The battle to control profit margin really boils down to a battle for the customer premises, where the serious money resides.The gas and electric industries in the United States control about $900...
The Search for Consumer Content in Energy Marketing and Retailing
the 1980s; WalMart did the same for general merchandizing in the 1970s. Once of course, IBM and Sears formed part of the environment, not just part of the competition.
In the 1920s, General Motors created a new business model centered on the automobile not as a utility, but as a social statement and expression of personal identity. Once the market had satisfied utilitarian needs (by the 1950s), GM emerged as the dominant firm,
displacing Ford, which continued to emphasize cheap but undifferentiated personal transportation. This new consumer need was brilliantly understood and exploited by GM's Alfred Sloan (em an early triumph of market segmentation and precise product positioning over mass production and the advantages of incumbency.
Few truly national energy retailers will survive the crucible of mass customization. North America as a region may well support only three to five first-tier players, each with over 15 million accounts at a minimum. Several more second-tier players will emerge (each, still, with millions of accounts). Scores, if not hundreds of niche or specialty players will collaborate in some fashion with the first and second tiers, occupying ecologies too small for national retailers. Some will organize around proprietary technologies or peculiar segments or distribution channels.
Today the ranks are swollen with affiliates or subsidiaries of the energy incumbents. Perhaps only one will ascend to the first tier of elites; maybe a half-dozen will attain a second-tier ranking. New entrants, yet unborn, will inherit the future. t
Vinod K. Dar is director in charge of the Worldwide Corporate Strategy Services Group of Hagler Bailly Consulting, resident in the company's headquarters in Arlington, VA. His work last appeared in the FORTNIGHTLY in April: see, "Competition, Convergence . . . and Cashflow? The Power Business in the Next 20 Years," April 1, 1996, p. 31.
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