The Relative Advantage of Solar

Most business schools still refer to Everett Rogers and his theory of how and why new ideas and technologies are adopted by a population.  In his book called Diffusion of Innovations, Rogers introduces five main dimensions that influence the adoption of an innovation: complexity, compatibility, observability, trial-ability, and relative advantage.

An examination of the factor called "relative advantage" reveals why there are so many challenges associated with making solar more widespread.

Relative advantage is the extent to which solar is viewed as better than the method in current practice.  Fundamentally, a new product or service will be successful if it does a better job than existing products at satisfying the needs of a targeted customer group.  But according to diffusion theory, "doing a better job" actually has four components. If a new product or service can surpass existing offerings across all four of these components at once, then we can guarantee that the targeted customer group will purchase it.

The four components expressed in terms of solar electric power are:

- solar must be less expensive than power from a utility (lower price).

- solar must provide better features or functionality than power from a utility (greater benefits).

- solar must not have any switching or adoption costs (easy to use).

- solar must be readily available (easy to buy).

Customers for whom all four conditions apply will purchase solar because there are only benefits and no barriers. And the closer a solar product comes to succeeding in all four dimensions, the greater the chance that the product will be a success.  And, of course, the new solar product will be a financial success if these conditions can be met at a profit.

The convenience and reliability of electric power from a utility makes it very difficult for solar to meet all four criteria.  And notice we haven't even talked about "trial-ability" yet.


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.

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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.

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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.


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Smart Grid Standards Must Come First

Technology adoption is all about standards. To succeed with consumers, one firm's gadget often has to work with other gadgets from other firms.

Technology moves so quickly that standards set by committees usually come too late. Instead, the industry organizes itself around de-facto standards championed by single firms with the clout to make them stick. For example, as Intel has done with microprocessors.

Early adopters who are using Smart Grid Investment Grants (SGIG) are currently choosing hardware, software and communications technology well before most of the relevant standards have been settled. This creates enormous *risk* in the minds of the public.  The possibility of selecting the wrong vendors or technologies is keeping a lot of people from participating, thereby delaying mainstream adoption of smart grid products and applications.

Smart grid standards would help remove this barrier to adoption and open the door to mainstream markets.  The only question is, who has the clout to establish a de-facto standard that the rest of the industry can follow and benefit from?

I was disappointed to read a recent article written by General Electric -- clearly one of the candidates capable of establishing a smart grid standard -- that said the key to smart grid adoption is education and awareness.  This claim was based on a report commissioned by GE Energy that surveyed consumers in the U.S. and Australia.  It found that 10% of the people surveyed know "something" about smart grid technology, and those people are overwhelmingly in favor of pursuing and adopting it as soon as possible.

GE's logic goes like this: we found that people who know about the smart grid concept support it…so if everyone knew about it, everyone would support it.

Innovators and early adopters (who make up about 16% of the smart grid market) are willing to accept high risk.  And the GE survey did a nice job of confirming the fact that innovators and early adopters are technology advocates and enthusiasts.  But the bulk of the smart grid market (known as the early and late majority) is risk averse and not willing to participate until standards and other risk-lowering factors have emerged.

I wouldn't recommend spending a lot of money promoting the smart grid concept until a minimal amount of standardization is in place.  You can't advertise or "educate" your way into a mainstream market.  Without the right mix of vendors, channels, products, services and standards, pragmatic and conservative customers simply won't buy in.

With emerging technologies and markets, sometimes raising awareness is the last thing you want to do.


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The Gatekeeper of Mainstream Markets

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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


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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.


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The Relative Advantage of Solar

Most business schools still refer to Everett Rogers and his theory of how and why new ideas and technologies are adopted by a population.  In his book called Diffusion of Innovations, Rogers introduces five main dimensions that influence the adoption of an innovation: complexity, compatibility, observability, trial-ability, and relative advantage.

An examination of the last factor, "relative advantage," reveals why there are so many challenges associated with making solar more widespread.

