1. What do we really know about this situation? We know that along with PV Technologies, two other companies – SOMA Energy and BJ Solar are in the supplier’s shortlist that Solenergy has to provide a large quantity of utility scale central inverters for a PV solar energy power plant. Each of these companies sent their proposals, and a final decision is being reached by Solenergy. If the two competitor rely mostly on lower prices of their product, PV technologies rely on their superior efficiency and a warranty of 10 years, the double that each of the direct competitors offer.
In terms of market, we know also that many governments have long-term objectives that will probably keep alive public and private investments in renewable energy power sources, where photovoltaic segments have a solid ground. 2. Is this just a brush fire or an important problem? It’s an important problem, because if the rumors are to be believed, PV Technologies are in verge of losing the contract, and this deal is strategic not only because of the large profits that it can generate, but mainly for the visibility impact that it’ll have in the marketplace, possibly a dramatic one if the contract is lost.
That would have a negative impact not only in the solar plant segment, but in consumer segments too. 3. How profitable is each of the four alternatives suggested? The rationale behind on first alternative is the offering of an extended 10 years warranty with special conditions. The customer pays 18% of the purchase price of the inverters at the beginning of each year included in the extended warranty period. This sum, however, cannot be considered profit, because eventual money not spent on maintenance is returned to the costumer at the end of the year.
The total profit in this scenario is $7. 128. 000, for a period of 20 years. The profits in the 4th alternative are not known, for they depend on further negotiations with Morgan. In this alternative, PVT will try to figure out if the evaluation method used by Solenergy had flaws, and show the data that they collected from their our analysis, which may have been collected with a more rigorous and thorough methods, indicated that their inverted were superior by a margin great enough to justify the price differences between their proposal and those of the competitors. 4.
What other product management considerations should be addressed when planning a new product or service introduction or managing an existing product or service in this market place? The considerations that have to be taken into account when introducing new services or products and maintaining current ones in these market are slightly different. The introduction of a new product or service makes only sense if it fits well in the company’s portfolio. It should complement the existing offer, so that the customers can perceive clearly the different benefits of each distinct offer. For example, the introduction of the new 1.
25MW inverter only makes sense if its price is significantly higher than the 1. 00MW counterpart, or in alternative, the cost of the weaker version should be lowered. Such a decision can be taken accordingly to the threat level that other competitors are posing. Lowering prices is a more aggressive strategy, however is should be applied only when necessary, so that the profit margins are kept as high as possible all the times. There are other considerations that apply both to new and existing products and services. There always has to be the perspective that the offers – new or old – satisfy an actual necessity of the market.
This can be asserted by market analysis, statistical processing, questionnaires or other forms of marketing research. In the specific renewal solar power market, we know that many governments around the world are “sponsoring” and giving incentives to short, mid and long-term investments in this market. This information is extremely relevant to formulate a strategy, Moreover, the major players in the same segments as the products or services must be also analyzed, so that the changes of success are high enough to risk launching – or maintaining – those product and services in the market.
What will PVTs product team want to say about the new products, particularly the accelerated introduction of the new central inverter and the marketing initiative? R&D? The finance people? The engineers? The public relations people? Sales? Customer service? R&D people have reservations regarding a premature introduction of the new product in the market. They recognize that it may be an attractive offer to Morgan and Solenergy, but are concerned that by collapsing the test phase for the launch to be on time, the risks of potential operating malfunction are greater.
The finance people share this concern, but don’t think that it will impress Solenergy because some opinions within the industry favor the coupling of smaller PV inverters rather than building larger ones, supposedly reducing the costs in this way. Basically, they are against this option. Contrary to the finance people, engineers are confident that this alternative could work, for the technical advantages that it offers would enable PVT to beat the competition with ease, without compromising their profits in this project.
Public relations and marketing people also favor this alternative. They think that the new powerful inverter will address the market needs. Being the first company to introduce an inverter with 1. 25MW, PVT would reinforce their leadership status. Sales force are confident that the new inverter could be successfully sold by utility users and the price was attractive. 6. How should PVT promote itself in the first quarter 2012 and position the launch of the new 1. 25 MW central inverter that’s been re-schedule for introduction in January?
PVT will have a great opportunity to differentiate from its competitor with the new 1. 25MW central inverter. I’ll be the first company to introduce this product to the market and the advantages comparing to the 1. 00MW version are obvious. There’s a most appreciated increase in the energy output, and thus this should be the best way for PVT to make the consumers perceive the new product – the most powerful (or prolific) inverter in the market. To avoid cannibalization, the chosen price should be higher than the current 1. 00MW inverter. 7.
What conclusions can be drawn about the evolution and impending changes in technology, pricing, and buying criteria in this business? As the technology becomes more and more accessible and cheap, new low-cost companies are threatening the whole equilibrium that exists on the inverter business. Chinese companies, for example, are already offering products that, although inferior in quality and reliability, have a much inferior target price. It is reasonable to think that with time, the gap in the quality level with reduce, and as it happens the price with pose a bigger and bigger problem to the other players.
However, if a differentiation strategy is applied by the companies with better technology and capable R&D department, the gap in technology and directly related benefits will enable those companies to survive and maintain a healthy portion of the market share 8. What short and long term policies and processes should PVT develop and implement to effectively improve its marketing programs? In order to enable a continuous and more effective differentiation they have to: – Continuously evaluate competitor’s products – Help states and consumers to reach the long-term government objectives in terms of percentage of energy generated by inverters.
Courtney from Study Moose
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