Assumption University of Thailand

Graduate school of eLearning

Master of Science in Management

Semester 2/2014

Course Title: MS6402 Advance Marketing Management

Lecturer: A. Bhumiphat Gilitwala

Group Case Study No.1

“ENERGY PERFORMANCE SYSTEMS, INC.”

Group Members

1. Mr. Swatchai Bualert Student ID no. 5772008

2. Ms. Ausara Saelim Student ID no. 5772006

3. Ms. Watsana Ruchidamkoengsak Student ID no. 5772001

4. Ms. Pimparat Snguannapaporn Student ID no. 5672003

Introduction

David Ostlie, the power plant superintendent who invented and patented Whole-Tree-EnergyTM

technology (WTETM) and the president of Energy Performance Systems,Inc. (EPS). Ostlie worked for

Northern States Power, learned well about electricity generation and created the experimental called

Whole-Tree-EnergyTM. WTETM is a new potential power source for a new electric power generation

technology, this system isn't only produce electricity by burning sections of whole hardwood trees that

have been dried in an air-support fiberglass dome but this patented innovation also appears to be an

attractive cost-competitive alternative to fossil-fuel power production.

There are 3 key features that Ostlie mentioned in the case study journal what make the ESP owned

and patented WTETM which are unique technology and innovative concept.

1. Using whole hardwood trees

Whole-Tree-EnergyTM technology offers higher efficiencies than plants fired by chipped wood, not

just because of greater plant size and drier fuel but also because it employs high-Pressure, high-

Temperature steam. " Hardwood trees" in this journal means all broad left trees which will be using

wood burned to produce electricity which will reduce the cost, time and energy.

2. Drying the whole trees

Harvested and delivered whole, the trees are dried in a air-supported fiberglass dome structure over

a 30-day period by using waste heat from the combustion process in the adjacent plant. WTETM process

dries the tree to remove about 70% of the moisture before the combustion process start which will

reduce energy output and decrease resulting in emissions that lead the acid rain and air pollution.

3. Three-stage combustion

The idea was to simulate the wind-sheltered environment integral to the whole-tree drying process

which trees would be dried inside an air-supported fiberglass dome structure. In an actual, Whole-Tree-

EnergyTM plant waste heat from the combustion process would be used to dry the trees. There are

Three-stages of combustion, (a) as trees in a 12-foot deep, mid-level pile, (b) as wood char that falls and

is burned on a great below the pile, and lastly (c) as volatile gases above the pile that burns cleanly like

natural gas. The outcome is not only increase the environmentally-clean but also efficient combustion

throughout the process.

Furthermore, WTETM is the advance thinking which will create the development and improvement

toward existing issues from the traditional power plant technology. According to the case study Ostlie

explained the benefits of WTETM into 3 solutions; the environment and pollution, Jobs and economic

development and Buying interest of utilities.

1. The environment and pollution

Whole-Tree-EnergyTM technology is a renewable energy technology that offers environmental

benefits at an acceptable cost without the need for the expensive sulfur dioxide (SO2) emission control

equipment required for many coal-fired power plants. The WTETM concept has been developed and

tested over the years with support from EPRI, Northern States Power, and other organizations. The final

test result has shown that this concept decrease the volumes of SO2, NOx, ash and extra CO2 which will

be a reduction in air pollution, acid rain, and global warming causes.

2. Jobs and Economic Development

Biomass power offers economic benefits by increasing the huge number of jobs for growing,

harvesting and transporting whole trees and in the plant producing electricity which will stimulate the

economic by increasing the local employment. Besides, WTETM is using the existing trees that overage,

diseased and otherwise unmarketable portions by other forest product firms that could be targeted as a

traditional fuel resource. Harvesting over-age hardwoods actually stimulates forest regeneration,

provides better habitat for wildlife and also modified the useless trees to be beneficial resources.

