Marketing Strategy for SELCO India

Assignment Taken

Market Expansion Strategy for SELCO India

Case Understanding

Solar Electric Light Company (SELCO) India is a Bangalore-based social enterprise that makes solar lighting technology accessible to the economically impoverished people of India. The company was founded in 1995 by H. Harish Hande. Mr. Hande has always firmly believed in the potential of solar energy for improving productivity of rural households. The case describes the evolution of SELCO as an organization and the various challenges that Mr. Hande and SELCO India faced before they could build a viable business model of providing solar light to the poor. SELCO India has strived and accomplished a very important feat in solar power market, i.e. innovative designs and customised solutions and their ability to provide a microfinance solution. To date, SELCO India has sold solar lighting to 120,000 rural homes and several other institutions, such as clinics, seminaries, and schools in the Indian state of Karnataka. Employing about 534 people, SELCO services these households from its service centers. Although SELCO India has been able to establish a sustainable business model that realizes Mr. Hande’s vision of bringing a low-cost energy solution to the economically impoverished, its challenge today is to create greater impact by scaling its business and creating an organization that sustains its success beyond the tenure of its founding members. Our company has to consult SELCO India and guide them towards market expansion. Operational flow chart for expansion: - Identify market - Creative awareness - Shortlist customers - Workout energy requirement - Find financial leakages - Do the installation - Explain the working - Gather Feedback

BCS Solution Summary

India has tremendous scope of generating solar energy. The geographical location of the country stands to its benefit for generating solar energy. The reason being India is a tropical country and it receives solar radiation almost throughout the year, which amounts to 3,000 hours of sunshine. This is equal to more than 5,000 trillion kWh. Almost all parts of India receive 4-7 kWh of solar radiation per sq metres. This is equivalent to 2,300–3,200 sunshine hours per year. States like Andhra Pradesh, Bihar, Gujarat, Haryana, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan, and West Bengal have great potential for tapping solar energy due to their location. Since, majority of the population live in rural, areas, there is much scope for solar energy being promoted in these areas. Use of solar energy can reduce the use of firewood and dung cakes by rural household. According to the estimates, Rajasthan and Jammu & Kashmir have the highest solar power potential. Rajasthan, with its healthy resource of solar radiation and availability of vast tracts of wasteland in the form of the Thar Desert, has a potential of about 142 GW. Solar also provides the ability to generate power on a distributed basis and enables rapid capacity addition with short lead times. Off-grid decentralized and low-temperature applications will be advantageous from a rural electrification perspective and meeting other energy needs for power and heating and cooling in both rural and urban areas. From an energy security perspective, solar is the most secure of all sources, since it is abundantly available. Theoretically, a small fraction of the total incident solar energy (if captured effectively) can meet the entire country's power requirements. Market research shows that the primary customers of SELCO India are Small farmers, Small businesses, Individual Households and Home based workers. Marketing strategy of SELCO India needs to meet two broad objectives – carefully selecting target market and designing marketing activities to achieve desired positioning in hearts and minds of the target market. The company has to follow market expansion strategy for its existing customers through existing products, do market development for new geographies, and customised product development for existing and new geographies. For expansion plans SELCO India has to focus on product line expansion, sales network expansion and energy service center expansion, all which can be achieved by collaboration activities. SELCO’s rural service network that directly interact with the rural client has attracted the attention of many organizations, that would like to partner with SELCO for various reasons – with the ultimate goal to uplift the quality of life among the poor. With our plan, we expect to improve customer reach by 5x and grow 10x in net income by the end of the first year.

Solution

We have used various marketing frameworks to analyse and provide solutions to SELCO India:

• Analysed the Strengths, Weaknesses, Opportunities and Threats of SELCO India (SWOT Analysis)
• Analysed the external factors impacting the overall business environment (PESTEL framework).

 

SWOT Analysis

a) Strengths

-Financially strong with backing from banks and financial institutions.

- Competitive pricing.

-High technology in par with other global brands.

- Strong leadership and management

- Low cost of production.

 

b) Weaknesses

- No brand name to compete globally.

- Wide range of renewable energy missing as compared to other global competitors.

 

c) Opportunities

- Worldwide awareness and government support for eco-friendly energy generation.

- Expansion into other countries with partnerships.

- Demand for low priced eco-friendly energy.

 

d) Threats

- Lack of government support in India to avail tax cut or subsidy in order to compete with similar priced Regular supply energies.

- Entry of other competitors into India to utilize the opportunity to manufacture at low cost.

 

PESTEL Analysis- to analyse and monitor the external marketing environment

 

Political Factors

The political factors play a huge role in investment decisions by companies such as SELCO India. Political environment and other factors not only impact the cost of doing business but also long-term sustainability. Some of the political factors are – governance system, democracy & institutions, military coup chances, probability of armed conflict, law and order in market etc.

