Thursday, September 27, 2012

DISTRIBUTION CHANNEL OF PEA FOR NEW ELECTRICITY SERVICE

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Kasetsart International MBA



DISTRIBUTION CHANNEL OF

PEA FOR NEW ELECTRICITY SERVICE

live paper help



Prepared by

Mr.Korn Suphanaroj

October 00



TABLE OF CONTENTS

1. EXECUTIVE SUMMARY 1

. INTRODUCTION

. MARKET STRUCTURE OF PEA

.1 BACKGROUND ELECTRICITY SUPPLY INDUSTRY OF THAILAND

. STATEMENT OF PROBLEM 4

4. SOLUTION FOR PROBLEM 4

4.1 CLASSIFY CUSTOMER TARGET 4

4. SET DISTRIBUTION CHANNEL 5

5. CONCLUSIONS AND RECOMMENDATION 7



Kasetsart International MBA - KIMBA

Individual Marketing Report

DISTRIBUTION CHANNEL OF

PEA FOR NEW ELECTRICITY SERVICE

1. EXECUTIVE SUMMARY



PEA is a government enterprise and is responsible for the provision and distribution of electricity to all classifications of customers in the service area covering 7 out of 76 provinces all over the country, except Bangkok, Samutprakarn and Nontaburi. Although, the demand of electricity in Thailand grows up and the energy sales of PEA increases every year, it has been expected that in the next 5 years the sale volume of PEA will decrease resulting from the competition from Small Power Producers (SPP) trying to flight for PEA customers in industrial estate areas which regards as major customers.

As a result, PEA has planned to establish a new business in providing electricity services in parallel with electricity sales. For this new business, PEA has categorized its customers into groups; factory, business building and household. Each category of customers require different services and distribution channel. The distribution channels will be separated into 6 channels

• Marketing section of electric office

• TV advertising and radio spot

• Household customer

• Seminar and educational institute

• Magazine

• PEA product

This is the first step of PEA to enter to this service business that quite new for PEA. The result obtained from the establishment of the distribution channel will be analyzed to improve PEA marketing strategy in the future.

. INTRODUCTION

The Provincial Electricity Authority (PEA) is a government enterprise under the Ministry of Interior. PEA was established in 160. Act by the Royal Decree executed on 0th September 160. The service Area of the PEA is approximately 510,000 km, according for percent of the whole country (except for Bangkok, Samutprakarn and Nontaburi province). Now, there are 41 PEA’s sub-offices spread cover 7 provinces, rendering service to theirs customers. PEA has separated its service area into 4 regions; North Region, Northeast Region, Central Region and South Region.

PEA has three major objectives are

• To improve the process on provision and distribution services of electricity energy for customers.

• To develop activities in all areas in order to achieve sufficient revenues to further development.

• To develop its organizational structure, man power and management of resource in order to achieve maximum efficiency and effectiveness



. MARKET STRUCTURE OF PEA

.1 BACKGROUND OF ELECTRICITY SUPPLY INDUSTRY OF THAILAND

In generally, the electricity supply industry of Thailand consists of major organizations that support the whole public facilities in Thailand. The responsibility of these organizations is separated into parts as electricity generator and electricity distributor. The scope of responsibilities of these authorities can be described as follows.

• Electricity Generating Authority of Thailand (EGAT) � the power generator and supplier which selling the high-voltage electricity (115kV) and medium-voltage electricity (-kV) to Provincial Electricity Authority (PEA) and Metropolitan Electricity Authority (MEA).

• Metropolitan Electricity Authority (MEA) � The electricity distributor which provides and distributes electricity supply to customers in provinces of Thailand; Bangkok, Samutprakarn and Nontaburi.

• Provincial Electricity Authority (PEA) � The electricity distributor which provides and distributes electricity supply to customers in 7 provinces (except MEA responsible areas).

As mentioned above, it is foreseen that each organization has its own service areas and customers, especially MEA and PEA having the same responsibility as distributor. The customers in MEA and PEA areas can buy the electricity energy only from the distributor in their areas. Those means customers in MEA service areas can not buy electricity energy from PEA. In the same way, customers in PEA service areas have to buy electricity energy only from PEA.

. STATEMENT OF PROBLEM

As people know, Provincial Electricity Authority business is to sell electricity to households, industry estates and private sectors. The trend of PEA’ customers and demand of electricity grow up more than 5% each year. It seems quite well that PEA has a lot of profit each year, but in fact PEA still face decrease of sale volume in major customer such as industrial estate.

According to the government policy, PEA will be privatized within this year. PEA will be a public company that everyone can buy stock for get earning from PEA operation. Selling electricity is core business of PEA for a long time, but now status is being changed. PEA has idea to expand business into electricity service sector service as energy conservation, wiring electricity line and checking level of electricity safety since PEA has skill and experienced manpower in this field. But PEA has problem in distribution channel how PEA can make customer know and satisfy about this service since it new business for PEA.

