Regulatory and technological developments in the energy sector, underpinned by climate and sustainability goals, have forced utilities to rethink their current business models and has even resulted in a rumoured ‘utility death spiral’.
The universal call to provide customers with access to modern energy services, improve efficiency and increase use of renewable sources has turned an industry, once fraught with monopolistic traditions, on its head.
These factors have forced a fundamental shift in the adopted mindset that electricity, thought to be a ‘constant’, is now considered a valuable ‘commodity.’
So then, how do utilities redeem themselves from age-old practices and ways of thinking to compete in a competitive, consumer-driven market? How do they market an intangible commodity?
If electricity is thought of as a product, energy providers could look to the examples of Nike, Apple, Google and Coca-Cola who have implemented innovative brand strategies to differentiate themselves from their competitors.
While the concept of branding is not a new one, “applying it to energy is relatively new,” says Dr Friðrik Larsen, CEO of LarsEn Energy Branding (LarsEn).
According to Larsen, energy branding can be defined as “a corporate philosophy that defines the whole organisational behaviour of an energy company that is reflected in its actions both internally and externally.
“It entails strict consumer understanding – not just doing what the consumer wants but anticipating what the consumer might want before the consumer knows it. It’s about two-way communication with the consumer – it’s about knowing who your customer is and how to communicate in terms that the consumer understands. For companies outside the energy space, it’s about being able to use the energy that is used by the organisation as a part of the brand’s storytelling.”
He goes onto say that superbrands have set the bar higher in engaging with the consumer.
“It’s not enough to show up once a year to read the meter and send out the bill. More and more companies and entrepreneurs have noticed the shortcomings of the utility model and are improving it,” added Larsen.
Power of branding
The potential power of branding is illustrated by Keller’s example whereby California-based oil company Chevron’s highly visible “People Do” ad campaign attempted to transform consumers’ negative perceptions of oil companies and their effect on the environment by describing specific Chevron programmes designed to save wildlife and preserve seashores.
Further afield, in Europe, Italian utility Enel embarked on a company-wide rebranding strategy, through which it has repositioned itself as a multifaceted smart energy company.
“The world of energy is transitioning towards a new paradigm which has at its core distributed generation systems that use renewable energy sources and a more active and participatory role played by customers,” says Ryan O’Keeffe, director of Communications at Enel.
Perhaps one of the most significant market trends to impact the traditional utility model is the accelerated adoption of distributed generation and renewables. The move away from fossil fuel generated power to clean energy is a giant leap forward for an industry, which up until now has been characterized by an over-reliance on ‘dirty power’. This would prove to form part of the key messaging of utilities’ rebranding strategies.
Kevin Lane Keller, an international leader in the study of brands, branding, and strategic brand management, notes that “environmental issues have long affected marketing practices, especially in Europe – their salience has increased globally in recent years. On the corporate side, a host of marketing initiatives have been undertaken with environmental overtones.”
“For power companies, it is essential to recognise that the only way to remain successful in this context is to embrace the transition and the changes it entails. In supporting this change of step, a rebranding of the business was required, projecting the change taking place within the organisation to the outside world.”
O’Keeffe explains that a brand is more than a logo. He says: “We didn’t start our creative process by asking, ‘How do we want Enel to look?’ Instead, we asked ourselves, ‘What do we want Enel to be?’”
Larsen holds the same belief that a brand is not just the logo, a slogan or a jingle in an advertisement. He maintains that all good brand work is done at the molecular level – it’s the core that defines how a company approaches everything else.
“All good brand work is done at the molecular level – it’s the core that defines how a company approaches everything else”
Viewed from that perspective, rebranding should be about much more than how your company is graphically represented. It’s about adopting a new philosophy of doing business and representing that strategically through your brand.
For any business, the brand is a big idea on an organisation’s purpose and activities which motivates its people towards the same goal and is expressed in all its products and communications as well as how people experience them. A great brand expresses a company’s current activity and – to some extent – its aspirations, informing both its internal and external worlds.
“The world of energy needs to face this reality and prepare to give people more power, to work more closely with consumers, inviting them into the energy conversation and transforming them into actors of a world that before belonged just to utilities. Brands are essential to writing the terms of this new relationship. We have articulated this strategic approach in a new company positioning: Open Power,” adds O’Keeffe.
