PV Technologies, Inc.

:
Were they asleep at the
switch?
 What do you think these companies have in
common?

5th
1st

3rd

2nd
4th
They are the Top Five Fortune 500 Companies using Solar
Power*
With green being all the rage these days, many Fortune 500 companies are
making the switch to solar power by partnering with solar power companies
and using solar energy to power their offices and retail establishments.
A voluntary program called The Green Power Partnership encourages
organizations to go green and tracks their annual green power purchases.
2

p://www.solarenergy.net/News/2010051301-the-top-five-fortune-500-companies-using-solar-power.aspx
 Green Energy Sector

Shrinking supply sources.

Rising costs of traditional energy sources.
DEVELOPMENT
Unstable oil market.
FA C T O R S
Increasing environmental awareness.

Public policies in favour of green energies:

Subsidies drive the market growth in Europe.
Federal program in the US : satisfy 80% of the electricity
demand with green energy by 2035. MARKET
EVO LUTIO
New competitors focusing on low prices. N
Expected 30.4% CAGR in the US between 2010 and 2015.

3
 The US Green Market

Even if it gets more and more

challenging, the market is growing at
a very high rate. PV Technologies
could take advantage of it due to its
position of leader.

Installations of PV Tech
and market projections

2009: 477 MW for PV Tech

2010: 878 MW for PV Tech

Market by 2015: 1906 MW

US MARKET SIZE EVOLUTION
4
 PV Technologies

AT A G L A N C E
Solid balance sheet
% of Revenues (2010)
Strong Profitability

8%
Industrial High Cash Flow
Automation
12%
34% Investments in R&D and Technology
Process
Management
22%
Network Power
24%
Drive Technology
Industry leader in
Climate
Technologies PRODUCT INNOVATIVENESS
QUALITY
PERFORMANCE
Founded in 1993 in San Francisco
Specialist in RENEWABLE ENERGIES
$30 billion in revenues (2010)
25 countries

5
 Current situation
THE PRODUCT
Photovoltaic Inverters convert the direct
current output of a solar panel into
alternative current that is compatible with
residential or commercial use. Fundamental
components in a PV system.
No international standards of quality and
efficiency.
Growing market (+66% in 2009/2010),
supported by strong government incentives.
THE CUSTOMER
Solenergy Development LLC
Major developer of energy generation
systems
Among the biggest customers of PVTs
solar energy business unit
Strong relationship with senior
management team
The project :
Construction of a PV solar energy power
plant in Barstow (California)
Looking for a supplier of utility scale
central inverter 6
 Solenergys evaluation

Evaluations are conducted by Greg

Morgan, chief electrical engineer at
Solenergy and very respected among
the industry.

Solenergy is used to
evaluating the
companies they invite
to bid on their major
projects.
PV Tech needs to
get a Solenergy often includes
its comments and
GOOD opinions in press
E VA L U AT I O N releases. Morgan
of its projects in judgements are highly
order to get the influential throughout
contract and to the entire industry.
confirm its
leadership.

7
 The problem

PVTs prices are significantly higher than competitors ones.

PVTs better quality could explain the difference but Morgan was surprised
of the spread being so wide.
MORGANS Solenergy was committed to cut costs among the company.
E VA L U AT I O
N Inferior performance could be compensated developing an
enhanced maintenance schedule and a proactive quality control program.

Salvatori heard that Morgans evaluation was bad for PVT.

Solenergy was about to conclude the selection process.
The evaluation was mainly based on prices.

OUR
PROBLEM: the evaluation had not been published BELIEF
Information only based on rumours.
Hard to contact Morgan.

8
 Different alternatives

1. 2.
Offer to extend the original Offer a 99% UPTIME
WARRANTY at internal cost GUARANTEE at no cost for the
from 10 to 20 years customer

3. 4.
Accellerate the introduction of the Initiate a DIALOGUE with
NEW INVERTER (1.25 MW Morgan to find out the real output
with 98.5% efficiency) of the evaluation

9
 Are PVTs products really more expensive?

COMPETITIVE ANALYSIS OF THE PRODUCTS

SOMA Energy BJ Solar PV Tech 1 PV Tech 2

Nominal AC output power 1.0 MW 1.0 MW 1.0 MW 1.25 MW
Efficiency rate 96.5 95.0 97.5 98.5
Expected life service 12.5 10.7 13.2 13.2
List price $170000 $160000 $180000 $187500

