The different forms of energy that are in use in the United Kingdom - Essay Example

?Running head: MARKET INTELLIGENCE REPORT Market Intelligence Report Insert Insert Grade Insert January 13, Market Intelligence Report 1. Introduction Like the other developed nations, various forms of energy are in use in the UK. The country is one among the countries endowed plenty of energy resources in Europe (Key Note, 2000). The country has plenty of supply of energy resources like oil, gas, and coal. Other forms of energy like solar energy, hydro-electricity, wind energy, and bio-fuels are also in use in the UK. The country is highly industrialized and the expert and resources that are necessary in tapping and utilizing these energy sources are available. Nonetheless, due to the environmental impacts of coal and the petroleum products, the use of these products may be jeopardized as the government develops policies that encourage the use of renewable energy forms like biomass that are friendly to the environment (Key Note, 2000). The reduced government support and the environmental policies may be the reason behind the reduced production and use of coal in the country. The country is also a producer of nuclear energy, even though its production may be declining. The use of energy in the UK is also high with a substantial proportion of the consumer expenditure going for energy consumption. For instance, a total of ?60.68bn was spent on energy and energy products in the UK in1999 with ?28.63bn being derived from domestic use (Key Note, 2000). This report provides an analysis of the secondary information that was obtained from various databases on the European market. It highlights on the different forms of energy that are in use in the United Kingdom, the proportions of use of these different energy forms by various categories of the user, and the market trends in the country. The secondary data generated a need to investigate more into the UK energy market and the researcher sought to found out the likely market for various energy firms. In particular, the researcher focused on the markets of petroleum products as well as nuclear energy in the region. The report, thus, provides detailed findings from the primary data collection and gives proper recommendations for market researchers and investors who would be interested in exploring the patterns in the UK energy market The purpose of this MI report is to enable companies in the energy market make accurate decisions through identification of the market opportunities, the appropriate market penetration strategies, and the right market and marketing strategies. It aims at identifying the forms of energy that are in reduced production in the UK market but is currently receiving increasing demand. The research concentrated on energy for domestic and not industrial consumption. The information is particularly helpful to foreign companies that would wish to have establishment in the UK in the energy sector. By focusing on the different categories of energy producing technologies like the solar energy, geothermal/hydroelectricity, natural gas, oil and coal, the report becomes helpful to the managers in determining an environment-friendly energy investment that can survive not only in the UK but also in the global energy market. The marketing managers for the companies can use the information in this report to analyze the market trends and identify the key performance indicators. 2. Procedure In order to obtain the correct insight into the energy market in the UK and the appropriate marketing strategies that can be applied by a company that is willing to establish itself in the country, the researcher relied on both primary and secondary sources. The researcher also used both quantitative and qualitative data in describing the market patterns in this particular market. The author sought information on the energy forms that are used in the UK with a focus on those with declining need and those with increasing need. There was also a need to examine some of the factors that could have led to the changing patterns that are observed in the usage of different sources of energy. The secondary information provides the background upon which the researcher can build foundations for recommendations. The primary data cannot be collected over a long period in order to identify the changing patterns in the market. There is a set of secondary data that gives the usage of energy as well as the changes in the UK energy sector that have been observed over a span of a number of decades. Besides, it may be difficult and needless to carry out research that covers the uses of all forms of energy. The secondary information is necessary in studying these trends across different energy production technologies. Alongside the findings from primary data, the researcher is able to make valid conclusion that is in line with the objective of the study. A large proportion of data obtained by participatory research tools like use of interviews or focus group discussions is generally qualitative (Abeyasekera, n.d, p.1). It is often necessary to obtain the opinions of the respondents in relation to the concepts that are under study. The use of qualitative