Target market for solar energy

Financial Analysis, Implementation, Controls

Marketing Objectives

Marketing objectives should contribute and align with the overall company goals. Strategic and clear marketing objectives are fundamental to any sound, effective marketing plan. To set our marketing objectives we will use the SMART approach. The SMART approach requires the following characteristics: specific, measurable, achievable, realistic and time-bound. The SMART approach allows the department to manage marketing activities better and be able to determine how successful new objectives can be (Lang, n.d.). Canadian Solar’s marketing objective is to increase its communication efforts and increase their ROI by 10%, in order to increase brand awareness. This will be achieved by strategically communicating the product’s benefits to the consumers in the target markets identified. Good KPIs to track our progress are the value of the investment and the cost of the investment, as these are vital to ultimately calculating the return on investment. This objective is achievable. Companies typically set a certain percentage, such as 10 percent, for ROI in a product's first year following its launch (“Price the Only Revenue Generator”, n.d.) . This objective is relevant as Canadian Solar’s objective is to expand its market reach and provide a high quality product at an affordable price. Therefore, it is vital for there to be an increase on ROI to continue to evolving and providing better products than its competition. The marketing objective should be achieved within one year, as this will give Canadian Solar the opportunity to evaluate their progress in the year end. An increase in ROI will allow Canadian Solar to continue investing in the integrated marketing communication strategy to expand the reach of the target market. Also, it will give them the opportunity to invest in the product and brand image to distinguish itself from the competition. ROI is exceptionally useful for measuring success over time and taking the guesswork out of making future business decisions. The ability to calculate return on investment is extremely valuable for any business, regardless of size or industry. By calculating ROI, you can better understand how well your business is doing and which areas could use improvement to help you achieve your goals (Hawkins, 2016).

Segmenting, Targeting, and Positioning

In order to conduct an STP for Canadian Solar, we need to conduct market research to understand and act upon the customer’s needs. The Community Solar Value Project offers suggestions for market research and market segmentation for community solar. CSVP says we should be asking ourselves questions that define five key market-research tasks: Assessing needs, outside research, mining customer data, interviewing customers, and incorporating feedback loops (Mitchell-Jackson, 2016).

Segmenting

An early step for market research should be to learn from past work in other areas of the country. With respect to understanding customer perspectives on community solar, there is some information available that can start to answer questions, such as: What are the segments that have the most potential for community solar deployment? What are the market drivers and barriers for each of the markets or segments? What are the best channels for reaching customers? However, while some lessons from other regions of the country apply directly to utilities looking to start their own community solar programs, there are also unique aspects of any community that set them apart—such as the cost of electricity, patterns of constrained distribution lines, other geographic aspects that affect project siting, or attitudes among consumers. Local energy markets can vary dramatically, so information from other jurisdictions should be reviewed in the context of: 1) the way the research was conducted (e.g., identifying how customers for the research were selected and whether surveys, focus groups or other methods were used), and 2) the characteristics of this utility territory compared to those of the utility where the research that is referenced was performed (e.g., differences in energy costs, differing customer familiarity with innovations, etc.) (Mitchell-Jackson, 2016).

Mining existing customer data –including digging into utility marketing or corporate-communications knowledge -can tell Canada Solar a lot about the sub-groups, or segments, within their customer base, and each groups’ potential to be interest in a solar offering. A few examples of the sub-groups or segments that may be receptive to solar offerings are customers who are most likely to engage and participate in utility programs, identify with green communities, are tech savvy, in higher usage and/or price sensitive groups, part of customer pre-defined in national solar market research. Segmentation may include broad-based categories that are used for marketing. This is more of a macro-segmentation into 4-6 broadly defined “types” of customers, which may go so far as key demographic characteristics or more granular sub-groups identified through a micro-segmentation that takes into account their lifestyle characteristics (Mitchell-Jackson, 2016).

Finally, another type of market research will be interviewing customers. Some questions Canadian Solar can ask themselves are:

· Why am I running this program?

· E.g., To retain certain groups of customers or reach customer groups we haven’t been able to reach through other program offerings; to reduce costs of renewables integration, or to fill another specific customer need?

· Is the program focus on residential, commercial or both?

· What options do I want to explore with customers?

· E.g., Price points and terms, visibility/importance of local siting, importance of real-time information, desire for recognition?

· Do I have a sense of the program name and marketing messages?

