Intermediaries
The company has cash sweep payments payable to NFL due to the restructuring of the company.
Customers
British Energy Direct supplies over 1,600 commercial customers; for example Network Rail with electricity contracts.
Competitor
Their principal competitor in the UK market is The AES Corporation and its subsidiaries as they have an advantage in the generation and distribution of electricity globally. Other competitors are Power Gen plc; and Scottish and Southern Energy plc.
Marketing Audit
6.0 SWOT Analysis of British Energy Group
Marketing Audit
7.0 Internal Environment
Structure
B.E.G organisational structure layout reflects such as B.E.G is the main Parent/Group. BE Direct has a Management, Sales, Customer Care and Technical departments.
Style
The company adopts a Democratic Leadership where they incorporate Team work and their openness that are embodied in their vision and values.
Staff
The Company has high employment and the staff is motivated and discipline in providing customers a British Energy experience through excellent customer service.
Skills
Employees have high critical and analytical skills as they provide innovative solutions to clients. High Investment on Training for staff through [WANO] and the recruitment of graduates suggests efficiency.
Marketing Audit
7.0 Internal Environment
Sustainable Competitive Advantage
High investment on the power plant stations and Training on Human Resources and High Customer Service are their strategic advantages as returns from the investment leads to efficiency.
Systems
The company uses very technical systems. British Energy Direct uses more customer service and Computer systems to increase their efficiency.
Shared values
The company invests a lot into their human resources and ensures smooth operations and provides safety measures for staff. They are ethically cultural; as they contribute to local communities and to the broader UK.
Marketing Audit
7.1 Internal Environment –Marketing Mix
Product/Service
BE Direct provides a service designed exclusively for the UK’s Commercial community that purchases electricity contracts through professional relationship management.
Price
As their current target market is more large scale through the commercial community the pricing is as per wholesale prices.
Place
They company offers direct supply and contracts to their target market; providing personalised service.
Promotion
Not much emphasis is placed on advertising. Quality service and efficiency is the key to their attraction of their client base.
Marketing Audit
7.1 Internal Environment –Marketing Mix
Profits
The profits have fluctuated; BE Direct capture 50% of the parent company contracts. The company gained a 25% and 8.1% increase in Operations profits and Net Profit, respectively from 2006 to 2007 financial year.
People
Employees are highly trained in customer service as they are the industry-leading customer service .The company ensures Staff development through extensive training.
Process
BE Direct provides a comprehensive range of free management tools to help customers monitor, assess and predict energy use. Sales Team fulfills retrieving sale and contracts
Physical Evidence
The layout of the Corporate Office is well structured to adopt a fluent system that delves customer service. This is for clients who meet with BE Direct Manager.
Marketing Audit
8.0Competition
Competition has increased considerably over the past decade. The number of electricity and gas suppliers in the market has increased by more than a factor of four. Their main competitor is The AES Corporation
SWOT Analysis of the AES Corporation
Competition
Another competitor is International Power plc [formed in 2000 by the de-merger of .] The remaining was renamed; they have globally dispersed power plants.
8.1 SWOT Analysis of International Power
Competition
8.2 Porter Five Forces Analysis on BE Direct
Rivalry
Competition
Value Chain
Michael Porter proposed the value chain as a tool to identify ways to create more customer value. The support activities include the Human Resource management and Technology inter-relates the customer Operations group linking to the sales team and billing thus activities can flow smoothly.
9.0 Target Market and Market Structure
BE Direct, target market ranges of 1,662 customers across 9,365 sites in Great Britain; existing target market is the large industrial and commercial customers.
Market Segment Criteria for BE Direct
10.0 Marketing Objectives and Review
British Energy Direct’s aim is to increase profits by £6 million per year for the next three years. BE Direct brings in half of B.E.G output thus increasing sales and profitability of the firm. After review of the market and the internal and external affairs of BE Direct, there is an avenue for extensive strategies to increase awareness and therefore expand their target market for non –commercial customers.
On the other hand assuming that market gas and oil prices are stable within the economy; would the objectives be achieved. The firm’s objective for operational efficiency and health and safety can be fulfilled. However, there are economic and legal constraints that may hinder the achievement of the objectives.
S- The specific objective is to increase profits by£6 million per year for the next three years.