Political Factors that Impact SELCO India:

- Size of Government Budgets – The government at both national level and local levels are running deficit budgets which is boosting growth in the short term but may lead to increase in inflation over medium term.

- Transition of Government and Changes in Policy – There is consistency in policy making from one government to another. Secondly governments from all parties adhere to the treaties made by the previous governments.

- Judiciary Independence – In the matter of commercial and business decisions, judiciary of the country is independent to a large extent. Business do face problem when the conflict is between public interest and proprietary technology similar to ruling in South Africa where government & judiciary allowed generic AIDS drug irrespective of patents of global companies.

- Local Governments – Local governments are highly influential in the policy making process and implementation as most of the policies and regulations are implemented by the local government as enforcement agencies mostly report to local government in their own states regarding various laws.

- Democracy & Other Democratic Institutions – the democratic institutions are needed to be strengthened further so that business such as SELCO India can thrive in an open, transparent and stable political environment. Strengthening of democratic institution will foster greater transparency and reduce the level of corruption in the country.

- Role of Non-Government Organization, Civil Society & Protest Groups – India has a vibrant civil society community and SELCO India should build bridges with them and seek out areas of co-operations. Civil society groups are influential not only in policy making but also in building a society wide narrative.

- Segregation of Political Responsibilities between Different Government Agencies – There are numerous government agencies which reduces the risk of overwhelming pressure by one agency. But on the flip side it does increases both time and cost of doing business and getting certifications and clearances.

- Chances of Civil Unrest – We don’t think that SELCO India’s business operations are facing any dangers from any kind of civil unrest or internal militant operations in the country.

 

Economic Factors

Some of the economic factors that SELCO India should evaluate both in the present market and one in which it wants to enter are – inflation rate, GDP growth rate, disposable income level etc.

- Inequality Index– The Index is a great barometer for harmony and development of a society. Likelihood of conflicts and crimes increases when there is huge income inequality in the society. It can lead to uncertainty and suppression of consumption in both short term and long term.

- Fiscal and Monetary Policies – The Republican government tax break culture has increased the deficit and it can lead to fiscal trouble for the economy in coming years.

- Government Spending – Since the government is running deficit budgets, it can boost sales of the company’s products in short run but also expose the company to medium term forex and currency depreciation risks.

As seen in the above graph, the installation of solar energy in India has grown every year and is projected to grow in the upcoming years.

The Government of India has set a target of installing of installing 175 GW of renewable energy capacity by the year 2022, which includes 100 GW from solar, 60 GW from wind, 10 GW from bio-power and 5 GW from small hydro-power.

 

- Level of Household Income and Savings Rate – Increasing consumption and stagnant household income in United States had led to credit binge consumption. It has decimated the culture of savings as people don’t have enough to save. Selco Harish needs to be careful about building marketing strategy that is dependent on “Purchase on Credit” consumer behavior.

 

- Foreign Exchange Rate – SELCO India needs to be careful about the history of forex risk before entering new market.

- Work Force Productivity –SELCO India can hire skilled workforce at competitive salaries.

- Consumer Disposable Income – SELCO India can try to expand the market beyond its traditional customers by employing a differentiated marketing campaign.

 

Social Factors

Social factors such as demography trends, power structure in the society, women participation in workforce etc have immense impact over not only the country's economy but also on workforce talent availability and level of consumer demand.

- Attitude towards Authority – The company should carefully analyze the attitude towards authority before launching a marketing campaign for its products and services.

- Attitude towards Savings –The culture of consumption and savings impact both type of consumption and magnitude of consumption.

- Attitude towards Leisure – Ethnographic research should be conducted by SELCO India to understand both attitude towards leisure activities and choice of leisure activities. Experience economy is one of the fastest growing segments both among millennials and among baby-boomers.

- Power Structure in Society – The company should carefully analyze the power structure in the society and how it impacts the demand in the economy.

- Education Level in Society – Education level of the society impacts both the quality of jobs and level of income. High level of education often results in better jobs, higher income and higher spending on complex and aspirational products.

- Nature of Social Contract between Government & Society – Before entering into a market SELCO India needs to understand the nature of social contract between government and society.

- Demographic Trend – The demographic trend is one of the key factors in demand forecasting of an economy. The company should consider demographic trends before launching new product developments and integrate features that cater to this segment. As population is ageing it will require less tech intensive products.