· What messaging options are we considering (good for planet, lower energy costs, independence from utility, take your kids to see your solar array, avoid hassle, affordability, you can be part of the solution)?

Targeting

After we conduct the market research and have segmented buyers and develop a measure of consumer insight about them, we can begin to see those that have the most potential. An attractive market has the following characteristics: it is large enough to be profitable given the operating cost, it is growing, it is not swamped by competitors, is accessible, the company has resources to compete in it, it fits in with the firm’s mission and objectives (“Market Segmenting, Targeting, and Positioning”, n.d.). When choosing the target market, these characteristics should be in mind. Solar energy customers vary across many variables. Some of these are geographic, related to different policies and access to solar development. Some are demographic, defined by socio-economic indicators such as gender, age, income level, or education. Others are psychographic, defined by similar attitudes, values, and lifestyles. It is important to know which groups of customers are interested in PV solar, what is driving local interest, and whether customers are aware of what these programs offer (e.g., savings, bill certainty over time, environmental benefits, etc.) (Mitchell-Jackson, 2016). Given the nature of solar power, its geographic markets are generally concentrated in areas of the country that receive regular sunshine. Furthermore, states with RPS, especially those that focus on solar power, account for a greater share of domestic solar module shipments. According to the EIA [2013], three-quarters of domestic shipments went to five states in 2012: California, Arizona, New Jersey, Hawaii, and North Carolina. California alone accounted for 47.8 percent of domestic shipments, followed by Arizona with 14.8 percent. Commercial properties have ramped up solar panel installation primarily as a result of strong government incentives. In particular, the Solar ITC provides commercial customers with a tax break equal to 30.0 percent of solar panel costs. The electric power sector is the second largest consumer of solar module shipments, accounting for 1.5 million peak kilowatts, or 38.6 percent of the domestic market, in 2012 [EIA 2013]. Utilities purchase solar panels for power plants to generate electricity for the power grid. This market has expanded as a result of state government RPS that mandate utilities to provide renewable energy to the power grid. The residential sector accounted for about 672,100 peak kilowatts of solar module shipments in 2012, or 17.7 percent of the domestic market [EIA 2013]. Consumers purchase solar panels to generate electricity for their own homes. The industrial sector is the smallest domestic market for solar panels. Industrial customers do not benefit from federal government incentives for solar energy, which are targeted toward the commercial, residential, and electric power sectors. As a result, the industrial sector only accounted for 0.6 percent of domestic solar module shipments in 2012 (Goddard, 2015).

Position

Finally, Canadian Solar needs to position their product relative to the competition. Positioning is how consumers perceive a product relative to the competition. Companies want to have a distinctive image and offering that stands out from the competition in the minds of consumers. (“Market Segmenting, Targeting, and Positioning”, n.d.). Product positioning is an important element of a marketing plan. Product positioning is the process marketers use to determine how to best communicate their products' attributes to their target customers based on customer needs, competitive pressures, available communication channels and carefully crafted key messages. Effective product positioning ensures that marketing messages resonate with target consumers and compel them to take action. The final challenge in effective product positioning is conveying the differentiating, value-added aspects of your product or service to your target audience through the communication channels you have selected. These messages are designed to convey how your product is different (and better) than competitive offerings, as well as to address the value-added attributes that are important to your audience. Product positioning is at the foundation of any effective marketing plan because it impacts the ultimate purchase decision (Richards, 2019).

Marketing Strategy

Branding Strategy

New government incentives programs should also be taken into account when forming a branding strategy. In light of the increasing scientific consensus on global climate change and the desire for greater energy security, many governments have recently set ambitious targets to increase the share of renewable energy in the total energy mix. To meet these targets, policymakers are deploying a variety of policy instruments, including technology subsidies. Along with wind, solar energy has been one of the largest beneficiaries of these policies, particularly in Germany, Japan and California. Appropriately assessing the economic efficiency of such policies is important as many other governments are planning on following suit. Although solar energy makes up only 0.3% of the total electricity supply in California, solar PV has experienced rapid growth since 2000. This rapid growth is at least partly a result of two California government incentive programs: solar rebates (a dollar amount per installed Watt) and tax credits (a percentage of the 6 installation cost of a solar system paid by the state) (Van Benthem, 2007).