3. Buying Interest Utilities

Nowadays, demand volume of electricity is increasing everyday by industrial, commercial and

residential users. To avoid electrical blackouts and improve the generating capacity of electrical, WTETM

technology project provides an opportunity either retrofitting WTETM to the old coal and oil-fired plants

or building the new WTETM plants which will increase the capacity to reach the high demand volume in

the future and also reduce the existing air pollution from the old technology.

The additional concerns

Ostlie mentioned about 6 emerged prospective to give clearer picture about WTETM. First, after

several test showing burning wood technology create enough power that will produced higher volume

heat-release and will definitely enough to generate electricity. Second, WTETM dried the whole trees in

an air-supported dome like a sport stadium size which won't affect the loading, transporting and drying

process. Third, WTETM researchers said to support the power plant, only 0.1 percent of land in a 50-mile

radius of the plant would be harvested each year plus WTETM also create hybrid tree plantations. Thus

there will be enough trees available to support this technology. Fourth, Ostlie claimed that WTETM create

environment benefits by retrofitting and building no polluting plants which will decrease the pollution

that created by the old power plants. Fifth, to retrofit might be a little costly but create more future

value while building a new WTETM plants is cheaper than a new fossil fuel plant. Lastly, a recent study

evaluating that WTETM technology create less production cost that today's fossil fuel plants.

Question No. 1 : In a utility’s decision whether to buy and use the WTE™ technology, (a) who comprises

the buying center, (b) what aspects of the buying decision does each look at?

Answer: (a) Who comprises the buying center?

For Energy Performance Systems, INC (EPS) to achieve its first sale objective of its WTE™

technology, it is essential to understand needs, resources, policies, and buying procedures of its

prospected customers, which is electric utilities in this case. Like most of business buyers, a buying

decision of electric utilities will be made through their buying center. The buying center is comprised of

“all members of the organization who play any of seven roles in the purchase decision process” (Ibid) as

illustrated in below figure.

Source: www.brianddayday.blogspot.com

Each player in an organization’s buying center plays different roles in buying procedures and decisions.

1. Initiators: It refer to those individuals or groups who initiate or request to purchase a

product/service. An inquiry of a product or service always comes from initiators.

Regarding to our case study, initiators within electric utilities are those who are responsible for

planning, and managing utilities’ supply chain, especially in the aspect of sufficient and secured sources

of energy. The initiators are production-capacity planning department, business strategic planning

department, and supply chain department. Additionally, a research and development department (R&D)

could possibly inquire for WTE™ technology as their new development alternatives.

2. Users: They are individuals or groups who uses a product/service. These people sometimes

involve in initiating a need for a purchase of a product/service, and help define its

specifications.

From the given definition, users of WTE™ technology can be identified as those who involve in

electrical power production. This implies to staffs, supervisors, and managers working in production

department.

3. Influencers: Individuals or groups who influence the buying decision can be called as

influencers. Their roles include not only to help defining appropriated specifications, but

also to provide information used for evaluating alternatives.

According to the mentioned role, influencers of electric utilities should possess both expertise,

and experience relating to energy sources in order to give influential advice or proposal. Therefore,

electric technicians, power plant engineers or environmental specialists are considered as important

influencers in utilities’ buying decision.

4. Deciders: It refers to individuals or groups who decide on a product/service requirement,

and on suppliers. All informations are collected, compared, and analyzed by deciders to

incorporate their decision makings.

Referring to our case, there are several key aspects to consider whether electric utilities should

buy WTE™ technology, therefore, deciders could possibly come from various department. Deciders for

cost-related matter are purchasing department. For technical and specification issues, electric

technicians and engineers play a decider role.

5. Approvers: As suggested by its name, individuals or groups who authorize buyers and

deciders to take action on their selected alternative. This role often depends upon

organizations’ hierarchy and policy.

For electric utilities, the top management or the chief executive officer usually plays an approver

role. However, it is possible that the approval can only be granted by the broad of directors or the

executive committee rather than any top managerial individuals alone if the deal is considerably high

value

6. Buyers: They are those who are authorized to select suppliers, and arrange purchasing

terms. Buyers also play an important role in negotiating with potential suppliers to achieve

the best deal.

