Get Strategies for Competitive Advantage in a High Price Environment With This Essential Report

Research and Markets (http://www.researchandmarkets.com/research/da6bb3/strategies_for_com) has announced the addition of the “Strategies for Competitive Advantage in a High Price Environment” report to their offering.

Europe has become a high price environment as wholesale energy prices soar. This brief looks at strategies that have been used previously by energy companies to mitigate the difficulties associated with this. Each strategy is categorised and analysed, with their likely benefits in todays climate assessed by energy experts

Scope

– A comprehensive review and analysis of the previous methods that have been used to gain competitive advantage in the face of rising wholesale prices

– A logical segmentation of the key strategic areas available to suppliers: product innovation; internal cost/benefit; external cost/benefit

– A logical segmentation of the key strategic areas available to suppliers: product innovation; internal cost/benefit; external cost/benefit

– An understanding of potential impact to the brand in comparison to the financial benefit which a strategy may deliver

Highlights of this title

Competition across Europe is increasing, and suppliers will have to compete as never before to retain existing customers and attract new ones. The cost of gaining – or losing – customers is significant and suppliers will have to take new initiatives to preserve margins already trimmed by rising wholesale fuel costs

Consumers are becoming increasingly aware of energy costs. Suppliers must evolve their positions to meet the changing demands of their customers. Corporate responsibility drives consumers to source green energy, rising wholesale fuel prices make this more commercially viable

Price competition becomes less important as propositions become more sophisticated – the relationship between price and market share breaks down even in a high price environment, and the benefit of a strong brand is confirmed through analysis of the price/market share over time

Key reasons to purchase this title

– Understand previous initiatives that have been tried to insulate customers from rising energy wholesale prices

– Gain insight to the behaviour of competitors during periods of instability in the power and gas markets

– Identify possible advantages that can be gained from the turbulence in the wholesale gas and power markets

Key Topics Covered:

CATALYST

SUMMARY

ANALYSIS

-Wholesale energy prices have increased dramatically in the last 12 months, and price rises are expected to continue

-Wholesale European gas prices have continued on an upward trajectory

-European power prices have increased due to the rising cost of generation fuel

-Despite rising gas prices, potential margins from gas generation have increased as Spark Spreads increase

-Despite rising coal prices, potential margins from coal generation have increased as Dark Spreads increase

-As wholesale prices rise sharply, energy companies profits reduce as they attempt initially to absorb the price rises

-Energy companies will need to adopt new strategies and innovations in order to cope with the new high priced environment

-There are three main strategies that players can adopt to gain competitive advantage in a high price environment

-PBIs focus on how energy is sold to consumers

-ICBIs focus on how the administration processes work

-ECBIs focus on mitigating risks from outside factors

-Datamonitor assess each potential strategy against six criteria and rate the benefits of each

-PBIs allow companies to market energy in different ways in order to appeal to different customers

-Price capping has the disadvantage of being expensive and binding for the supplier

-Tracker products inherently have a greater cost to serve, and while passing on savings is popular, passing on costs is less so

-Loyalty schemes can show benefit at low costs, and can be applied to a large segment of the customer base

-Charity affiliations help target specific attractive demographics, and raise company profile for a low cost

-Additional services, which can be standalone products or affiliated to a supplier, will become increasingly important as energy prices increase

-Green products hold an important position in the market, as awareness of the environmental impacts associated with energy is increasing

-ICBIs aim to increase margins by reducing costs

-New sales channels are alternative ways of targeting more profitable customers and may offer lower costs of acquisition

-Reductions to administration or other costs to serve grant greater margins and increased profitability without increasing retail prices

-Managing customer losses allows targeted retention of profitable customers, and reduces unrecoverable administration costs

-ECBIs help to manage or mitigate the risk that external cost factors pose to a company

-Diversification of generation portfolio allows a company to source energy from the cheapest possible wholesaole fuel, or to take advantage of low Spark Spreads

-Green generation or subsidized generation is good for the company brand, and can also be profitable as traditional wholesale fuel prices rise

-Strategies impact a company in many ways; financial benefits may be at the expense of brand image

-Strategies which offer advantages in one area may incur benefit or detriment in others

-A case study: retail price and market share in the UK are not related as would be expected in a classical proportional model

-A case study: lower prices do not consistently show an increased market share

-Price competition in liberalized markets such as the UK is failing as other factors take precedence

List of Tables

Table 1: Aggregated analyst scores for strategies

List of Figures

Figure 1: Gas prices have increased with oil prices

Figure 2: Wholesale power prices have tracked wholesale fuel prices closely

Figure 3: UK Spark Spreads

Figure 4: UK Dark Spreads

Figure 5: Retail prices against wholesale spot price

Figure 6: Categories for scoring each strategy

Figure 7: PBI: price capping

Figure 8: PBI: tracker products

Figure 9: PBI: loyalty schemes

Figure 10: PBI: Charity affiliations

Figure 11: PBI: additional services

Figure 12: PBI: green products

Figure 13: ICBI: new sales channels

Figure 14: ICBI: reductions to administration or other costs to serve

Figure 15: ICBI: managing customer losses

Figure 16: ECBI: diversification of generation portfolio

Figure 17: ECBI: green generation or subsidized generation

Figure 18: Brand benefit against financial benefit

Figure 19: Deviation from average market share against deviation from average retail price over time

For more information visit http://www.researchandmarkets.com/research/da6bb3/strategies_for_com

Source: Datamonitor