Surviving The Next Solar Industry Shakeout

There seems to 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.

So how does a 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: the 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.

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 in the following diagram.

crossing the chasm with intangible product attributes

As solar products move through the adoption process, intangibles assume more importance. Often, pioneering new 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.

In an existing solar business, with established products, customers and competitors, the process of determining the intangible factors that influence purchasing decisions is relatively simple. It means asking customers (and others who influence the purchase decision) two open-ended questions:

  1. What factors in the purchase and use of solar power are important to you?, and
  2. How does our solar offering compare on these factors to other alternatives (including related but not directly competitive products)?

This type of research is easy to describe but difficult to do. In my experience, many research efforts fail to achieve adequate answers to these two questions.

When it does, however, the results can be dramatic. In one recent case, interviews with 200 solar/PV customers and potential customers found that users valued the reputation of the supplier, the service and support provided, prior interaction with the supplier, and industry standards or certifications as the most important intangible attributes of the product. In fact, the tangible characteristics (i.e. system specs) ranked no higher than sixth in the customer’s ranking.

Simple in concept as this type of customer-focused research is, it rarely appears in discussions about the solar industry. Determining product intangibles and converting the knowledge into messages and programs can be the difference between survival and failure during the next industry downturn or shakeout.

This seems to be a persistent weakness in the marketing practices of solar suppliers and installers today. Most solar companies are not working to build intangible attributes into their offering, and instead seem to be focused on primarily tangibles.

 

Warren Schirtzinger is dedicated to helping organizations accelerate the adoption of disruptive and renewable-energy technologies. He believes technology must be humanized before it leads to progress.

Schirtzinger is the owner of High Tech Strategies, Inc. a consulting firm specializing in strategy and marketing. In his work at High Tech Strategies, Schirtzinger studies the effects of disruptive technology on people, business and society. As a result of his work, Schirtzinger has helped leading companies, associations, non-profits and startups humanize their innovations so they are adopted and put into practice.

 

Author

  • Warren Schirtzinger has made the understanding of market dynamics surrounding disruptive innovations the core of his life’s work. He is widely recognized for his expertise in solar market development and CleanTech product management. Since 1991, Warren has consulted with leading organizations in the solar industry, and also in high technology. Warren pioneered development of the Marketing Chasm framework that addresses the challenges companies face when transitioning from early adopting to mainstream customers. Highly regarded as a dynamic public speaker, Warren is the founder and CEO of High Tech Strategies, Inc. where he serves as an advisor to solar companies, utilities and energy education organizations, and draws upon best practices derived from his extensive work. Earlier in his career, Warren was a principal at Regis McKenna, Inc., a leading high tech marketing strategy and communications company, and for the decade prior, an engineering and marketing executive in Silicon Valley.

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Warren Schirtzinger has made the understanding of market dynamics surrounding disruptive innovations the core of his life’s work. He is widely recognized for his expertise in solar market development and CleanTech product management. Since 1991, Warren has consulted with leading organizations in the solar industry, and also in high technology. Warren pioneered development of the Marketing Chasm framework that addresses the challenges companies face when transitioning from early adopting to mainstream customers. Highly regarded as a dynamic public speaker, Warren is the founder and CEO of High Tech Strategies, Inc. where he serves as an advisor to solar companies, utilities and energy education organizations, and draws upon best practices derived from his extensive work. Earlier in his career, Warren was a principal at Regis McKenna, Inc., a leading high tech marketing strategy and communications company, and for the decade prior, an engineering and marketing executive in Silicon Valley.

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