data enables the researcher to obtain information on a wide scope that explains, for example, not only the number of likely users of a given commodity in the region but also why they are likely to remain loyal to the product and/or a given brand. However, to give the insight into the size of market and the potential users of a given product, it is necessary to quantify the qualitative findings that are difficult to understand. In other words, quantitative techniques are helpful in removing the vagueness and difficulty in using qualitative data (Abeyasekera, n.d, p.2). The use of quantitative data also enables the researcher to provide a report on numerical and analytical terms with less emphasis on the low-level details. The whole population could not be involved in the collection of data hence there was a need for sampling. The researcher applied the procedures outlined by Churchill and Iacobucci (2002) and Wilson (2006) on the measures of reliable sampling. These include the definition of the target population, identifying the sampling frame and the appropriate sampling method, determination of the sample size and the final collection of data (Limpanitgul, 2009, p.13). The primary research was concentrated on the domestic use of energy sources and so the target population was the individual heads of households who would be responsible for providing such information. The sampling frame is the entire UK population and the researcher resort to carrying out the research in London and its environs due to the financial and time constraints. The population in this region is heterogeneous in terms of financial abilities and as such, there was need to apply stratified random sampling in order to have a sample that truly represents the entire UK population. The region was divided into three sections namely central London, inner suburb and outer suburb. With the available resources, the researcher settled in visiting 240 households with 60 from the central London, 80 from inner suburb and 100 from the outer suburb. The researcher did not employ any bias or personal discrimination in identifying the households to be included in the survey. This was meant to improve on the validity and reliability of the data collected. In the events that the identified household heads would not take part in the research for some reason explained or unexplained, the researcher allowed a replacement to reduce these cases of non-response. A questionnaire was designed to help gather information on the usage of energy. The questionnaire sought data on the demographic factors in the household like the average household income, the number of members in the household, the type of energy used in lighting, energy used in cooking/heating, the respondent’s views on the current energy prices and any observation(s) that they can make to improve the energy sector. In the design and the administration of the questions in the questionnaire, the researcher followed the guidelines and code of conduct required of professionals in market research. The research was conducted in accordance to the guidelines provided by the Market Research Society (MRS) that was revised in 2010 from the 2005 version. The MRS guidelines require the researcher ensure privacy of data retrieved from or stored in the websites and servers (MRS, 2012a). The privacy of information obtained from the primary data was enhanced through seeking details as per the identity of the individuals like names and addresses. The other information like areas of permanent residence/physical address was necessary in establishing the reliability of the data. Similarly, in any interview process, it is necessary to build a rapport with the interview, inform him/her of the likely amount of time (and/or financial cost) that may be taken, and the purpose of this particular research. The respondents were informed on the aim of this report and that the information would be confidential and only used for this purpose. The researcher also considered that a research of this nature would be successful through the willingness of the respondents to participate in the research. The respondent simply volunteers to give the needed information and reserves all the rights to decline this request. Thus, the rights of the respondents who were not willing to take part in the interview or those who declined to answer some of the questions were reserved. Besides, it was also clear to the researcher that the survey should be aimed at obtaining information about the market and persuading the respondents to turn to some form of energy product or particular company brand (MRS, 2002). There were no leading questions in the questionnaire that would lure the respondents into providing some guided response. The researcher remained focused on the questions in the questionnaire and had neutral reactions to the responses like the average household income even though some seemed alarming. It is unethical to show the respondent that the interviewer is surprised by the average income given the household size. The questions in the questionnaire were also short and easy to understand so that the respondent could be able and willing to provide an answer. The author used data presentations like tables and charts to give a visual impression concerning the usage of different forms of energy by the households under survey. The proportions of the users were given as well as the observations of the respondents on the appropriate adjustments to improve the energy sector. 