Research and Markets (http://www.researchandmarkets.com/reports/c82272) has announced the addition of Value from segmentation a review of practice and potential across four geographies to their offering.
Different energy market structures, dynamics and player strategies across geographies leads to widely differing approaches to customer segmentation and value extraction. This brief provides an analysis of segmentation practice across four key liberalised markets and provides insight into best practice for exploiting customer value elsewhere.
Scope
- An overview of current segmentation and value extraction practices in the UK, Italy, Spain and Ontario energy markets.
- Analysis of channel usage in each market and the relative merits of each option.
- Understand how the ability to segment acquisition and retention activity appropriately can be a value generator.
- Insight into best practice and alternative approaches to exploiting customer value.
Highlights of this title
There is a void waiting to be filled in terms of the domestic energy internet comparison site market outside the UK.
In all of the countries studied, with the exception of Canada (Ontario); being able to identify a customers propensity to purchase multiple products from a retailer was seen as a significant source of value as it offers a higher margin per customer with little difference in acquisition cost or cost-to-serve
Only the UK hides the costs of distributing products from its consumers (although this practice was originally put in place for regulatory rather than market driven reasons). The ability to segment acquisition and retention activity by size of household will be a significant value generator.
Key reasons to purchase this title
- Gain insight into segmentation practices in liberalised markets.
- Understand how current segmentation practices can be improved.
- Improve the potential to gain greater value from customers.
Content Outline:
OUR VIEW
CATALYST
SUMMARY
ANALYSIS
Although Italy, Spain, Ontario and the UK all have liberalized energy markets, there are significant variations between them
Domestic competition in energy retail is now a legislative reality
Switching experiences differ across geographies, driven by market history and regulatory structure
Channel usage is dominated by the use of door-to-door and telephone
Telephony is a mix of three sub-channels: direct response TV and radio, inbound and outbound telesales
There is a void waiting to be filled in terms of the internet comparison sites market outside the UK
Regulatory structure provides only a partial explanation of switch rates
Italy has a price-controlled energy market that is dominated by Enel and comune-based organizations
Standard price competition is not feasible in Italian urban markets, as cost-based discounts are only €5 to €10 per annum per household
With strong local branding and limited scope for price competition, the locally based distributors are an attractive means of accessing the market
Outside of Italy's urban areas, Enel is the dominant force and is the main threat to the comune-based organizations within urban areas
There are signs that the structure of the Italian energy market is changing
The Spanish energy market is characterized by the fact that it has both regulated tariffs and non-regulated tariffs
The Spanish gas market is dominated by Gas Natural
Most of the switching that occurs in Spain is accounted for by customers moving from the regulated tariff to a new tariff (fixed or green) with the same supplier
As in Italy, the price-controlled tariff for electricity in Spain offers no room for price competition
Competitive gas pricing has allowed Gas Natural and Endesa to make some headway in the electricity market through customer acquisition
The Ontario energy market is semi-regulated, with competition at just the wholesale level
The Ontario market is a semi-regulated market that has enjoyed very high switch rates even though it has low regulated prices
With a mechanism akin to Italy and Spain's for determining a low regulated tariff, why has switching been so prevalent?
Smart metering offers scope for distribution cost control, but may be frustrated by market structure
The energy market in the UK is characterized by the fact that it is highly competitive with no state control over pricing
The UK exhibits the highest switch rate due to the existence of high price competition potential and the emergence of a number of national brands
Market segmentation as a driver of sales, and marketing policy and practice are the most evolved in the UK
Further potential exists through focusing acquisition and retention activity on low cost payment methods and behaviors
The review of these four energy markets provides a number of pointers for creating additional value through market segmentation
The ability to segment acquisition and retention activity by size of household will be a significant value generator
Geography: should the UK adopt the practices of the other markets?
Consumer life-stage is, as yet, an untapped source of value, but smart metering will be needed to unlock its potential
Segmenting by breadth of product service offering may provide value in particular country environments
It is expected that when environmental tipping points have been reached, green attitude segmentation will come into its own
Exploiting perceptions of future price rises
Playing the payment behavior/method cards
The propensity to switch is a double-edged sword
Studying the segmentation issues across geographies indicates that there is value to be extracted on six dimensions:
APPENDIX
Methodology
Ask the analyst
Our consulting
Disclaimer
List of Tables
List of Figures
Companies Mentioned:
- E.ON
- Gas Natural SDG SA
- Union Fenosa, S.A.
For more information visit http://www.researchandmarkets.com/reports/c82272
Source: Datamonitor