To perform such role, buyers in most organizations’ buying center including electric utilities

refer to individuals in purchasing department. In the case of high value, and complex purchasing

activities like WTE™ technology, it would include departmental high – level management as well.

7. Gatekeepers: This is the last but yet significant role in organizations ‘buying center.

Gatekeepers refer to individuals or groups who possess certain power that could obstruct

either sellers or information to reach other players in the buying center.

To reach prospected members of electric utilities’ buying center, EPS‘s salesperson should make

sure to get a bypass from gatekeepers such as receptionists, operators, or purchasing agents.

Answer: (b) what aspects of the buying decision does each look at?

The buying decision process of organizations or businesses is a multi-personal activities

comprising of individuals or groups playing different roles as explained in the previous part. Unlike

consumers buying, organizations or businesses’ buying are more complex, and not influenced by

individuals own needs. For developing its business marketing strategies targeting at prospected electric

utilities, EPS should consider major aspects of buying decision below.

1. External Environmental Factor: How businesses or organizations operate, more or less, is

influenced by their external forces. The buying decision and process also has no exception.

Economics conditions, changes in related regulatory, political environment, or even

competitions are major elements affecting buying decision of businesses and organizations.

2. Internal Organizational Factor: It is not only external environment, but its internal

organizational factors also play a big part in influencing buying decision. This includes

organizations, goal & objectives, structure, policies, technological level, and manpower’s

skill/competency.

3. Interpersonal & Individual Factor: Organizations or businesses’ buying involves many

participants as their nature. Therefore, the interpersonal relationship among players in

buying center are crucial. It could specifically implies to degree of participation, authority,

risk-taking abilities, interpersonal conflicts and/or interest, and personal factor (i.e. ages,

education, cultural background)

4. Situational Factor: From time to time, organizations or businesses act upon their current

situation. Thus, the situational factors such as time frame, availabilities of products/services,

promotions, and financial situations determines their buying decision.

Despite all influential factors are being considered, it is essential for business marketers to be

able to identify how the factors influence each player of organizations’ buying center. The implication of

EPS’s marketing strategy is illustrated in below table.

External

Environment

Internal

Organization

Interpersonal &

Individual

Situational

Initiators

Related

Dept./Personal

- Business Strategic

Planning

- Production Planning

- Supply Chain

- R&D

- Availability &

accessibility to

current energy

source & other

alternatives.

- Energy and electric

related regulatory.

- Capacity Vs.

demand of energy

sources.

- Organization’s

target production

- Relationship &

performance of

current suppliers.

- Personal factors

- Delivery Time

- Availability of a

product Vs. need

Users N/A

- Compatibility w/

- Personal factors

- Delivery Time

Who

Factors

External

Environment

Internal

Organization

Interpersonal &

Individual

Situational

Related

Dept./Personal

- Electrical & Power

Production

current technology &

infrastructure

- Applicable for

manpower’s skill

- Easy to use in

production

- Availability of a

product Vs. need

Influencers

Related

Dept./Personal

- Electric Technicians

- Electric Engineers

- Environmental

Specialists

- Pros & Cons of

other technology

alternatives

- Environmental

Regulatory.

- Cost & Price

comparisons

- Compliance w/

purchasing policy

- Compatibility w/

current technology &

infrastructure

- Applicable for

manpower’s skill

- In-dept. knowhow

of salespersons

- Degree of

participations

- Personal factors

N/A

Deciders

Related

Dept./Personal

- Pros & Cons of

other technology

alternatives

- Compliance w/

purchasing policy

- Compatibility w/

- In-dept. knowhow

of salespersons

- Degree of

- Organization’s

Financial Situation

- Time Frame

Who

Factors

External

Environment

Internal

Organization

Interpersonal &

Individual

Situational

- Electric Technicians

- Electric Engineers

- Purchasing

- Environmental

Regulatory.

