SWOT Analysis of Direct Energy with USP, Competition, STP (Segmentation, Targeting, Positioning) - Marketing Analysis
Energy and utilities
Largest energy retailer in North America
Electricity and natural gas requirements
Business and residential
Energy and services expertise which can make positive difference in everyday life
1. It is the largest residential energy retailer in North America according to customer numbers. 2. It has strong customer base of 4.2 million and it operates in 50 U.S states, 10 Canadian provinces and Columbia district. 3. It is a fully owned subsidiary of Centrica Plc which has a strong customer base of 20 million and is among top 25 companies in the world for carbon emissions disclosure by the Carbon Disclosure Project. 4. With changing environment, they have also adapted and through the acquisition of Astrum Solar they have added residential solar capabilities. In 2014 they finished 600 residential solar installations.
5. They implemented smart meters to execute plans like ‘Free Power Saturdays’ which helps its customers to reduce costs. They are also collaborating with various manufacturers to improve management of their energy grids.
6. They have strong corporate responsibility policy and have donated more than US$1.1 million in charitable contributions. Direct Energy is also associated with the Children’s Miracle Network.
1. Abundance of shale gas in US has resulted in decline of price of natural gas. Due to this margin in natural gas has also declined. 2. It does not have enough energy generation capacity and thus has to purchase energy. This causes a risk of low margin. 3. In Q1 of 2014 affect of drastic weather (polar vortex) and lower margin lowered their operating profit.
4. They have been associated with various controversies which include class action suit in Alberta and engagement anti-competitive practices along with Reliance Comfort.
1. Increase in demand in electricity and natural gas creates opportunity for Direct Energy. 2. Investment in new projects which can help them to expand operations can create opportunity for Direct Energy. 3. Investment in grid, pipeline infrastructure can create opportunities for them.
4. Its partnership with Nest Labs for smart thermostats which can increase its customers’ energy efficiency is a huge opportunity for them.
1. High competition. 2. Various environmental laws and regulations are there in this industry and this creates a risk for the business as any unfavorable policy can harm business. 3. Natural gas demand depends on weather conditions as it is mostly used home heating systems and adverse weather can affect their business.
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