Effective Power Output 0.965 0.95 0.975 1.23125

Expected Lifetime Power 12.0625 10.165 12.87 16.2525

Output
List price/Exp. Lifetime 14093.26 15740.28 13860.01 11536.68
Power Output

PRICE is not the only element to take in consideration when evaluating a product

10
 Alternative 1: extending the warranty to 20
years

S. Would contractually prepay the

warranty at the rate of 18% of the
purchase price
Extending the product warranty to 20 years while
the industry standard is 5 years.
Marketing and sales department: high
economic value for Solenergy;
Finance, production and engineering
department think: competitive advantage
already in place (10 instead of 5 years).

PROs CONs
Reliable: sign of Relatively costly;
good quality;
Warranty is not a
Assure it will not key factor;
break;
Warranty doesnt
Higher standard always mean
quality 11
 Alternative 2: Uptime Guarantee

Uptime PROs
Guarantee
The offer would be unmatchable by the
99%
competitors;
It will increase even more the quality
and superiority of PV Technologies
products;
Economic impact Signal of high reliability.

CONs
Too costly, high impact on the profit;
Other customers would ask for it;
Short-term solution non sustainable in
the future, the market is more and more
focusing on low cost solutions.

12
 Alternative 3: Investment in a new model

Profitability would be PROs: No change in

Alternative 3: in line with the other
Introdudction of options and it would pricing strategy, this is
the new 2.5MW be the most efficient what the sector is
Model and reliable inverter
on the market looking for

BUT

Extremely risky
&
Expensive 13
 Alternative 4: direct approach to Morgan

One possibility is to approach Morgan

directly in order to understand the
situation and underlining our skills.

PROs CONs

More personal We rely on not

approach: we public
demonstrate we information;
are ready to
personalize our Call for help
product for them; could make us
appear as
First step to build a desperate
long term
relationship
14
 PVT is not competitive for Solenergy

1 Criteria are not aligned 2 The B2B relationship

is not managed
properly
Relevant criteria From PVTs
for PVT: perspective these
are elements that
Efficiency; real add value to
Reliability; the customers
Productivity into the long run

Relevant criteria Due to new cost

for Solenergy: cutting strategy,
Solenergy has
Price developed
different priorities

Salvatori discovers that

PVT is going to lose the
auction 15
Which one do you think is the best solution?

16
 The strategy

hoc strategy
Adopt an ad
Speak with
Morgan

what his real

evaluation is
Understand

needs are
real and
if the

B2B
If we marketing
Morgan is allthat
do notconfirms
manage tobased on him
convince NETWORKING,
the evaluationabout
is real, weit should
shouldof understand
the superiority not
the be considered
product,the canbegging.
we roots adopt
of the
a
Customer
problem and
strategy relationship
basedfigure
on his management
outneeds
with to sell
him is products.
our fundamental
a solution, to build
after proving hima that
successful company.
our product is the best
one.
17
Is this situation just a "brush fire"
or
an important problem?

18
 Impact on the company

Losing an important and powerful client can

IMPACT
ON certainly have an impact on the overall
IMAGE reputation of the company.

Inverters sales 4%
account for only Photovoltai IMPACT
4.1% of total c Inverters
ON
revenues, the Other PROFIT
economic loss is not 96%
incredibly significant.

19
 What should the company do now?

1. Salvatori is the only one responsible for KAM

SERIOUS
2. There is no contingency plan
ISSUES
3. The quality perceived is not as excellent

1. Hire more trained sales people

SOLUTION 2. Develop a contingency plan

3. Focus on COMMUNICATION

20
 General Approach B2B Communication

PERSONAL TRADE PUBLIC

SELLING SHOWS & RELATIONS
EXHIBITION
S

DIRECT ADVERTISI SALES

MARKETING NG PROMOTIO
N

Its not about the seven spokespeople in our PR

department but in how we can use our 60,000
employees as communicator.

Hubertus Kuelps
Head of Global Communications

21
 Excellence in Managing the B2B Customer
Relationship

Obviously theres been

a communicational
issue between
Salvatori and Morgan.

Good communication is key to

success:
Avoid an intense sales-based culture
Dont talk big and deliver small
Be flexible and responsive
Regular, at the right level and consistent
KAM development cycle

22
Thank you for your attention

23