There are a few wants and needs solar panel customers want and need. Two of these needs are savings and choices. Customers who are primarily cost-conscious are likely to want a simple, cost effective solution to their energy needs. These customers are going to look for a supplier with a strong brand name and easy, affordable energy solutions. The customer who wants choice in their decision process is going to be unhappy with standard energy solutions. Because of this, they are more likely to look for solutions that are tailored to their needs. These customers want to work with someone to tailor their plan, and expect that person to be an industry expert. What’s more is that an increasing amount of energy customers are looking for someone that can meet their personal needs, which shifts the industry’s focus from regulations to customer satisfaction(“The New Energy Consumer: What the Solar Trend has Created”, n.d.). Relative to the competition, Canadian Solar should focus on keeping the price low while having a distinctive image and offering a superior product. Considering our STP and the needs and wants of our target market, we should refine our selection and offer 2 products. One product should focus on the quality of the product along with its affordability. The other product should be a higher-end product with more features and reliability. We can call them the Standard and Max Power panels respectively. The standard panel will produce from 260-285 W. The Max Power will produce even more power with 310/340 W. Both products will have high performance and energy yield features. If there is a need for additional products there can be product line extensions for those products. The packaging of the product will be 100% recycled custom boxes corrugated boxes from EcoEnclose. These boxes are not just 100% recycled - they are made from 95% post-consumer content - and are manufactured here in the United States (“Corrugated Boxes”, n.d.). An additional benefit for the customer will be free installation for a certain amount purchased. In all, the benefits for the customer will be affordability, reliability, low maintenance costs, reduced electricity, and an environmentally friendly product which is what our target markets are interested in.

Pricing Strategy

A study by Kenneth Gillingham examined the variability in equilibrium prices of solar PV systems in the United States using a large dataset of installations in fourteen states between 2010 and 2012. There was considerable heterogeneity in prices, both across and within states. They then seeked to explain this heterogeneity in terms of system characteristics, market structure, installer characteristics, demographics, and policy conditions, all of which influence pricing through their impacts on underlying costs and demand. Even after controlling for many plausible observable factors, a surprising amount of unexplained variation in PV system prices remained. The size of this residual suggests that unobserved conditions, including installation-specific factors such as the characteristics of the roof or the negotiating power of the household, may play an important role in the heterogeneity in pricing (Gillingham, 2016). Price is the only revenue generator, so we will need to account for the customer’s and Canadian Solar’s needs and objectives when considering price. Our price objective should aim to be lower than the competition while maintaining a high quality product (our target market needs and wants). To accomplish this Canadian Solar needs to earn a targeted return on Investment. In this case, undercutting is not necessary to take over the market. Aggressive pricing for market share has come and gone in the PV industry since its inception. Traditionally, buyers of PV cells and modules have had the most control over the price function. This is because sales of PV systems, particularly into the grid connected application, have relied close to 100 percent on government and utility demonstration projects and on incentives — that is, demand was ‘push’ not ‘pull’ market (“The Solar Pricing Struggle”, 2013). Pricing tactics like discounts and incentives will be needed to attract customers to the product. One major incentive will be to offer free installation with the purchase of our product. Another incentive can be a 1 year warranty on the product. Further discounts can also be applied when a certain amount of the product is purchased. There are several factors that will allow Canadian Solar to continue reducing costs to keep the product affordable and enticing. Utility company rebates, tax incentives and other programs may help defray the cost of a solar panel system; plus having a PV system can add thousands of dollars to your home's value. As technology improves, costs continue to go down, and once PV manufacturing starts to be done on a larger scale, they'll go down even more. The world is becoming more aware of how important it is to conserve power. As demand goes up, mass manufacturing becomes more possible and prices continue to fall, so the future of photovoltaics looks promising (“What Factors into the Cost of Solar Panels”, n.d.). Prices for solar PV systems in the United States are heterogeneous.

