Solar panels are a promising solution to satisfy the increased demand of Yemeni people for electricity. As a new technology to the Yemeni market, product awareness is one of the important issues in our marketing plan. Enviromentally, yes; It is a very eco-friendly product but it has no much to add to its value in a developing country where environmental issues are not a priority. A macro-environmental analysis is scanned and promising trends are uncovered. The regular blackouts and the national power grid shortages are stimulating people to search for new ways to produce electricity and this market plan suggests how to position the product in such a case benefiting from this opportunity. The high prices for such panels need carful marketing strategies, especially in a low-income country. This marketing plan shows how to arrive with people at a conclusion that benefits from solar panels outweigh its high cost. And the company mush share risks a way or another.
1.0 Situation Marketing Analysis
1.1 Company Background
Elect-sun is a new company that aims to open this year with a capital of US$250,000. Its shareholders are 2 electrical engineers with 2 other shareholders (2 Companies).
It,s mission is to solve the electricity problem in Yemen by the technology of Solar energy.
1.2 SWOT Analysis
Because this technology is completely new to the Yemeni market and the company will be the first in mass offerings, a wide macro-environment scanning should be performed.
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1.2.1 Macro-Environmental Scanning
Economic forces:
The annual average income of people in Yemen is low. Electricity bills have increased dramatically in the past 3-4 Years.
But this year showed trends in people’s income. Salaries have been undergoing increases. And different benefits are in their way to almost all employees in different sectors.
The exchange rate of the Yemeni currency is getting strong.
Environmental forces:
Yemen is a sun-drenched country. The sun is available at all seasons. In winter, sun is still available in the coldest regions most of the day-time.
In coastal areas, the sun is much more available. In winter, summer is there.
Social-culture forces:
Protecting the environment and reducing air pollution, in Yemen as well as in all third world countries, is not an important issue. No sufficient organizations are educating the community about the danger facing humanity from pollution effects or any other issues. Limited efforts are done due to limited resources delegated to such issues.
The eco-friendly characteristics of an product is not of high concern in a country where environment is a secondary issue.
In the theory of Hierarchy of needs, this might have an interpretation. Communities with low-incomes tend to care less about global issues. Their main attention is towards the first levels of need in the hierarchy. Therefore, an eco-friendly product would have no added value to the product from the consumer point of view. The functionality of the product will merely make its value.
Trends:
This image is likely to change in the coming time, due to over-all changing in the Yemeni community along with what has been known as the “Arabic Spring”. Many civilian organizations have emerged lately, and in different activities, from human rights to anti-Qat (a non-healthy tree wish many Yemenis chew) to non-smoking organizations. Therefore, environmental issues are not outside their activities.
For the first time, Yemeni youth have launched tens of “cleaning campaigns” in the first quarter of this year, in which are signs that will give a push to the friendly-environment concept.
What makes one sure that this environmental culture will develop soon is that the emerging activities are being considered and developed at the governmental level too. The prime minister along with his staff went out to streets leading a comprehensive cleaning campaign.
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“Prime Minister stresses that the broad participation in the campaign marks a difference in Yemen’s history and culture regarding cleanliness and preserving the environment.” YemenTimes newspaper, 16 April 2012.
From now on, protecting the environment would be a concern of this new generation.
Legislations:
Due to the cultural factors above, Eco friendly products have no facilitations in the legislations or in the taxes system in the meantime.
Usually in developed countries, the environment protection organizations fight for reaching deals with governments to force more taxes and boundaries on materials and products which have negative impact on the environment, and vice versa with eco-friendly products.
But positive trends are on the way to come. For example: The consumer protection organization has recently been more active than ever before.
Politics:
Yemeni government is making efforts to solve the electricity problem. There is a new government which is taking the problem with the utmost seriousness. Therefore any innovative solutions could be adapted and backed up by the government. It is likely that the government will give all assistance to any part or company offering real solutions that can help overcoming this long-lasing problem.
Any elective program for any party in the coming scheduled elections would largely highlight the electricity problem and all its possible solutions. It would be a high priority in any party program.
Many electricity Blackouts due to attacks on the electricity towers caused the government losses of millions of dollars!
Technology factor:
Producing electricity in Yemen is mainly through gas power plants or diesel power plants. Yemen is shifting toward gas-run power plants to restore petrol for export. Many regions in Yemen are still out the national power grid. The need for electricity is increasing. Many People faced the Blackouts by purchasing “Portable Power generators” that uses either diesel or petrol. It’s a noisy dirty source of electricity.
