XNL, Photovoltaic Energy

Our first target was to find a product, photovoltaic energy (solar panels) and then to select five potential countries to sell it to. After we did a Macro-analysis on these countries, we narrowed it down to two. Then we did the meso-analysis, to see how the market of solar panels in these countries is. Comparing these markets (Mexico and Indonesia) we found that Indonesia has the best potential to sell the panels.

Indonesia is the best country for XNL to export to; we had to create a strategic marketing plan. At first, we have made the objectives for the company. Then, we made a SWOT analysis. These two combined resulted in some strategic options.
We picked what was in our opinion the best strategic option and worked it out, including the financial estimation for the coming three years, a promotion plan and the best strategy for entering the Indonesian market.

The strategic option which we advise company XNL to choose is entering the Indonesian market with the indirect entry strategy with using agents and middlemen. The reason for this is that they know the local market, culture and the consumer behaviour. Also the fact that they already have a network with the "highest" people in the villages is an advantage of this strategy.

The potential customers are the 20 million households in Indonesia which are not attached to the public electricity network. These households are mainly on the small islands. About 6000 of the Indonesian islands are inhabited. (1)

The plan is to sell the product on the region Nusa Tenggara Timur to which about 550 islands belongs. The biggest islands in this region are Flores, Sumba, the Indonesian part of Westtimor, Alor, Sawu, Rote and Komodo. About 4,3 million people live on these islands. The average number of people in one household is five and so there are about 861.200 households (2). Estimated that in the average 20 households build one village, there are 43060 villages in this area. On short term it is our target to sell one system to each village. For the year 2007 the plan is to sell the product to 10% of the villages, 4306 systems. In the following years this shall be increased (2008: 6259 products (15%); 2009: 8.612 products (20%).

The final objectives of this plan are to create profit and turnover. On behalf of the analysis we formulated these marketing objectives:

• Within three years 45% of the 43060 habitants of the villages in the region Nusa Tenggara Timur are using the solar energy product.

• Within three years obtain a profit of $300.000 for the solar energy products.

• Gain a minimum turnover of $1.000.000 in 2008 and a turnover of $1.300.000 in 2009.

The Product: is very simple to put together, practically it consists from a panel and a battery which has to be connected through a wire. The rest of the technical difficulties are being done in the factory.

The Place: we will produce the product on the Island of Borneo, this Island has been the least affected by the past two major catastrophes Indonesia had to cope with. We will not build stores because this will increase the costs of the product and we want to sell a cheap, good product. When the product is produced on Borneo, the product will distribute through a boat, because this the cheapest channel to distribute it to the customers.

The Price: we advise the company to take 199,-- USD and not 200,-- USD because this is a psychological border for the customers. This is cheap for a product of such high technical quality, we have created this low price because of the fact that our target group lives near the poverty level.

The Promotion: we will do is very much adapted to the way the Indonesians live. They are collectivistic so we will first approach the people who are "higher" in the hierarchy. Once these people are convinced they will convince the rest of the target group as well. This is a way to keep the costs low. The marketing instruments which we advise to use are: free publicity by giving interviews to the local media, sales promotion and advertisement. Also a brochure is one of the media instruments. The promotion will be finished by giving an after sales service to the customers.

It was our mission to keep in mind the people, the planet and of course the profit.
The People: the product will be of great importance to the people. Once they have electricity, a whole new world opens for them. They can have better contact with the rest of the world. Therefore the product will stimulate the economic growth of the country. It is a simple, quick and sustainable product. When the people have their communications they can more easily find a good job or find products they need or want.

The Planet: most of the energy sources are fossil energy. Our solar panels don’t create any waste what so ever except for the batteries which have to be replaced once every few years. To prevent the people from throwing them away, we give a discount to the new battery when they hand in the old one. This way our system does not produce any waste at all which is a huge benefit for the environment.

Profit: of course we want to make profit as well. This won’t happen in the first year, but this is the case with practically every new company. The break even will be reached in the second year. The margin on the product is low, but this is not a problem because the market is very large. Competition is not going to be a big problem, because with a low margin as we advice the market isn’t very attractive for new entries. Besides that, with a good promotion programme the people who are very collectivistic will be loyal to the brand of the product.

(1) www.harald-melcher.de
(2) Interview with Heidrun Friederich