Introduction
This paper explores a solar system business idea that is expected to achieve a market turnover of more than $1 million in its first year of operation. When they are well harnessed, solar systems are a viable alternative to electricity as a source of power. However, for this business to succeed, a comprehensive understanding of its operation is required. The location of the business should be convenient to ensure that the business achieves scalability (Hisrich et al. 67). Although the business targets both rural and urban populations, it is more advisable to locate it in an urban centre to ease its accessibility. The main concern when setting up this business is the means through which the overall performance of the business can be improved. After making all the above considerations, the business will be located in an urban area that has connection to electricity but neighboring rural areas that are partially connected to electricity.
Solar systems are a welcome idea among the rural population because they offer citizens a cheaper and more reliable alternative source of energy. If the location of this business is favorable, the goal of achieving a turnover of $1 million is tenable. Most of the targeted customers are yet to have electricity connections. Therefore, the business banks on the portion of population that is yet to be connected to electricity. Nevertheless, the business also targets individuals who have electricity connection but hope to shift to a more reliable and environmental friendly source of energy. The business primarily targets rural dwellers who have not yet been connected with the government-supplied electricity. In addition, the business focuses on the areas that are logistically challenged in terms of electricity supply. These logistically challenged areas include sparsely populated areas as well as very remote regions. This approach will also compliment the government’s efforts of providing a renewable source of energy to all citizens and at the same time cutting back on environmental degradation.
Marketing Mix
Adopting the right marketing mix is instrumental to the business’ success. Therefore, the solar systems company needs to consider several factors that are relevant to the business’ operations. Some of the factors to be considered when coming up with the right marketing mix for this business include product-pricing, area of operation, means of promotion, future prospects of the business, and the market size.
Pricing is a major consideration when marketing a solar unit. The prices of solar panels and other solar related technologies in Canada have been declining for the past decade. For instance, the cost of a photovoltaic panel was averaging at $12 per watt in the year 2000 but by year 2008 the price had dropped to around $6 per watt. Currently, a watt-equivalent in a fully mounted solar system costs between $15 and $20. On the other hand, a solar system with the capacity of producing a kilowatt of energy costs between $15,000 and $20,000 (Jagoda et al. 1268). Our business targets moderate energy consumers with energy requirements of between 50 and 250 watts. Therefore, the solar units will be moderately priced with a fully equipped solar unit going for between $15 and $18 per watt. In addition, there is the option of a payment plan for those customers who require units with a capacity of more than 100 watts. Our marketing will target low-income families with moderate energy needs and the lowly priced units will be an attractive marketing tool.
The market size of our product covers an entire province. Initial marketing will target only the low-income consumers residing in rural areas. The business aims to acquire market presence in more than seven densely populated areas with a market potential of 10,000 consumers. The Canadian government has also introduced the Feed-in-Tariff (FIT) under the Green Energy Act (Jagoda et al. 1270). FIT program compensates consumers who take part in production of renewable energy. For instance, a consumer who has a solar unit that produces a kilowatt of electricity but only consumes half of this energy can release the excess energy into the public grid and receive compensation in return. The market size for consumers who wish to benefit from the FIT program is quite lucrative because it encompasses the urban population. The potential market size for this block is in excess of 100,000 customers. A market share of 30% is achievable for this business under the current conditions. A realization of this market share would yield an annual turnover of over $2.4 million.
The future of the solar system business is bright. The business mostly relies on the government’s efforts to seek for alternatives to fossil-fuel dependent energy. Solar energy is environmental friendly and a major weapon in the battle against global warming. The FIT program involves a 20-year contract between the government and renewable energy producers. The 20-year contract implies that the government recognizes the long-term nature of the solar systems business. National wide, the solar systems business is expected to achieve a 12% growth within the next five years. Moreover, the business is expected to maintain an annual growth rate of 5% after the first five years. However, in rural areas the size of solar business is expected to start with an annual growth rate of 32% for the first three years and then decline gradually after this. The solar systems business aims to capitalize on the bright future of the renewable energy market and the accompanying government support.
Market Elements
For promotion, the solar systems business plans to employ salespeople to traverse the rural terrains of the targeted market. In addition, our business will recruit salespeople from within our targeted customers. This strategy will help give our products a ‘local image’. The business’ target customers can easily relate to a local business that aims to provide solutions to local problems (Weinstein 121). The product promotion among urban dwellers will be achieved by forming a partnership with a local environmental group. The group educates urban residents about the benefits of using renewable energy. This partnership is expected to last for the first three years after which the business will conduct independent product promotions. Most of the business’ product promotion will focus on the durability our solar units. For instance, our product comes with a five-year warranty while most of our competitors only give a two-year warranty on their solar units. This advantage will feature prominently in the product’s promotional campaigns. Moreover, the business will capitalize on social media for promotions. Most of the promotion that will take part over social media will focus on small local groups such as the ones that are found in Facebook.
The biggest source of competition for this product is the non-profit organizations that provide similar products to consumers. However, these types of competitors usually show up in the market for limited periods of time then disappear. Currently, the two non-profit organizations operating in our area of operation target minority rural populations. The main challenge for this business is achieving a considerable market share of the competitive business.
Works Cited
Hisrich, Peters, et al. Entrepreneurship, Boston, MA: McGraw-Hill Ryerson, 2009. Print.
Jagoda, Kalinga, et al. “Development and Commercialization of Renewable Energy Technologies in Canada: An Innovation System Perspective.” Renewable Energy 36.4 (2011): 1266-1271. Print.
Weinstein, Art. Handbook of market segmentation: Strategic targeting for business and technology firms, New York, NY: Routledge, 2013. Print.