4. SOLUTION FOR PROBLEM

4.1 CLASSIFY CUSTOMER TARGET

PEA must classify target present customer that will be customer of PEA service. The different customer will require different service from PEA such as industrial estate will need

PEA to improve energy consumption in their own factory in order to reduce production cost. But household customer may require only check electricity circuit for safety. Target customers of PEA service can separate as follow.

ʒ Factory

This customer is concerned to major customer of PEA since they buy a lot of electricity from PEA. Profit is normal achievement that they need. PEA can provide electricity service in part of energy conservation or energy efficiency to them. This service will make effective electricity consumption in their factory such as lighting, cooling and production. The technology, equipment and practice will be applied for make energy efficiency. The payback period of investment should be reasonable for sure that amount of electricity that they can reduce is money that they will earn. PEA also can apply priority strategy such as factory that use PEA service will get priority higher than other factory. PEA will send service team to check and monitor as consultant every month.

ʒ Private Sector

This want service like factory but they want their investment can get quickly pay back period not more than years. In practice, they don’t need to spend money so much about energy efficiency in their own building since they don’t know benefits that they will get. For this kind of customer, PEA will provide simple practice about energy efficiency firstly such as turn off lighting during lunch time, substitute fluorescent by compact fluorescent. When customer satisfies that the services or practices can safe cost, they will invest more money later for effective technology and equipment. Furthermore, PEA will send service team to provide knowledge what they will get from PEA service.

ʒ Household

Household is largest type of customer; more than 500,000 customers locate in this type. They use electricity only for their routine life and consume electric energy not much. They don’t want energy efficiency service like factory or private sector. PEA can provide service in part of checking their electricity circuit in their house for sure that it will safe for family. Furthermore, when they need to expand structure in their house, they can use PEA service to wire electricity line for new construction. This customer is very important for PEA to expand business since they can tell about their satisfaction to public.

4. SET DISTRIBUTION CHANNEL

After PEA know who are target customers of PEA, PEA can set appropriate distribution channel for them. As mention before different type of customer will need different service, distribution channel is the same. PEA should analyze which effective channel that suitable for various type of customer. We can classify distribution channel for PEA as follow.

ʒ Marketing section of electric office

PEA has many electric offices spread cover whole country in order to support customer need. Marketing section of each electric office is one of important component to create distribution channel. In normal, major task of this section is to maintain customer relationship with customer in their area. They will visit factory, private sector and household every month. PEA can use the section to carry information about new service of PEA as sale representative since marketing section had got family with customer and list of target customer. This distribution channel will work well with industrial estate and private section that need to deal with representative if interesting. When factorys or companies want to go in deep detail, the section can contact to head office to provide information and staff.

ʒ TV advertising and Radio Spot

PEA will use TV and radio to advertise new service to target customer, especially household section. The advertising spot will lunch during evening or holiday time when most people go back home and take rest. In advertising will have some message such as “Safe your house with PEA” or “Build your home with PEA” to reach target group who concern about safety or want to reconstruct their house.

ʒ Household customer

This is not direct channel for PEA. If people who apply PEA service feel appreciate or satisfy, good information will carry to their work place. When their company or factory which they are working need service about electricity, PEA will be first name that they choose.

ʒ Seminar and Campus

When institute or company set up seminar or technical conference about electricity service, PEA will send staff to present PEA project that had implement and get success. The objective of this channel is to show PEA knowledge and activity to public. Furthermore, PEA will join with university or institute in part of senior project or research in engineer faculty as partner. When student who take electricity course go back home, their parent will ask about topic that discuss in class. PEA service information will be transfer from student to them.

ʒ Magazine

Now a day, many magazines about electricity technology and environment are available on shelf of book store. Inside magazine, many topics such as technology, government action in this field and selling equipment is presented. PEA will transfer data form real project to paper in order to make brand awareness and information about PEA service to people. In part of environment PEA can put message “Save environment by reduce energy with PEA”. This will make good view of PEA from people.

ʒ PEA Product

As people know PEA is organization that provides electricity to whole country and be one of specialist about electricity distribution in Thailand. Many electricity standards that PEA use in working is accept to standard for other company or organization. In future, PEA should create electricity equipment brand name by PEA standard such as cable, ballast to make brand awareness for people. When people think about electricity, PEA will be in their mind.

5. CONCLUSIONS AND RECOMMENDATION

PEA would like to expand business to electricity service in order to increase revenue. Many customers locate there but the way to contact with them should be careful. The target customer separate in to groups; factory, private sector and household that make different distribution channel for them. Marketing section of electric office is first channel that PEA will take action since no cost and relationship with all group of target customer. The other channels will set later since they need time for preparation and investment. The success of electricity service not depend only effective distribution channel but also task that perform by PEA to customer. The success tasks will make distribution channel provide best result so PEA has to prepare well in staff, technology and equipment. Furthermore, PEA may employ consultant who has experience in this field to be partner for transfering know-how in marketing field.



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