Marketing Plan for Free Power Set(Customized Solar Generators) ACKNOWLEDGMENTS By the grace of Allah Almighty, we have successfully completed the term report on our marketing management project "SOLAR GENERATOR." The project was assigned to us by Mr. Hammad Ur Rehman. We are thankful to him for giving us a chance to learn about marketing strategies. This will help us in enhancing our entrepreneurial and creative skills. In successful launch of our SOLAR GENERATOR, we are thankful to several people without whom the launch would not have been possible. We thank our families for their support and coping up with our absences. Our class fellows and friends also helped us with their suggestions and ideas. Finally, the members of the group are thankful to each other for supporting and complementing each other whenever need be. Page 2 TABLE OF CONTENTS S. No Description Page No. 1. Acknowledgments 3 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 1.1 Executive Summary Strategic Focus And Plan Mission And Vision Core Competency And Sustainable Competitive Advantage National Power Sector at a glance Solar Generator Mechanism Solar Viability in Pakistan Free Power Set by Power Generator Marketing Mix Promotion Channels Market Segmentation Strategy SWOT Analysis PEST Analysis BCG Matrix Competitor Analysis Customer Analysis Financial Plan References Tax exemption letter, government of Pakistan Page 3 5 6 6 7 8 9 11 12 13 13 15 17 18 18 19 19 21 25 26 EXECUTIVE SUMMARY This report is about the launch of our new product “SOLAR GENERATOR”. The report consists of variable aspects of marketing plan which will be practiced in the launching and later invigorated for the promotion of the product. There are few solar products that could satisfy the needs of natives in Karachi. They need products through which they will not only live a healthy life but should add confidence to their personality. Nowadays, electricity is a necessity. High-tech machines that business factories operate need energy; else their operations will be paralyzed. To add, entertainment-giving gadgets need to be plugged into electrical outlets to function. Air conditioners and other devices giving comfort and convenience need electricity to be useful. Everywhere you go, electricity is in high demand. Yet due to this high electricity demand, the nonrenewable sources of energy are being utilized in large amounts. These sources are considered as unfriendly to our environment. These are the propane, petroleum, coal, and natural gas. The good news is that the discovery of solar energy as an alternative energy source has provided a good option to electricity consumers. Current Situation-Electricity Crisis. Use of UPS/Generators leads to high utility bills. Our aim is to reduce expenditures on light and ensure savings on replacement costs. Solar energy is freely available without caring for utility expenses. No import duty on solar chips-reduction in expenses. Page 4 STRATEGIC FOCUS AND PLAN Power generator aspires to an agent of change by providing efficient power products to satisfy consumers need while understanding the importance of environmental sustainability. The company’s short term approach is to inculcate customized solar systems in Pakistan which can address the needs of all the valued corporate and domestic customers. MISSION AND VISION “The vision is to make the total cost of solar energy economically workable for everyday use, so that all Pakistani will benefit from this clean renewable energy resource” Page 5 CORE COMPETENCY AND SUSTAINABLE COMPETITIVE ADVANTAGE Core Competency: Customized solar generators for all kinds of usage. Sustainable Competitive Advantage: Low cost and low maintenance efficient energy production Page 6 NATIONAL POWER SECTOR AT AGLANCE Pakistan has two integrated public sector power utilities, the Water and Power Development Authority (WAPDA) and the Karachi Electric Supply Corporation (KESC). WAPDA supplies power to the whole of Pakistan except the metropolitan city of Karachi, which is supplied by KESC. The system of WAPDA and KESC are interconnected through 220 kV double circuit transmission lines. The country has a total installed generating capacity of about 19522 MW. The installed capacities owned by various agencies operating in the country. These are: Water & Power Development Authority (WAPDA): 11327 MW Karachi Electric Supply Corporation (KESC): 1756 MW Pakistan Atomic Energy Commission (PAEC): 462 MW Independent Power Producers (IPPs): 5977 MW WAPDA was established in 1958 and entrusted with a massive agenda, which included generation, transmission and distribution of power along with irrigation, drainage and flood control etc. It owns about 58% of the country’s total power generation capacity and serves about 88% of all the electricity customers in the country. It serves over 13 million customers. KESC was incorporated in 1913 and is responsible for the generation, transmission and distribution