- Societal Norms and Hierarchy – What sort of hierarchy and norms are acceptable in society also influence the types and level of consumption in a society. In highly hierarchical societies the power of decision making often reside at the top

 

Technological Factors

Technology is fast disrupting business models across various industries and are impacting the macro environment like – developments in artificial intelligence, use of machine learning and big data analytics to predict consumer behavior, growing importance of platforms over service providers etc.

- Empowerment of Supply Chain Partners – SELCO India should analyze areas where technology can empower supply chain partners. This will help it to bring in more transparency and make supply chain more flexible.

- Acceptance of Mobile Payments and Fintech Services – The company should assess what are preferred choice of mobile payments in local economy and chose the business model based on it.

- Preparedness for 5G Related Infrastructure – The company should assess the level of preparedness by the local market to roll out the 5G connectivity.

- Level of Acceptance of Technology in the Society – SELCO India has to figure out the level of technology acceptance in the society before launching new products.

- E-Commerce & Related Infrastructure Development – As E-Commerce is critical for the company’s business model, it should evaluate the e-commerce infrastructure, technology infrastructure etc before entering a new market.

- Intellectual Property Rights and Patents Protection – Before entering new market, the company should focus on the environment for intellectual property rights.

- Mobile Phone & Internet Penetration – SELCO India should assess the level of internet and mobile phone penetration in the country as it will it in building a requisite business model based on local needs and realities.

- Cost of Production and Trends – SELCO India should assess the cost of production trends in the economy and level of automatization.

 

Environmental Factors

Environmental factors are fast gaining traction not only among consumers but also among regulators and policy makers.

- Influence and Effectiveness of Environmental Agencies – The role of environment standards enforcement agencies is critical in safeguarding norms. But often in emerging countries these agencies delay the process as a tactic to extract bribes. SELCO India should be aware of presence of such practices in a country.

- Environmental Standards and Regulations both at National & Local Levels – Often the environment policy at national and local level can be different. This can help the company in numerous decisions such as plant location, product development, and pricing strategy.

- Corporate Social Responsibilities Culture – Assess if SELCO India’s present CSR efforts applicable in the new market or does it needs to have new initiative to cater to the prospective market.

- Focus & Spending on Renewable Technologies – The company needs to analyse the budget that can be spent on renewable energy sources and how it can make this investment as part of its competitive strategy.

- Waste Management – Know the policy of waste management in the prospective market and how SELCO India can adhere to the waste management requirements in that market.

 

Legal Factors

Legal factors often govern – conditions to enter the market, laws to operate in the market, and procedure to resolve any dispute with other stakeholders. If the legal system is not strong then SELCO India can face numerous challenges – from consumer petitions to shakedowns from authorities.

- Data Protection Laws – SELCO India needs to assess what are the data laws in the country and what it needs to do to comply with them.

- Consumer Protection Laws – SELCO India needs to know what are the consumer laws, what is the rate of enforcement, what is the attitude of authorities towards consumer protection laws, and what is the role activist groups in enforcement of consumer protection laws.

- Business Laws – Before entering into new market – SELCO India has to assess what are the business laws and how they are different from home market.

- Independence of Judiciary and Relative Influence of Government – The judiciary independence often reflect both strength and credibility of the institutions in the country.

- Employment Laws – What are the employment laws in the country and are they consistent with the business model of SELCO India.

- Laws regarding Monopoly and Restrictive Trade Practices – As a new player SELCO India shouldn’t be worried about the monopoly and restrictive trade practices law.

- Health & Safety Laws – The company should be aware of the health and safety laws in the country and what it needs to do to comply with them.

Fundamental strategies of Expansion

 

Marketing Strategy

A successful marketing strategy at SELCO India would entail understanding of customers’ needs and drivers of those needs, conceptualizing products and services that can meet those needs and are feasible to SELCO India. For growth over the next years, SELCO India should consider the following objectives of marketing strategy. This will give the direction to develop the marketing mix for entire go-to market strategy.

1. Enhance customer loyalty– efforts should be made to increase loyalty among existing customers of SELCO India by organizing events, and by providing post purchase support and services.

 

1. Brand Awareness and increase in sales– The goal of the marketing efforts of SELCO India should be to improve brand awareness and positioning and to increase sales of the present products. It will involve selecting a new target segment or positioning an existing product differently to a new segment. To get the existing customers of SELCO India to buy more, plan selling accessories along with the existing products. Share guidance on how to increase usage rate of products.

 

1. Introduction of a new product or service – New innovative products as per the needs of the target segment should be launched periodically and their features, superior value, and uniqueness should be communicated effectively.

 

1. Attract new customers – It may involve launching innovative versions of product that can appeal to new segment of customers or entering into new markets.

 

1. Increase market share – Marketing efforts should be used to increase market share either by driving increase in sales to new customers or by driving higher sales to existing customers.

