Price is fight for power houses

I read with interest Rod Peel’s prescription for a power industry consumer strategy in his piece The Mains Attraction (MW December 8). Apparently, “it will be about brand positioning, market segmentation, delivery of a promise, creation of tariffs and quality of customer service following (sic) through”. In other words, success will be based on marketing strategy. This is true, but not very helpful.

The average household consumes 300 to 350 of electricity a year. But margins are tight and average annual customer profitability is but a few pounds. A marketing strategy based on the forecasted price discounts of ten to 15 per cent is not sustainable in the long term unless:

High value consumers can be identified, acquired and retained.

Marketing investment, including the cost of discounting, can be calculated based on the lifetime value of consumers or market segments.

The average profitability of each customer can be enhanced through differential pricing based on metered consumption patterns, reduced overheads and the cross-selling of power products or other goods and services.

There will undoubtedly be increased price competition when the industry is deregulated in 1998; and the fiercest battles will be fought by new entrants without an established customer base.

It will be bloody but the marketing strategy is clear and the odds are heavily stacked in favour of the existing RECs. But do they have the heart for the fight?

A. Paul Hawkes

Abram Hawkes

Haywards Heath

Latest from Marketing Week


Access Marketing Week’s wealth of insight, analysis and opinion that will help you do your job better.

Register and receive the best content from the only UK title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work. The more we know about our visitors, the better and more relevant content we can provide for them. And, yes, knowing our audience better helps us find commercial partners too. Don't worry, we won't share your information with other parties, unless you give us permission to do so.

Register now


Our award winning editorial team (PPA Digital Brand of the Year) ask the big questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.


From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we are your guide.


Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Having problems?

Contact us on +44 (0)20 7292 3703 or email

If you are looking for our Jobs site, please click here