- Cost & Price

comparisons

current technology &

infrastructure

- Applicable for

manpower’s skill

participations

- Relationship w/

selected suppliers

- Personal factors

- Delivery Time

- Availability of a

product Vs. need

Approvers

Related

Dept./Personal

- Top Management

- CEO

- Broad of Directors

- Executive Committee

- Competitors (i.e.

others electric

utilities )

- Market Trends (i.e.

clean energy)

- Political factors (i.e.

government’s

subsidy)

- Economics (i.e.

world ‘s oil price )

- Legal issues

- Compliance w/

corporate policy

- Organization’s

strategic goals

- Applicable for

Organization

structure,

manpower’s skill

- Reliability of

influencers &

deciders

- Authority Power

- Personal factors

- Organization’s

Financial Situation

- Time Frame

Buyers

- Cost & Price

- Compliance w/

- Relationship w/

- Special Offers

Who

Factors

External

Environment

Internal

Organization

Interpersonal &

Individual

Situational

Related

Dept./Personal

- Purchasing

comparisons with

other utilities &

other technologies )

- Economics factors

i.e. interest rates

purchasing policy

- Organization’s Cost

and Price target

selected suppliers

- Personal factors

- Long credit terms

- Delivery Time

- Availability of a

product Vs. need

Gatekeepers

Related

Dept./Personal

- Purchasing agents

- Receptionists

- Operators

N/A

- Compliance w/

confidential policy

- Existing established

contact route

- Relationship w/

salespersons

- Personal factors

N/A

Question No. 2: What are some of the key elements EPS should have in developing its strategy to

market WTETM to prospective utility buyers?

Answer: There are 4 key elements of business customers can be identified.

1. Price-Oriented customers

Who

Factors

Concern of buyer will satisfied at level of the price that they can afford to pay, will decide at

affordable price. How much can company lower the price and still make margin.

Compromise on profit margin, lower the profit margin make sure the buyer will happy with the price

that company offer.

A group of actions taken by a business to support its sales and service staff in considering client needs

and satisfaction their major priorities. Business strategies that tend to reflect a customer orientation

might include: developing a quality product appreciate by consumers; responding promptly and

respectfully to consumer complaints and queries; and dealing sensitively with community issues.

By setting to low price and low condition.

2. Solution-Oriented customers

Solution-Oriented customers are always looking for extra benefits that comes along with the end

product.

These customers seeks more value added on to the product and are often flexible to the prices

offered even though the prices are higher by extra benefits meaning extra service offered by the

supplier such as free delivery on-site installation, repair and maintenance and yearly inspection.

Some examples of being solution-oriented are offering suggestions, giving advice, providing solutions,

offering samples or store credit, etc.

3. Gold-standard customers

Gold-standard customers are someone that willing to pay more no matter price will high or low, gold

customer will need everything to be perfect on service, product, quality or extra benefit sometimes. For

example, company shouldn’t only provide the product feature advantage information before selling but

also need to clarify what is after sell services.

4. Strategic value customers

Strategic value customers are customers who value supplier more like a partners in their

business and expects suppliers to be reliable and dependable they know that without supplier support it

is difficult for them to run their day to day business so they put suppliers as key element in their

strategic planning decisions.

Customer sees you as a dependable and reliable supplier in a sense that company will able to

support them on a consistent basis while they are also concerned about their responsibility towards the

environment, labor, laws and their corporate social responsibility.

Product feature advantage information.

Wood trees reliable delivery on time.

Additional of strategies that EPS should considerate as below:

Develop strategies EPS have to look for potential growth by capturing be insights and feedback

of the market.

Reviewing and analyzing what the competitors are doing in the market place to better

understand the need of the market while also developing the brand image.

Deliver value to the customers while also keeping a close eye on the margins or profitability of

the business.

Seeking ways to strength the core competency and eliminate weaknesses.

Question No. 3: As a concerned citizen, (a) what do you see as the key benefits of the WTETM technology

and (b) what do you personally see as the potential “show stoppers " for WTETM - the critical things that

can prevent it from being commercialized and becoming a reality?

