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Marketing and Competing

Fortnightly Magazine - April 15 1997

customers is only the beginning. Service providers can use these segments in a variety of ways. Used at the household level, they can identify new services and customers that are likely to leave. Aggregated they can determine real potential attractiveness of new markets. At all levels, the information is critical to developing focused programs and services to attract new customers, enhance existing revenues and minimize loss of valued customers.

It is said that the Chinese symbol for opportunity has a secondary meaning, which is danger. Likewise retail competition will bring challenge to the utilities industry and opportunity to those companies prepared to face it. t

Kerry Diehl is vice president at PNR and Associates. ReQuest III, the next study in the series, will feature enhanced segmentation, including switching segments independent of price and the estimation of the separate impacts of price and will be released soon. Rich Gillman is manager of market and load research for Electric Power Research Institute.

Table 1. Market Segments: Who Switches and Why

10 Cents Middle of Stuck in Give Me

Question a Dance the Road the Mud My Cable TV

Age

Marital Status Single Married Divorced Widow/widower

Avg. Monthly Electric Bill $72 $76 $75 $74

Satisfied with Electric Company 32.2% 30.8% 32% 31.4%

Interested in Wireless Telephones 67.9% 58% 39.7% 54.8%

Switched Long-Distance Carrier 23.7% 11.2% 10.5% 14.9%

Said Long-Distance Should Provide Local Service 35% 33.9% 35.1% 34.1%

Interested in Outdoor Lights for Security 43.1% 39.6% 37.7% 39.4%

Own Personal Computer 38.1% 39.2% 28.9% 33.2%

Census Region

New England 30.2% 15.3% 21.7% 32.7%

South Atlantic 29.3% 16.4% 22.7% 31.5%

Pacific 30.1% 14.9% 22.7% 32.3%

Mountain 33.2% 13.0% 22.1% 31.7%

Percent of Population 31.0% 33.0% 14.4% 21.6%

Table 2. Switching Long-Distance Providers:

Comparison of Actual and Expressed Behavior

"I will change "I changed Actual vs.

providers" providers" Expressed

AT&T 27.5% 10.0% 36%

MCI 46.6% 28.9% 62%

Sprint 37.2% 21.6% 60%

Other 38.6% 24.9% 64%

Table 3. Actual Retention Rate for Major

Long-Distance Carriers

Which Company Their Customers Switched To

Original Original

Provider Market Share AT&T MCI Sprint Other

AT&T 76.6% 92.5% 2.5% 0.7% 4.4%

MCI 11.6% 18.2% 66.2% 12.5% 3.1%

Sprint 4.9% 11.3% 14.9% 71.8% 2.0%

Other 3.1% 20.1% 5.3% 2.1% 72.5%

1Information based on the second National Residential Consumer Research Survey, ReQuest II. Electric Power Research Institute (EPRI) cofounded the study, which collected data from approximately 30,000 consumers, at the national, regional and household levels. PNR conducted the study of customer categories and switching behaviors for local- and long-distance telephone, cable TV services and electricity and gas utilities.

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Marital Status Single Married Divorced Widow/widower

Avg. Monthly Electric Bill $72 $76 $75 $74

Satisfied with Electric Company 32.2% 30.8% 32% 31.4%

Interested in Wireless Telephones 67.9% 58% 39.7% 54.8%

Switched Long-Distance Carrier 23.7% 11.2% 10.5% 14.9%

Said Long-Distance Should Provide Local Service 35% 33.9% 35.1% 34.1%

Interested in Outdoor Lights for Security 43.1% 39.6% 37.7% 39.4%

Own Personal