3. Findings 3.1. Secondary literature The UK has been a good producer of oil and gas in the European Union countries with large oil reserves and gas reserves. The country has hundreds of oil and gas fields that are in use or are being developed. By 2010, the country had about three billion barrels of oil reserves with 250 oils and gas fields and other 140 companies performing operations offshore (Business Monitor International Ltd, 2012, p.22). It also had about 256 billion cubic meters of natural gas reserves. In the recent past, the UK was the country with the richest endowment of energy supplies so that it was self-reliant. The country boasted of domestic gas, nuclear energy, coal, and oil and relied very little on imported energy resources. However, this pattern has changed in the past few years and the production of these domestic sources of energy has reduced with the same trend expected to continue into the future. The production of oil has recorded a decreasing trend over the past decade or so. The high rate of 2.9mn b/d (barrels per day) was recorded in 1999 and the figure has reduced significantly with the production rate being 1.79mn b/d at the end of 2010 (Business Monitor International Ltd, 2012, p.22). The other energy form that was produced in the country in large quantities was coal. However, the high production costs and the environmental constraints imposed on the production as well as use of this energy source has led to the decline and subsequent closure of various coal mines in the country thereby lowering its production (Business Monitor International Ltd, 2012, p.22). Based on this trend, it was forecasted that the rate of production would be 1.29mn b/d in 2011 and 0.98mn b/d by 2016. On the contrary, the need for these forms of energy continue to rise thereby creating opportunities for foreign investors into the country. For instance, while the rate of production was predicted to be 1.29mn b/d, the rate of consumption in the year was projected to be 1.63mn b/d (Business Monitor International Ltd, 2012, p.22). The income of a given household determines whether a household experiences fuel poverty- a condition in which the household has to spend over 10% of the total income in order to fuel the household adequately (Guy Palmer, 2012). 3.1.1.1. Primary findings A number of significant observations were made from the primary research. Kerosene was still a popular source of energy for lighting with 40% of the households of Electricity was also a popular source of lighting especially in the inner suburb and central London with the overall usage standing at 30% of the households. It was also noted that 15% of the households used biogas lamps for lighting whereas 10% of the households used natural-gas lamps. Another 5% of the households used solar energy for lighting. This is presented below. Fig.1. Different Forms of Lighting Kerosene was still the most popular form of energy for cooking/heating with 45% of the household being users of the energy. Its use was high among the households in the outer suburbs (82%) compared to the households in central London (38%). Lower proportion (about 15%) of the households used electricity for heating/cooking and another 15% used natural gas. The use of coal as fuel for heating/cooking was very low at 5% whereas the use of biogas for cooking/heating was quite significant at 15%. The use of other forms of energy like charcoal and solar accounted for the remaining 5%. This information is presented in the following pie graph. Fig.2 Different fuels used for cooking/heating The average income of the households involved in the interview was ?16000 p.a. The results indicated that individuals with low incomes (those with income below ?6000 p.a.) were likely to have high fuel poverty as they spent a substantial proportion of their income in fueling the household. It was also interesting to note that 40% of the households were heeded by females as the sole breadwinner. This corresponds to the findings by Euromonitor International that the level of employment is increasing among the females and the investors need to apply strategies that appeal to the females (Euromonitor International, 2011). The results also indicated that the individuals in the outer suburban regions were less contented with the energy costs and wanted the prices lowered as compared to the households in the central London region. This could be explained by the level of income that also decreased as households moved away from the urban setup. A good proportion of the respondents suggested that measures should be put in place to increase the use of renewable forms of energy like solar power, geothermal, and wind energy. The use of environment-friendly sources of energy like biogas and other bio-fuels was also recommended by several respondents. 