Explain the innovation adoption process for SELCO systems in terms of the six factors that affect customers’ technology adoption decisions (Chapter 7).
Customers’ needs and pains are those forces that drive the purchase process, whether it is related to a high-tech product or a regular one. Hereby, marketers defined six main points to be assessed by every firm in order to understand clients’ motivation to buy their products. The six issues include: (1) steps taken by the customers in making a purchase decision; (2) the process of adoption of the technology innovation; (3) changes of the marketing strategy after crossing the chasm; (4) ways of segmentation of the technology market; (5) factors that influence customers’ timing in buying high-tech products; (6) customers’ relationship with technology (Mohr, Sengupta, & Slater, 2010, pp.231-232). Hereby, SELCO’s innovation adoption process was based on the following points:
-more than 46% households in India did not have an access to the electricity, which greatly limited people’s ability to work, study or run any kind of business (Mohr, Sengupta, & Slater, 2010, p.512). Which is why once SELCO introduced their solar batteries, it took little or no time for the target audience to get attracted. Purchase decisions were made fast and easy;
-the only factors that limit customers’ purchase decisions are lack of information about the new product and necessity to take bank loans so that to be able to pay for the battery. Which is why, SELCO provides their customers with the information, installation, training, financing, and other products and services (Mohr, Sengupta, & Slater, 2010, p.513);
-SELCO’s market is not segmented as they sell solar batteries for the same price for both, low-income households, and organizations like schools or seminaries. The company operates in three Indian states only: Karnataka, Kerala, and Andhra Pradesh. On the one hand it allows sales representatives to cover over 70% of all clients, but on the other hand, the company has limited opportunities to compete with the growing market of solar energy products.
Of the various models of social entrepreneurship in Chapter 13, which model does SELCO follow? Which of the challenges and success factors for base- of-the-pyramid strategies affect SELCO? Be specific in your elaboration.
Corporate social responsibility is the way company understands its impact on the stakeholders, either direct or indirect (Mohr, Sengupta, & Slater, 2010, p.433). CSR helps the company to establish closer relationships with its clients, enhance corporate brand, gain competitive advantage against similar companies, get more information about the market tendencies and customers’ needs (Mohr, Sengupta, & Slater, 2010, p.436). At first glance it may seem that SELCO adopted a Social Values or even Social Philanthropy CSR model, as their prices are relatively low, they cooperate with local banks helping people to get funds for purchasing solar batteries, and what is more, supporting services go way beyond what other similar companies offer. However, SELCO is a business oriented firm, as understand that the more customers can afford their services the greater revenue they will get. Furthermore, developing small business and sustaining education, SELCO boosts economic development, which will also offer new opportunities for the county itself, namely their prices might be increased once the average income level will raise. Thus, they run a Syncretic Stewardship CSR model.
What role has the marketing function played in SELCO’s success? What suggestions do you have to make their marketing more effective?
SELCO primarily uses direct marketing through their sales representatives. Considering that their target audience has limited or no access to the electricity, it makes impossible for SELCO promote their services via the Internet, TV ads or other similar ways. So contacting people in person is, perhaps, the only best way at this time. Besides, direct marketing is an excellent way of building trust with the clients.
SELCO has been approached by people who would like a franchise to sell SELCO’s systems. Should SELCO sell franchises? Why or why not?
Even though the market of renewable energy is growing, especially in the field of solar batteries, I would not advise SELCO to sell franchises. Entering new markets through franchising may cause a price increase, as non-Indian competitors abroad already have higher pricing strategies, yet SELCO is unknown to the foreign consumers. Secondly, additional legal expenses, technical expenses and other business or legal constraints will increase the price for the product, which will make it less attractive for the main Indian consumers (Holmes, 2003, p.2-3).
Is SELCO’s business model sustainable long-term? What are the threats to the business model and how can SELCO prepare for these?
Business model, especially a long term one, is a conceptual combination of the organizational and financial ‘architecture’(Treece, 2010, p.173). Which is why, being effective in a long run requires the firm to create added value for the customers and partners. Even though SELCO’s business scale and pricing are comparatively low, their CSR and customer oriented innovative technology will allow the company to stay profitable in the market.
Is the SELCO business model sufficiently scalable to support its growth goals? If not, what should it do?
In order to sustain SELCO’s growth the company needs to rearrange is structure. Specifically, they should create more decentralized offices with regional sales and marketing managers to monitor the process. SELCO may also cooperate with other developed firms of the similar industries in order to decrease its expenses on supplementary elements.
What proactive actions can help SELCO cross the chasm in the Indian market?
In order to cross the chasm I would advise SELCO to implement a referral promotion program, which would allow every client to benefit from bringing a new one into the company. By this loyal customers would get more involved in learning about company’s services and specific characteristics of the equipment purchased. Simultaneously, this referral program will serve as a good promotion campaign for the company, and furthermore, this will help to establish good reputation and positive image. The more customers are attracted, the higher benefits the company will get, and sooner the chasm will be crossed.
References
Mohr, J., Sengupta, S., and Slater, S. (2010) Marketing of High-Technology Products and Innovations. 3rd ed. Upper Saddle River, NJ: Pearson Education, Inc. ISBN-13: 978-0-13-604996-8
Holmes, D.E. (2003) The Advantages And Disadvantages Of Franchising. Available at: http://www.holmeslofstrom.com/z_pdf/articles/franchisors/Fran%20Advantages.pdf
Teece, D.J. (2010) Business Models, Business Strategy and Innovation. Available at: http://www.businessmodelcommunity.com/fs/Root/8jig8-businessmodelsbusinessstrategy.pdf
