Proposed Marketing for EDF Energy - Research Paper Example

Proposed marketing research for EDF Energy Contents Contents 2 Introduction 3 Company Overview 4 About the company 4 Company objective 4 Company Offerings 5 Target Market 5 Proposed Market Research Plan 6 Information Need 6 Research Objective 6 Research Design 7 Secondary Research Literature 7 Primary Research Plan 8 Quantitative Research Plan 10 Qualitative Research Plan 11 Analysis Plan 11 References 13 Introduction Customer loyalty programs can be defined as a set of structured marketing activities initiated with an objective to encourage loyal behaviour on the part of the customers through rewards. Customer loyalty programs usually include loyalty cards, point’s cards, rewards cards, club card, advantage cards, etc. The main objective to the customer loyalty programs is to retain the existing customers. According to a study it takes five times of more effort on the part of a company to acquire a new customer rather than retaining an existing one. Also the same study revealed that companies round the globe acquire 65% of the revenues from existing customers. Judging by this statistics it seems that the loyalty programs are great importance to a firm. Usually customer loyalty programs are more visible in FMCG, FMCD and retail industry. Customer loyalty schemes are something that is usually not associated with the companies producing energy. However, things are changing drastically. If the UK energy market is concerned it can be seen that the major energy suppliers such as N-power, British Gas, N-Power, E-ON are have started various customer loyalty schemes. One of the major drives behind the initiation of the customer loyalty programs have been the much worried high percentage of customer switching rate. Just like the major competitors EDF energy also uses to install love and initiate a two-way loyalty program of their own. However, before starting the loyalty programs the company wishes to conduct a formal market research. The study has been conducted in lieu to prepare a proposed market research plan for EDF energy. The report focus upon different data sources to be used to collect the data (Primary and secondary); Type of data (qualitative or quantitative) and also a data analysis plan. Company Overview About the company EDF energy is an incorporated energy company in the UK. The company mainly provides sale of gas and electricity in the UK market. The company happens to be a fully owned subsidiary of French owned EDF (Électricité de France). The company was formed in the year 2002. EDF energy also happens to be generator of electricity in the UK. The company also has the largest distribution network. It has over 20,000 employees and has a customer base of 5.7 million customers. The headquarters are situated in London, England. The company very recently completed the largest door drop in the energy history as it touched 19.5 million households. Company objective To remain as the lowest carbon emitting companies in the UK. To derive customer offers to market the issue of climate protection. Develop and sustain bondage with the local communities. To become the most trustworthy energy company in the country ensuring high level customer engagement and loyalty. Company Offerings The company primarily offers electricity to the people of UK. The main source of electricity happens to be natural gas and fossil fuel. However, keeping the diminishing of natural resources and carbon emission in mind the company also uses renewable energy resources as well as nuclear energy to produce electricity. Target Market The company operates in both B2B and B2C market segment. It provides energies to households as well as to small and medium enterprises (SME) and large business entities. Figure 2 Target Market Segment of EDF Energy Proposed Market Research Plan Any market research project begins and ends with an actionable report or presentation. In between there are various steps to make sure that the research project achieves the main objective. A schematic diagram of the market research process is given. During the course of the report each of them would be discussed. Figure 3: Marketing Research Process Information Need This is the need that initiates any market research project. In this it happens to be the realization among the EDF authorities about the need to carry out a market research to successfully implement the two way customer loyalty program. Research Objective Research objective is usually set in terms of the information need. In this case the market research objectives could be; to identify the effects of customer loyal programs by the competitors, to find out the factors affecting customer brand switching, to find out factors affecting customer loyalty, to find out the level of customer satisfaction. Research Design Research Design depends upon the target population and how easy or difficult it is to access it. The second factor that influences research design is the importance of the decisions that will be taken based on the research. The major parts of the research design are: Research Method (Primary and (or) secondary research), sampling plan, questionnaire design and analysis plan. Secondary Research Literature Secondary research is used to collect secondary data. Secondary data can be defined as data collected by someone else other than the user. Secondary data sources include newspaper reports, periodicals, published sources of data and most prominently used source happens to be the internet. One of the key objectives of this market research report is to analyze the customer loyalty schemes of the competitors and the corresponding affect on customers. As per the ‘In good company’ scheme launched by N-Power in 2011 the company promised the residential customers some contests as well as discounts. The first phase of the program included free vouchers for Café Nero, contests to grab £2000 for using at electrical retailer comet ad opportunity to win tickets to football games. The scheme was updated in every three months. The company also had a separate SME program (Brownsell, 2011, p.1). In the early 2011 British gas along with Nectar launched one of the most popular loyalty programs. The British Gas consumer had the opportunity to collect nectar points and earn nectar benefits that ranged from tickets for Eurostar, money off at Sainsburys, etc. The customers were able to enjoy the benefits in a variety of ways. This included British gas services account, through bonus points, paperless billing and other whole range of services (British Gas, 2011, p.1). With an effort to indulge increased amount of loyalty in the customers the marketing team of E. ON overhauled one of the ad strategies last year. Rather the company focused on a loyalty program called "best deal for you". This helped the company to position itself as a more simple, transparent and fair brand (Chapman, 2012, p.1). Scottish Power and Sainsbury joined forces to present Customers a New Deal. The partnership was big boost to the Scottish Power. It was based on reward card scheme of Sainsbury. Customers opting to use Scottish Power electricity and gas were provided vouchers of £25, usable in-store or at Sainsburys outlets (Scottish Power. 2000, p.1). In the year 2003 EDF energy started the first ever customer loyalty program of the company in partnership with Nectar. Before this however, Nectar had already worked with major brands like Ford, Sainsburys, Barclaycard, BP, etc. The rewards were given to the customers not to encourage energy consumption directly. Instead the reward was targeted towards those customers that pay promptly (Marketing Week, 2003, p.1). Primary Research Plan Sometimes it is possible to do a lot of good secondary research and get useful information. But market research typically requires a lot of current data that is usually readily not available through the secondary sources. For example, one of the probable objectives of the marketing research project is to assess the customer satisfaction level of EDF. However it is unlikely that such information is going to available through any primary data sources. Unlike secondary research primary research includes collection of data from actual resources such as customers or dealers. One of the key elements of the overall primary research plan is the sampling plan. There are various methods of sampling available such as the random sampling, systematic sampling, snow ball sampling, etc. However, while selecting a sampling technique it is suggested that the technique should be void of any kind of biasness. Hence it proposed to choose non-probabilistic sampling. To be more specific it is suggested to go for segmented sampling, keeping the fact in mind that EDF offers services to diversified target market segments. Therefore segmented sampling would be a true representative of the target market. The respondents may include existing customers (both B2B and B2C segment) and customers not using EDF energy services. Respondents not using EDF energy services should include customers using other services as well as students, who are directly not involved in the purchase decision. This will help the company to understand the perception of the brand among the people in general, level of customer satisfaction among the existing customers, compare the degree of satisfaction among different segments, analyze the perception of those customers towards EDF that are using services provided by the competitors and perception of future decision makers. The sample size could be two thousand (Total). Among these sixty percent could belong to the customer segment and rest to the business segment. It is suggested that the research work is carried out in three cities London, Bridgewater, Somerset and Leiston Suffolk. This is because EDF energy has office in each of the cities. So, it would be easier for the company to monitor the process. Just after the sampling plan the next focus has to the collection of primary data. The primary data to be collected can be both quantitative and qualitative in nature. For example, age of a car Quantitative data is all about quantities. Such data can be measured and expressed in numbers. Qualitative data is all about qualities. Such data cannot actually be measured. For example, colour of a car. Although there is much debate about the properties and attributes of qualitative and quantitative data; it is suggested that the primary research plan should be focused on collecting both qualitative and quantitative data. However, the main objective of any market research report is to make to final result measurable or quantifiable. Therefore 80% of the data collected during the primary research should be quantitative and rest should be qualitative. Quantitative Research Plan There are various methods of collecting quantitative data. Such as online surveys, face to face interviews, telephonic interviews, etc. Each of the techniques has certain pros and cons. For example an online and telephonic survey saves a lot of money and time, as the interviewer and the respondents do not have to be physically present. On the other hand people may not actually reply or even the check the e-mail. People may not reply over the telephone. Therefore the best way to collect primary data is believed to face to face interviews. Although it is time consuming, it still usually gives appropriate results. Plus the