goal of building a $25 million company appears to be too small. Venture capitalists look for a company that can grow to at least $100 million, and go public. Yet the facts argue that achieving just a $25 million level of business is a major achievement. For perspective, the average sales per business firm in the United States in 2006 was $338,000.

Only six in every 1,000 businesses achieve revenues of $25 million. The other 994 either fail, or peak at less than $25 million. Lack of focus on marketing transformation is at the root of much of the failure.

Marketing transformation is not rocket science but it's difficult for most CEOs to step away from daily operations to understand what it really means. Marketing transformation requires the continual redirection and renewal of your company that occurs from strategic adaptation to the environment. Since the solar marketplace is in constant flux, adaptation must continue without end.

The changing environment is a constant source of clues. Interpreting environmental clues requires judgment, analytical skill and creativity. For many solar suppliers, seeing the clues requires a perspective that is inconsistent with the need to focus on daily operations. Developing perspective is difficult for those whose consuming (and necessary) daily activities are concentrating on the latest order. So perspective is one of the most important qualities an observer can contribute to a company serving the solar/pv marketplace.

There remains the matter of will. For many managers, acting on fuzzy clues requires a leap of faith that is difficult to make, or that is resisted until change becomes inevitable. A continual, gradual transformation is less traumatic to the organization, provides higher returns and lower costs, and is preferable to the organizational disruption that affect some companies. The will to make continuing change occur is a prerequisite to breaking the $25 million barrier.

Read More

About This Blog

Welcome to the Solar Strategies Blog.

This blog is dedicated to solar market development. My goal is to share advice, resources and insights I think will help solar suppliers be more successful today and tomorrow. I’ll talk about where the solar industry is now and where it’s going, focusing on the market-development techniques, ideas and strategies I believe will make a difference.

I invite you to participate. Please post comments, start a discussion or send me your feedback directly. I'd love to hear your thoughts.

Read More