Distribution and Supply Chain Strategy

Solar panels are quite big, heavy, and fragile; therefore transportation will not be easy. Canadian Solar will need a reliable 3rd party company, such as UPS to transport the product from the warehouse to the customer. Canadian Solar will market its products and services through intermediaries like distributors. This will allow the company to focus on the quality and affordability of the products and services offered. Also, intermediaries can help sell the product better than working alone. In other words, the intermediaries have capabilities the producer needs: contact with many customers or the right customers, marketing expertise, shipping and handling capabilities, and the ability to lend the producer credit (“Using Marketing Channels to Create Value for Customers”, n.d.). The distributors could be retailers or brokers. Canadian Solar should follow a selective distribution strategy. This strategy will ensure that our products appeals to our target market looking for affordability and reliability; however it will not devalue the brand by using an intensive strategy. Using an exclusive distribution strategy helps the firm easily keep focus on the performance of the product in the market. Also, the firm will be able to easily get real customer feedback on time and take any necessary action possible. Another advantage is that the product will be easier to reach the distributor on time, a factor that enhances effective distribution (“Intensive Vs. Exclusive Distribution Vs. Selective Distribution: What’s the Difference?”, n.d.). Canadian Solar will need to ensure that it has the best marketing channels. , In order to make the distribution and supply chain strategy decisions the marketing channels will need to have similar objectives to Canadian Solar. There are vital criteria to consider when choosing an intermediary. An investigation of the credit and financial position of prospective intermediaries is vital. The quality and number of sales people employed is also an important criterion. Their reputation is another criterion to consider. Based on our STP, we will also want them to cover the geographical territories of our target market. Their market coverage capabilities will be a big indicator whether the can capture as much market share as Canadian Solar expects. Lastly, management should be strong. Many manufacturers feel that a prospective channel member is not even worth considering if the quality of management is poor. One of the key determinants of management’s ability is their ability to organize, train, and retain sales people(“Selecting the Channel Members” n.d.). After the distribution objectives are set, it is appropriate to determine the specific distribution tasks (functions) to be performed in that channel system. The channel manager must be very specific in describing the tasks and also detail how these tasks will change depending upon the situation.

Integrated Marketing Communications

When selecting integrated marketing communications strategy it is important for it to be cost effective and be able to reach most of our target market. Advertising will be crucial for Canadian Solar. Social media is the most vital venue. Social media can reach a large portion of our target market and can be relatively inexpensive. Social media sites, such as Facebook and Twitter can reach a large audience. Facebook is a great place to highlight the aesthetics of the solar industry: grand-scale solar installations, visually striking PV panels, and solar panels fitted on commercial properties overlooking lush, green landscapes. Visual ads drive engagement and boost click-through rates. The firm can use personal shots over stock images to humanize ads and differentiate the business from competitors. Also, paid Google ads and SEO can help reach the target market. Direct Mail, such as postcards or leaflets, is another great way to reach commercial property owners in need of your services. Effective direct mail ads are visually striking and communicate your value in a few words (“Commercial Solar Ad Tips for More Leads and Conversions”, 2019). Also, advertising on real estate magazines, such as Realtor Magazine, Realty Times, and Inman News can reach out to potential customers. HGTV is also a great place to reach our target market. According to Nielsen, HGTV has one of the most affluent viewerships in extended cable, regularly dominating what’s referred to as “Upscale” viewers with household incomes over $125,000 (47 percent of their total viewership has an income above $75,000). More than that, 75 percent of the total viewers are already homeowners. So HGTV’s is a uniquely well-off viewership, but it’s also a uniquely committed, or, perhaps, compelled viewership (Maciak, 2017). Lastly, trade promotions, such as trade shows can be beneficial to increase key contacts and leads with a display of the product. Certain incentives can also be applied to attract and retain customers. Rebates can be an incentive that that benefit both consumer and manufacturer. When you get a rebate, you are refunded part (or all) of the purchase price of a product back after completing a form and sending it to the manufacturer with your proof of purchase. The trick is completing the paperwork on time. Although different types of sales promotions work best for different organizations, rebates are very profitable for companies because many consumers forget or wait too long to send in their rebate forms. Consequently, they do not get any money back (“Integrated Marketing Communications and the Changing Media Landscape”, n.d.). Another incentive can be to offer free installation for a specific amount bought. For example, if the customer buys more than $20,000 worth of product, then the installation will be free. It is important the dollar amount chosen is enough to cover our cost and turn a profit. The message characteristics should be mostly informative depending on the venue of the advertisements. Since our target market is looking for affordable, reliable and environmentally conscious product, the communication should convey its benefits to them by providing facts with evidence. There is a lot of competition and it is vital for the consumer to remember our product after they have watched or read our ad.