1.2.2 SWOT Table
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After scanning the macro-environment above, opportunities can be discerned along with threats in this SWOT summary:
|Opportunities |Threats: | |There is a high market need for reliable electricity sources |At the moment, and in the very short term, there is no | |after long and repetitive blackouts. |environmental culture among people. That means an eco-friendly | |Yemen is a sunny country where sun still rises heavily even in |product will be without any added value. | |winter. |Many competitors are likely to enter the market attracted by | |There is a serious government which will do all efforts needed |the new technology and uncovered customer need. | |to find innovative solutions to the electricity problem | | |Trends in environmental culture | | |The exchange rate of the Yemeni currency against dollar is | | |increasing and so are the salaries , that means an increasing | | |the purchasing power of Yemenis | | |Strengths: |Weakness: | |Good advertising capabilities |Little financial resources. | |An effective working team |No established relations yet with government entities. | |Good relations with environmental organizations. |Small customer service team
1.3 Competition
There are one or two companies offering these solar panels, but in very limited amounts. They are offering the product only for those who are already looking for it and are ready to make a purchasing effort.
In such a case, we are in the introduction stage and our company is choosing to be the pioneer.
Porters model: Threat of new entrants:
In the short-term, it is not likely to have a competitor providing the product. But in the long term, it would be an attractive industry. Our high promotional expenditures will awake a non-existed demand which will be a must in the near future inshalla.
Therefore we can make rules from now to manage the competition later then. Our brand will be positioned to meet all possible needs and stimuli of users to be recalled as the pioneer who satisfied users. This is detailed in “Positioning strategy” below.
The threat of substitutes:
In the short and middle term, the main threat is the substitute of the product’s technology, which is the “portable electricity generators”. Accurately, solar panels are a substitute threat for generators.
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Environmentally, solar panels are cleaner and needs no supply fuel. On the other hand generators are relatively cheaper and don’t rely on weather fluctuates.
Currently, due to the lack of sufficient environment protection culture, solar panels in the eyes of customers have no added value for its
“eco-friendly” characteristic. Anyway in the mediate-term this tends to change.
Here is table of the most important differences between clean solar panels and portable electricity generators.
|Solar Panels |Electric generators | |Less power generated |More power | |Doesn’t need any supply |Needs supplies | |Clean |CO and other Poisons | |No sound |High sound | |A place directed to the sun + enough space |Any place, any wheather | |More expensive (short-term) |Less Expensive (short term) | |Natural free supply (The Sun) |Operation fuel ( costly) |
Even though Solar panels are expensive in the short term, but in the long term they cost less that fossil-fuel technology. Here is a 5 Year cost comparison between 2 street lights: one powered by solar and the other by fossil-fuel technology.
Yes generators don’t depend on the weather, but in a county like Yemen the weather is reliable in providing the sufficient sun energy.
Once our solar technology enters strongly the market, Respond from generators providers is expected: More discounts, Less-noisy generators. But they can make nothing to the dirty petrol and lubricants which are an everyday must to the generators.
The other Substitute: The National Grid:
Likely Blackouts, increasing monthly bills, limited coverage regions.
1.4 Objectives:
1. To convince 50% of companies working in residential cities projects to infrastructure in solar energy.
2. By 2016, 5% of Yemeni houses have switched to Solar energy. Most of the purchases should be from Elect-Sun.
2.0 Marketing Strategy
solar energy is new to the market, therefore it needs carful Marketing strategy. A new technology is risky and at the same time profitable. STP analysis and marketing mix will be illustrated in the coming sections.
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2.1 STP analysis
Segmentation, targeting and positioning we be performed in the following sections.
2.1.1 Segments:
We have here consumer markets and business market. Consumer markets: people living within the grid and out the grid. Business market: Residential cities companies and the government which is a prospect for solar energy products.
People living within the grid
– They are suffering from blackouts and are always searching for solutions.
– They are looking for quick solutions.
– In coastal areas the main consumption source is air-conditioning and fans.
– In mountainous area the main consumption source is water heating.
People in remote areas away from the national grid:
– They are living in villages, where government services are rare.
– They depend on agriculture; some of them use generators to generate electricity for some hours in the day.
– It’s hard to reach them. Advertising can’t get to them.
Residential cities companies:
– One of their major needs is to secure water and electricity infrastructures for their new residential units.
– They always look after cheap land in order to invest.