 

The five steps of Marketing Strategy Process to be followed at SELCO India are -

Step 1 - Marketing Research & Analysis

It is required to do research and analysis to identify the unmet and even unknown customer needs. A good point to start for the research and development is to conduct a 5C Marketing Analysis.

Customers

In its existence of 27 years, SELCO has served various sections of the society. The clientele of SELCO can be bifurcated in the following manner: (ref.: SELCO Business Plan 2006-2010 Nov.)

Type 1 – Primary SELCO Clients

65 to 75% of SELCO clients fall into these categories:

• Small farmers - earning between 1200$ to 1500$ a year

• Small businesses - earning between $2 and $4 a day.

• Individual Households with regular monthly incomes (postman, rural school teachers etc) –

between $100 to 150$ a month.

• Home based workers – earnings between $2 to $4 a day.

 

Type 2 – Secondary SELCO Clients

10 to 15% of SELCO clients belong to the following categories

• Farmers – earning between 2500$ to 5000$ a year

• Individual houses – earning between 250$ to 400$ a month.

 

Type 3 – Institutional SELCO Clients

The rest belong to the following category

• Institutions that cater to the poor – for example residential schools for poor children or old

aged homes.

• Religious institutions like temples, churches and mosques.

• Refugee camps – the Tibetan settlements in the state of Karnataka.

• Government institutions, training schools and private institutions.

 

SELCO does not have an active marketing strategy to cater to Type 3 clientele. Most of its efforts are directed towards Type 1 clients.

 

SELCO India needs to identify and understand the needs of the present and the potential customers and also identify attractive market segments and choose a market targeting strategy.

Marketing strategy of SELCO India needs to meet two broad objectives – carefully selecting target market and designing marketing activities to achieve desired positioning in hearts and minds of the target market. Customer analysis can include – growth rate of the industry, potential market size of both the overall market and target segment, tangible and intangible product features desired by consumers in the industry, core purpose of buying the products, frequency of purchase, recent purchases, industry trends, income levels etc.

 

Customers’ Factors

The overall Target Audience of SELCO India is:

Users: Local households, roadside vendors, farmers, etc.

Influencers: Religious head, Local MLAs, NGO, Bank manager, Local political parties, Village heads, etc.

Initiators: Self-help groups, Builders, Realtors, etc.

Buyers: Municipal Councils, Hospital Trustees, Local Heads, etc.

 

Identify the target customer- SELCO India should focus on the niche segment as it is highly profitable.

Identify the features most desired by consumers – decide which are the features most desired by consumers and how the company can position itself to deliver those 2-3 critical features.

Understand the level of brand awareness among target segment and general population – The brand awareness among the target segment and among wider population is high. SELCO India can leverage on it to build sub brands for niche segments within the target market and adjacent segments.

The type of product SELCO India is selling – High involvement product or low involvement product require different marketing strategies. High involvement products often have higher brand loyalty and less price sensitivity compare to low involvement products where industry players often compete on prices.

 

Company

SELCO India has to identify and analyse it’s strengths and weaknesses and how marketing can improve the effectiveness of its core strength and alleviate the impact of its weaknesses. It needs to analyze the internal strengths and weaknesses of the company before making marketing decisions. With the company analysis, SELCO India can optimize the use of the marketing resources. The company should take care to match the consumer expectations to build a sustainable competitive advantage.

Brand Equity – SELCO India has strong brand equity both among the existing customers and potential customers. It can leverage this brand equity to expand into new segments.

Financial position and availability of resources for marketing – With the strong financial position of SELCO India, it can afford to spend significant number of resources on marketing for – launching new products and to better position existing brands.

Research and Development spending – As a leader in various product segments, SELCO India spends significant number of resources on research and innovation in field of – product design, process optimization, marketing strategies, and building IT network to support all the promotion and distribution strategies.

 

Competitors

SELCO India has to identify their competitors, and what their marketing strategy is. Based on this the company can design its marketing strategy in view of competitive pressures and the marketing resources. The company has to take decisions regarding-

Where to position the brands respective to SELCO India’s own brands portfolio and competing brands.

What are the marketing strategies of competitors.

Analyse if the company should compete directly with the competitors or find niche positions within the segments.

What type of competition there is in the industry that SELCO India operates in.

Competitors Factors:

Threats of new entrants – The new entrants to the industry need huge marketing resources and high-level of marketing know-how.

Countering Marketing Campaigns of Competitors – Often one competitor campaign has to be matched with a counter campaign to stop the product trial of the competitor’s product by the firm loyal customers. It has to be done to control the churn of customers.

