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# Prof. Remigio De Ungria Lecture Sample Spade Approach Used For Conversion To CFLs

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Template for using SPADE approach in case analysis

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### Prof. Remigio De Ungria Lecture Sample Spade Approach Used For Conversion To CFLs

1. 1. CASE ANALYSIS using SPADE Approach CONVERTING to ENERGY EFFICIENT LIGHTING Bong De Ungria
2. 2. Outline: SPADE model shows the way! <ul><li>Situation </li></ul><ul><li>Problem </li></ul><ul><li>Alternatives </li></ul><ul><li>Decision </li></ul><ul><li>Evaluation </li></ul>Old vs. New Bulbs How to Convert? Which P to Use? Sell on Benefits Setting Milestones
3. 3. SITUATION A new, efficient product! <ul><li>Current product (incandescent) is </li></ul><ul><ul><li>Cheap (P30) </li></ul></ul><ul><ul><li>Short life (6 months) </li></ul></ul><ul><ul><li>High power consumption (100 watts) </li></ul></ul><ul><ul><li>Low involvement product </li></ul></ul><ul><ul><li>No communication needed/ sells by itself </li></ul></ul><ul><li>New product (fluorescents) offers advantages in longer life, less consumption but is 4 times the price (P120) </li></ul>
4. 4. PROBLEM: How to convert incandescent users to CFLs <ul><li>… .even if they have to spend more initially? is the major one! </li></ul><ul><li>Who is my target market? </li></ul><ul><li>What do they need? </li></ul><ul><li>How to position? </li></ul><ul><li>How to introduce? </li></ul><ul><li>How to sell? </li></ul>
5. 5. ALTERNATIVES give choices! <ul><li>Sell the benefits (Product/ Promo) </li></ul><ul><li>Lower price (Price) </li></ul><ul><li>Advertise! (Promotions) </li></ul><ul><li>Target only the Class A market (Primary Target Market) </li></ul><ul><li>Don’t sell CFL’s (Strategic Planning) </li></ul><ul><li>Don’t sell incandescents (SWOT) </li></ul>
6. 6. DECISION is to sell benefits Pros Cons Price Gain from higher revenue per piece Lower income market wont switch quick Product Higher quality Cant stop selling old type of bulbs; Longer replacement periods Place Everyone has access Greater Distribution Challenge Promo Prepare market for better technology products Expensive. Needs Consumer Education Positioning Consumer gets better value
7. 7. DECISION: Sell energy saving benefits at a higher price to Class ABC Incandescent Energy Savers Initial Cost (Selling Price) 30 120 Monthly Electricity Cost 10 2 No. of Lamps needed in 6 yrs 12 1 Total Cost of Ownership in 6 yrs 960 240 % Savings ---- 75%
8. 8. DECISION is to sell benefits Incandescent CFL Initial Cost 30 120 Monthly Elec.Cost 10 2 No. of Lamps needed in 6 yrs 12 1 Total Cost in 6 yrs 960 240 % Savings 75%
9. 9. The decision was implemented -2006
10. 10. EVALUATION means putting checkpoints for choice! <ul><li>Specify: </li></ul><ul><li>Sales increase of 30% in 1 yr </li></ul><ul><li>Number of incandescents sold decreases by 20% </li></ul><ul><li>Number of CFLs sold inc </li></ul>
11. 11. EVALUATION for Philips: Adjust price competitiveness <ul><li>Price was effectively adjusted from </li></ul><ul><li>P 120 to 99 for Philips CFL </li></ul><ul><li>To compete better </li></ul><ul><li>vs. other CFL brands </li></ul><ul><li>P 60 to 75 </li></ul><ul><li>Vs. incandescents </li></ul><ul><li>P 15 to 25 </li></ul>
12. 12. EVALUATION: Adoption was too slow Give away 13 million CFLs to poor!
13. 13. Summary: Conversion is happening! Plan adjustments made… <ul><li>Situation </li></ul><ul><li>Problem </li></ul><ul><li>Alternatives </li></ul><ul><li>Decision </li></ul><ul><li>Evaluation </li></ul>Old vs. New Bulbs How to Convert? Which P to Use? Sell on Benefits Setting Milestones Doing Plan B