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Hyundai Heavy Industries

Electro Electric Systems Renewable Energy Marketing Analysis

30 January 2009

Systems Renewable Energy Marketing Analysis 30 January 2009 Daniel Keeyeon Warren • email: Keeyeon@GMail.com 1
Systems Renewable Energy Marketing Analysis 30 January 2009 Daniel Keeyeon Warren • email: Keeyeon@GMail.com 1

Table of Contents

Table of Contents Executive Summary 3 SWOT Analysis 4 Brand Analysis 5 What is the brand

Executive Summary

3

SWOT Analysis

4

Brand Analysis

5

What is the brand DNA of HHI’s Renewable Energy products?

5

Marketing Communications Model

6

Solar Market Customers

6

Wind Market Customers

6

Brand Building Strategies

8

Trade Associations

8

Internet-Based Renewable Energy Media Companies

8

Conferences and Forums

9

Traditional Mass Media

9

RE Specific Magazines and Newspapers

9

Festivals and Fairs

10

Blogs & Social Networking Sites

10

Vertical & Horizontal Integration

Opportunities

Information Management System

Renewable Energy Knowledge Library Project

Business Opportunities

12

12

13

13

15

U.S. Broadband Internet Infrastructure

15

Mobile Networking Industry

15

Architectural PV Cells

15

Native American Lands

16

Brownfield Land Reclamation

16

Solar Financing

16

Smaller Scale Wind Turbines

17

References

18

Executive Summary

The economic slowdown still has the potential to cast a shadow on the industry as a whole. Clean energy projects around

the world fell by almost 25% during third quarter of 2008 due to fears of recession 1 . Big American utilities like Florida Power

& Light and Duke Energy have cut down on planned Renewable Energy projects. Despite the possible slow down, Renewable

Energy industry in the U.S. will gain critical momentum in 2009 2 . President Obama’s goal of pledging $150 billion dollars for

the next ten years to clean technology has contributed greatly to this build up of momentum 3 .

Based on a SWOT analysis, this report considers current lack of market share to be the number one weakness to HHI

Electro Electric Systems and offers some suggestions on how to strengthen market shares.

Goals & Objectives of this Report

To increase market shares through increasing Hyundai Heavy’s brand awarenessmarket shares. Goals & Objectives of this Report To increase market share through Vertical & Horizontal

To increase market share through Vertical & Horizontal integrationshares through increasing Hyundai Heavy’s brand awareness To increase market share by implementing a market management

To increase market share by implementing a market management systemmarket share through Vertical & Horizontal integration To increase market share by exploring market opportunities

To increase market share by exploring market opportunities& Horizontal integration To increase market share by implementing a market management system Daniel Keeyeon Warren

to HHI Internal to HHIExternal

SWOT Analysis

Strengths

Trusted Global Leader S in the Power Industry S in the Power Industry Trusted Global Leader S Trusted Global Leader S

Vertical & Horizontal Integration PotentialStrengths Trusted Global Leader S in the Power Industry Mass Solar Cell (PV) Production Capabilities. Mass

Mass Solar Cell (PV) Production Capabilities.

Mass Wind Turbine Production Capabilities

Weaknesses

Weak W brand presence in Clean Technology W brand presence in Clean Technology Weak W Weak W

Limited communication with the public

Limited involvement with trade organizations

Opportunities

Threats

Multiple industries O interested in RE O interested in RE Multiple industries O Multiple industries O Multiple industries O

Offshore Floating Wind farms

Government support of Renewable Energy

RE Market has not yet reached maturity

Global Recessionin RE Offshore Floating Wind farms Government support of Renewable Energy RE Market has not yet

T

Raw Goods Shortages (e.g. Silicon)T Government support of RE smaller than ex- pected

Government support of RE smaller than ex-T Raw Goods Shortages (e.g. Silicon) pected

pected

Brand Analysis

What is the brand DNA of HHI’s Renewable Energy products?