"Relative advantage" is the extent to which solar is viewed as better than the method in current practice.  Fundamentally, a new product or service will be successful if it does a better job than existing products at satisfying the needs of a targeted customer group.  But "doing a better job" actually has four components. If a new product or service can exceed existing offerings across all four of these components at once, then we can guarantee that the targeted customer group will purchase it.

The four components expressed in terms of solar electric power are:

• solar must be less expensive than power from a utility (lower price).
• solar must provide better features or functionality than power from a utility (greater benefits).
• solar must not have any switching or adoption costs (easy to use).
• solar must be readily available (easy to buy).

Customers for whom all four conditions apply will purchase solar because there are only benefits and no barriers. And the closer a solar product comes to succeeding in all four dimensions, the greater the chance that the product will be a success.  And, of course, the new solar product will be a financial success if these conditions can be met at a profit.

The convenience and reliability of utility-delivered electric power makes it very difficult for solar to meet all four criteria. Grid parity alone is clearly not enough.


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Does Grid Parity Matter?

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The Long Term Effects of Government Subsidies

There's never been a technology that was perfected before it was released.  Technology products like solar are introduced when their performance is not as well developed as established products along some dimension that mainstream customers have historically valued.

In order to become competitive over time technology-based products must be refined and improved by a sequence of users (starting with innovators and early adopters).  This dynamic, called the technology adoption lifecycle, is critical to the success of any new product or technology.  Without the adaptation and improvement that's demanded by early users, mainstream customers (the bulk of any market) will not adopt the product.

This is important because government subsidies often completely disrupt the technology adoption process.  When mainstream buyers of solar begin to enter the market because of a subsidy rather than product attributes, then forward progress on product adaptation tends to stop.

When I surveyed residential solar owners in the Sacramento area I found that the majority of them were late adopters.  That's because the local utility (SMUD) was offering 4 kW systems for only $7 per month. (after 10 years the customer could buy the system for $2400)  SMUD's offering, which included a lot of product intangibles, caused technology laggards to enter the market prematurely.

This subsidy by a utility in Sacramento completely disrupted the normal cycle of adoption that is needed for a market to be sustainable.  And when the subsidy is removed, the market adoption pattern must start over from the very beginning.  This is why government subsidies are so damaging over the long term.  It's more than just a loss of money when the subsidy goes away.  It's also a loss of a key component of sustainable market development: product and buyer evolution.

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Utilities Speed Solar Adoption

A recent article in the New York Times takes an interesting look at a partnership between TXU (a utility in Texas) and SolarCity (a Silicon Valley solar supplier) designed to help homeowners go solar. The article says "TXU Energy, with two million customers, is making it possible for homeowners in the Dallas area to lease or buy rooftop solar-power systems in one of the first programs of its kind."

Although this type of program is not one of the first, the author correctly states that utilities are the key to widespread adoption of solar power.

When solar suppliers partner with energy providers (especially utilities), adoption happens much faster. This is because most buyers in a market wait for the availability of a standard product that is made by a leading supplier who sells the product through someone familiar. These attributes are known as product intangibles. And together TXU and SolarCity can deliver most of these requirements.

This type of solar program however is certainly not new. In 1993 Sacramento Municipal Utility District (SMUD) began offering a standardized 4 kW solar electric system valued at $24,000 for only $7 per month. SMUD retained ownership of the system. After 10 years the customer could purchase the system for 10% of its original value ($2,400). Then in 1999 SMUD began selling the same system (worth $24,000) for only $4,800.

When SMUD offered PV to their customers through these two programs (called PV Pioneer) my research revealed that late adopters started signing up in droves. SMUD's program effectively delivered all of the product intangibles required by laggards and late adopters before making a purchase.

This latest initiative by TXU Energy is another version of a concept that is at least 17 years old. But it works!

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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.


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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?


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Does Grid Parity Matter?

One of the primary assumptions in the solar industry is: "if the cost of something gets low enough, everyone will automatically buy it." In my mind there is no guarantee that solar power will become mainstream when it costs approximately the same, or even less than conventional sources.

