Energy Gone Bananas

By Fridrik Larsen

Understanding the energy consumer


For a very long time, electricity was generated, transmitted and distributed by the same type of company, the utility. It would be wrong to say that electricity was sold since buying electricity did not involve a voluntary trade on either side. Consumers didn’t have a choice and the utility had to supply the customer with power as long as the bill was paid.

The marketing of electricity is now an increasingly significant issue following the deregulation of markets in many US states and many markets across the world. Utilities need to focus their market research on defining and understanding electricity from a consumer perspective and using the understanding gained to improve their marketing.

Much of what the utilities are using today does not work in the most effective manner. Although utilities often engage in comprehensive marketing campaigns, they are simply not seen credible by the consumer. The reason is that often they do not have a credible brand and a message that is aligned with their brand.

Defining consumer perception

Through my own cross-national research that gathered consumer insight from five European countries, I have found that consumers agree on a few broad constructs when they describe their perceptions on electricity and electricity retailers. Though the broad constructs are usually the same with consumers, the particulars of each construct are usually different between countries and cultures. The key constructs that were found during my research were sustainability/corporate social responsibility, local production, visual impact and energy savings.

An example of a broad construct that everyone agrees on but has a different meaning for different markets is green electricity and how it is perceived. Though consumers might agree on the broad terms, the details on how they define these constructs vary. To name an example, some relate the concept of sustainability to renewable sources that don’t emit CO2 directly. Others are concerned with pollution that has an immediate effect on their near environment, while a group of consumers raise concerns regarding the long term monetary sustainability of energy production.

By digging deeper to understand what affects consumers’ definition of sustainability, other constructs emerge, such as scepticism towards energy companies and their perceived shady marketing practices, higher energy prices, and the fact that the majority of consumers don’t think it matters who provides their electricity, since it all looks the same.

One size no longer fits all

Utilities must win over the consumers and connect to their hearts. A pressing concern for any retailer is the lack of trust consumers have towards the industry. Some consumers are burned by the lack of choice provided by monopolistic one-size-fits-all providers of the past. They still remember long wait for lacklustre service.

Utilities who want to have a winning positioning for their brands need to change these perceptions in an honest way. Find ways to be credible as an energy provider and use marketing in a credible manner. The best strategy for a successful brand is to know and understand the customers and build a strong brand by applying that knowledge. Branding energy is similar but also different from other products and services. Electricity is a commodity but so is bottled water. Electricity is intangible, so are telecommunications. If you look at bananas, they are all the same. However, a brand name is the first thing that comes to mind for an overwhelming majority of people when you ask them about bananas. It is time for energy to go a little bananas and be perceived as a brand.”

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Dr. Fridrik R. Larsen is CEO of LarsEn Energy Branding, the World’s first brand consultancy focusing only on the energy market and Chairman of CHARGE, the world’s first energy branding event joining executes from the energy space to talk about future of energy.