My individual seminar paper is written on EDF Energy. This is one of UK’s largest energy companies and its large producer of low carbon electricity. They generate around one fifth of the UK’s electricity. They supply electricity and gas to around 5. 5 million residential and business customers, making them the biggest supplier of electricity by volume. The market segments they target; 1. They target individual home owners through SME. 2.
They also target business organisations like Heathrow and major businesses like Tesco. Customer Value Before i go further let me touch on a brief introduction on customer value, customer value can be defined as the difference between what a customer gets from a product and what he or she has to give in order to get it. For EDF Energy the nature of the customer value are based on the fact that customers are understandably most interested in cheap energy as said by Chris Lodge, Head data and customer insight, EDF Energy.
He went on and stated that “it can be challenging to engage customers and get them interested”. So the key factor they looked at was segmenting customers in ways that enable EDF Energy to target customers most likely to respond to an offer as well as help reduce debt. So they adopted the use of SAS; a business analytics software and services, this helps them with their goal to increase the value of profitable customers while maintaining their green credentials and promoting energy efficiency.
So in predicting customer value, he went on to explain that “energy prices are fluctuating” which means that the profit made on gas for example can vary, and so identifying the most valuable customers in terms of the income they bring can be difficult. So they try to move away from the value amount to look at the energy they are usually using.
Lodge also notes that this industry like the mobile communications is prone to high churns, with customers switching suppliers based on more attractive offers, so they have to think of new ways to hold on to customers and gain as much value from them as possible, for instance identifying the fuel poor and people that are most vulnerable and helping them. Market Qualifiers and Order Winners Market qualifiers are the characteristics of a product or service that is required in order for a product/service to be considered by a customer.
For EDF Energy, the market qualifier is the ability to deliver sustainable energy solutions to everyone. Furthermore according to the company’s website, they are working to deliver a safe, socially responsible and competitive service that exceeds the expectations of the customers, their people, shareholders and the communities in which they operate. On the other hand order winners are the characteristics that will win the bid or customers purchase. So for EDF Energy, they offer a wide variety of services to meet various customer needs.
These services are as follows; 1. They have the Online saver version 7, which helps customers save up to ? 208 on energy and a welcome bonus of ? 100+. 2. There is the Eco20:20, which offers 20% cheaper electricity from 9pm to 7am and weekends, and also offers membership to Team Green Britain, to help save your money and help you live greener. 3. Then there is the Energy discount plan version 3, this is available for a limited period and offers 2. 5% discounts on standard prices until September 2011. 4.
There is the Fixed saver, also available for a limited period, which gives customers peace of mind, knowing their energy prices won’t increase before 31st March 2012, and there is also a ? 75 welcome bonus for customers who switch to this service before 30th November for dual fuel users. 5. They also have the ecomanager, with this service you can take control of your energy usage at home, you are offered a free ecomanager wireless appliance controller, it also offers competitive energy prices on their standard tariffs and also has a sign up bonus as well. . There is also the Standard services, where you get cheaper energy prices when you pay by direct debits, they also provide annual discounts, variable prices to suit customers and also flexible ways to pay. 7. There is the Green service, which is aimed at supporting renewable energy in the UK, by helping to fund renewable energy projects in the UK, free energy efficiency guide and free home audit. 8. There is the Annual fix version 4, which protects customers against unexpected price rises.
The prices are checked and renewed every year, so that they are always fixed at a competitive rate and is also available for a limited period. 9. Lastly there is the Fixed price 2015 service that helps customers secure their energy prices for the next 5years, and is said to be the longest fixed price tariff in the UK and is also available for a limited period. Current Pressures on the Supply Chain 1. Sustainability ; this has to do with maximizing and maintaining public and customer trust, it requires demonstrable and provable levels of transparency, accountability and integrity on the part of the company. . Complying with regulations and reporting requirements; the regulatory landscape can be particularly complex for utility companies. Not only do they have to conduct operations in a variety of regulatory and tax regimes but they also have big upfront investment needs, which often go hand in hand with great uncertainty about long-term outcomes. 3. Improving performance and operational effectiveness. 4. Managing financial risks; the energy and gas industry is exposed to significant whole sale price volatility and increasingly face the uncertainties of competitive customer markets. . Managing industry regulatory challenges; companies in the utility sector faces a range of market and regulatory environment. This industry remains caught between a pure market oriented approach and a more planned structured environment. 6. Security of supply; ensuring supply is a key challenge for the electricity and gas industry, due to various geopolitical factors and environmental concerns.