of electricity in Karachi and its adjoining areas. It has nearly 1.5 million customers, predominantly urban consumers. In order to promote fair competition in the electricity industry and to protect the rights of consumers as well as producers and sellers of electricity, the Government of Pakistan has enacted act the Regulation of Generation, Transmission and Distribution of Electric Power regulation Act, 1997. Under this act the National Electric Power Regulatory Authority (NEPRA) performs three main regulatory functions i.e., licensing of generation, transmission and distribution of electric power, tariff determination and prescription of standards and rules for conduct of business. Between 1984/85 and 2004/05, Pakistan’s total installed power generating capacity increased nearly fourfold, from 5229 MW to 19,522 MW, but then this trend was not duly followed which has resulted in energy crises. Page 7 SOLAR GENERATOR MECHANISM Solar power is the technology of obtaining usable energy from the light of the sun. Solar energy has been used in many traditional technologies for centuries and has come into widespread use where other power supplies are absent. For example in remote locations, and in space.Pakistan being unlucky country with regards to fuel reserves has to switch over to solar energy ultimately for its ever growing needs. According to energy experts, with the current rate of supplies, the total reserves of oil and gas in Pakistan will last 12 years, coal will take 200 years to exhaust which can face tough resistance from environmentalists while hydro power can meet one-fifth of the present needs. Page 8 With this situation, for the requirements of 14 million people living in cities and villages of Pakistan should adopt renewable energy. Among renewable energy, solar energy is the most abundant and widely spread in Pakistan. At present, Pakistan faces serious energy problems: significant part of its electricity generation comes from hydropower, which becomes less productive during the driest, hottest months of the year and cannot keep pace with the sharp rise in energy demand. If the current growth trend in the energy supply and demand continues then it is estimated that Pakistan would be facing a shortage of 31 percent of energy by the year 2020, which will seriously affect the balance of payment position of the country and would make it difficult for the economy to continue moving on the present growth trajectory. On the other hand, Pakistan covers 796,095 square kilometers of land between latitudes 24° and 36° north and longitudes 61° and 76° east. That means solar energy has excellent potential in central parts of Pakistan that receive high levels of solar radiation throughout the year. Every day, for example, the country receives an average of about 19 mega joules per square meter of solar energy. The total amount of solar energy incepted by the earth every minute is greater than the amount of energy the world uses in fossils and fuels each year. Solar power is pollution free during use. Production end wastes and emissions are manageable using existing pollution controls. Solar electric generation is economically competitive where grid connection or fuel transport is difficult, costly or impossible. Examples include satellites, island communities, remote locations and ocean vessels. Page 9 SOLAR VIABILITY IN PAKISTAN As is becoming painfully evident with summer around the corner, Pakistan is an exceptionally sunny country. If 0.25% of Baluchistan was covered with solar panels with an efficiency of 20%, enough electricity would be generated to cover all of Pakistani demand. In all provinces the AEDB has created 100 solar homes in order to exploit solar energy. Solar energy makes much sense for Pakistan for several reasons: firstly, 70% of the population lives in 50,000 villages that are very far away from the national grid, according to a report by the Solar Energy Research Centre (SERC). Connecting these villages to the national grid would be very costly, thus giving each house a solar panel would be cost efficient and would empower people both economically and socially. In many Pakistani villages, wood and animal dung is used for cooking fuel; however, this is causing widespread deforestation. Women are also forced to walk for many miles each day to gather wood. Then, their health suffers from the smoke emitted from cooking on wood fires. The AEDB completed a project whereby villagers that received solar panels were also given solar cookers. During the project, deforestation decreased by 80% near the villages and the cookers were also made in Pakistan, which generated local economic growth. The average temperature of the country remains extremely hot most of year which can be a remarkable breeding ground for solar energy. The success of this idea has been evident throughout the country, particularly in Baluchistan where solar power generation on both domestic as well