Answer: a) what do you see as the key benefits of the WTETM technology?

According to the case study, Ostlie explained the WTETM technology key benefits into 3 parts.

1. The environment and pollution

Unlike coal, WTETM technology offers relatively low harmful sulfur or mercury emissions, less

nitrogen oxides, reduce ash which considered as a hazard waste, and no additional carbon dioxide in the

atmosphere which means less acid rain, global warming, smog and other toxic air pollutants. The Whole-

Tree-EnergyTM concept has been developed and tested over the years, WTETM technology is sustainable

managed, and it can result in low or no net carbon emissions which will create a cleaner and healthier

environment for our future.

2. Jobs and economic development

Every year in the United States, roughly 39 million tons of crop residues go unused. WTEYM

technology will create beneficial to these unsalable wood by turning to usefulness wood burning system.

Moreover, harvesting the crops isn't only could help reduce the country's dependence on fossil fuels but

also could be a booster to rural economics. A Whole-Tree plants will generate jobs and stimulate the

economic by increasing occupation to farmers, truckers, wood harvesters and others living in rural areas

surrounding the WTETM technology plants.

3. Buying interest of utilities

Due to high demanding of electricity, WTETM technology provided 2 opportunities to their industrial,

commercial and residential users. First, retrofitting WTETM technology to existed hundreds of coal and

oil-fired plants to reduce current pollution problems. Second, building the new WTETM technology

plants.

Answer: (b) what do you personally see as the potential "show stoppers" for WTETM, the critical things

that can prevent it from being commercialized and becoming a reality?

1. Unintended economics and environmental consequences

Harvesting and raising the hardwoods crops for biofuels used a large amounts of fertilizer and water

to grow the healthy trees which could lead to the raising price of livestock food, fertilizer and also could

lead to shortage of water supply. Furthermore, planting hardwood trees required a big piece of land

which means the more WTETM technology is effective, the more land will be required for growing trees.

If the demanding of the land increase, it might lead to higher standing living cost and also could impact

the living style for those who lives around that area.

2. Existing of indirectly competitors

WTETM technology is not the first wood-fired electricity generator in the country, several hundred

already exist. Most of them are owned by paper companies and saw mills, which burn their own scrap

wood to generate heat and electricity, primarily for on-site use. It's increasingly common for these

companies to sell excess electricity utilities. Thus WTETM might face to the new competitors if these

companies turn to produce more electricity from their leftover woods and expand their plants to be

electricity generator in the future.

3. Overharvesting effect

One of the EPS plans is growing the trees to feed an electricity generator of WTETM technology.

Without the well management could lead to the overharvesting which will impact to small wildlife and

can cause the extinction toward some biodiversity. Typically, the crops can be harvest after seven years

of growth so ESP has to plan ahead for the nearest future by increasing the growth volume to avoid any

disruption and shortage of wood trees.

4. Overworked ecosystems

Furthermore, forests in the southern United States already produce more wood and paper products

than anywhere else in the world, so increased demand from the bioenergy market could put even more

pressure on these overworked ecosystems.

Question no.4: A new product or technology like WTETM requires educating a number of key groups, or ‘’

influencers’’, about the technology. Excluding the electric utilities themselves. (a) What groups, or

market segments, should EPS try to reach, (b) what key benefits should be emphasized to each, and (c)

what promotional methods or media should EPS use to reach each segment

Answer: (a) what groups, or market segments should EPS try to reach?

Regarding to the usage of the electric utility, it is wise to presume that there are already several

technologies that capable to generate the electricity without causing or least causing environmental

damage.

When it comes to the market segmentation, EPS must concern its unique strength and positioning in

order to aim their market. It obviously shown that EPS has three strong points as following

The environment and pollution concern

Jobs and economic development

Buying interest of utilities ( lower cost of production >>> low cost of consumption )

Thus, EPS should aim for the group of target which has certain authorities to make decision over the

wide area such as state governors, directors of natural resources due to united state department of

Energy or related-fields. Besides, those three positive factors could be the potential keys to support the

ideas and become a feasible project as it provides multiple positive impacts to the other fields as well.

