Case study 34 powerup electricity plc

The deregulation of the UK electricity supply industry in 1988 allowed new suppliers to enter the energy market and compete with the traditional (although now privatised) electricity supply companies. PowerUp Electricity plc is a subsidiary of a French utility company and was formed specifically to take advantage of the new competitive environment.

For the French company, the UK was an unknown territory. Having seen some of the mistakes made by French utility companies during the privatisation of water supplies in Britain, the parent company's management were nervous about making the same errors, so they decided to carry out a major market research exercise in order to ascertain the likely acceptability of PowerUp plc. The company's target market was home owners with family incomes in excess of £25,000 a year; an analysis of the French utility company's own records showed that these households (or at least, their French equivalents) had the lowest rate of default on credit, were relatively large consumers of electricity and were usually prompt payers. PowerUp needed to identify these customers, establish ways of reaching them and (more importantly) find out what would attract them to switch electricity suppliers.

In the first instance, the firm's researchers set out to find out how many such households exist within the UK. This proved straightforward enough; government statistics supplied the answer, at 2.2 million households. This was more than enough to make entering the market worthwhile; PowerUp could go to the next stage.

ACORN statistics were bought in to find out where the households were located, but then the work of surveying the households began. The researchers decided to opt for a quota sample, using the ACORN classifications to establish the quotas. This meant that considerable travel was involved, but since the survey was intended to establish parameters for a national company, this was only to be expected - PowerUp certainly did not want to skimp on research that might save the company millions in the long term.

Unfortunately, although the ACORN data were extremely reliable for judging the type of housing and the lifestyles of the inhabitants, they did not prove a successful predictor of income. For this the firm needed another source of data, which it was able to buy in from a specialist mailing list supplier. By combining details from the mailing list with those supplied by ACORN, PowerUp's researchers were able to generate a more refined mailing list of customers within the target market and use this to run a questionnaire-based survey to determine their needs.

Furthermore, some doubt was expressed at board level as to whether the figures for France could be applied to the UK - the directors were not naive enough to believe that credit ratings in the UK could be calculated in exactly the same way as they were in France or that UK consumers would have the same consumption profiles as their French equivalents, even if other details such as income and home ownership were similar. Apart from any other considerations, the rate of home ownership in the UK is much higher than that in France, which would alone be enough to distort the comparisons.

Overall, the directors felt that the research as conducted so far was inconclusive to say the least, and downright inaccurate to say the worst. Their feeling was that the UK should be considered as a completely separate market, with its own rules and parameters; very little could be carried over from experience of the French market, and indeed it might be dangerous to attempt to do so.

(Case contributed by Jim Blythe)

Online Survey Champion

Online Survey Champion

There are people all over the world trying to find ways to make money online. From stay at home moms looking to make a few extra dollars to college students and entrepreneurs, the allure of making your own hours and working from home or from the local coffee shop is very appealing.

Get My Free Ebook


Post a comment