I’ve been lucky enough to spend some time brainstorming recently with Geoffrey Moore, author of technology marketing classics Crossing the Chasm & Inside the Tornado. Geoff is a venture partner at Mohr Davidow Ventures, one of the firms that invested in Energy Innovations. I’m indebted to him for helping me to put a finer point on some of these ideas.
In an earlier post, I explored clean DG technology market development via a conventional technology adoption lifecycle, following the familiar trajectory from innovators to early adopters to early majority to late majority and, finally, to laggards.
The lifecycle model is useful to technology marketers because defines the dominant purchase rationale that drives market penetration during discrete developmental stages—and thereby provides a framework for building a phased market strategy based on the characteristics of who is buying and why at each stage. Indeed, terms like “innovator” or “early adopter” are loaded code words to marketers. They convey entire market strategies implied by the psychological buyer-profiles each term represents.
When applied to the clean DG market, I find it useful to enhance the conventional lifecycle buyer profiles in terms of their relative “greenness” as follows:
· Innovators / Dark Greens—Clean DG innovators have all the conventional innovator characteristics plus what I call a dark green motivation. Dark greens are aggressive seekers of solutions to what they see as environmental crises. They are passionate believers who go out of their way, even to the point of discomfort, to find a means to reduce waste, eliminate pollution, and conserve energy. As buyers, dark greens feel justified in paying “what it takes” to do “what is right.” Dark greens have been the sustaining force in the solar and small wind DG markets from the 1970’s until just recently as the market has shifted to early adopters.
· Early Adopters / Light Greens—Early adopters of clean DG share many of the same characteristics of conventional early adopters. They’re imaginative, forward thinkers who pride themselves on being “out of the box.” Highly individualistic, they are comfortable making a purchase based on their own evaluation of a technology’s benefit without supporting references from other buyers. In the clean DG market, these buyers can be characterized as light greens. Light greens care about the environment, but don’t expect to make big sacrifices of comfort or convenience for it because they see individual values to be at least as important as social values. Because they’re imaginative and forward thinkers, they are comfortable making purchase decisions based on perceived future benefits of a clean technology even if those benefits are not immediately or easily quantifiable. Light greens do care about price, but only to the extent that it meets their subjective sense of what is appropriate in light of a technology’s benefits. Light greens are now the primary drivers of market growth in the US solar DG market and in the rapidly growing REC market.
· Early Majority / Practical Greens—The clean DG market will enter the mainstream with the early majority when the practical greens start to buy. Early majority buyers are pragmatists, they are not technology-averse, but they typically want to make sure a technology is well-established before committing to it. Practical greens differ greatly from dark and light greens, just as the early majority differ greatly from innovators and early adopters. Whereas dark and light greens share a personal ideological commitment to the environment, practical greens are motivated by the immediate business advantage of an environmental program. To a practical green, the advantage of an environmental program comes from its value to customers, shareholders, partners, employees or other business stakeholders—or, it may be a tactic in a regulatory compliance strategy. In any case, practical greens are not directly concerned with the environmental benefits of a project. They care mainly for how those benefits translate to the bottom line and are thus very price sensitive. The US clean DG market has not hit the early majority stage yet. However, in Germany, the early majority are engaged in the solar DG market due to generous feed-in incentive programs. In a related example, Kyoto implementation in the European Union via CO2 cap-and-trade programs is clear example of a mainstream market driven by practical greens in search of a regulatory solution.
· Late Majority / Skeptical Greens —In a conventional lifecycle market model, the late majority enters the market because peer or competitive pressure makes it necessary. For the clean DG market, I like to think of this group as the skeptical greens. Unlike practical greens who are personally neutral about environmental issues, skeptical greens are characterized by their doubt about the value or need for environmental programs. They will be dragged to the market by regulatory pressure or competitive pressure from early majority buyers. I can’t think of any clean energy markets (DG or otherwise) that have hit the late majority phase yet. A related example can be found in the markets for low-flow toilets or efficient fluorescents—in both those markets the people buying will often complain that the technologies are unnecessary and express resentment about being forced to buy them.
· Laggards / Anti-Greens—What can we say about laggards except that they are averse to new technology and don’t want to change their ways until there is no other choice? In the clean DG market, it is hard to see these buyers as anything except anti-greens. A key concept that I’ll explore later is that laggards typically can only be brought into the market via a service model that allows them to avoid owning or having to maintain a technology. Again it’s hard to find clean energy market examples of laggard buyers, but a related example might be the California building industry where Title 24 requirements force everyone to engage in energy planning and conservation.