In addition, the EPS could specifically aim to industrial state as some of those industries have their

own electric generator or power plants. EPS must be able to attract them by providing the lower cost of

the electricity per unit which could certainly reduce the industrial expenses in both short term and long

term.

Besides, as the world are now concerned over the environmental issue. The EPS could also aim for

the private group of people (private companies) who may have interested in using clean energy as

sources in launching their businesses.

Answer: (b) what key benefits should be emphasized to each?

As the market segmentation of EPS is fundamentally from the government. It would probably cope

and provide benefits to several aspects as following

Social response by reducing the air pollution which lead to the less of global warming and the

increase in environmentally friendly ( which people are now concerned )

In term of the pros to the government and economy, EPS provides the electricity at the lower

cost. Thus, there would be a high probability that the competitive rate from both domestic and

international industries will be increased due to the lower cost of electricity. As the result, both

GDP and GNP can be raised at a certain point.

An increase amount of workforce through the EPS’s electric generating process which require

such a large amount of labor in order to perform all activities to bring out the final outputs.

Answer: (c) what promotional methods or media should EPS use to reach each segment?

EPS must use the government auction process in order to break through the market as they aim

to make the business with the government and all related department that are working along with the

government. However, EPS must not ignore to inform the information to the general public as the firm is

also need to build up the reputation as well as providing the reason of what the consumer can gain from

supporting the use of the Whole-Tree-EnergyTM (WTETM).

The types of the media must be various in order to reach all types of consumer that divided into

age, gender, life style as these groups of consumer may be differed in the way that they preferred to

update the news. Thus, EPS can use almost all of the media channel such as the advertisement via

television, radio, internet, newspapers.

Conclusion

WTETM is one of the best example for a present human concerned, creativity will enhance our

better life's quality that invent the best benefits with less or zero-impacts. WTETM technology is a

double-edged sword, depending on how and where it is produced. It can be produced in ways that

reduce global warming pollution or in a way that increase it. It can help clean up the air, water, and soil

and protect wildlife or it can degrade our lands, forests and water, threaten biodiversity and harm public

health. WTETM challenge is to ensure that this technology is not only reduce global warming pollution

but also protect the environment. In the other words, this technology should do the better job that the

fossil fuels it replaces.

As a marketer, ESP has a potential to commercialized WTETM to the utility market by providing

the core competency to their target market throughout the effective communication channels. The

targets of WTETM technology are not only selling this technology to business buyer and government but

it's ESP responsibility to convince and give the full details how this technology will benefits and impact

to a concerned citizen, it's part of ethical marketing principle. Besides, the company need to develop the

marketing strategies by using the key elements that match to their target customers then the

achievement of the company won't be far to reach. Even though the WTETM technology is still under

development but it appears to be a cost-competitive alternative compared to other power productions

thus ESP has to develop their technology by creating the outstanding and value as a first choice in their

customer's perception.

However, WTETM technology has proved that it is not too far for this technology to be one of the

best electricity power production in the nearest future, the company needs to improve their weak

points, promote their key benefits, creating the strong brand value and apply the right market strategies

to build up the long-term business activities to compete their competitors in the current market. Lastly,

the company has to keep developing their technology and plan ahead for any changes of environment,

to avoid any disruptions of the service and prepare for a new competitors to entry into the market.

References

1. "Marketing Management" ; an Asian perspective, 5th edition by Philip Kotler, Kevin Lane Keller, Swee Hoon Ang, Siew Meng

Leong and Chin Tiong Tan.

2. "Epri Journal" ; electric power research institute by Leslie Lamarre

3. https://energyperformancesystems.com/Energy_Performance_Systems/About_EPS.html

4. http://www.nrdc.org/energy/renewables/biomass.asp

5. www.brianddayday.blogspot.com