Pitching the invisible commodity: branding power in retail markets

Roxane Richter, Customer Systems Editor

What they don’t know won’t hurt them. That is, until now. Times were that the most a consumer had to understand about their electricity was where the bathroom and living room switches were located on the wall. But with deregulation barreling down on the commodity-na

Now more than ever, energy suppliers need to successfully market, brand (and ultimately sell) the end-user on Brand A or Bundled Brand B of electricity service(s). Branding, or the building of the relationship between the customer and the brand’s value, hits consumers where it counts in retail: choice.

“We haven’t seen a lot of branding so far in the power market,” said Al Cappannelli, director of media relations with High Point/Franklin, a New Hampshire-based communications firm that has designed, implemented and measured customer programs on electric restructuring and has been hired to assist six states (Connecticut, Maryland, Texas, Ohio, New Hampshire and Maine) with public campaigns for deregulation. “We find we don’t have to sell consumers on the issue of choice, they understand that they want to be empowered. I advise the state’s commissions and companies to adhere to a ‘Tell me, don’t sell me’ policy. The company that succeeds in educating a consumer on their choices has the best chance to gain them as a customer.”

Some of the more recognized national branding campaigns to date include: Southern Company, who launched its GoodCents campaign in the Southeast, GreenMountain Energy with its environmentally friendly power and Unitil, a New Hampshire-based electric utility, who is using advertising to build a “we’re in this together” rapport with consumers facing the uncertainty of deregulation.

Just how important is branding a product, commodity or service, you ask? Well, if you think of “care” every time you see a Johnson & Johnson product, and if you think of “unlimited selection” when you hear an Amazon.com ad or imagine “young and fresh” when you reach for a Pepsi, that’s effective branding sending a powerful consumer message that packs a revenue-pumping punch.

A rose by any other name would smell as sweet

When Spokane-based Washington Water and Power expanded its operations into business-to-business e-commerce, technologies, trading and marketing, they needed a fresh name that would reflect its new international and broad-based services (and not just regional) corporate focus. So Washington Water and Power became Avista Corp. in January of 1999.

“Our biggest hurdle is that we didn’t want our name change to be perceived as a takeover or merger,” said Pat Lynch, Avista’s branding manager, “We just wanted a new name to announce that we were doing business differently. We wanted to push the new name out there, but have it be recognized by our old customers, too.”

And with the name change came several other strategic changes for the newly focused energy information and technologies company, including the formation of Avista Services, which offers a bevy of bundled and unbundled value-added products and services.

“We’re currently positioning ourselves as a trusted brand for many different broad-based types of products and services. We want people to know that we offer electricity, natural gas, telecom, energy conservation and efficiency services, appliances and maintenance, Internet service, billing and payment services and home security. Not just energy,” explained Lynch, “In our brand campaign within the utility business, we stress customer service, reliability and a community-based focus.”

But aside from entering the market or re-positioning your marketplace niche, how can you bring your name to the forefront of the electricity consumer’s mind?

My power’s better than your power

Yet another way to brand your electricity is to differentiate it from other power supplier’s wares. In 1997, prior to deregulation, California environmental and consumer protection agencies launched the Green-e Renewable Electricity Branding Program, the country’s first voluntary certification and verification program for environmentally preferred electricity products. The Program’s centerpiece (the Green-e Logo) helps end-users quickly identify credible green electricity products. Californians see the logo on promotional materials from power marketers offering products that meet the program’s stringent ethical, consumer and environmental protection criteria (at least a fifty percent renewable electricity content). Ultimately, the program helps customers sort through the landslide of information from over 100 companies seeking to penetrate the $20 billion California retail market.

“The biggest issue is what in the past were ‘given,’ now must be ‘got,'” noted Russ Parkell, senior managing director of corporate communications at Hill & Knowlton, “For consumers, there’s much more of an emotive connection to electricity. This is more than a service or product; it’s a way of life. To me, energy companies have to try to communicate not just price, but trust and service reliability.”