– They have high cash flows.
The Government:
– They need solutions for their electricity shortage
– They are spending millions of dollars in fixing the gird.
2.1.2 Targeting strategy:
Which strategy to choose?
Mass marketing: Due to the high prices of units, it might be better to have one product for the whole segments in order to get discounts from suppliers in order to avoid putting more costs (get large quantities, with lower prices).
But at the beginning we will target the companies investing in residential cities as they are more likely to pay for an infrastructure installation and try it. Other segments will be stimulated accordingly. Any way, our product is still suitable for other segments.
2.1.3 Positioning
Putting in our mind that positioning is: “not what you do to a product, it is what you do to the mind of a prospect” (Ries and Trout, 1972), we will do the following: Our product is positioned as a reliable source of energy in Yemen as well as a clean quit source which needs no dirty fuel. Its fuel is the infinitive sunlight. It is a product which will solve the blackouts for ever.
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Therefore our slogans would be these:
• “Put an end to Blackouts”
• “No more electricity bills”
• “No matter how far you are from the Grid”
• ” electricity with no:” blackouts, noise, CO pollution, bills, fuel”
• “no one will black you out, you black out the grid”
• “No one can cut the sun rays”
• “No petrol or lubricant at home again”
Environmental slogans would not be effective in the meanwhile, but they will be in the middle and long term, such as: “Put an end to your share of pollution”.
Our positioning is aimed to tell customers why our solar systems are much better than: 1) portable power generators, 2) national power grid.
Positioning: Residential cities projects
Solar panels will add value to the housing units: “A free sustainable source of electricity in each unit”. More over, such projects won’t need to choose land near the national grid anymore which leads to lower costs in land purchasing. Therefore, such panels would add a value to the housing units; not just because of the clean and free-bill electricity but also because of no more black-outs too. And in the other hand it would make the investment costs less, because such projects can choose lands where ever they want, they don’t need to be near the national grid.
Such slogans will be stimulating:
“Your units with solar: 1) more valuable, less costly”
“You choose the land, the grid comes right there”
Individual real-estate: People in Yemen are investing in a water tank to guarantee water supply. They can now invest to guarantee electricity which proved to be less reliable. Yemenis pay for each new residential 3000-5000 $ for a water tank. They would definitely pay the same or less amount as soon they are aware of the benefits of solar energy.
Such a slogan would position the solar products attractively: “a water tank and a solar panel, electricity and water are there for ever”.
Much more, investing 3000-5000 $ in a water tank still doesn’t guarantee water supply. At the end you still pay for water. But with solar you’ll never pay again for electricity.
Positioning: Government:
The company will play an important role in solving part of the electricity problem which all Yemeni governments have been facing for decades.
The government has wasted millions of dollars. Instead of building new power plants, the government can support the solar energy projects. This then, will need neither security protection nor fossil-fuel supply.
As more and more residential switch to solar power, the load on the national grid will decrease. And in the long-term, the country would save revenues from its gas exports. It would look more like privatizing the electricity sector.
Due to the diffused distribution of the Yemen population in rural areas, solar energy would be much more saver in the long term.
Therefore, all the government budgets for new plants, gas supply, security protection and net infrastructure could be diverted to the solar energy, saving money and time and effort. And such a slogan would position the solar energy products successfully: “together, let’s solve it and forever”
2.1.4 Key to Success:
The main thing that yields to success is to make people aware of the product and its long-term savings which outweigh its current high price. And educating people environmentally will have strong results.
Therefore Promotional expenditures should be at a high level in order to achieve the points above.
2.2 Marketing Mix
The marketing mix will be suitable for the segments above with a more concentration of real-estate projects.
2.2.1 Product
Residential Solar Panels, in the first stage with a reasonable efficiency (15%) would be our main product. These solar panels turn the sunlight into electricity. With these dimensions:”1300*900*50 mm” and a generating power of 190W for a panel, 4-10 panels on roofs will be suitable for different residential electricity consumption in Yemen.
These panels will have a warranty of 25 years. And a free maintenance service for 5 Years.
As the Market grows, and people get used and be environmentally cultured, this will pave the way to add new solar energy products: Solar Water pumps, Solar street lights and solar water heaters.
2.2.2 Price
We will make our margin as little as possible in order to stimulate as much customers as possible. The initial cost of the panels are high, therefore we don’t want the product price to be out the reach of people. Therefore we will follow a market penetration strategy or more accurate a cost-leadership strategy.