Hyundai Heavy builds ships, electric transformers, and various other products and services. To effectively increase HHI’s

U.S. market share in the RE industry, the company should have a strong “green image.” Green Strategies Consulting states,

“The best and most successful companies recognize that a clean and healthy environment and strong, sustainable eco-

nomic growth go hand in hand. 4 The best example for this approach is GE’s Ecomagination Brand, which states, “A busi-

ness initiative to help meet customers’ demand for more energy efficient products and to drive reliable growth for GE —

growth that delivers for investors long term 5 .”

Current external Hyundai Heavy communication states “trying to diversify our portfolio by investing in renewable

energy sectors. 6 This statement is economic and strategic business centric and doesn’t include the “sustainability” and

“green” aspect. Therefore it is important that HHI communicate the right brand image to accompany its Renewable Energy

product portfolio. So, what will be Hyundai Heavy’s Renewable Energy brand promise?

Marketing Communications Model

Hyundai Heavy should start by developing one central RE mission statement that balances “economy” with “green.” How- ever, Hyundai Heavy will attract different customers based on varying advantages and disadvantages of solar and wind energy products. Therefore it is recommend that Hyundai Heavy’s brand communication efforts use different marketing channels for wind and solar customers. (Figure 1)

Solar Market Customers Financing is fundamental. Solar panel installation in homes and small businesses are becoming increasing easy and popu- lar due to recent trends in solar financing 7 . Financing options such as Berkley First, SunEdison, and MMA Renewable Ven- tures are driving this trend 8 . Therefore HHI’s solar panels could be marketed to large solar farm installation projects, indi- vidual homes, and everywhere between.

Wind Market Customers The end users of wind energy products in the U.S. fall into two basic categories: businesses (maturing) and consumers (budding). There are two categories of businesses. Large installers of wind farms (energy companies or governments) and businesses that are looking to reduce their carbon footprint and greenhouse gas emissions, a move which can improve their “green” image among competitors and customers.

Figure 1 HHI Renewable Energy Growth Strategy Model

HHI Renewable Energy Growth Strategy

Growth Strategy Model HHI Renewable Energy Growth Strategy HHI Renewable Energy Mission Statement Be Genuine in
HHI Renewable Energy Mission Statement
HHI Renewable Energy
Mission Statement

Be Genuine in wanting to be green.

**There is consumer mistrust regarding

company motives for going green.**

Define Advantages

&

Disadvantages

Consumer Categories

Define Advantages & Disadvantages Consumer Categories Solar Energy Marketing Communications Large Scale Projects
Define Advantages & Disadvantages Consumer Categories Solar Energy Marketing Communications Large Scale Projects
Define Advantages & Disadvantages Consumer Categories Solar Energy Marketing Communications Large Scale Projects
Define Advantages & Disadvantages Consumer Categories Solar Energy Marketing Communications Large Scale Projects
Solar Energy Marketing Communications

Solar Energy Marketing Communications

Solar Energy Marketing Communications
Solar Energy Marketing Communications
Consumer Categories Solar Energy Marketing Communications Large Scale Projects Energy companies & Government
Large Scale Projects Energy companies & Government

Large Scale Projects Energy companies & Government

Large Scale Projects Energy companies & Government Business Consumers “Improve Green Image” Distributers,
Business Consumers “Improve Green Image”

Business Consumers “Improve Green Image”

Government Business Consumers “Improve Green Image” Distributers, Retailers, & End Users Wind Energy

Distributers, Retailers, & End Users

Wind Energy Marketing Communications

Wind Energy Marketing Communications

Wind Energy Marketing Communications
Wind Energy Marketing Communications
& End Users Wind Energy Marketing Communications Large Scale Projects Energy companies & Government
Large Scale Projects Energy companies & Government

Large Scale Projects Energy companies & Government

Large Scale Projects Energy companies & Government
Large Scale Projects Energy companies & Government
Large Scale Projects Energy companies & Government Business Consumers “Improve Green Image” Distributers,
Business Consumers “Improve Green Image”