as commercial level has served as cost saving incentive for government as well as social and economic escalation for the people. Page 10 FREE POWER SET BY POWER GENERATOR Brand name plays a significant role in the success or failure of any product. Being in accordance with the product type and company’s mission and vision, it would be marked as “Free Power Set.” The philosophy behind the brand name reflects the potential customers both corporate and domestic who are engaged in various problems due to shortfalls of electricity and are being empowered by POWER GENERATOR to resolve their issues in a socially responsible manner. PRODUCT LOGO AND TAGLINE “Reliable energy source that you prefer” Page 11 1.1.1 MARKETING MIX Product Price Place Promotion In response to the customers’ needs the business shall strive to lead with innovations both in product design and services which are unequalled in this specific market and industry. Price penetration will be used to penetrate in the market and quality sales will be focused rather than escalating prices The business will be intended to earn 20%-30% profit only making it affordable by the target market. Products (solar generators) will be distributed by technicians to the site. Transport companies will be hired to assist in this process. The business will be engaged in direct marketing to companies, governmental institutions and NGOs. Billboards and print ads will be most suitable for this purpose. PROMOTION CHANNELS Promotion being the one of the most essential part of the marketing, deals with the actual selling, advertising, or publicity of the product; it entails communications with the customers and trying to convince or persuade them to purchase company’s products and services. This could be done through various channels including television commercials, magazine ads, direct mailings to residences or businesses, and billboards. Channels adopted for promotion: Power generator will adopt various channels of promotion through TV, Newspapers, magazines and hoardings, online promotion etc. 1. Television Advertisement: TV channels like GEO, Express, Ary, Dawn would be preferred and the time slots would include the News Bulletin, at 8:58 & 9:05. And it would be a continuous pattern; 1 st and 2nd week, and then would pulse; once a month. And in the followed by every 1st week of every month continuously. 2. Newspaper and Magazines: Regular advertisement will be published in widely circulated newspapers i.e. are Dawn, The News, Jung etc. However, after the product has sustained in the market, the advertisement will be relatively lowered. Page 12 Popular Magazines and yellow pages will be used for publishing advertisement in which the green element and relieve from load shedding will be highlighted. Social networking websites including face book, twitter and various other websites like Dawn.com, express tribune etc are important mediums of effective advertisement to the target markets. 3. Billboards: Branding will be done on billboard on various locations in the city including II Chundirghar Road, Balouch Colony Flyover etc. Currently Page 13 MARKET SEGMENTATION STRATEGY During the segmentation of our market we divided it into the following segments. Consumer Markets Business Markets Consumer Markets: For segmentation of our market we examined the market to determine the energy needs of the people satisfied by wapda, KANNUP, Sui northern and different dams of Pakistan and those as well where we can exploit the market i.e. those needs which are not yet satisfied by wapda and other power generation companies. During our market research we found that a large number of our population residing in rural and remote areas is completely devoid of electricity. those that are getting electricity are paying electricity bill monthly and are quite frustrated with the fact that wapda fails to provide them the assurance about electricity. People desire to have a more safe electricity provision. In storms, thunders and lightning and rains the voltage wires are short circuited and cause lot of damage to property as well as human life. Secondly they are oriented toward getting energy at lowest possible cost because the average income per capita is $2600, which is not sufficient to afford the energy bills and the diesel they have to buy to draw water. We can make the purchase of solar panels easy for them by providing them panels at lease. As the people in villages are not all very well off so they can’t afford to buy panels. From the above research we found that our project has a lot to offer to these groups of people because the average temperature of Pakistan is sufficient and useful in the implementation of solar energy at domestic as well as commercial level. As the large percentage of Pakistan is devoid of electricity so it can prove to be a potential target market. Being an agricultural country electricity or diesel is needed by Pakistani farmers for running