‘Openness’ is a core brand value in Enel’s strategic approach, whereby energy is ‘opened’ up to more people, new uses and new technologies.
Enel asserts that its brand, Open Power, impacts all parts of the business; it informs the selection of the commercial and industrial initiatives it invests in, the services it offers to its customers, and how it engages and collaborates with people internally and externally.
O’Keeffe concluded by saying: “[OpenPower] celebrates the shift from an idea of energy companies as production-oriented, conservative and self-referential businesses, to a business model that engages customers, partners, and stakeholders in an open, people-centric and transparent way.”
Keller added that energy providers emphasising ‘clean and sustainable’ must also ensure that they create value in other areas that matter to consumers, e.g., customer service and pricing. Customer service standards have also been raised across many industries and are likely to continue that way. It is important for energy firms to be customer-centric in all customer interactions to provide exemplary service.
Demonstrated by the Chevron and Enel examples is the increasingly important role that consumers are playing in the branding process.
According to Keller, what is paramount in the process of building a brand is to establish a firm foundation with brand awareness and image by ensuring that consumers; 1) know who the brand is – its name and what it looks like; 2) what it does in terms of needs satisfied, benefits supplied and products and services that it offers; and 3) what makes the brand special and unique and worth buying. These three pieces must be constantly assessed and refreshed, if need be, over time.
In an era where consumer choice is vigorously advocated and competition intensified, aided by liberalisation efforts in many countries around the world, customer engagement is key to prioritising and catering to the needs and wants of customers.
Larsen pointed out that engagement has to move beyond the meter. He says: “The meter is a prime example of the industry’s fixation with engineering. It was the only tool of communication from the old utilities – reading the meter. “Today the industry is vaguely aware of customer engagement but they still think that engagement is about someone staring at a meter. The smart meter offers the possibility of more engagement but the point of branding is to communicate in a way the consumer understands. No consumer has ever understood what a kWh is about. It has been interesting to watch established utilities like RWE, British Gas and EDF trying different approaches, both in terms of imagery and services.”
“Today the industry is vaguely aware of customer engagement but they still think that engagement is about someone staring at a meter.”
An accomplished scholar, consultant and speaker, Dr Sławomir Smyczek, notes that a very popular trend among energy companies is to expand the product offered.
These offerings he says, are energy-related products and services and includes those that are “completely outside the current area interests of the sector.”
Supporting this view of diversification and cross-industry competition in an open market, Martin Stadler, strategy director at Edenspiekermann, points out that, competitors of today and tomorrow are not other established energy brands, but Google and agile start-ups.
“Energy brands need to respond to this intelligently,” says Stadler.
Impact of competition on brand strategies
Larsen states that most of the utilities in the more competitive markets are aware of the importance of a strong brand and are doing things to move more towards branding.
“The problem is that they are big ships and it takes time for them to alter course. For branding to be implemented successfully – the whole organisation needs to be on board. And it can be hard to teach an engineer to react in a new way when his entire career has focused on something entirely different.
“In my experience, there are often many people that want the company to go more into branding but management is often more focused on the engineering part of the organisation and don’t understand the importance of a strong brand,” says Larsen.
The volume and value of mergers and acquisitions have soared over recent years, as utilities look for opportunities in diversifying their customer base, strengthen their market offering and position in the market.
In 2015, First Utility, one of the largest energy suppliers in the UK, entered the German retail market based on a trademark licence agreement with Shell – one of the world’s largest energy brands, providing household and small business customers with electricity and gas under the name Shell PrivatEnergie.
“A brand is one of the strongest differentiators if products and prices are more or less identical. Strong brands help to deliver high-quality services, transparent products and generate trust.”
Maik Neubauer, CEO of the German subsidiary of First Utility and responsible for the Shell PrivatEnergie activities, said that a customer profits from a reliable partner he can trust and turn to in a very competitive and nontransparent retail market.
He said: “We, for example, used the strong brand message of Shell for our initial marketing campaigns, to combine the attributes of power, speed and racing with our retail energy products as these are widely associated with Shell. We continue to go ahead with this marketing and communication alignment strategy associated with the global strength of the Shell brand and enrich them with the Shell PrivatEnergie power for households and small and medium business customers.
“A brand is one of the strongest differentiators if products and prices are more or less identical. Strong brands help to deliver high-quality services, transparent products and generate trust.” W
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