Business Consumers “Improve Green Image”

Government Business Consumers “Improve Green Image” Distributers, Retailers, & End Users Daniel Keeyeon

Distributers, Retailers, & End Users

Daniel Keeyeon Warren

7

Brand Building Strategies

Trade Associations

Get more involved with trade organizations and be an active participant. Trade associations can help Hyundai Heavy brand by: spreading technical information, statistically monitoring the market, lobbying for favorable policy, and publicizing RE benefits through media and demonstration projects 9 . Top five trade organizations:

Internet-Based Renewable Energy Media Companies These Renewable Energy media companies monitor news regarding technical developments, investment deals, and com- pany moves. Top six sites:

Conferences and Forums

Attend conferences and forums. Provides Hyundai Heavy with networking opportunities with trade associations, profes-

sional organizations, media groups, and even governments. Better yet why not host a regional (Asian) or sponsor an inter-

national conference?

Traditional Mass Media RE is beginning to be advertised through the mass media. Advertising could promote more investment, encourage major

companies to commit to RE, and create new opportunities for loans and financing. Greater demand would also positively

influence government policies. The cost General RE advertising could be shared through trade organizations. GE took out a

rare Super Bowl (슈퍼볼 10 ) TV ad this year (something that the company has not done since 1981) on Renewable Energy 11 .

RE Specific Magazines and Newspapers The advertising of Hyundai Heavy branded RE products and services could benefit from advertising in specialty and niche

magazines & newspaper section dedicated to RE industry.

New York Times series: The Energy Challenge The Energy Challenge

Festivals and Fairs

Festivals and fairs create opportunity to engaged public in a personal way and therefore have high word of mouth value.

Hyundai Heavy could deliver experiential marketing to win hearts and minds of festival goers. Examples of festivals include:

Blogs & Social Networking Sites

CA) SolWest RE Fest Blogs & Social Networking Sites The Energy Fair Learn from Obama and

Learn from Obama and get involved in the dialogue. Be transparent and start communicating. This is one of the most cost

effective, yet powerful ways of spreading the Hyundai Heavy brand. The most concentrated Renewable Energy information

is distributed over the Internet as web logs or blogs 12 . GE for example, have blogs (GE Reports 13 ), micro blogs (Twitter 14 ) and

dedicated Renewable Energy brand site (Ecomagination 15 ) to communicate with potential investors and consumers alike.

The transparency created by GE through their blogs create a trust of the GE brand and gives the company authority over its

leadership role. (Figure 2)

Figure 1 Twitter Strategy Model

Figure 1 Twitter Strategy Model Daniel Keeyeon Warren 11

Vertical & Horizontal Integration

An emerging trend in solar and wind competition is to integrate vertically and horizontally. Hyundai Heavy should take full

advantage of both vertical and horizontal integration. Vertical and horizontal integrations could create “bundled” or value

added systems that could be successful in the market place.

Opportunities

In particular Hyundai Heavy’s expertise in the field of offshore platforms could potentially be a powerful industry ad-that could be successful in the market place. Opportunities vantage. The current trend in mega wind

vantage. The current trend in mega wind farms is to go offshore 16 . According to the National Renewable Energy labo-

ratory, “the development of floating platforms for wind turbines will be necessary to deploy wind turbines in deeper

waters” 17 .Current capital costs are approximately 30-50% higher than onshore, but these expenses are partially offset

by higher energy yields -- as much as 30% 18 .

Leverage Hyundai Heavy’s already existing strengths in the electro electric systems to market bundled “complete solu-are partially offset by higher energy yields -- as much as 30% 1 8 . tion”

tion” systems.