What will drive future growth and how competitors will try to take share of that future growth – technology innovations can result in making present positioning less profitable so SELCO India needs to continuously innovate and look for new opportunities.

Intensity of rivalry among existing players – The profitability of any industry is low if the intensity of rivalry is high. Thus SELCO India has to contribute higher resources on marketing efforts.

 

 

Collaborators

SELCO’s solid rural service network that directly interact with the rural client has attracted the attention of many organizations, that would like to partner with SELCO for various reasons – with the ultimate goal to uplift the quality of life among the poor. Some of the examples of such partnerships are:

1. Venture Development Department of Business, Colorado State University, Fort Collins.

a. The department of business in the Colorado State University was looking to develop many products that would enhance the lives of the rural clientele in the developing world. For example they have developed a stove, called as ‘StarLight Stove’, which not only is an efficient cooker but also generates electricity. Similar rural targeted products could be easily tested by SELCO via its supply chain. Successful and need based products would them be introduced into SELCO’s product menu.

b. SELCO would also approach the labs in MIT that work on poverty related issues, for partnerships.

 

2. ICT

a. Two organizations with plans to set up multiple services-based e-kiosks in the rural areas of India, had approached SELCO for providing reliable solar power solutions to their kiosks.

 

3. Water based services

An organization specializing in providing safe drinking water to rural households had approached SELCO for the following:

 a. To provide reliable solar based power solutions for their purifying facilities, those are run by local entrepreneurs or local communities.

b. To leverage the network of SELCO, in-order to install clean water centers in many parts of Karnataka and Gujarat. Similar partnerships would enhance the need of energy services in various sectors and thus lead to sustainable solutions for the rural clientele.

SELCO India has to research on supply chain and value chain partners so it can effectively develop and deliver new products to its customers.

Collaborators include the supply chain partners both upstream and downstream of the value chain. For doing analysis on the collaborators, SELCO India needs to critically evaluate the supply chain based on numerous factors such as – bargaining power, what suppliers bring to table, flexibility & agility of supply chain, revenue sharing at each step of the value chain.

Collaborators Factors

Number of suppliers and their abilities – If there are too many suppliers then it will become expensive for the company to manage them. If the number of suppliers is too few then it will expose the company to supply chain disruption risks.

Managing delivery and services in times of uncertainty –SELCO India has to diversify rapidly to reduce delivery and supply chain risks.

Flexibility of supply chain and international risks – SELCO India has to plan on how much to localize in the international markets based on local preferences. The company has to make the decisions from production to marketing is based on this critical decision.

Risks to intellectual property rights and patents – Operating in international markets can expose Selco Harish to the risk of theft of Patents, Copyrights and other Intellectual Property Rights. Any marketing and diversification decision should be taken after evaluating these risks.

Position and bargaining power in the value chain – If the collaborators have strong bargaining power then SELCO India will not able to sustain higher margins even with higher marketing expenditure.

 

Context

Analyse the macro and micro environment factors that impacts the business environment in which SELCO India operates in. For this, we have carried out a PESTEL analysis of SELCO India.

Context Factors:

Employment – Employment is a critical factor in designing marketing strategy. Employment not only impacts the purchasing power of the customer but also impacts the self-esteem and brands she can associate with.

Economic – The consumer behavior during boom time and recession time is often totally different so the company has to decide how the consumers will behave in the present economic situation.

Regulatory Framework – It will impact the type of products SELCO India can sell and its advertising and marketing campaigns it can run. For example, the standards & regulations for SELCO India’s products in US and European Union are vastly different.

Inflation & Diversification – When there will be inflation, it will highly impact the pricing strategy of SELCO India.

Foreign Exchange Exposure – International operations not only bring risks of marketing strategies that are not relevant to specific market but also risk of foreign exchange exposure.

Political Risks – The company has to be aware of various geo-political risks, especially those that have increased over the last three to four years with developments such as US-China trade situation, Brexit, etc.

 

Step 2 - Segmentation, Targeting & Positioning Decisions

The second step of marketing process after completing the 5C analysis is – selecting the target market. It requires three steps –

Segmentation

Through market segmentation, SELCO India can divide the large market into smaller segments based on distinct needs, characteristics, or consumer behavior. The segmentation can be based on following criteria – geographic, demographic, usage, user status, income, lifestyle, value proposition priorities, benefits sought, loyalty status, gender, social class, self-perception, psychographic factors, and other attitudes.

Targeting

SELCO sells its products through a wholly-owned network of sales and service centers (SSC) located throughout the areas of its operations. Each SSC contains a showroom for products and serves as the basis for sales and service operations for the given geographic territory.

After dividing the overall market into various segments, the company needs to choose a target segment or few target segments to be able to deliver only specific value proposition.

