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Risk and Reward: Navigating a Competitive Solar Market

Posted by AllEarth Renewables on August 31, 2016 in Selling Solar, Solar Industry, Solar Marketing, Dealers

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As the solar market continues to grow and mature, large companies are increasingly trying to create national solar brands that capitalize on this consumer interest. While this is great for the expansion of the solar industry, it can present some challenges for smaller solar businesses when a corporation enters a new market. It’s important to have a plan in place: what are you going to do when the big solar retailer opens up a franchise in your market and starts spending time and money to sell their systems to your customers? This is a moment of truth for you and your business, offering both great risk and great opportunity.

To understand this phenomenon, there are a few key points to consider.

1. These large national brands and retailers will have a large (and unavoidable) impact on your market.

Large companies will be a force to be reckoned with, and ignoring their impact will not make them go away. Large retailers are a fact of life in America. From books to basketballs, houses to hotels, and phones to photos, how people shop for and purchase goods and services has changed forever. Industry after industry has seen this happen: a new product is introduced to the market and sold by small entrepreneurs, and if it is successful and finds a market, the larger, national companies jump in to take advantage of the consumer demand for this new product. Solar power is no different. Yes, it is a more technical product and more expensive than buying something small, such as a smartphone, but the success of SolarCity has shown that this is not a major obstacle to widespread, mainstream success.

2. You will have to adapt and change your business in response to the challenges and opportunities presented by the entry of a large competitor into your market.

The entry of a new large competitor into your market will force you to up your game. What has been working will most likely no longer be enough: you will really need to study your business and your market, and be clear on what you do best and how you can better serve your target customer. As the Wall Street Journal says, “plan from day one that you will meet big competition sooner rather than later. The way you do it is by making your product or service special, distinctive, even unique.”

3. Large national brands have some true advantages.

The influence of a large corporation’s brand marketing and the resources they can employ have given them strength in the marketplace. There is a real power in a national brand that invests in a marketing strategy to build consumer awareness. Once these companies have identified a broad consumer market, they have the financial ability to develop a line of products and services that meet the needs of a majority of their potential customers in a very efficient, affordable manner. Between the marketing power of their brand and the value proposition of their offerings, they have a proven business model. With their ability to reach more customers, these large brands can more effectively convert consumer interest into sales.

4. By the very nature of their size and scope, large brands have inherent weaknesses that you can take advantage of.

With size comes a certain inflexibility and inability to respond to the market. These large brands have products and services that appeal to a broad spectrum of consumers. As a result, they cannot easily refine and modify their offerings to meet a specific niche. Additionally, in their marketing, they may be creating interest and demand that they cannot necessarily fill.

Think of Microsoft and their inability to follow the market as consumers moved from computers to hand-held devices, or how McDonalds failed to respond to the consumer interest in healthier fast food.

As these large brands invested heavily in growing their markets, they failed to respond to changing consumer demand, and are now being left in the dust by smaller, savvier competitors that had the ability to change course and listen to their customers. While no company in the solar market is currently of the size and scope of these brands, it is clear that many of the larger solar companies have a very specific (and somewhat limited) product offering that may not meet consumer’s needs as the market continues to grow and evolve.

5. There are niches and market segments for small businesses to survive or even thrive in this environment.

One of the benefits of a large brand entering the market is that they create greater consumer awareness and add credibility to the product and service that you are offering. As noted by the Wall Street Journal, “When the Goliath comes to town…they are validating and promoting your product and service. This should lift your business, not just theirs.” Studies have shown that increased awareness of solar (regardless of the type of installation or who performed it) makes a consumer more likely to consider going solar themselves, so don’t view their entry into the market as a threat—their installations can be a different form of free advertising for your services.

You don’t have to compete directly against the big guy, and, in fact, you probably shouldn’t. Rather, you should look at the areas where you can serve customer needs better than they can. Look at your business and figure out what you can do better than the big guy. In most cases, this relates to being nimble, flexible, and more in tune to what the customer actually wants. While you may not be able to beat them on price, you can compete on the value of the product and service you provide. In the solar market, this means providing a range of unique products and specialized services that the big guys simply don’t offer.

Although a new competitor coming to town, whether they’re large or small, can be intimidating, it doesn’t have to be. Although size certainly comes with power, your small business has many advantages over the big guys that savvy customers will recognize. Play to your strengths and be aware of what your customers want, and you’ll be well on your way to establishing yourself as the go-to installer in your market.

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