Information Management System

Recent LexisNexis (렉시스 데이터베이스) 19 search returned 638 articles during the past month with the word “renewable

energy” in the title and over 3,000 articles that contains “renewable energy” somewhere in the article. The sheer number of

information surrounding Renewable Energy is daunting. Therefore one of the major challenges for Hyundai Heavy is infor-

mation managing. It is the recommendation of this report to install information management system based on employee

involvement. (Example 1)

Renewable Energy Knowledge Library Project

All employees are encouraged to contributing to the RE Knowledge Library(Example 1) Renewable Energy Knowledge Library Project Employees are encouraged to follow and monitor RE news

Employees are encouraged to follow and monitor RE news and fill out a one page “Summary Report Form”are encouraged to contributing to the RE Knowledge Library Every week the employee participating employees are

Every week the employee participating employees are placed into a lottery and could win a $100 Hyundai DepartmentRE news and fill out a one page “Summary Report Form” Store Gift Certificate. Employees would

Store Gift Certificate.

Employees would categorize the report by industry trends, competition news, or new business opportunities.could win a $100 Hyundai Department Store Gift Certificate. Senior managers could act as “librarians” and

Senior managers could act as “librarians” and monitor and edit the reports.categorize the report by industry trends, competition news, or new business opportunities. Daniel Keeyeon Warren 13

Example 1

Sample RE Knowledge library

Renewable Energy Knowledge Library Type of Report Solar Energy R&D Two Sentence Summary To make
Renewable Energy Knowledge Library
Type of Report
Solar Energy R&D
Two Sentence Summary
To make Thin Film solar cells more efficient, sprinkle them
with silver.
Why is this important?
This new technology could potentially be a threat to PV
based technology.
Who is Involved?
Kylie Catchpole of the Australian National University
Albert Polman of the Institute for Atomic and Molecular
Physics in Amsterdam
Source of the Article
The Economist, January 10th-16th 2009
Is there a web link?
http://www.economist.com/science/displaystory.cfm?story_i
d=12887225
Submitted by
Kim Min Gi: MG.Kim@hhi.com

Daniel Keeyeon Warren

Renewable Energy Knowledge Library Type of Report Wind Energy R&D Two Sentence Summary Possibly solving
Renewable Energy Knowledge Library
Type of Report
Wind Energy R&D
Two Sentence Summary
Possibly solving the problems of wind turbines interfering
with the radar used in air-traffic control.
Why is this important?
If true, this new technology can help strengthen land
based wind turbine market. Nullify objections from the U.S.
military.
Who is Involved?
Cambridge Consultants (cambridgeconsultants.com)
Source of the Article
The Economist, November 8th-14th 2008
Is there a web link?
http://www.economist.com/science/displaystory.cfm?story_i
d=12551574
Submitted by
Kim Min Gi: MG.Kim@hhi.com
14

Business Opportunities

U.S. Broadband Internet Infrastructure Obama administration has stated that the, “deployment of a modern communications infrastructure is a priority” and “America should lead the world in broadband penetration and Internet access.” 20 The biggest challenge to this plans is the lack of accessibility for millions of Americans living in rural or off-the-grid communities.

Mobile Networking Industry The GSMA, the global trade association representing the interests of over 750 GSM mobile phone operators worldwide, launched the Green Power for Mobile program. The program aims to use renewable energy in the developing world for the powering of off-grid base stations 21 . In the U.S. 3G networks using wind or solar energies could be installed in rural areas to bring telecommunication and internet connections.

Architectural PV Cells Arcelor Mittal is currently marketing, Arsolar® Plus Photovoltaic System, steels structures that are built with solar panel inte- gration in mind 22 . This could be a great opportunity for Hyundai Heavy to work with steel manufacturers to provide solar panels as a possible brand leveraging strategy.

Native American Lands Twenty Northern Plains Indian Reservations hold several hundred gigawatts of wind power potential, earning the Dakotas the title "Saudi Arabia of Wind." Wind power potential on these Indian Reservations alone is more than enough to meet North American Kyoto targets 23 .