 

Conduct a Segment Attractiveness Analysis

This will be the first step in the targeting process. Under the Segment Attractiveness Analysis all the segments are evaluated based on the following criteria –

Profitability in various segments – Analyse and list the segments which have higher margins compare to another.

Mode of competition and business models – Study the way competitors compete to understand the entire landscape of the solar power industry.

Maturity of the market –EV division can have higher margins because of lower competition but the demand forecasting can be a difficult process.

Customer behavior and loyalty analysis – Study periodically how the customers are behaving in each segments and are there opportunities of over lapping. Loyalty behavior analysis will be a critical factor in analysing the conversion rate if the company’s core strategy is based on attracting existing players’ customers.

Differentiation & Positioning

Differentiation process will involve how SELCO India will differentiate its products and services in the market place compared to its competitors. Positioning is how SELCO India will position its products in minds of target customers – based on distinctive features, qualities and functions.

The company will have to-

• Identify competitive advantage or unique value proposition to position the brand in the mind of the consumers.
• Choose competitive advantages that are most compatible with SELCO India’s marketing strategy. The company can make perceptual maps to better understand competitive positioning of various brands in the market place.
• Finally position the brand as a deliverer of superior value to the target segment and effectively communicating that position to consumers using marketing mix and promotion mix.

 

Step 3- Making a Marketing Plan

1. Objectives of the Marketing Plan: The objectives for which SELCO India can make marketing plan are- New product launch, repositioning of existing brand, targeting new customer segment, entering international markets etc.

2. Marketing and financial goals and objectives: The second step is to correctly assess how much financial resources will be required to execute the marketing plan. It involves resources spent from product development to building a communication strategy mix.

3. Marketing mix: Build a marketing mix based on the marketing plan objectives and as per the financial resources.

4. Marketing budget: Budget each prospective activity that will be under taken under the marketing mix strategy.

5. Monitoring and evaluating performance: Carefully monitor each marketing mix activity and analyze the target performance with the actual performance. Analyse the media vehicles which are performing better compare to others etc. This will help in making changes and adaptation as we go along.

 

Step 4 – Four P's of Marketing Mix & Go-To Market Strategy – Capturing Value

SELCO India should closely adopt the Four Ps of Marketing mix in accordance with trends and forces in the company’s marketing environment.

Product

SELCO’s expertise initially was in the technology of solar photovoltaics, but subsequently it started producing the following: (Ref: SELCO Business Plan 2006-2010 Nov.)

a. Solar Thermal- Individual, Community and Institutional

b. Efficient Cooking- Individual, Community and Institutional

c. Biogas – Animal and Human Based- Individual, Community and Institutional

SELCO India should understand the deep-seated drivers of perceptions and behaviour of consumers and develop products that appeal to those drivers. SELCO India needs to consider Product Management as part of the marketing process:

• Identify the Opportunities – SELCO India has to do continuous market research and customer research to identify the needs of the customers so that they can cater to them with their present and acquired resources.
• Design and Prototype Testing – Product is designed based on the value proposition that customers are seeking and one that SELCO India can deliver. The key consideration regarding product design and testing are – customer value proposition, regulatory requirements, Selco Harish skills and resources, opportunities for differentiated positioning, and profitability.
• Product Launch – It includes decision regarding pricing, communication strategy, distribution channel management, and building infrastructure to provide post purchase services.
• Product Life Cycle Management– Once the product is launched, the company needs to manage the life cycle of the product through its various stages such as – introduction, growth phase, cash cow stage, and finally decline stage.

Following are major product line planning decisions that SELCO India can take:

1. How the new product brand launch will impact the overall brand equity of SELCO India’s present brands and products.

2. Will the product retain its individuality from the existing products of the firm and the risk of cannibalization of the existing brands by a new brand.

3. Does the product launch or product extension launch satisfy potential customer needs and wants in a way that can deliver profits to the firm.

Product Line Breadth Decision for SELCO India-

Since SELCO India has a strong position and is well established in the industry, it can expand to the adjacent segments where the customers are using complementary products from other brands to get the maximum value out of the products.

 

Product Line Length of SELCO India-

The decision regarding product line has to be balanced between complexity of the present products and service required, and available niche space available in the market place.

The following products may be introduced: 

Solar Boats, Solar farm equipments, Solar Fans, Solar Mobile charger, Solar Cooler

Product - Broad Recommendations

1. SELCO India can try to reposition the products from the existing brands within one line.

2. The company should think of ways - how features and value can be added to existing brands that help them in consolidating and increasing their market position.

3. SELCO India can discontinue selling the products that are either not profitable or not creating enough differentiation from the existing products.

