LED technology has made many breakthroughs in recent years. The most notable of which is its level of cost effectiveness. However, the initial investment required to implement LED light bulbs still exceeds the alternative market choices. Yet the total cost of ownership offers consumers sizable gains. The market segment that this marketing plan is catered to is composed of industrial firms who purchase items in quantity as well as consider such items as the total cost of ownership. It is reasonable to suspect that this segment will be the most receptive to LED technology.
Rationale for Research
LED lighting solutions were chosen because this technology represents the future of lighting. The LED bulbs offer better quality of lighting, have a much longer lifecycle, and require is significantly reduced amount of electricity to operate when compared to their less efficient counterparts. It is reasonable to suspect that the technology will be ubiquitous at some point in the near future. However, since the future growth trajectory is still somewhat uncertain, then this makes for an interesting position in which to analyze.
Benefits of LED Technology
Electric used in lighting currently accounts for roughly nineteen percent of the world's electricity use, emitting about as much greenhouse-gas pollution into the atmosphere ever year which is roughly equal to the emissions from about half of the world's automobiles. The importance of this source of power consumption cannot be overstated in terms of reducing anthropogenic global warming. LED technologies offer an alternative to traditional lights while lasting roughly ten times longer and requiring a fraction of the electricity to operate. Not only that, but LED doesn't require Mercury for production and it provides a high quality of light emitted. Furthermore, the technology is already cost efficient when considered from the perspective of its lifetime. All individuals involved, consumers, investors, and producers will benefit psychologically from knowing they are doing their part to address climate issues.
III. Marketing Situation Analysis
The current marketing situation that is present in any green marketing product at the moment represents one of the most salient challenges that anyone familiar with both marketing and the environment will attest to. Generally, marketing concerns itself with trying to promote the relevant products in the most beneficial manner as possible. However, when the ecological demolition that is currently being undertaken by societies is considered, then the problem is heightened to unfamiliar levels. Not only is marketing a profession but also a lifeline to the future of humanity. Promoting products that make a difference to the future of the planet and the species that inhabit is on another level altogether.
Climate change, due to anthropogenic activities, poses a real challenge to all species on this planet, now and into the future. Exponential increases in greenhouse gas emissions since the pre-industrial era have led to a current carbon dioxide concentration in the atmosphere of roughly 390 parts per million in the atmosphere (CO2 Now, 2011). The current CO2 concentration is enormously disturbing considering some scientists have estimated the level at 350 parts per million to be the threshold point (Hansen, 2008). Furthermore, The International Panel on Climate Change (IPCC) estimates that at 450 parts per million there is a fifty two percent chance that catastrophic climate change will not occur (IPCC, 2007). There exists appropriate evidence for a person to be troubled; our planet is in peril.
Unfortunately, in many nations, the political determination to introduce the required regulations in emissions limitations has been sluggish, at best, to adapt to the scientific findings on an international level. During the last international convention, optimisms persisted that an arrangement would be decided upon, but the conference was unable to establish a new agreement to supplant the Kyoto agreement. Furthermore, one estimate that was produced that utilizes data from each country's current pledged emission path and runs them in MIT's most sophisticated climate model predicted the estimated carbon concentration in atmosphere in the year 2100 would be 770 parts per million (McKibben, 2009); clearly greater than any worried individual would deem as not dangerous.
There is some evidence that has been presented that suggests that this trend might change in the near future. Ethics and social responsibilities are increasingly becoming the target of the attention of individuals, organizations, and societies across the earth. Moreover, ethical considerations for future generations have become more salient when organizations and institutions consider stakeholders that include those who are yet to be born. Hence organizations should initiate conversations about how they are going to address future challenges that come in the form of regulations as well as other pressures that emerge from groups such as employees, customers, and all other stakeholders. This also poses an increased challenge to marketers who are concerned but yet to be provided with a consumer market that values environmentally conscientious products on the level that the science dictates. Thus the market must be educated and marketed to simultaneously.
A. Internal Strength and Weakness
The consumer market for environmentally friendly products has yet to reach fruition, to say the least. Public opinion regarding the climate science has not reached the consensus that the actual science itself has (von Storch & Krauss, 2005). Thus the segment of perceived value that the consumer segments are not consistent with the state of the science as it continues to unfold. Thus marketers have a tremendous challenge, not only creating value for their product against its market competitors but also fostering demand for their type of products compared to cheaper and less efficient alternatives that are already accustomed to.
In the lighting industry, for LED bulbs suffer from the fact that they require a significantly higher upfront cost than their lower cost alternatives. For example, traditional light bulbs can be purchased for a dollar or less, while compact fluorescents (CFL) are significantly more expensive; furthermore LED lighting is significantly more expensive than their CFL counterparts as well. The total cost of ownership, which includes considerations for the life of the bulb as well as the total wattage necessary for daily lightening, needs paints an entirely different picture than the initial investment. However, this calculation escapes most consumers with the exception of the most environmentally conscious.
The greatest weakness of the LED bulb is the initial price or upfront investment. These price exceeds that of the competing choices by a considerable amount. While the price difference between CFLs and incandescent isn't insurmountable for many consumers who are environmentally conscious, the price for LED equipment compared to incandescent technology can deter a majority of casual shoppers. Also the total lifecycle costs of LEDs over CFLs hasn't yet produce a considerable distinction between the two (Richard, 2009) The strengths of LED technology can be thought of in terms of lighting quality as well as the total cost of ownership; some estimates of LED bulbs give the 60 watt versions a useful lifespan of over six years (Angelie, 2010). The quality of light that LED bulbs produce resembles daylight more closely than any competing light emitting products.
Figure 1 - Light Source Comparison by KWh (Richard, 2009)
B. External Opportunities and Threats (including ecological issues, such as depletion of natural resources)
The external environment dictates that LED technology becomes ubiquitous at some point in the future; the main question is when that threshold will be reached. The ecological impacts that follow from the use of fossil fuels including coal, natural gas, and oil are becoming increasingly clear to the purview of science though the consumer segments are slow to keep pace. The greatest threat to the future of LED lighting is that the industry is slow to reach fruition. This would cripple producers who represented the early adopters who chose to manufacture LED products before the market was ready. If the market does not support the frontrunners then this could result in a major setback for the entire industry. Many firms could deteriorate quickly if the market does not support minimal profitability margins.
However, the greatest opportunities for such firms are represented by policy makers. If policies are initiated that increase the costs related to electricity consumption or subsidize the initial costs of LED technology then consumer demand could spike rapidly. This could be responsible for a quick industry boom and product differentiation would become more salient than the technology itself. The potential for this outcome is becoming increasingly likely due to scientific understanding driving public support among certain demographics. The key to leveraging such an opportunity comes down to timing; ideally building sufficient capacity just before consumer demand spikes.
III. Desired Outcomes
This marketing strategy is heavily dependent upon a triple bottom line that considers an extended set of stakeholders. Not only must the investors be financially rewarded, but the employees and the planet should be equally rewarded. It is possible with such a product as LED bulbs to satisfy the increased requirements inherent in such a sustainable business…