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Marketing & Competing

Fortnightly Magazine - June 1 1995

to compete on something other than just price.

Five Challenges

An energy marketer today faces at least five challenges trying to create a fresh brand identity. It must:

s Educate the market about how not all electricity and gas providers are alike

s Distinguish itself at the point of purchase in multiple regions, including states with different regulatory climates and contrasting peak energy needs

s Connect a benefit with the use of its natural gas, electricity, and/or energy services

s Measure or quantify the benefit

s Promote the heck out of it to the targeted market segments, with integrated marketing communications.

By taking advantage of the absence of a truly national energy company, UtiliCorp may have to spend significantly less money now than other companies would have to spend later to achieve the same share of the customer's mind, especially if its advertising, public relations, and marketing materials and exhibits truly reinforce each other.

Among the lessons the energy marketers are learning from the years it took AT&T to respond to competition is that competitors will waste no time flocking to niche opportunities. Many analysts agree that AT&T gave up more market share than it had to in its reticence to develop new products and service plans for business and residential markets.

Indeed, EnergyOne could conceivably offer value to energy buyers who would prefer dealing with one energy supplier. EnergyOne could, perhaps by default, become the national standard by which all other energy brands and companies might be measured. And that, in turn, could make it difficult to dislodge as the national leader in much the way that:

s Heinz held on to its reputation for ketchup thicker than Hunt's, even after Hunt's could demonstrate its ketchup was just as thick

s Honda was widely perceived as a better car value even when critics were saying Ford and Chrysler had drawn even

s IBM could not find a way to compete against Xerox's dominance in copiers, while Xerox could not put much of a dent in IBM's computer mainframe business.

Growing Customer Relationships

If the telecommunications marketing wars offer any indication, the energy business could soon see new products and services developed for close to 30 (em or more (em customer segments. For the residential segment, there could be sophisticated but easy-to-use energy controls, steep discounts that incentivize off-peak energy consumption, and big-ticket appliances with energy-saving timers. For municipal wholesale customers, there could be needs assessments and services designed to help meet other pressing local problems. For big industrial users, there could be customized energy management and power plant partnering services (em anything that can take the burden off pure price competition.

One big difference between telecommunications (em and the approximately $800 million spent by those companies on advertising last year (em and energy that changes the dynamics of brand marketing is market growth. The proliferation of cellular phones, pagers, facsimile machines, and telephone services is driving up total volume by about 8 percent a year in the United States. Compare that to average annual growth of roughly 2 percent in energy.