How Solar Companies Can Survive an Industry Shakeout

There seems to be wide spread agreement that solar power is well on its way to becoming a commodity.  And when it does, there will be a consolidation of the industry with only a handful of solar suppliers left standing. Some say the shakeout has already begun.

So how does a solar company survive an industry shakeout?  And what does it take to build a lasting position of leadership in an industry that makes and sells a commodity?

The answer is, companies that effectively market their solar offering (using a mix of tangible and intangible product attributes) so that it is always in step with the changing preferences of the market. ::continue::

The relationship between product tangibles and intangibles shifts dramatically as different stages of the adoption process are achieved. This shift in customer emphasis from tangibles to intangibles can be demonstrated as follows:

As products move through the adoption process, intangibles assume more importance. Often, industry-leading products lose their initial prominence because a new entrant is more successful in product positioning based on a more effective mix of intangibles. This can be the case even if the second product is not technically superior.

So whereas early users of solar power have been most interested in: conversion efficiency, crystalline vs thin film, panel size, inverter specs, power or voltage ratings; mainstream users of solar [in the future] will be most interested in: supplier recognition/reputation, industry standards, perceived product quality, financial success, business partnerships, service and support.

Apple was not the first microcomputer company, nor was the Apple II the first microcomputer. It was the first product to be called a personal computer, but much of the success of Apple, at a cost to MITS, Tandy and others, was the result of emphasis on intangibles.

Similarly, International Business Machines was not the first mainframe computer company. A number of others were ahead of IBM (generally, Univac is credited as being the first moderately successful mainframe company). But IBM was ultimately successful in dominating the mainframe market. The main reason was an appropriate emphasis on intangibles in the early stages of market development. Univac and the others continued to compete mainly on the tangible aspects of the product, even though customer preferences had changed.

The power of the tangible/intangible mix of the perceived product is so strong that it can be used to identify markets and/or product categories where pioneers can be superseded. A number of solar/pv market segments exist, for example, where the major focus of suppliers should be intangibles. The solar installation business is also ripe for the effective marketing of intangibles.

Warren Schirtzinger advises solar companies on how to: differentiate their products, grow during an industry shakeout or consolidation, and thrive without government subsidies. He has authored articles as a "Renewable Energy Insider" on RenewableEnergyWorld.com and writes about marketing strategies on the solar strategies blog.  Contact him via e-mail (warren["at"]solar-strategies.com) or follow him on Twitter @SolarStrategies.