turbines, threshers and harvester’s etc. The current rate of diesel oil is 106/liter, this is not cost effective. Business Markets: During our market research we found that there are a large number of investors eager to invest in solar panels. As the quality manufacturers of solar panels a large number of local as well as foreign distributors have shown interest in our business. As they prefer quality products and on time delivery we have taken a great care in the establishment of our location in the market. This has minimized the cost of transportation to the buyers. Even the cities of Pakistan can also be potentially targeted for solar energy implementation. Especially the hot areas of Pakistan such as Multan, Sibbi, Kohat, Karachi, Lahore, Jacobabad and Mardan that receive sufficient energy. Page 14 Targeting Strategy Socially responsible target marketing is responsibly of marketing the company’s product. Various targeting strategies customized for domestic, commercial, urban and rural population will be adopted to reach all the potential customers in their respective societies. The USP of the product will be customization, cost effective and maintenance free green power solution. Page 15 SWOT ANALYSIS Strengths Weaknesses Almost no maintenance cost. Highly cost effective Efficient power generation Completely renewable resource. Solar cells make absolutely no noise at all. Solar energy generation creates absolutely no pollution of all sorts. Solar powered panels and products are typically extremely easy to install. Wires, cords and power sources are not needed at all, making this an easy prospect to employ. Solar power technology is improving consistently over time. Opportunities Initial cost of the equipment used to harness the suns energy. Solar energy technologies are a costly alternative to the use of readily available fuel technologies. A solar energy installation requires a large area for the system to be efficient in providing a source of electricity. Pollution can be a disadvantage to solar panels, as pollution can degrade the efficiency of photovoltaic cells. Unavailable market channels Threats As the price of solar panels decreases, an increase in the use of solar cells is predicted to generate electricity. The decline of natural resources globally is encouraging the convergence to solar. Prevailing energy crises and shortfalls Increasing unit rates of electricity particularly for commercial consumers. Companies aspirations to become a “Certified Green Business.” Increasing awareness on nondisposable nature of earth Increasing government and NGO projects of solar energy in various Page 16 Governmental inferences. Decreasing price of solar equipments may result in diminishing margins. Global variations in weather. Political influences Future tax and import duty imposition villages across Pakistan. PEST ANALYSIS Political Economical Social Technological Tax and duty free import Encouraging governmental stance Diminishing cost of solar equipments particularly solar cells Large market potential Broad investment horizons Japan’s nuclear power plant incident are encouraging investors to plug money into secure solar projects Boast in agriculture activities in villages due to solar electricity Increasing efficiency of solar cells and inverters From PV cells to c-Si cells. BCG MATRIX Page 17 Free Power Set is an innovative product introduced by Green solutions and thus it will maintain its stance in the question mark face. The growing market potential and product need may result in cash cow in a short term future time. COMPETITOR ANALYSIS Our product will be competing mainly with Green Biz Co, First solar and various small solar products vendors directly as these companies are importing and/or selling solar panels. Power generation and distribution companies including Wapda and K.E.S.C will be classified as indirect competitors. From reports we know that Wapda is providing 58%of the total energy being provided. There is currently load shedding of 700 MW a day because of shortage and poor transmission capabilities. This means that wapda is not being able to meet the requirements of electricity of people. So in this matter our product will be competitive with it and will surely provide electricity more economically. It might prove uneconomical in the short run but it will run out profitable in the long term. They also incur much less operation and maintenance costs and have a longer lifetime as compared with other sources of energy which Wapda provides. CUSTOMER ANALYSIS There are about 19211738 (www.statpak.gov.pk) house holds in Pakistan and there are 6.80 individuals in each home on the average and the persons per room are 3.13. With a high rate of growth of population we can expect Pakistan as a big market of solar energy converters. We can distinguish the population in rural population and urban population. Rural Population: The 67.5 % population of Pakistan is living in rural areas. Their