The paper "Behavioural Aspects of Marketing: Electricity Market in the UK" is an excellent example of a term paper on marketing. The electricity market consists of the sale of electricity to industrial, commercial, household and other end-users, including agricultural and transport users. Consumption is the highest in the household sector which was 53.2% in 2005 while the industrial and commercial sectors consumed 27 and 18 percent respectively, the balance 1.8% being consumed by other areas. The chart below represents the segmentation of the electricity market in the UK (Table 1). There are several players in the UK electricity market but the major ones are Centrica, E.
On UK, EDF Energy, SSE apart from several small players. The market share of the major players has been shown in Table 2. The electricity market reached a value of $32.8 billion in 2005 in the UK and is expected to have a value of $44.3 billion by 2010. The market volume has shrunk to reach a volume of 340.9 billion kwh in 2005 but it is expected to go up to 351.7 billion kwh by 2010 which represents an increase of about 3.2% since 2005.
The increase in the turnover over the years is not due to an increase in volume but due to the increase in tariff. All of the major players in the UK market are engaged in electricity and gas supply to consumers. All of them are headquartered in the UK and only Centrica offers additional services like plumbing and central heating. It also operates in North America and the rest of Europe while others concentrate in the UK alone. There has been a negligible growth in the population in the UK while inflation has increased between 2001 and 2005. 1.2 EDF Energy – competitive position EDF Energy is a major generator of electricity and has a customer base of 5 million.
The company runs power stations and wind farms and buys and sells power. It generates about 5GW of energy. Despite the electricity market is highly volatile, the company experienced robust financial growth and created value for the shareholders. Their customer base has been steadily increasing despite the hike in tariff. The Chairman of the company has expressed a vision for the company to be recognized as a passionate, committed, caring, innovative and successful energy company, enabling its people to make a difference.
This implies that EDF has to work towards enhancing its brand image as a product or service brand holds great importance for the customer. It thus becomes essential to understand and chart out how the consumer base can be increased while retaining the existing customers. In a nutshell customer satisfaction strategies have to be devised. 1.3 Rationale for the study Since the privatization of the utility sector in the UK, competition has been fierce which has driven down the combined household utility bills for the consumers until 2004 when the prices have risen dramatically (Graham, 2006).
The competition was encouraged since liberalization and the new entrants were provided with incentives to develop the new markets.