James C. Anderson
Florent G. Carbonneau*
* James C. Anderson is the William L. Ford Distinguished Professor of Marketing and Wholesale Distribution, and Professor of Behavioral Science in Management, Kellogg School of Management, Northwestern University. He is also the Irwin Gross Distinguished ISBM Research Fellow at the Institute for the Study of Business Markets (ISBM), located at Penn State University, and a Visiting Research Professor at the Department of Technology Management, Eindhoven University of Technology. Florent G. Carbonneau is a Research Associate, Kellogg School of Management, Northwestern University. The authors gratefully acknowledge the cooperation of Dennis Murphy, Bill Brady, and Ellen Lutz in the case research. Please note that we prepared this case as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. We disguised some of the company names and information on marketplace conditions.
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James C. Anderson
Kellogg School of Management
2001 Sheridan Road
Evanston, IL 60208
(847) 491-2724; (847) 491-2498 (fax)
EXELON: ECO-PREFERRED® POWER
Ellen Lutz, Director of Marketing at Exelon, the 4th largest electric utility in the United States (U.S.) and her colleague Bill Brady, Business Development Director, had been working together on an environmental project for months when they both received the same text message on their cellular phones. It was Friday, October 5, 2001, and their Vice President of Marketing & New Business Development, Dennis Murphy, was calling a meeting for the following Monday. The message was: "Tangibilize the intangible! What role can branding play?" Ellen had been leading the Environmentally Preferable Power (EPP) project since 1998 and was about to launch a pilot program. She knew that Monday's meeting was going to be key for her division and for the whole company. Environmentally Preferable Power (EPP) is an energy that has a reduced effect on human health and the environment when compared with competing sources of energy that serve the same purpose. After doing a rigorous, scientific analysis of Exelon's generation portfolio, Scientific Certification System (SCS), an independent third-party certification company utilizing an ISO14042 methodology, confirmed that a sizeable portion of Exelon’s generation portfolio in the Mid Atlantic region was 'environmentally preferable'. (www.scs1.com)
Following the certification, Dennis Murphy gathered his team to celebrate with enthusiasm: "Part of our energy is cleaner than what the competition is offering. Receiving an ISO certification gives us credibility when we talk about the environment. Our challenge now is to find a way to market this advantageous asset and get a premium for it." For Ellen, branding the new asset was critical. She was convinced that giving a name and an identity to Exelon's certified energy would help demonstrate its value. Customers, she believed, would only pay a premium if they were convinced that EPP would positively contribute to positioning their own businesses as socially responsible and environmental stewards. A few months later, a series of focus groups were done on the concept. A brand name, EcoPreferred®, had been chosen to market Exelon's EPP. The team was about to launch a pilot project in the 4th quarter of 2001. Ellen, Bill and Dennis knew that the decisions they were going to make during Monday's meeting would directly affect the success of the pilot program and shape the expectations of later customers, should Exelon go forward.
The Electric Utilities industry in the U.S. has evolved in the 1990's from a regulated, monopolistic market to one in which supply is competitive but delivery remains regulated. The National Energy Policy Act (NEPA) of 1992 greatly increased...