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mix of the perceived product is so strong that it can be used to identify markets and segments where pioneers can be superseded.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

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.

Read More

Intangibles Develop New Markets

One of the most famous examples of the power of product intangibles is xerography. In the late 1950's, the Haloid Corporation (the predecessor of Xerox Corporation) developed the first dry copier, but ran short of funds for marketing. Haloid approached IBM with the notion that IBM handle distribution. The idea seemed to be a good one, in that IBM had the sales force and service organization that Haloid would otherwise have to establish.

IBM hired Arthur D. Little, Inc. (ADL) to do a study of the market for dry copiers. ADL reported that the entire U.S. potential market was 5,000 machines. The study was used as one of the factors in IBM's decision to reject the Haloid offer.

So, with limited resources, Haloid brought the 914 Xerox copier to market. In the first two years, even though production was constrained, over 10,000 units were placed in use. Twice as many copiers than the predicted potential of the total market were sold. This story, and others like it, demonstrate the power and value of the tangible / intangible product concept.

ADL and IBM looked primarily at the tangible product. Haloid, on the other hand, concentrated more on intangibles. The 914 was sold in a unique way: based on a flexible utilization plan (in other words, on an intangible).  A customer could acquire a Xerox 914 for as little as $95 per month, which covered the machine and the first 2,000 copies per month. Additional use was billed on a cost per copy scale.

Customers bought double the projected total market forecast in the first two years primarily on the intangible aspects of the product. This is but one of many examples of short-sided research that focused more on tangibles than intangibles.

It has become a premise of the industry that research cannot uncover a market for a product that does not yet exist. But this premise is wrong. The problem is not with research, per se, but with research that focuses exclusively on the tangible product factors.

Good qualitative research, conducted by well-experienced professionals, often can elicit glimpses of markets based on intangible factors that might otherwise be ignored.

Are your market research efforts focused on the tangible or intangible side of solar/photovoltaics?

Read More

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?

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

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.

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