Brownfield Land Reclamation Brownfields are abandoned or underused industrial and commercial facilities available for re-use 24 . The U.S. Conference of Mayors called for a national commitment to ‘recycle’ the thousands of brownfields in America’s cities 25 . Recycling these sites into energy farms also offer a unique publicity potential for Hyundai Heavy. Actively reach out to local governments with Brownfields. Explore the possibility of creating a small Marketing (PR) & Sales department that promotes solar energy (and wind) in cities and towns. Offer to visit local governments to hold “town meetings and Q&As” to have open discussions about the role of renewable energy.

Solar Financing

For many potential residential customers and small organizations, the initial start up costs are often deal breakers. SolarCity

signed a deal with Morgan Stanley that will cut homeowners' upfront solar-installation costs to about $2,000 and charge

them a fixed monthly fee -- not a rate -- for solar power. It's the latest in a series of new programs trying to use a commer-

cial financial model to grow the residential solar market 26 .

Smaller Scale Wind Turbines

The U.S. consumer market is rapidly changing. Some large-scale manufacturers of wind turbines and other wind energy products have catered to the U.S. consumer market opportunity by developing smaller scale products to use for homes and other noncommercial properties 27 .

REFERENCES

1 The Economist. (2008, November 6). Clean Technology in the Downturn [Gathering Clouds]. Retrieved February 1, 2009, from

2 Bosik, D. (2009, January). Wind Power in the U.S. and the World (D. Sprinkle, Ed.). SBI. (Page 90)

3 The White House. (n.d.). Energy & Environment. Retrieved February 1, 2009, from www.whitehouse.gov/agenda/energy_and_environment/

4 Green Strategies Inc. (n.d.). Retrieved February 4, 2009, from http://www.greenstrategies.com/services/services.html

5 GE Ecomagination. (n.d.). Welcome to Our Vision of a Healthier World. Retrieved February 5, 2009, from General Electric Web site:

6 Kim, K. (n.d.). American Wind Energy Association "View Profile." Retrieved February 1, 2009, from www.awea.org

7 Capello, D. (2008, March). The U.S. Solar Energy Market in a World Perspective (C. Minkler, Ed.). SBI. (Page 65)

8 Kho, J. (n.d.). Battle for Home Solar Financing Begins. Retrieved April 2, 2008, from http://www.greentechmedia.com/articles/

battle-for-home-solar-financing-begins-757.html

9 Sprinkle, D. (2007, November). Renewable Energy Investments in the U.S. (C. Minkler, Ed.). Packaged Facts. (Page 111)

11 GE Takes Out Rare Super Bowl Ad to Tout Smart-Grid Technology. (2009, January 22). Retrieved February 5, 2009, from

12 Sprinkle, D. (2007, November). Renewable Energy Investments in the U.S. (C. Minkler, Ed.). Packaged Facts. (Page 115)

16 Bosik, D. (2009, January). Wind Power in the U.S. and the World (D. Sprinkle, Ed.). SBI. (Page 9)

17 Musial, W., & Butterfield, S. (2004, June 26). Future for Offshore Wind Energy in the United States. Retrieved February 5, 2009, from National Renewable Energy Laboratory Web site: http://www.nrel.gov/docs/fy04osti/36313.pdf

18 IBID

20 The White House. (n.d.). Technology. Retrieved February 4, 2009, from http://www.whitehouse.gov/agenda/technology/

23 Native Wind. (n.d.). The Richest Wind Regime. Retrieved February 6, 2009, from http://www.nativewind.org/html/wind_potential.html

25 Organization of United States Mayors. (n.d.). City Report Shows Effects of Brownfields in America. Retrieved February 6, 2009, from

26 Kho, J. (n.d.). Battle for Home Solar Financing Begins. Retrieved April 2, 2008, from http://www.greentechmedia.com/articles/

battle-for-home-solar-financing-begins-757.html

27 Bosik, D. (2009, January). Wind Power in the U.S. and the World (D. Sprinkle, Ed.). SBI. (Page 90)