1. Introduction to Smart Grid
IBM is being involved in this many aspect of developing smart grid.
1. Working with the companies produces which sort of devices to going to grid to monitor to provide IT infrastructure supporter.
2. IBM also work with energy companies to look what is the pragmatic business case behind taking the first step towards smart grid.
One of the projects that has the greatest scope into a grid wise project which IBM did in the United States. Working with the number of other companies under the grid wise alliance which responsible department of energy. IBM looked at doing complete smart grid trial. It is just over hundred homes. This included put appliance to the homes, technology that would enable them to send when grid was under stress and activate 5 minutes price changes. IBM have to put whole IT infrastructure end to end simulating 5mintues change energy price by 5 minutes by 5 minutes that run over whole year and there was significant period when there was over 50% reduction in peak demands and ultimate saving for end customers were for 10% to 15% savings in terms of energy. So I think that one proves that IBM can actually make this thing work in United Kingdom (IBM (2009) Internet Video)
IBM new product and service marketing plan
1. Marketing Analysis function
This function involves a careful and detail analysis of IBM external marketing environment and internal strength and weakness of the company.
2. Planning function
The marketing is a functional plan like other functional plan. As example: HR plan, finance (budget) etc. This is prepared taking to account the overall corporate plan of the whole IBM.
1. Description of the present marketing position
2. Examine market threats and opportunities
3. IMB Objectives of marketing
4. IBM Strategies of marketing
5. Marketing action programmes in detail
6. Marketing budget
7. Marketing control assist to monitor the progress of the whole plan
3. Implementation function
This process turns plans into action in order to achieve objectives of IBM smart grid.
4. Controlling function
This process measures the implementation and takes correct action to ensure achievement of marketing objectives. A major tool used in controlling is marketing Audit.
Managing the marketing effort
The final element in the marketing process includes marketing effort. The focus is on effective planning on marketing effort, its involvement and its control to ensure that the whole marketing effort will be carried out successfully. There are four marketing management functions which considered here.
1 Analysis function
2 Planning function
3 Implementation function
4 Controlling function
1.1 What is driving the need for smart grid?
Some of the major contribution to that are the objectives to that across European Union reduce emission by 2020. And the UK meet the objective 30% to 35% electricity has to come from renewable.
* This can be offer to the customer well valued
* This is going to well reputations for the brand image.
* Easily can be distributed using existing grid lines
* IBM innovative technology and consultant service vs capital investment can be helped
Diversification strategy for new product and service
This strategy involves IBM growth by starting new businesses (New products and new market)
A process is a sequence set of activities in which one activity follows the each other in continuous systematic way. In the marketing process which have been defined earlier the first step was analysing the marketing opportunities of smart grid. Once this had been done the next step involves selecting market segments to pursue. The next step involves developing suitable marketing mix by IBM and its marketing department.
Managing the marketing effort
Once all marketing opportunities are analysed the IBM marketing manager may final many different kind of consumers in a country similar needs. Thus how IBM must choose the best market segments which it can serve better and develops marketing strategies (the marketing mix) to serve the chosen segment better than the competitors do. (New product and service development IBM Business Value Alliance, IBM [Internet])
2. Market segmentation
This means separating a whole market into different portions, based on the needs and wants, behaviour or characteristics of buyers who may need separate services or products which interns requires different marketing mix from a company.
It can be defined as a part of the whole market (there can be many such parts) with a group of consumers with similar behaviour patterns and who response to a product or marketing effort in a similar way.
* Individual plans – A customer's enthusiasm to set up decisions and act based on exact goals. As examples manage cost which desire of information how much pay each time or each unit, trustworthiness of the provider, convenience and impact on climate change which is focus on environment. UK is going to meet the objective 30% to 35% electricity has to come from renewable energy by 2020.
* Enthusiasm for energy Efficiency: Motivation to act on high energy efficiency through few mixture of investing on expensive product for lower-cost actions.
* Power of income – A customer's income should ability to help energy-related objectives; beginning of new grid, customers with enough income will be able to set up new technologies and spend more money on expensive equipment like smart meters. UK has got affordable income it is very easy to implement the product in UK. [Lighting the way: Understanding the smart energy consumer (2009) IBM [Internet]
* Consumers who are power quality conscious in UK
* Customers want to know what the usage level is seasonally and daily basis in this modern world and they would like to take control of it.