For branding to ultimately be successful, there should be one clear and concise message from the supplier, which is heard over the din and hubbub of energy choice. And that singular message should be communicated, reiterated and constant in all of the company’s branding, advertising, marketing, public and media relations’ messages.

The more you say, the less they’ll hear

Time and again branding falls under the age-old K.I.S.S. plan-Keep It Simple, Stupid. Or as the legendary marketing guru Harry Beckwith explains it: Have a “fanatical focus” on doing one thing well and stand for “one distinctive thing” that will give you a competitive advantage.

“The biggest challenge for a supplier is not to overwhelm the consumer by offering lots of different services and bundle them with other services. Keep it simple in the beginning,” explained Cappannelli, “This is a 100-year-old monopoly that’s breaking apart; a market needs time to developellipseit’s not a one-day sale. You’ve got a lot of time for the market to develop.”

But for those that decide to bundle on value-added services like telecom, Internet, appliance or home security, a word of caution. By bundling your product and/or service(s) with other perhaps well-known or “household name” entities (such as MCI, ADT, Sears or AOL.com), your products run a high risk of getting lost among the glitz and glamour of big, well-branded names.

“The problem with bundling is losing your identity, so you have to tie it all back to the brand positioning. If it doesn’t tie back, you’ll have a schizophrenic brand-one that has too many identities and platforms,” said Parkell.

Considering the public’s inundation with energy’s scores of mergers and acquisitions, company name changes and regulatory changes hitting the news every week, it seems especially important that an energy supplier’s branding not get lost in the corporate shuffle. Perhaps Parkell summarized the need for branding in retail power markets most succinctly when he said: “If you can’t differentiate the commodity itself on quality between one provider or another, like in electricity, it’s all boils down to service and feeling loved.”

Branding Tips & Challenges in Power Retailing

According to Hill & Knowlton, a nationally recognized public relations, branding and marketing firm, there are numerous industry-specific challenges facing the branding of energy in the retail marketplace.

1. UNDERSTAND your customers/audiences.

Given the rapid implementation of deregulation in the United States gas and power retailing sectors, companies will not be able to benefit from “given” customer bases in their respective regions/states. The increase in service provider choices will mean that customers will either have to be aggressively retained or aggressively acquired.

In order to do this effectively, utility companies must thoroughly understand their current and potential customers inside and out. Some questions to consider include:

  • What are consumers thinking and feeling?
  • How are they behaving and why?
  • What are they looking for (desires) in a product/service relationship?
  • What are their energy usage habits, and how can this usage data be applied to better the relationship?

In addition, companies must understand their secondary audiences-such as employees, government officials, investors and local citizen groups. By truly understanding what their audiences are looking for in the relationship, companies can add the value needed for the two-way partnership to not only be successful, but long-term.

2. Understand your brand assets versus your COMPETITIVE SET.

Companies must compare what their audiences are looking for in a given relationship with both their own offerings and those of their competitors. Without clear competitive differentiation, the risk is that consumers will choose based on the lowest common brand denominator-price. Price wars never benefit companies in the long run.

3. Develop ONE relevant brand platform/statement.

Based on audience and competitive knowledge gathering, develop one corporate statement that will appeal to all audiences. This positioning statement or brand platform should ideally be one sentence long, sum up your corporate brand vision, and support your corporate objectives. This is your “relationship value proposition,” and it tells audiences what’s in it for them.

4. Develop ONE unique and integrated communication idea.

It is from your one brand platform that one integrated core communications idea should springboard. With the information clutter people experience today, companies must speak with one voice across all communications channels. Consumers don’t have time to put the pieces together, therefore, whether it be direct marketing, advertising, public relations or logo designs-speak to them with synergy.

5. Build TRUST with the best and most innovative customer service.

Take knowledge and apply it to your service offering on an ongoing basis. The war will never be won on price alone. Lower prices will become a cost of doing business in the energy category. Therefore, it will be unparalleled service offerings leading to trust that will drive success and build a bond with customers. In the end, innovative offerings that lead to satisfaction and trust will breed long-term relationships that benefit both parties-consumer and corporation.

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