4. The company may introduce a new brand in the existing product line or it can strive to establish a whole new product line.

 

Place

SELCO initially was present in 16 districts of Karnataka, 3 districts of Kerala, 4 districts of Gujarat and 3 districts of states like Maharashtra and Andhra Pradesh.

SELCO India needs to evaluate the buying behavior and distribution channel costs to make a channel decision.

Target Geographies and Expansion Strategy- choose strategically based on total village population and ease of transportation. Appoint Business Associate for village sales and service.

For instance, Karnataka can be targeted for Market expansion and Product development, while Bihar and Tamil Nadu for Market development. Karnataka still holds immense potential in discovering new areas and with SELCO having strong brand recall and equity in Karnataka, high conversion rates is expected with more addition to the consumer base and significantly better ROI.

Rajasthan, with its healthy resource of solar radiation and availability of vast tracts of wasteland in the form of the Thar Desert, has a potential of about 142 GW. Jammu & Kashmir receives the highest amount of solar radiation in India, and has a significantly large area of wasteland in Ladakh. The state has an estimated potential of 111 GW. Madhya Pradesh and Maharashtra both have more than 60 GW of solar power potential. These are among the largest of the Indian states and thus have large wasteland resources. Both these states have ambitious solar power policies and plans to implement large-scale solar power projects. Gujarat, the leading Indian state in terms of installed solar power capacity, has an estimated potential of 36 GW. The state has large tracts of land covered with marshes but these lands also support a wide variety of wildlife.

Target the states expected to produce maximum solar energy as assessed by Government of India and submitted in their reports.

State-wise estimated production of Solar energy in India as assessed by National Institute of Solar Energy

Top 10 Solar states in India with cumulative installations as published in Mercom Report of 2018

The distribution channels for SELCO India can be designed based on the following factors:

• Channel Design

SELCO India needs to plan its type distribution system- whether Direct, Indirect, or Both. The channel design decision will involve - understanding of customer value proposition, current customer convenience points, length breadth and depth of SELCO India’s product line, and competitors’ distribution systems.

• Direct Distribution System

SELCO India may utilise its own direct distribution channel and reach directly to the customers. It can be by opening its own stores or just selling all the products online.

• Indirect Distribution System

SELCO India may include its channel partners such as wholesalers, retailers, logistics companies, and distribution agents.

• Hybrid Distribution System

SELCO India can implement a hybrid model where the critical aspect of distribution system are managed by the company itself, and the secondary functions such as logistics, warehousing, store management etc are delegated to various channel partners.

 

Channel Management

The channel management from marketing perspective can be done considering three critical aspects:

• Per Unit Cost of Stocking

If the cost is high then SELCO India will need channel partners to pool in resources. Else, it can carry out the operations on its own.

• Market Development Requirement

If SELCO India needs higher market development efforts, then it should include channel partners who have know how and skills to expand into new markets.

• Customer Willingness to Search & Travel to Purchase Good

SELCO India can design favorable channel policies vis a vis channel partners.

 

Promotion

SELCO India should use various Integrated Marketing Communication tools like Advertising, Sales Promotion, Personal Selling, Public Relations, and Direct Marketing to persuasively communicate to customer the existence of the product, price of the product, differentiating features of the product, places where people can buy the products, and finally how consumers can effectively use the products or services.

-             Create awareness on the use of Solar Lightning system and generate interest

-             Emphasize on the benefits like- Sustainability, Affordability and Reliability

-             Engage with customers and audiences through use cases and benefits instead of functionalities and features. Communication should be focused on experience rather than product features.

-             Promote Trials and Adoption

 

Market – SELCO India should aim all of their marketing communications to their target segment – current or potential. The Personal Influence would be through Word of Mouth, Influencer demonstration.

For Sales promotion, locals of the same village should be hired as sales representatives which can shorten the time of trust building.

Mission – SELCO India should list the goals and key performance indicators (KPIs) of the marketing communication strategy.

Message – Note the specific aspects – brand awareness, product features etc, that SELCO India would have to communicate to its target customers. The medium will be- Leaflets, banners, newsletters, road shows, street plays, exhibitions, samples/trials, sales demonstrations and social media platforms. The language for the same should be both English and vernacular. Promote partnerships with other sectors.

The Marketing Mix Plan will be:

-             Advertisement- 20%

-             PR- 5%

-             Personal Selling- 40%

-             Direct Marketing- 20%

-             Sales Promotion- 15%

Media – Identify which are the most effective media vehicles that SELCO India can use to convey its message to its target market. Interviews on TV, Radio, Company profiling, Accolades and Testimonials, etc. will be the various mediums. Attend and showcase the products in various trade fairs and conferences.

