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The Next Convergence: Energy, Telecommunications and Internal Infrastructure

Fortnightly Magazine - March 15 1997

satisfaction through a single, convenient payment;

(ii) Increase the sale of ancillary or upgraded services by creating a one step umbrella; and

(iii) Create a friendly interface for expanded customer care.

By linking the BCCS System with digital printing, the billing statement can be turned into a mass, customized magazine. Thus, the bill could be transformed from an undesirable, incomprehensible mechanism to force payment into welcome marketing communications.

4. Quadbranding: The next evolutionary stop in co-branding. An example of co-branding is an affinity group credit card. With quadbranding four brands associated with a provider of consumer content, a distribution channel or conduit, a means of payment (e.g., credit card) and a cyberspace interface will be combined to trigger the customer's buying decision. Quadbranding will generate repeat business and command the price premium afforded by the various brand equities.

5. Consumer Infrastructure: The IRI necessary for delivering solutions and benefits to consumers and may be owned, co-owned, leased or financed by the merchant. By linking the IRI with the Strategic BCCS System the merchant of the future can become a part of the almost-invisible environment of the consumer.

Energy Marketing (em

Five Pervasive Errors

The new retail marketing will concentrate on delivering results not merely products. However, the transition from the old to the new marketing will be difficult and expensive. Only a fraction of the putative players will succeed. This is largely because of two

factors: (i) pervasive marketing errors by energy companies, and (ii) the need for a new business model that is consumer, not supplier, based.

Companies are making five kinds of errors as they strive to create or develop a new business model. All make some, some make all.

Myopia about the industry boundaries that define the arena of strategic struggle. With convergence, the boundaries that once separated the gas, electricity, IRI, water, telecom and cable industries are blurring. The ambit of competition is vastly greater. Coupled with boundary myopia is competitor myopia as the universe of actual and potential competition expands. Finally, there is myopia about the deep drivers of consumers and their switching behavior. The relatively low switching, for example, in retail pilots reflects both inadequate customer education and early adopter behavior. That does not mean there is low switching potential; it just means that the main body of consumers are waiting for the early adopters to provide direction. Once this direction becomes manifest switching will be explosive in the next few years.

Ambiguity about the value proposition that is being articulated and offered. If a company is hesitant or confused about its value proposition, then it is inevitable that customers will be just as baffled. Pure value propositions range from deep discounting to speed of response to high information added to customized solutions to customer pampering. Companies can try to offer more than one value proposition. But, no company can offer all or even several value propositions at the same time to the same population. This ambiguity is closely related to myopia.

Indiscipline compounds the first two errors. For companies that avoid the first two, indiscipline