Solar - Marketing

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Marketing campaigns

Lessons from early experience suggest that marketing campaigns can be extremely costly and time consuming in rural areas, often requiring door-to-door and direct contact. Simple consumer awareness is usually insufficient by itself. Dealers benefit from marketing assistance in early phases of new market development until a “critical mass” of customers develops that makes marketing easier.

Customers living in close proximity to towns are generally better informed about solar products than people in villages and tend to make highly informed purchasing decisions. They would not buy the lamps on the occasion of a particular promotion event, but rather collect detailed information about the products promoted and later compare them with the full range of offers available with retailers in the town. 

Source: E. Martinot et al.: World Bank/GEF solar home systems projects: experiences and lessons learned 1993-2000, Published in Renewable & Sustainable Energy Reviews 5(1): 39-57 (2001).

Marketing through freelance sales agents

Marketing through freelance sales agents requires a high level of trust especially if products are handed out on commission base without asking for any collateral. There is a high risk that sales agents don't repay the cost of all received products. Consequently, selection of freelance sales agents has to be taken with care. Alternatively, products should be handed over to sales agents only against up-front payment to ensure that they, in turn, will enforce payment by households. However, for such a model capital availability on the side of the sales agents would certainly emerge as a bottleneck. Lack of accountability by the freelance sales agents could also be overcome by identifying at least 2 guarantors for each agent.

An important factor for marketing of products is the personal relationship between the agents and the customers. If people trust the agent they feel assured that they can him in case of technical problems or defaults. One model taking this into account is that of using the community hierarchy to establish consumer confidence in the community by enlisting community leaders as direct sales agents, who sell products directly in the community making a commission on each sale. By targeting marketing at respected members of the community who exhibit authority, the likelihood is high that they can substantially influence the community to purchase off-grid lighting products, while also serving as a return channel for warranties and complaints – thereby reducing the risk perception of buying a new and unproven product for consumers. 

A similar marketing approach is based on a community roadshow partiy sponsored by the lighting company, in which it is announced that a competition will take place for community members to see who can get the most endorsement as the ‘community vendor’. The one with the most signatures receives the opportunity to supply the off-grid lighting products to the community members, under the assumption that this ‘competition’ will select a particularly credible, sociable and persuasive community member.

Marketing through cooperation with MFIs or companies

Most low-income consumers spend approximately US$ 5-10 per month for kerosene, wick lamps and candles. This money could be saved if solar lighting is used. However, consumers are very often reluctant or unable to make an up front investment of US $ 30 or more dollars, due both to the nature of their available cash flows as well as to the real and perceived risks of investing in a potentially sub-standard product. In fact, the primary drivers for the high market penetration of kerosene are: (i) the ability to buy small portions of kerosene over time, as permitted by the availability of cash, and (ii) the relatively low risks involved with buying small portions of a well known commodity.
Microfinance provides a means to overcome these limitations. However, Microfinance institution face two key problems: a) high transaction costs for loans of small size, b) risks of non-payment.

Pushing consumers to pay can be done by locking lighting systems until fees are paid. Another option is the cooperation with companies, which sell quality lighting products to their workers  with loan repayments deducted from salaries.

After sales services

Consumers have higher trust in products if spare parts are easily available and if warranties are provided.

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