Here's why. Even with lower and lower cost per watt, solar power is missing two key elements of market expansion: product intangibles and a compelling reason to buy.

Consider what happened with the personal computer (PC). Not only did prices go down (and performance went up) but MANY other things helped make the PC a mainstream appliance. One of the biggest factors was the addition of IBM's backing and reputation to the desktop computing industry (does anyone remember the so-called "IBM compatible PC" standard?) IBM's blessing along with other "standards" such as the DOS operating system and the ISA/EISA bus (i.e. product intangibles) all combined to reduce the perceived risk of buying a PC.

But the most powerful factor in PC market development was a compelling application called the spreadsheet. Early spreadsheet software (Lotus 1-2-3 and Context MBA) running on the PC provided a quantum leap in capability over the existing ways of manipulating numbers…with adding machines, calculators, pens, pencils and sheets of paper.

It's true there are future benefits associated with solar such as greater environmental health and sustainability, but that's like selling green bananas. The promise that someday a green banana will turn yellow is not compelling enough.

In the solar industry, there are few if any risk-lowering product intangibles (who's the IBM of solar?) and the compelling "mainstream" reason to buy hasn't been sufficiently articulated yet. So when solar reaches grid parity, it will provide something that people already get from a utility…electric power for the same price. There's no quantum leap in capability or extraordinary advantage above what a utility already offers. Plus, there's no need to install a bunch of complex equipment when power comes from the grid.

Without risk-lowering standards or intangibles, and a compelling reason to buy, the solar industry needs to use reference-based techniques to overcome these missing elements of market expansion. (more about this in future posts)

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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.

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Marketing High-Risk Products

Marketing a high-risk product is *vastly* different than marketing a consumer product that carries little or no risk. As everyone knows from personal experience we choose a professional advisor, a doctor, an attorney, or a stockbroker with much more care than we buy soft drinks or even automobiles. With high-risk products (or services) the customer has more at stake and looks for objective sources of evidence about the provider's methods and abilities.

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. Have you ever had someone call and ask you what kind of computer he or she should buy? This is a common method of lowering risk by gathering objective evidence.

Although solar power may not be considered high risk from a technical point-of-view, it is certainly much riskier than the alternative of obtaining electric power from the local utility. Consumers perceive solar to be high risk "relative" to Ready Killowatt.

With low risk products, there is little or no penalty for making the wrong decision. Marketing low-risk products relies on name recognition, image and branding because most products in a given category are interchangeable, plus customers accept the claims of the provider at face value. When was the last time you called a trusted friend to ask what type of cereal or milk to buy? Or called the Coca Cola Company to ask if they offer 24-hour support? We just automatically believe that Kellogg's knows how to make Corn Flakes.

Marketing solar power as if it were a low-risk consumer product is a fatal mistake.

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Solar's Main Competition

Who are solar suppliers really competing against?

The answer is "Reddy Kilowatt."

It's true that solar companies compete not only against their solar peers but also against other sources of electricity. But when customers make decisions about energy providers, the "concept" of Reddy Kilowatt (i.e non-stop power from the local utility) still holds the advantage.

For almost 70 years, Reddy Kilowatt served as the official mascot of the electric utility industry, licensed for use by as many as 300 electric utilities in the US and abroad. Created in 1925 by Alabama Power Company executive Ashton Collins, Sr., the familiar “bolt and bulb” figure symbolized the power industry during a time of tremendous growth and goodwill.

Reddy represents specific characteristics and attributes that are the competitive strengths of all electric utilities -- attributes such as reliability, plenty of capacity, plug-in ready, and always available.

Even though we don't see Reddy Kilowatt mentioned today, he is an enduring symbol of our culture and a competitive advantage for electric utilities.

It's vital that solar companies of all sizes recognize and compensate for this enduring "consumer perception" in their marketing programs and activities.


Reddy Kilowatt Commercial:

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Product Adoption Fundamentals

The Technology Adoption Lifecycle is a model that describes a market’s acceptance of a new technology in terms of the types of consumers it attracts throughout its useful life. It is probably the most well established model in “new product marketing” because it provides useful insight at all stages of market development.

