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Jessica Merrill MerrJes Workshop 3 Consumer Product Class

Solar Photovoltaic (PV) Panels are a newly emerging product with early adopters taking a risk by being the first to try it out. These early adopters make up a niche market that are, according to the Solar Electric Power Association, highly educated, have higher than average incomes, lower than average household size, and an awareness of environmental concerns and solutions. According to the Interstate Renewable Energy Council (IREC), growth of installed residential PV systems grew 48% from 2006-2007, and again by 60% in 2008. IREC data shows that residential systems constitute 84% of those installed. Eventually, this product could move into the heterogeneous or homogeneous classification of consumer goods once it is well established; dependant upon the how the product develops over time. The Photovoltaic Incentive Programs Survey was conducted by SERA and published November 2009, providing the demographics, motivations and experiences of residential consumers who have installed PV systems beginning in 2005. The survey included 600 respondents in the six states containing the largest number of residentially installed PV systems; California, New York, Maine, Minnesota, Ohio and Wisconsin. The details of this survey, how and why it was conducted, sources, a copy of the survey, and many important details are available at www.solarelectricpower.org. SERA believes that with incentive programs, business models and pricing changing over time, and increased market

penetration, the demographics of PV consumers will likely shift toward a more median income, educational level and household size. Based on the respondents from the survey, more than half had household sizes of 1-2 members; the national average is 3, indicating most PV owners have no children, or none living in the home. Of the respondents, 44% have a combined household income of more than $100,000; 32% fall into the $50,000-$100,000 range. The national average income is $26,000; showing that more than of the respondents have household incomes of at least twice the national average. Marketing and reaching out to all household members is very important for widespread solar development. Just over of the respondents referred to themselves as joint financial decision makers with at least one other person in the household, and the remaining 22% reporting to be sole financial decision makers. PV owners tend to be highly educated compared to the national average as well. Of the respondents, 81% had a Bachelors Degree or higher, compared to a national average reported by the Census Bureau to be 29% of those Americans 25 and older. 51% of the respondents obtained a post-graduate or professional degree, compared to the 10% national average of Americans 25 and older. The National Association of Home Builders estimates that the average single family home in 2007 was 2500 square feet and 46% of the survey respondents live in homes ranging from 1000-2000 square feet. The driving force behind deciding to become a PV owner is concern for the environment, and close in importance are reducing dependency on foreign oil and the capability to produce ones own electricity. Less important reasons were reducing current electric bills, the future price of electricity and health concerns -- not specified, but could logically

conclude health problems can arise from the pollution created by the process of converting fossil fuel into electricity. The primary concern behind becoming a PV owner was the initial price. Of the respondents, the top three payment methods were: 67% cash exchanges, 21% home equity loans, and 8% mortgage re-financing. Other concerns ranged in importance from having to deal with the incentive program application process, to the effect on property taxes, the resale value of the home and the aesthetics of the PV panels. Other important information to consider when marketing to this niche market is that of the respondents, 93% were also regular purchasers of CFL (compact fluorescent) light bulbs and 53% consumed organic food on a regular basis. Consumers acquire information about solar panels primarily through the internet and secondarily at local events such as fairs and expos. It is important to have a well developed website, as well as participation in local events where consumers get one-on-one time with experts to become educated and have questions and concerns addressed. Of the respondents 76% relied on a solar dealer, who sells and installs PV equipment, for installation and set up; 4% of them installed the equipment themselves. The respondents are interested in other areas of renewable energy and energy efficiency, and those who used solar dealers discussed these topics with them, even though they were not experts in the area. Other primary areas of interest included solar water heaters, energy efficient appliances, efficient HVAC systems, weatherization and wind energy. Important marketing techniques include maximizing the primary types of exposure to information; promoting and communicating the benefits of the product to the customer and the value it has for them, including educating them on how the incentive programs work

and providing assistance with the application processes and paperwork. Also important in building credibility for a new product is establishing peer review sites, which is perfect considering the internet is the primary source of information regarding PV panels, businesses and other important information. With new technology and a new product, there has to be consistent updates on the systems reliability so potential consumers have evidence to base their expectations. Other important promotion techniques include providing extended services such as warranties on equipment, and awareness of incentive programs. Along with these techniques, it is important for project managers to maintain lists of qualified installers, indicating experience and certifications, and credit ratings of the business for future peace of mind in its stability. It is extremely important that consumers are educated in every aspect and step of the process, from the initial benefits and choosing of equipment, to the installation and utilization of the product, all the way to maintenance and follow up services. The importance of the marketing mix and understanding the consumer demographics and psychographics is the key, in this niche market, to establishing a new product and technology. Consumer product classification can be applied to services as well. A local news station or website could be seen as homogeneous in the eyes of a consumer, who do not see a difference in the source of information, but just want the information and will make decisions based on the ease of obtaining it for instance. Any type of insurance company could be seen as homogeneous; consumers do not focus so much on brand names, but price. A service could also be classified as a convenience good, staple good, impulse good or any of the others. The difference between classifying a product and a service is the classification of a service depends more on the consumer of the service and how it relates

to them; these services can also jump from category to category. Most product classification is a little more cut and dry. For instance, a hair cut to some people may be considered a staple item, where others may consider it a convenience good. Most everyone would consider a candy bar a convenience good. A service considered a staple by some, such as a dentist appointment to get a routine teeth cleaning, could jump to the emergency category in the event of a cavity or tooth pain. There are multiple ways different services could be classified using the same application consumer goods use.

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