* There are source of information available on energy to do survey before implementing this project in UK because of global high carbon emission, government, all other renewable companies, and environmental groups have done vast research on this subject. (2009, Net MBA Business Knowledge Centre: Market Segmentation)
3. Target Market
This means evaluating, each market segments attractiveness and selecting market. Segments the company can enter into.
IBM targets its smart grid on this market segment and also it may develop their marketing strategies in order to create unique position of Smart Grid in the mind of such consumers of the market segment.
* Single power grid can be introduced to entire market. Market segment attractiveness is every customer in UK uses electricity it means millions of customers.
* This product easily can be grown because of millions of customer's demand of money saving through energy savings technology.
* Existing customers fed up with frequently energy price rise.
* Buyer's intensions are very high due to energy saving technology
* Can be introduced to the market easily help government intension of under energy saving policy.
* Test marketing can be easily introduced – Customer wants to know how they are dealing with energy companies.
* Impact on micro and macro environment explain more
* This is going to be patent protected market and it is easy pursue large market
* There is product specialisation market and IBM has got many loyalty customers around the world and its vast experience and knowledge on IT communication and consult.
(Net MBA Business Knowledge Centre: Target Market Selection [Internet])
4. Market positioning
This means arranging for IBM smart grid to occupy a special, clear, and pleasing place in the mind of target markets segments consumers.
* Recognize and give confidence new customer behaviors which will be vital in the future company environment
* Invest in consumer logical analysis and segmentation to evaluate the present consumer foundation and arrange the base for constant reevaluation
* Start a plan to analyze improved and new consumer connections that will happen over a livelier and data rich network.
* IBM is market leader in IT and consults in Business therefore they have global partners it is a famous brand. Their market challenger too they got strong market on Advanced Communication system as well as market pioneers because of their expertise.
IBM is market leading company it can adopt a defensive strategy on implementing new power grid and they capable of step head of others who trying be market leaders and IBM has got the ability of blocking offensive attack. This is the belief that good leaders posses certain specific qualities.
(Plugging in the consumer: Innovating utility business models for the future: results from the 2007 IBM Energy and Utilities Global Residential/Small Business Consumer Survey EU and US. (2007) IBM [Internet])
4.1 Market Differentiation
In terms of marketing, the procedure of differentiation is for the company to identify their differences in the service and product from the present competitors in the market. It assists to build the company like IBM Grid communication very attractive to a specific target market over the normal limit. Market differentiation is the centre of competition and it relies on current trends, integrity and creativity.
* Safe and secure of when information transmit Security issues you don't want to people hacking in to your smart grid technology electric influencing people home turn on and off or finding out what actually doing in terms of energy consumption or whether someone in or not.
* Financially strong (no ups and downs) to deliver a consistent and powerful financial performance
* IBM worldwide leader is safe and sound in leading share of smart IT communication industry and business consultant global with considerable existence in every main geographical market.
* Value and service supply as a whole with better service and good quality for money in all market segment.
* Customer driven in anticipating and speedy reaction to consumer wants and needs
* To maintain an operational environment that retains, attracts, and develop a consistent employee who shares the achievement of IBM. Good fellow citizen concern for the environment and community.
To accomplish these objectives, IBM should deliver friendly, specialized reliable service constantly well motivated and trained staffs (Performance = motivation x ability (Human ability is unlimited). Examine continuous improvements through new technology and innovation.
Product life cycle (why innovate is useful): Research and development need to be done on smart grid before put it into the market. Innovation is function of research and development and use of technology. Staff decision making and planning process gives understandable direct sense of purpose.
Foster of a leadership approach throughout IBM that encourage respect for individual working as a team and recognising customer very closely (part of cooperate culture). Every individual entitle to respect and every customer is given priority. Striving continuously to accomplish agrees quality standards at competitive cost level (IBM [Internet] Delivers New Platform to Drive Smart Utility Innovation and Operational Efficiency)
5. Marketing Objectives
An objective can be defined as an aim or a target and it should need following certain requirement. What IBM tries to achieve?
* IBM marketing objective is over 50% reduction in peak demands and ultimate saving for end customers for 10% to 15% savings in terms of energy.
* How do they get to work when you got millions of devices out there?
* System management how do you make sure you got right soft of level software out there distributors
* Security issues you don't want to people hacking in to your smart grid technology electric influencing people home turn on and off or finding out what actually doing in terms of energy consumption or whether someone in or not.
* Missives amount of data collections compare to what we had in the past such as smart meters, smart technologies all through the grid
* UK has aging infrastructure which progressively deteriorating that have to be significantly investment.