M- It would be managed through increasing the number of contract customers by fifteen percent over the three year period
A-It would be achievable relative to the Financial Review and the strategies adopted
R-The aim is realistic to the company as they have increases in output
T- The three year period is timely to achieve the projected objective due to the market conditions
11.0 Marketing Mix- Strategy 1
The Market Penetration strategy would be implemented to achieve the objective to increase market share.
Product/Service
BE Direct would be providing the same personalised service for the UK’s Commercial community. Their service entails providing businesses with professional relationships management and identifying the needs and the usage of the electricity. The service-quality model [Parasuraman, Zeithaml and Berry] incorporating Reliability, responsiveness, assurance and empathy would be clearly identified in their service.
Promotion
Business testimonials would be used to support their direct sales efforts. Typically, this support sales in the short to long term, establishes the corporation's branding for a strong, ongoing market. The Mirror [UK’s daily newspaper] would print monthly testimonials from existing clients. This is supported by Sir Basil Clarke (1879-12 Dec 1947)
Talk Power 2008 would be directed to existing and potential commercial customers; broaden the perspective of energy and to maximize value from their energy purchasing habits. Potential customers, who sign contracts, would have a chance to win the grand door price draw to win a two week Caribbean Cruise; existing clients would receive a five percent discount allowance on Energy Invoices for a six month period starting from March till September and a ten percent discount for the interim three months starting from October ending in December. This would be monitored and deemed successful through customer feedback surveys completed by the Customer Service Team.
11.0 Marketing Mix- Strategy 1
Price
Prices have been driven by events in the gas and carbon prices and are easily affected by high volatility. BE Direct would use the fixed price contract pricing strategy to avoid any falls in the market price that would negatively affect the price and revenue. Pricing is set at a realised price.
- Price in financial year 2006/07 was £44.2/MWh
- January 2008 price would be set at £.50/MWh [13% increase]
Place
BE Direct is the Retail arm and offers direct supply and contracts to their target market. This is channeled through the Direct Sales Force; thus building customer relations and focuses on customisation.
Profits
The profits of the company would gain stability as profits would increase from the increase in sales, market share and realised price. The financial status would improve as compared to their 2006/2007 financial year.
Realised Price-Calculated by dividing revenue from generated electricity by total output for the period.
ii MW (Megawatt): MWh (Megawatt-hour)-One megawatt equals 1,000kW: one megawatt-hour represents one hour of electricity consumption at a constant rate of 1MW.
11.0 Marketing Mix- Strategy 1
People
Staff is highly trained and motivated. They portray professional image and conduct and have Just In Time training if there are any dynamic changes on the system or Billing.
Process
Processes are simplified as they can contact the direct sales force or contact customer care, the process follows are the signing of contracts with an account manager assigned to the commercial account.
Physical Evidence
The corporate offices are well modern -day structured with a professional ambience effect , the company ensures that it is well maintained as the first impression lasts for their commercial clients.
12.0 Marketing Mix- Market Development [Strategy 2]
A strategic window for British Energy Direct
The external audit suggests that society demands quality customer service thus BE Direct gains an advantage and can easily attract new customers from a new segment to achieve objectives.
Market Segment Criteria
12.0 Marketing Mix- Strategy 2
Product/Service
The same intangible service is provided which entails providing individuals and domestic homes with personalised customer relationship management and solutions that and tailored electricity invoices that suits the customers’ usage.
Promotions
The medium for advertising is The Mirror [daily newspaper] that would distribute informative leaflets advising public that the service has been restructured for Individuals and the date of signing contracts [January 2010.]Five percent discount cards would be issued to newly contracted clients and a Referral Competition with a chance to win Cash price of £5000 would be initiated for individuals that can have five potentials sign contracts for 2010.
Price
Price is set using a pricing model based on client segmentation, offering volume discounts for high consumption customers. The pricing strategies is set by defining new price offerings for different market segments and identifies and customize a model to support the price definition. This would service both the commercial and newly contracted clients
12.0 Marketing Mix- Strategy 2
Place
Indirect Distribution is used as being the Retailer would be selling contracts directly to the end customer as this is of convenience to accessing customers.
Profits
The profits of the company would gain stability as profits would increase from the increase in sales, market share and new pricing strategy of client segmentation.