References

Van Benthem, A. (2007, December). Learning-by-Doing and the Optimal Solar Policy in

California. Retrieved from Research Gate: https://www.researchgate.net/profile/James_Sweeney5/publication/227354039_Learning-byDoing_and_the_Optimal_Solar_Policy_in_California/links/02e7e520951b4612f2000000/Learning-by-Doing-and-the-Optimal-Solar-Policy-in-California.pdf

Corrugated boxes. (n.d.). Retrieved from Eco Enclose: https://www.ecoenclose.com/shop/boxes/corrugated-boxes/

Commercial solar ad tips for more leads and conversions. (2019, May 1). Retrieved from Reonomy: https://www.reonomy.com/blog/post/solar-advertising-tips

Gillingham, K. (2016). Deconstructing Solar Photovoltaic Pricing: The Role of Market. Retrieved from EB Co Host: http://web.b.ebscohost.com.ezproxy.umuc.edu/ehost/pdfviewer/pdfviewer?vid=7&sid=eec4b22c-f235-4ffb-954a-81ff54359a0a%40pdc-v-sessmgr02

Goddard, L. (2015). The Solar Panel Manufacturing Industry's Boom, Bust, and Future. Retrieved from Business Economics: https://search-proquest- com.ezproxy.umuc.edu/abicomplete/docview/1717108322/C5A1A6CA55634099PQ/1?a ccounti d=14580

Hawkins, E. (2016, August 18). Importance of ROI: Why it matters for all businesses. Retrieved from Call Rail: https://www.callrail.com/blog/importance-of-roi-why-it-matters-for-all-businesses/

Integrated marketing communications and the changing media landscape. (n.d.). Document

posted in University of Maryland University College MBA 640 9048 online classroom, archived at: https://leocontent.umuc.edu/content/umuc/tgs/mba/mba640/2198/learning-resourcelist/integratedmarketingcommunicationsandthechangingmedialandscape.html?ou=423980

Intensive vs. exclusive distribution vs. selective distribution: what’s the difference? (n.d.). Retrieved from Viva Differences: https://vivadifferences.com/intensive-vs-exclusive-distribution-vs-selective-distribution/

Lang, V. (n.d.). Your Ultimate Guide to Marketing Objectives. Retrieved from UHURU Network: https://uhurunetwork.com/marketing-objectives/

Maciak, P. (2017, June 14). Why do so many people watch HGTV? Retrieved from Pacific Standard: https://psmag.com/social-justice/many-people-watch-hgtv-91461

Market, segmenting, targeting, and positioning. (n.d.). Document posted in University of Maryland University College MBA 640 9048 online classroom, archived at:

https://leocontent.umuc.edu/content/umuc/tgs/mba/mba640/2198/learning-resourcelist/market-segmentingtargetingandpositioning.html?ou=423980

Mitchell-Jackson, J. (2016, December). Market research and market segmentation for community solar program success. Retrieved from Community Solar Value Project: https://www.communitysolarvalueproject.com/uploads/2/7/0/3/27034867/2016_01_08_market_research.pdf Price the Only Revenue Generator. (n.d.). Document posted in University of Maryland University College MBA 640 9048 online classroom, archived at: https://leocontent.umuc.edu/content/umuc/tgs/mba/mba640/2198/learning-resourcelist/price-the-only-revenuegenerator.html?ou=423980 Richards, L. (2019, March 6). The Importance of Product Positioning to the Marketing Plan. Retrieved from Chron: https://smallbusiness.chron.com/importance-product-positioning- marketing-plan-24275.html Selecting the channel members. (n.d.). Retrieved from https://fac.ksu.edu.sa/sites/default/files/chapter_07_1.pdf The new energy consumer: what the solar trend has created. (n.d.). Retrieved from Mass Live Media: https://www.masslivemedia.com/new-energy-consumer-solar-trend-created/ The solar pricing struggle. (2013, August 28). Retrieved from Renewable Energy World: https://www.renewableenergyworld.com/2013/08/28/the-solar-pricing-struggle/#gref Using marketing channels to create value for customers. (n.d.). Document posted in University of Maryland University College MBA 640 9048 online classroom, archived at: https://leocontent.umuc.edu/content/umuc/tgs/mba/mba640/2198/learning-resourcelist/using-marketing-channelstocreatevalueforcustomers.html?ou=423980 What factors into the cost of solar panels. (n.d.). Retrieved from How Stuff Works: https://science.howstuffworks.com/environmental/energy/cost-of-solar-panels.htm