interviewer can also view the body language of the respondents. In order to collect quantitative data through face to face interviews a set of questionnaires would be required. Since the research work would be targeted towards both B2C and B2B respondents. Two types of questionnaires need to be prepared. However, booth set off questionnaires should have some important common question regarding the service quality of EDF, after sales service quality, customer satisfaction level, etc. Scaling techniques such as Likert scale can be used to collect such info in a more structured manner. Qualitative Research Plan Qualitative Research is mainly exploratory research used to understand the underlying reasons, opinions, and motivations. It helps the researchers to get formation from the respondents at a subconscious state of mind. Some of the most commonly used qualitative techniques are focused group, mystery shopping, product tests and omnibus studies. Based on the project objective it is proposed that focused group discussion is used to collect the required qualitative data. Focus group discussions are usually carried out by highly experienced researchers. The groups are too be made of selected respondents. Usually the number of respondents should be made of 10 to 18 participants. The researcher acts as a moderator. A particular topic is provided by the moderator. In this it could be the ways to increase customer satisfaction for the EDF customers. During the process discussions, opinions and beliefs are encouraged. Here it needs to be mentioned that just like other methods the FGD also have certain pros and cons. The advantages of FGD could be the scope of use of visual aids, monitoring the respondents behaviour from behind the scene; interactive research sessions. Some disadvantages could be, complex to organize, can be quite expensive, need of highly experienced researcher. Since the field work is to be carried out in three cities it is suggested to carry out three focus group discussions. Mainly the respondents may include existing customers belonging to the B2B market segment. This will allow the company to make a comparative analysis across different cities. Analysis Plan Analysis is conducted based on the type of data collected. It is important to have an analysis plan in mind even before the field work. Data collected in this case is primary as well secondary in nature. In case of the secondary data some qualitative analysis needs to be conducted. For example, porter’s Five Force Model. One of the key elements of the model is the bargaining power of the customers. This is likely to provide important information regarding the customer switching behaviour. The findings of this analysis need to be compared with the customer loyalty program various companies. A part from this the company can also use different secondary research sources to find out relevant secondary data to carry out a SWOT analysis. The primary data needs to be analyzed in two very basic ways: simple tabulation and cross tabulation. The simple tabulation involves counting the number of responses in each category for a question putting it in a frequency table form. Cross tabulation is the result of counting simultaneously, answers to or more questions on a questionnaire. E.g. Age wise customer satisfaction level. A part from this exploratory statistics needs to be used. This may include the use of advanced statistical concepts, like t-Test, Anova, Chi-square, etc. An example may provide a clear understanding of the exploratory statistical concepts. Since the field work is being carried out in three different cities the analysts may want to compare the customer satisfaction level across three different cities. The questionnaire may include rating scales to assess the degree of the customer satisfaction. The analyst may draw a null hypothesis that customer satisfaction ratings are similar in different cities. An alternate hypothesis can be formed against this that there is significant difference across different cities. This can very easily be analyzed using the independent sample t-Test using SPSS software. The software provides a p value. If the p value is less than alpha or the level of significance which is usually held at 5% or 0.0.5 then the null hypothesis would be rejected and it would be concluded that the there is significant difference in the customer satisfaction rating across different cities. If the P value is more than the value of alpha then the exact opposite would happen. References Brownsell, A. 2011. Npower plots loyalty scheme joining business customers with consumers. [Online]. Available at: http://www.marketingmagazine.co.uk/news/1084872/Npower-plots-loyalty-scheme-joining-business-customers-consumers/. [Accessed on March 25, 2013]. British Gas. 2010. British Gas joins Nectar loyalty program. [Online]. Available at: http://www.britishgas.co.uk/blog/articles/british-gas-joins-nectar-loyalty-programme. [Accessed on March 25, 2013]. Chapman, M. 2012. E.ON alters ad strategy in move to loyalty focus. Available at: http://www.marketingmagazine.co.uk/news/1153860/EON-alters-ad-strategy-move-loyalty-focus/. [Accessed on March 25, 2013]. Scottish Power. 2000. Scottish Power and Sainsbury Join Forces To Offer Customers a New Deal in Energy. Available at: http://webcache.googleusercontent.com/search?q=cache:54O2-VsxjZIJ:www.scottishpower.com/PressReleases_675.htm+scottish+power+loyalty+scheme&cd=1&hl=en&ct=clnk&gl=in. [Accessed on March 25, 2013]. Marketing Week. 2003. Rebranded EDF Energy joins Nectar loyalty program. Available at: http://www.marketingweek.co.uk/rebranded-edf-energy-joins-nectar-loyalty-programme/2017475.article. [Accessed on March 25, 2013]. Read More