We are sure that this product has a high need among the majority of the residential, and that such a limited margin will stimulate market growth quickly giving the company high overall profits in the middle and long term.
By time: the cost will get lower due to the “environmental culture aware”, which will lead to free taxes on eco-friendly products and much more legislation facilitations.
Government may also have further contributions to sponsor such energy solution businesses as it saves the government long fuel-fossil projects efforts and time.
A market-skimming strategy would not be suitable due to:
– A high price would make the market growth slow, and competitors will be attracted once the awareness of the product is achieved by our company.
– Moreover, People and government are about to decide strategic solutions, once the solar panels are available in affordable prices, the solar energy would be the main nominated strategy.
2.2.3 Place
Branches will be opened in the major cities where wide real-estate projects are going on: Sana’a, Aden, and Hudaidah.
These branches are ready to serve any orders along the country. With a phone call order from any place in Yemen, engineers are ready to travel and install the solar system.
2.2.4 Promotion:
Product-awareness is the main duty of our promotion because solar panels are almost new to the Yemeni market. Promoting the product’s advantages over other alternatives is illustrated under the above title: “positioning”
Cooperation with environmental organizations:
Promotional events can be coordinated with environmental organizations. Demonstration of the products could be part of every environmental activity.
TV programs educating people environmentally and emphasizing the effects of toxic emissions produced by fossil fuel generators could be developed and sponsored cooperatively with local and international environmental organizations. These kinds of programs suggest renewable and clean energy: wind, solar, etc…. setting the floor for our solar products.
Media
Because new residential cities projects would be the first prospects, posters and brushers will be distributed in all places related to them. A list of architecture engineers and main building equipment wholesalers and retailers will be hold in order to deliver messages and promotions about solar panels.
Advertisement will be nationally through TV and newspapers but a concentration would be more on some type of magazines like: real-estate magazines, Environmental magazines, furniture magazines.
The word of mouth is very essential, because people who will be eager to have solar electricity at home will still need to see a real example of this new technology before paying a relatively high initial price. In the control section below, it shows how such a promotion will be monitored and supported.
3.0 Financial Projections
The projections will be 5 Years from (2012-2015).
Sales forecast and break-even will be discussed below.
3.1 Sales Forecasts
In 2012 and 2013 our new electricity technology is in its introduction stage with heavy promotion expenditures and low sales. In 2014 and 2015 our growth stage began. In 2016 competetories who entered the market in 2015 began go have their market share.
3.2 Break-Even
Monthly Fixed costs $27000
Unit Variable Cost $190
Unit Selling Price $250
Monthly Break-even (units) 450
Monthly Break-even (Sales) $112500
As illustrated in the table above, at least 450 solar panels should be sold each month. If the average residential unit needs 4-5 panels, that mean 90 to 100 Household units should be powered by solar energy each month.
4.0 Control
4.1 Custom feedback:
Because the word of mouth is an important media for our product, we should make sure that customers are satisfied with the product and are using it according to the advices and instructions of the service team.
Our service and advice staff has to deliver the right instructions and electric advices to customers before and during installation.
Regular phone calls to customers should be made. And if troubleshoots are discovered, that means our service team has to get more train.
Surveys, and calls, should be made to customers regularly to make sure that they understood all the instructions well.
4.2 Monitoring Advertising
How effective are the advertising? Are they reaching prospects?
How many calls are received after each national advertisement? Are People asking about the product? That is to make sure advertising is reaching and stimulating demand.
Surveys to the street man, are the “People awareness” of the product high?
4.3 The Target Market Sales:
We should monitor sales regularly, and highlight the main segment purchasing the product, if it is not the one projected, then our positioning strategy should change. As set in our strategies the first main prospect for our solar panels are those involved in the real-estate. Purchase inventories should be monitored.
4.4 Budget:
We should make sure that the promotion expenditures are making the revenues. Or we should adapt the promotions expenditures accordingly.
4.5 Contingency plans:
The main threat facing the company is that the advertising is not much effective. and sales growth will be very slow.
In such a case, more expenditure on advertising should be done and a price-skimming strategy should be performed instead of the cost-leadership until product awareness reaches most of the prospects.
References
Kotler, P., & Keller, K. (2006).
Marketing Management. 12th ed. Upper Saddle River, NJ: Merrill Prentice Hall.
Ries, A., and Trout, J. (2006), Positioning: The Battle for your Mind, London: McGraw-Hill Professional.
http://www.sunergysystems.com/