4. Conclusions and Recommendations 4.1. Conclusions The UK was a sufficient producer of different forms of energy due to abundance of these energy resources and the necessary technology and expertise. Nonetheless, it is also evident that the production of these energy sources is declining over the past years with the trend expected to continue into the future. The production of coal as a form of energy has reduced considerably due to the lack government support and the negative environmental impact of the product. The other petroleum products have similar environmental problems and their reserves become depleted. This happens at a time when there is increased need for these energy products for not only domestic consumption but for industrial use as well. It will then be necessary that the country import some energy products for industrial and domestic use in the future. The research also indicated that the use of renewable forms of energy is on the increase with substantial proportion of the population using solar energy and biogas that are friendly to the environment as well. The use of these forms of energy is expected to increase in the future. In the above regard, the aims and objectives of the research have been achieved. The researcher has been able to identify a market opportunity that is likely to occur in the UK energy market due to the country’s reduced production and increased consumption. There is a looming market for fuel for domestic use (kerosene and the related products) in this market. However, these products should be priced competitively in order to attract the potential consumers with low level of income. 4.2. Recommendations to marketers In order to survive in this market, the foreign investors have to understand that a good proportion of their potential customers are low-income earners who would wish to have the prices of these products lowered. Thus, the firms should enter joint ventures with the local companies in the country in order to produce products at relatively lower costs to attract the domestic users. This will also improve their penetration ability through exchange of skills. They should put much emphasis on research and innovation to develop fuels that are cheap but friendly to the environment in order to comply with the government policies and those from the environmental management authorities. Reference List Abeyasekera, S., N.d. Quantitative Analysis Approaches To Qualitative Data: Why, When and How. Statistical Services Centre, University of Reading. (Online). Available at: http://www.reading.ac.uk/ssc/n/resources/Docs/Quantitative_analysis_approaches_to_qualitative_data.pdf [Accessed January 13, 2012]. Business Monitor International Ltd. 2012. UK Oil and Gas Report Q1 2012. (Online). Available at: http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=4&hid=10&sid=962fd4d9-0b98-4967-b747-c8d27eec783a%40sessionmgr10 [Accessed January 13, 2012]. Euromonitor International. 2011. Not just a "man's world" - Female breadwinners' growing influence in consumer spending. (Online). Available at: http://blog.euromonitor.com/2011/07/not-just-a-mans-world-female-breadwinners-growing-influence-in-consumer-spending.html [Accessed January 13, 2012]. Guy Palmer. 2012. United Kingdom: Fuel Poverty. (Online). Available at: http://www.poverty.org.uk/80/index.shtml [Accessed January 13, 2012] Key Note. 2000. Energy in the UK Market Review 2000. (Online). Available at: http://www.keynote.co.uk/market-intelligence/view/product/791/energy-in-the-uk?utm_source=kn.reports.index [Accessed January 13, 2012]. Limpanitgul, T., 2009. Methodological Considerations in a Quantitative Study Examining the Relationship between Job attitudes and Citizenship behaviors. (Online). Available at: http://www.edamba.eu/userfiles/file/Limpanitgul%20Thanawut.pdf [Accessed January 13, 2012]. Marketing Research Society. 2012a. Internet research. (Online). Available at: http://www.mrs.org.uk/standards/internet.htm [Accessed January 13, 2012]. Marketing Research Society. 2002. Code of practice for conducting market research in town centers. (Online). Available at: http://www.mrs.org.uk/standards/downloads/revised/draft/Code%20of%20Practice%20for%20Conducting%20Market%20Research%20in%20Town%20Centres.pdf [Accessed January 13, 2012]. Appendices Appendix A: Questionnaire 1. Age of the household head……………… 2. No of individual in the household……… 3. Physical address ………………. 4. What is the average income for this household? 5. What energy form do you use mainly in lighting? (Natural Gas, Oil, Electricity, Coal, Biogas, and solar energy and others) 6. Are you contented with the current prices of the energy form used above? If no, give a suggestion of the prices 7. What energy form do you use mainly for cooking/heating (Natural Gas, Oil, Electricity, Coal, Biogas, and charcoal/solar energy and others) 8. Are you contented with the current prices of the energy form used above? If no, give a suggestion of the prices 9. What reforms do you want to be made in the energy sector 10. Final comments (If any) 11. Date: …………………. Appendix B: Table of results The usage of Fuel for lighting and cooking/heating Type of Fuel No of users for lighting No of users for cooking/heating Kerosene 96 108 Electricity 72 36 Natural gas 24 36 Coal 0 12 Biogas 36 36 Others 12 12 Read More