The underlying thesis of the Technology Adoption Lifecycle is that innovations are absorbed into any given user base in stages corresponding to psychological and social profiles of segments within that user community. The process can be represented by a bell curve with definable stages; each associated with a definable group, and each group making up a predictable portion of the whole community.



The prescription for success in introducing a new product or technology into any community is to work the curve from left to right, focusing first on the innovators, growing that market, then moving on to the early adopters, growing that market, and so on. To do this effectively, it is necessary to know and understand the psychological characteristics of each group of buyers.

The psychographics of each group in the adoption process influences the development and dynamics of the market. For example, each group places a different value on product intangibles, and on endorsements or references from other groups. As products move through the adoption process, intangibles and user references assume more importance. Often, pioneering new products 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.

The concept of dynamic change in the perceptions of products is reinforced by the concept of the adoption process. In 1957, researchers at Iowa State College were able to track the diffusion of information and purchase patterns of a new product: hybrid seed corn. They found that purchase and use (or adoption) behavior fell into understandable patterns. They found that five "segments" of an adoption population could be described. They noted the different characteristics of persons in these five groups, and hypothesized about the way word-of-mouth influences purchase behavior.

Five groups were identified as follows:

• Innovators--2.5% of the population

• Early Adopters--13.5%

• Early Majority--34%

• Late Adopters--34%, and

• Laggards--16%

The research demonstrated a number of elements of purchase behavior, including the dynamic nature of how products are purchased. Innovators, for example, are motivated by being first, while late adopters are primarily interested in a bullet-proof product.

The primary value of the research was the development of the idea of an "adoption process." New product acceptance could finally be understood and even diagramed.

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Solar Product Perception

Understanding changes in the solar marketplace and translating those changes into organizational change is the key to long term survival for most solar suppliers. And the best starting point to understand why this is necessary is the concept of "product perception."

Typically, when an organization brings a product (or service) to market, the initial consumers and users are intrigued with the tangible features of the product itself: its performance, its specifications, its size, color, shape, weight, etc. On top of that, the entrepreneurial team that conceived, developed and first sold the product is, by definition, often consumed by these tangible product attributes. Tangible aspects of the product, often become the only focus of the development team.

But as the product moves from technology enthusiasts and early adopters to users who are more conservative and pragmatic, a subtle yet powerful change occurs. Tangible aspects of the product decline in importance and intangible aspects surrounding the product begin to emerge. In the early days, the overwhelming emphasis on product tangibles can be diagrammed like this:


Typically, the product development team focuses on the inner portions of the circle: the tangibles.

But as the product begins to move into the market, and as the markets develop, a change occurs in perceptions of the product: intangibles assume an increasingly larger proportion of the perceived product. The comparison can be illustrated like this:

Customers begin with an appreciation of the tangible product, but they soon appreciate more the aspects of intangibles surrounding the product -- service and support, the image of the company, the nature of the underlying technology, industry standards, or the reputation of the supplier.

So whereas early users of solar power have been most interested in: conversion efficiency, crystalline vs thin film, panel size, inverter specs, maximum power and voltage, etc; mainstream users of solar will be most interested in: supplier recognition/reputation, industry standards, quality, service and support.

Are you building intangibles into your solar product offering?

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When Will Solar Go Mainstream?

There is an unfortunate fact about emerging markets that causes great frustration for anyone offering something "new." A recent article on the RenewableEnergy.com website about how most people still view solar as something in the future, but not here today, is a good example.

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, must 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 all kinds of different buildings, and it means NOTHING to the guy on a hill in Iowa.

I've studied this peculiar market-behavior pattern for many many years now and it applies to anything new or innovative that is introduced into a marketplace. In every case, the secret to achieving mainstream market acceptance (which includes positive support from NPR correspondents) is extreme 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.

Any technology that is considered mainstream today, had to go through a phase of extreme vertical marketing to get there. And I'm not seeing anyone do this yet in the solar industry.

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