major earning factors are agricultural activities, jobs in cities, jobs in army, small shops in rural areas and etc. Also in many rural areas of Pakistan the electricity is not available. If it is available in some areas then it is too expensive to afford by rural area’s population. We can focus on these rural areas. We can motivate them to buy our products because after buying the solar energy products they will not have to pay heavy electricity bills. Moreover in many rural areas people have to go to nearly towns to pay electricity bills if they are given electricity. This is a big problem for rural areas people. To motivate them our mobile team can go to almost very village and tell the people the Page 18 importance of the solar energy converters they can tell the benefits of using solar energy converters and we should keep on communicating with them. Remember that people are interested deeply in that thing which they see working in front of them so we can show them some equipment working live. I can say here that rural areas of Pakistan are a big market of solar energy converters. The Urban Population: About 32.5% of population of Pakistan is living in urban areas. We can see that in Pakistan there is a severe summer and winter season. People use Electric heaters in winter and air-conditioners in summer season to escape from the violence of season. Major population of Pakistan belongs to middle and lower middle class and electricity is more expensive in Pakistan. People of the urban areas have to pay electricity, telephone, water bills. Some have to pay their monthly house rents. Some additional expenses such as High tuition fee of children, constantly increasing inflation rate, low increase in wages, dependent parents, brother & sisters and parents, health care expenses, etc. It is very difficult for a middle class person to bear all these expenses at time. Therefore we can focus on this middle class people to attract our products which can escape them from high electricity bills. This middle class population can easily be convinced for buying our products. We just have to tell them that this is the cheapest way of getting electricity. Page 19 FINANCIAL PLAN COST OF SOLAR GENERATOR: Solar Panel: Solar cells from china: Rs. 60 x 1 Watt. Costing of 100 Watt Solar Panel: 63 x 100 = 6300 Tempered Glass @ Rs 250 feet 8' x 2' = 16' 16 x 238= 3808 Other materials including EVA Sheet & electrical junction box Approx: 1700 TOTAL PRICE OF 100 watt SOLAR PANEL IN PAKISTAN: 11,808 Costing of Charge Controller: Locally manufactured charge controller: 9,000 Costing of 12V dry cell / jell battery Imported from China: 11,500 Page 20 Costing of 100 Watt Inverter: Locally manufactured 100 watt inverter: 4,500 TOTAL COST OF COMPLETE SET OF SOLAR GENERATOR: Rs. 36,808 Price per Unit: Cost of 100 Watt Solar Panel (100 units) Cost of tempered glass (16 Units) EVA & Junction Box (1 unit) Total Cost of 100 Watt Solar Panel Cost of Charge Controller (1 unit) Cost of 12v Dry Cell Battery (1 unit) Cost of 100 watt Inverter (1 unit) Total Cost of Generator Gross Profit Margin Price before NGO donation NGO Donation (per unit) Consumer's Price 63 238 1 6300 3808 1700 11808 9000 11500 4500 36808 7361.6 44170 1325.088 45495 9000 11500 4500 20.00% 3% Total Fixed Cost: Fixed Cost Office rent Warehouse Salaries Expenses Sales Person Motorcycle Transportation expenses Utility Expenses Promotional Expense Entertainment Expense Fixed cost Amt 5000 4500 50000 12000 12000 10000 6800 5000 2000 Page 21 qty 2 2 2 month 6 6 6 6 6 6 6 Total 30000 27000 300000 72000 12000 60000 40800 5000 12000 558800 Total Variable Cost: Description VC VC/unit Units 50341.204 500 Total 25170602 Total Cost: Description fixed cost Variable Cost Total Cost Amount 558800 25170602 25729402 Total Promotional Budget: Bill board TV promotion Add making expense On air expense News paper(20x3 Dawn) once in a month for 4 month Out door promotional expenses World call expense Total 500000 Total Revenue (units 500 x 45495 price /unit) 22747500 1000 3000 36500 150000 25000 711500 Break even: Profit (TR-TC) Profit of a month (Profit/6) Break even (FC/Price - VC) 4475598 745933 Page 22 Break Even In Rs 55.501255 Sources of Finance: The sources of financing for the product are the four members of the solar generator group, who have agreed to invest in the product on an equal share basis. Page 23 REFERENCES http://solarlighting-s.com/solar-generator/ http://www.pcb007.com/pages/zone.cgi?a=56814 http://www.hebesolar.com/portable-solar-power-generator-systems.html http://www.tbl.com.pk/the-feasibility-of-renewable-energy-in-pakistan/ http://www.energytribune.com/articles.cfm?aid=864 http://www.rural-electrification.com http://alternate-power.org/ http://www.clean-energy-ideas.com/articles/disadvantages_of_solar_energy.html http://www.mobilesolarpower.net/ Page 24 TAX EXEMPTION LETTER, GOVERNMENT OF PAKISTAN Page 25 http://www.aedb.org/Downloads/exem.pdf Page 26