It was far from common just two years ago to identify an electric utility with a senior executive responsible for proactive marketing activities. Today, such people are relatively easy to find. Often they report directly to the CEO.
The waves of utility downsizings and corporate reorganizations have brought the realization that electricity will need to be sold, serviced, and strategically marketed to customers large and small. Positions that have disappeared in various administrative and technical support areas are showing up in marketing, often for the first time, according to a focused survey of 25 utilities.
At least two utilities have hired executives to ply their significant experience in consumer packaged goods; a handful of others have reached out to the telecommunications industry for the savvy honed in the telephone wars since the breakup of Ma Bell.
Even more telling is the growing number of electric utilities that separate marketing from sales and customer service. Pacific Gas and Electric Co. recently placed one vice president in charge of sales and another in charge of marketing. The most common title for the marketing chief at utilities is senior vice president of marketing. Where there isn't such a person, sometimes the CEO himself brings the marketing sophistication to the boardroom. That's the case at LG&E Energy, where Roger Hale draws on his experience as former marketing officer at Bell South.
Recasting DSM
The obituaries for demand-side management programs may be premature. While most utilities are scaling back subsidized demand-side initiatives, we may see market-driven energy-efficiency programs reborn within the next three to five years. Look also for myriad "energy services" or "energy management consulting" to play an increasingly important support function in holding onto existing industrial and large commercial customers.
And utilities without plans to roll out time-of-day rates or their equivalent had better have a good reason for holding back. Such offerings are a basic staple of many emerging service portfolios.
The survey also showed the retail distribution of electricity growing farther apart organizationally from wholesale bulk-power marketing. In some regions, even if a utility can keep its generation costs competitive, it will face retail marketers ready to resell someone else's power if that's what it takes to keep a large customer.
Cultural and philosophical divides are adding to the tensions between retail and wholesale marketing. They may foreshadow the spinoff of utility generation or transmission.
The Marketing Mix
One exercise that has fully taken root (em though utilities are reluctant to talk much about it (em is the segmentation of customers far beyond traditional classifications. A pair of utilities in the East have "product managers" selling specific services to specific customer segments. Southern California Edison specifically restructured its retail marketing function to separate "product development" from sales, and marketing support (em which includes advertising and market research. The newly created marketing department at Niagara Mohawk Power Corp. has at least two executives (em a vice president and a senior vice president (em who focus on strategic electricity marketing.
Another sign that utility executives are giving strategic marketing top priority is the nearly day-to-day communications between corporate communicators and marketing decisionmakers. And company actions can change the company image in the minds of customers. That image is often as important, or more so, than views held by external audiences such as bond-rating agencies and security analysts. Niagara Mohawk may be the first electric utility with an individual in charge of "marketing communications" per se.
One illustration of how more utilities are playing their cards very close to the vest is the unwillingness of a dozen utility marketing managers to say anything about their emerging organizations and product development activities. "Proprietary!" was the blunt response. t
James R. Pierobon counsels energy providers on strategic marketing initiatives through Potomac Communications Group, Inc. in Washington, DC, and Houston, TX.
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