People
Training would be conducted on the Individual Billing systems, new pricing schemes, and customer relations management and on change control. Motivation incentives and annual bonus applied.
Process
Appointed base process to sign contracts and they would contact general customer care service for further assistance on Bills and advice.
Physical Evidence
The corporate office carries a professional ambience to maintain image and have BE Direct branding within the outlet.
13.0 Time Scale of Activities for the three year period
14.0 Resources Audit and Implications
14.1 Human Resource
Human capital within the company has varied skills such as professionalism; cognitive and analytical skills. Staff is flexible as the customer service works twenty-four hours. Training and education are always employed where necessary. On the other hand some staff may not be receptive to change and may cause conflict; thus costs may increase expenses.
14.2Financial Resources
Capital investment of £11m on systems software and Net assets Equity is positive as the net assets have increased giving them financial stability. Cash Sweep Payment of is made to NFL as they are obligated to pay in relation to the restructure of the company. The Board will seek to return all surplus capital to shareholders as an additional dividend after.
15.0 Budget and Forecasting
The company would review the corporate objectives and measure and evaluate the performance and thereafter if any situations arise take corrective action the following year to.
Market share Analysis
Assuming that the dividend of £13.6p per share increased to £14 after employment of the strategies, suggests that market share have increased by 2.9%
Sales Forecast
BE Direct can include sales force opinions using their past forecasts records compared to the actual sales output in relation to the market insights like the company’s assumptions , competitors behaviour and the marketing plans .
15.1 Budget Allocation.
16.0 Monitoring and Control and Contingency Plans
Monitoring and Control for Market Penetration
BE Direct would monitor the market penetration strategy through the evaluation of the effectiveness of the Promotional activities and compare the sales with the actual output. This would be conducted on a six month basis. As annual control; measures the performances against the goals set and determine if the objectives were achieved.
Contingency plan for Market Penetration
Assuming that the Customer Service call centre experiences technical difficulties and they are unable to make and receive calls , to ensure that they maintain their standards of high quality customer service , a contingency plan B is implemented whereby a Computerised Interactive Voice Response would direct customers queries to an automated Billing system for their corporate accounts.
17.0Monitoring and Control and Contingency Plans
Monitoring and Control for Market Development –Strategy 2
Monitor all the activities that endorse the change of attracting the new market segment and observe the financial efficiency through the profits and rate on investment. This can be done every three months to monitor how effective the strategy is and also to measure performance and adjust strategies accordingly. The company can collect Voice of the customer [ VOC ] measurements to probe customers satisfiers and dissatisfiers on the new strategy and adjust
Contingency plan for Market Development Strategy 2
As strategy two consists of heavy advertising as BE Direct is targeting a new market, in a worse case scenario that there is a greater cost to what they budgeted for the allocation of resources for advertising and promotional activities. The company can rely on a secondary fund that is used in case of dire need .This would be a back support in case financial stability occurs .
Conclusion
BE Direct has demonstrated pro-active schemes in their contingency plans for their marketing strategies .They have great human capital that is the core of their Leading position in customer care in the industry .One would recommend to ensure efficient allocation of resources and also to motivate the human capital in the company . As the company would be targeting individual persons indicates that they would provide differentiated levels of service , according to Kotler Keller (2006); “ the company must be careful about claiming superior service as customers who receive poor customer service will bad-mouth the company and injure the company’s reputation.”
On can recommend BE Direct to adopt an Hollistic approach to Marketing as the service oriented company requires external, internal and interactive marketing. It is also advisable to increase financial stability, make appropriate investments, address the pension scheme deficit, meet the collateral requirements of the Group and, over time, and allow for further investment.
Bibliography
Paul Weeks, (2007) Managing People, Finance and Marketing, Pearson Custom.
D. Hall, (2005), Business Studies, 2nd Edition, Caseway Press.
A.Griffths&S.Wall (2005) Economics for Business and Management, A Student Text, Prentice Hall
P. Kotler & K. Keller (2006) Marketing Management; 12th Edition
Websites
Adjusted EBIT DA is defined as profit before financing (charges)/credits, taxation, depreciation,
amortisation and other charges, unrealised net (losses)/gains on derivative financial instruments and commodity contracts, Cash Sweep Payment, other exceptional operating expenses and income