Money – SELCO India has to figure out how it needs to spend its resources to get the best outcome based on specified objectives.

Measurement – The company has to measure the impact of the promotion campaign regularly.

Email Marketing- Email Marketing is a direct marketing approach that SELCO India can take to directly reach out to its potential customers. It will help reach out high probability prospects based on the data collected by the company using its kiosks, trade marketing, and customer survey.

Search Engine Marketing- Make the best use of appropriate keywords in the website. They must have clear insights and information so that customers and potential customers get to know in detail about the products. With adequate Search Engine Optimisation and utilisation of appropriate keywords, we will ensure that our website ranks amongst top 3 websites selling EVs. The website and App will reflect the trust factor.

 

Price

If the business model is built on conversion of existing customers, then SELCO India needs to arrive at a price through research at which the present customers are willing to switch to a new brand.

To a large extend pricing depends upon the other 3Ps of marketing – product, place and promotion.

• Cost Base Pricing

Under cost-based pricing strategy – SELCO India can work out what it takes to produce the product and put a markup based on profit it wants earn. In a highly competitive strategy with dynamic pricing the strategy may not be feasible.

• Value Base Pricing

Value Base Pricing is a pricing strategy which is based on customer perception of value. It inculcates put the number on both tangible and intangible benefits with a clear understanding of elasticity of demand and competitive pressures.

• Market Penetration Pricing

SELCO India can employ this pricing strategy whenever it launches a new product either at loss or at very low margin to get a foothold in the segment.

• Market Skimming Pricing

For certain well-established brands, SELCO India can increase the prices as customers can pay higher price.

• Good Value Pricing

Offering right mix of product features, quality, and service combination at fair price.

• Competition Based Pricing

The pricing strategy is based on the competition in the market. Under this strategy, SELCO India’s focus is to match the prices of the competitors and focus on reducing the cost of operations to increase profitability.

 

Pricing Recommendation:

Based on the evidences at hand – we can choose the following pricing strategy

High Brand Awareness – SELCO India is well respected in the market so it can fetch a slight premium over the other competitive brands.

Innovative Product – With advanced features the product is perceived as innovative in the current market context. A slight premium price will not only emphasize the features of the products but also stops other players entering into the present segment. A high premium price may attract new entrants and thus lower the profitability.

 

Step 5 - Post Purchase Services – Sustaining Value

Post purchase services and communication are critical to foster long-term loyalty among the customers. Various ways in which SELCO India can improve the post purchase experience of the existing customers –

• Providing installation and other related services.
• Taking regular feedback from customers and asking them how certain features can be enhanced.
• Providing product care tips.
• Building communities where customers can share experience and help other customers.
• Providing regular maintenance services and spare parts, if the customer needs them.

Conclusion

In the conclusion we can state that SELCO India needs to implement the above proposed marketing strategy phase wise. Phase 1 (Quarter 1): SELCO India should create awareness on the use of Solar Lightning system and generate interest the interest of the audience. They should heavily emphasize on the benefits like- Sustainability, Affordability and Reliability. They need to personally engage with customers and audiences. Communication should be focused on experience rather than product features and promote trials and adoption. This will help garner their trust that we need. Furthermore, having a good website and mobile application for customer experience and a presence on social media platforms for visibility will help SELCO India be seen as a more professional brand. Expansion to new rural areas can be planned and strategy be made around Total villages to be reached per year, Total households to be reached per year, Growth rate forecasted in new customer acquisition and Total Revenue per house. Phase 2 (Quarter 2 and 3): Based on the success stories and pattern of segregations observed during Phase-1, the next phase will be carried out. This phase will also essentially take about 6 months to mature and give the projected results. By this phase, we can expect people to start believing in our product with a positive attitude. We have to continue our efforts towards brand awareness in newer rural areas and regions. Based on the interest level of the audience, we will plan supplier base and marketing channels. And accordingly target-region based advertisement campaigns will be introduced to customers. We will gather continuous feedback and based on the community recommendations along with social media metrics, we will calculate the effectiveness of testimonials. Customer retention rate will be calculated to get an overview if everything is moving as per the plan. We will continue to collaborate with micro and nano influencers who will help us give more push to our products. Phase 3 (Quarter 4): By now many of the customers will have grown a positive attitude towards our products and brand resulting in purchase. Most of our proposed changes and results would also be in place by now. So, more efforts will be given to advertising campaigns and mass broadcasting. Our focus has to be on continuous improvement in the overall infrastructure of the company based on data analysis of the historical data gathered during Phase 1 and Phase 2 so that we are able to accomplish the marketing objectives we have set.

Attached File Details

View Attachment file (SELCO India_ Marketing Plan.ppt)