Britain's top energy suppliers compete on price but offer their own unique benefits and incentives.
In addition to the effects of regulatory reform and policy, certain consumer, environmental and technological shifts in the United Kingdom are effecting significant changes in the manner in which electric and gas companies competing for customers in the mass market. The U.K. residential market was opened to electric retail competition between September 1998 to May 1999. As of September 1999, about 10 percent of all U.K. residential customers had changed electricity suppliers. Furthermore, since 1996, about a quarter of all residential gas customers in Britain had switched from British Gas, the former monopoly supplier.
These customer losses are indicative of the changes taking place in the U.K. electric and gas industries. Several important factors appear to be shaping the structure of the U.K. utility markets.
Branding is playing an important role. To this point, a recent U.K. survey revealed that the brand identity of the electricity supplier was the leading factor in consumer purchasing decisions.[Fn.1] Customer segmentation is proving important in determining those customers with whom top utility retailers attempt to develop long-standing relationships. For instance, several U.K. utility retailers have successfully segmented their customers based on the method by which they pay their bills (e.g., prepayment or direct debit). Identifying profitable new sales channels is significantly affecting the basis for competing in the mass market. In fact, up to 55 percent of utility-related products and services sold in the United Kingdom may be routed through non-traditional sales channels by 2005, including e-tailers and affiliate (e.g., affinity group) channels.[Fn.2]