* Work force particularly engineers have to be brought into the industry to fill job before hit their retirement age.
· Challenges building smart grids and engineering point of view Design the grid
* Regulation point of view regulations have to in place to enable to people to operate smart grid as distinct type of grid we have
* Commercially who's going to get paid for providing what services? What is the distribution company do in the future? What services they are providing in the future? How do you pay the people there are actually going to be providing distribution generations?
* And technically how do you actually role out what is the effect digitalise IT infrastructure over an existing energy grid
* When move to future scenario where IBM have there are thousands of power plants out there in to a big virtual power plant utility companies must have to have IT infrastructure in place to make it happen
* In electrical engineering point of view to make it function
* Commercial point of view to enable you to pay people for energy they produce and recycle energy might they produce. (Maximo for Utilities, IBM [Internet], Valocchi M, Juliano J. and Schurr A., Lighting the way: Understanding the smart energy consumer (2009) IBM [Internet], IBM Business consumer survey (2007))
6. Element of marketing mix
This can be defined as controllable marketing tools (but marketing macro-environment cannot be controlled) that the firm may bland together to produce the response it wants target market for its Grid.
Product – Smart Grid offers to the target market with technical equipments such electricity meters and it services such a smart meter should satisfy the needs and wants of consumers or they less successful. Smart meters should accurately show peak and off peak electricity usage to consumers to use house utilities effectively. Smart grid and its services of management, vary and quality, level of smart meter stocks for customers are variables.
Price – The amount of money the consumer have to pay to obtain smart meters and electricity. IBM should have a standard price or negotiate able the price with existing grids consumers. Aspects like discounts, credit terms are taken into account here. Also the psychological effects of a price (As example Unit price off peak time is 99p) in the mind of the consumers the taken into account by IBM marketers.
Place – it includes all IBM activities that make the smart grid available to target consumers.
Promotion –The main focus of this element is communicating information about Smart Grid to consumers. IBM has to advertise about smart grid how it is going to save money, usefulness, eco-friendly, etc. IBM can do the advertising very well because of communication technology involvement with social network by using Facebook, Youtube, etc. it save money.
People – Here are the focus is on those who provide service to customers all employees contributed to market effort. The people element attempts to improve customer service by training all employees who are involving customer services. IBM has to invest some money on engineers who go to customer door step regarding maintain the equipment and it services. Engineers have to be trained to repair Grid.
Processors – This element focused on various processes (sequent set of activities) that directly involve customers, in providing Smart Grid electricity to them. Processors are improved continuously to provide and effective and efficient customer service.
Physical Evidences – This aspect seek to improve whether the physical evidences necessary to serve customer better. It may be front of interior, uniforms owns by customers executives IBM brochures, well design electricity meters, etc. (2009, Net MBA Business Knowledge Centre: Marketing Mix [Internet])
7. The costs of the marketing strategy
IBM should be able to provide their technology and service to grid customer and consumers less price than any other competitors in the future. It can't say price of the smart meters or service they provide in the future but price is going to be less than IBM competitors.
* Sustainable capital investment on whole IT infrastructure in UK to communicate with grid and customer and access to capital; cost has to be controlled very carefully and strictly.
* Skilled engineers who involved with grid network, and IT.
* Labour work monitoring is required each stage of the process
* Smart meters have to be design very simple way to manufacture them conveniently
* Minimize cost involve distributions
(Valocchi M., Schurr A., Juliano J. and Nelson E. (2007) Plugging in the consumer Innovating utility business models for the future, USA, IBM [Internet], Mr. Perera N. (2009) Interview with the IBM UK ex-employer)
7.1 Return on IBM investment
IBM emerging in to smart grid new business, customers are uneasy about the product and services early levels of the grid life cycle. Smart grid probably become not fit to the customer satisfaction very first stage because there can be many errors on new product and services of it therefore IBM can't expect good return on investment.
Transition to maturity is building new market for smart grid and targeting on UK market and at the same time try to become very efficient in the business. In this stage customer developing their confident with IBM smart grid. As a help for this development IBM can do advertising. This is stage IBM can expect return on investment than any other stage.
Sophisticated smart meters, devices, etc involve with smart grid and they run the grid efficiently in order to save energy. This efficient system stops building additional power plants which reduce fuel cost and carbon emission. It helps consumers to manage their energy by saving money. According to IBM my marketing strategy plan and scheduling, smart grid can be offered to United Kingdom near future.
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11. Mr. Perera N. (2009) Interview with the IBM UK ex-employer (10 January 2010)
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