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MARKETING CASE STORIES

COPYRIGHT 1996 - 2008
4/6/08

Energy Saving Light Bulbs


A long time ago and a short time ago. In a place both near and far away Costco was discounting energy saving light bulbs. The sign said that the local electric provider was paying Costco to reduce the price of the bulbs to consumers. Four 100 watt light bulbs that retailed for more than seven dollars were sold for around two dollars and fifty cents. I was overjoyed and bought everyone in the family a four pack of bulbs for Christmas presents. I purchased more than 30 packs at the time.

I just could not figure out why a power company would pay Costco to sell energy saving light bulbs at such big discounts. I knew that the power companies are always promoting energy savings for their customers but it seemed so out of corporate character. The tacit reason give was that they were being forced to do this for customers because of their regulators or as punishment.

Marketing Application
IMBALANCED

My wife is an accountant and she looks over our bills to understand the different charges. Last month we went away during the billing period and used 151 kwh for $32.14. In a previous month we used 376 kwh for $40.30. The only thing left on was the refrigerator. When we saw the bill the cost of the bill seemed to go up during the month we were away. When I worked for Agway Fruit Marketing I studied the electric bills and found that when our plant was closed for three months a year the electric costs did not decline.

I went to talk to the power company and was told that to assure service they did not reduce that cost of power when it was not utilized. The reason was that the power was available even though we did not use it.

It then hit me. If we use energy saving light bulbs our power consumption will go down. This will not impact our power bill in relationship to my conservation. So this could mean if we conserve electric power the power companies will make more money. This is an exceptional marketing strategy. Assist your customer to purchase less and then charge more when they do.