Solar Marketing Lessons, Learned in the First Grade

Most of us learned at a very early age that it's not a good idea to kick sand in the face of the biggest kid in school.  Unless you enjoyed getting pounded into the ground like a tomato stake, the best strategy on the playground was to avoid direct, physical confrontation.

This simple lesson in life also applies to the practice of marketing.

The number one rule of marketing is never attack an entrenched competitor in his or her area of greatest strength with an emerging technology. (especially not with an emerging technology like solar)

Yet that is exactly what many people in the solar industry actually do!

Hardly a week goes by without a solar vendor, clean energy lobbyist, solar advocate, industry analyst, PR agency or marketing organization proclaiming that the solar industry needs to emphasize "reliability."  Well like it or not, reliability is a key strength of solar's biggest competitor…the electric utility industry.  Using a less traumatic metaphor this time, claiming reliability as an advantage of solar is like challenging Lance Armstrong to a race immediately after learning to ride a bicycle.

Not only does solar provide something that people already have (electricity), but their current supplier (the electric utility industry) has created an enduring public perception of being the most reliable source of electric power.  For more than 70 years, Reddy Kilowatt served as the official mascot of the electric power industry, and in the process became a permanent symbol of our culture.  Reddy represents specific characteristics and attributes that are the competitive strengths of all electric utilities -- reliability, unlimited capacity, plug-in ready, and constant availability.

Utilities are the 900 pound gorilla of the electric supply "playground" and power from the grid is perceived by the public as the safest, most reliable choice.

Those of us in the solar industry know that PV is in fact very reliable.  But utilities have already captured the reliability square on the game board.  They own that part of the playground. And it's a waste of time and money trying to compete against a public perception, built over 70+ years, that utility power is the most reliable.  There are many other areas in which to successfully compete against electric utilities.

One more thing.  Next time you are playing basketball at the local gymnasium, don't challenge Shaquille O'Neill to a game of one-on-one.  The results won't be pretty.


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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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Branding Only Works on Cattle

I'm all in favor of promoting solar and raising awareness for renewable energy.  It doesn't matter if it's with buttons, bumper stickers, social media (twitter, facebook etc.), web sites or search engine marketing (seo).  The more the better.

But never forget that solar power is seen as a riskier than the alternative -- power supplied by the local utility.  This perception of risk comes from the fact that solar is more complex, installation is not as simple, solar costs more, and most solar dealers/installers are smaller, unknown companies (at least compared to the local utility).

So don't expect people to seriously consider buying solar based on a promotional button, twitter or bumper stickers.

Think of it this way:  If you had a serious heart condition and needed surgery, would you select a surgeon based on something you saw on a bumper sticker or read on Twitter?  I know I wouldn't.

I would look at a surgeon's reputation, ask for recommendations from other doctors, determine which hospital the surgeon is affiliated with, investigate the surgeon's credentials and formal training, and definitely talk with patients who have had a similar prognosis.

Solar isn't a life or death proposition like heart surgery, but the trusted sources of information needed by buyers to reduce risk when making a high-risk decision do not include promotional materials developed by the vendor.

Promotional content does NOT help the customer lower their perception of risk in buying solar. And branding only works on cattle.

Marketing solar (which is higher risk) the same way that Coke markets soft drinks (little or no risk) is one of the reasons the solar industry has such a hard time breaking into mainstream markets.


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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.


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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.

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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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