Neptune should continue working with the City of Richmond through applying for a new bidding process. They should present updated statistics to Richmond and keep their current marketing approach. Neptune should also prepare a new promotion plan with increased billing frequency, eliminate non-profitable initiatives, and reinforce technical personnel to spread accurate awareness of the volunteer program. This would allow Neptune to increase revenues and benefits for both itself and the City of Richmond in future years.

1. Case: Volunteer Water
Metering in the City of
Richmond
Hugo Valdivia
International Full-Time MBA, Class of 2013
Marketing Management

2. S hould Neptune continue working with City of
Richmond?
Because:
• Onl 20 ofel e househol v unt ed
y % igibl ds ol eer
• Pr a a aeness notspr d a desir
ogr m w r ea s ed
• Pot ia highermonet r benefit forbot Cit ofR
ent l ay s h y ichmond a Nept
nd une
• Possibil yofl t m r aionship, incl M t fa ycompl in t pr a
it ong-er el t uding uli- mil ex he ogr m
J y9, 20
ul 12

3. Only 20% of eligible households volunteered
• Pea occurdue t w t bil incl w h Cit a lt x not
ks o aer l uded it y’s nnua a ice
• No const ntbeha iorofv unt s enr l
a v ol eer olment
• 20 5: ~190 v unt s
0 0 ol eer
• 20 6: ~ 13 0v unt s
0 0 ol eer
• 20 7: ~ 20 0v unt s
0 3 ol eer
• Incr singbiling fr
ea l equencyca incr se peopl a aeness
n ea e wr
• Pessimist scenaio: numberofv unt s aound l estpea of
ic r ol eer r ow k
l st3yeas
a r
• F om J nuayt A il20 6, aound 28 househol v unt ed
r a r o pr 0 r 0 ds ol eer
J y9, 20
ul 12

4. Only 20% of eligible households volunteered (cont.)
• Dur l st3yeas, Nept a ed conta ua t r of1,250v unt s peryea
ing a r une chiev r ct l aget ol eer r
• r a r 0 o ember20 7: ~5,3 0househol enr l
Fom J nuay20 5 t Nov 0 0 ds oled
• Consider pr ect ‘pessimist scenaio, fr J nuay20 8t December20 : sign- ~7,90 new
ing oj ed ic’ r om a r 0 o 10 up 0
v unt s
ol eer
• T a v unt s dur 6yeas ofoper t ~13 0
ot l ol eer ing r aions: ,20
Market penetration within S ingle-family
and Duplex segment
J y9, 20
ul 12

5. Program awareness not spread as desired
• T t r iewNept maket a oa
ime o ev une’s r ing ppr ch:
 Fir yea guaa ee
st r r nt
 Fr w t conser aion dev
ee aer vt ices
 Fr a no- ssl inst laion a ma ena
ee nd ha e al t nd int nce
• A w la Nept pr ions init t es:
s el s une’s omot iaiv
 A lbil inser
nnua l t
 Infor t bookl
maion et
 W e
ebsit
 Open-
houses
 Post s
er
• Because:
 T e is
her misconception regardingprogram itself,
 And, misunderstanding aboutfuture ofthe program
J y9, 20
ul 12

6. Program awareness not spread as desired ( cont.)
• Peopl t t tt e is no guaa ee ofsa ing. T showfolow gr ph:
e hink ha her r nt v hen, l ing a
Pr ect
oj ed
J y9, 20
ul 12

7. Potential higher monetary benefits for both City of
Richmond and Neptune
• Richmond’s cost ofw t w lhighl incr se dur coming yeas (20 6- 15 pr ect
s aer il y ea ing r 0 20 oj ion),
• A w la ga bet een summera w err t
s el s p w nd int aes
J y9, 20
ul 12

8. Potential higher monetary benefits for both City of
Richmond and Neptune ( cont.)
• Pr perm3consumed byhousehol w lincr se dur coming yeas t
ice ds il ea ing r oo
• Nota much a Fl tr t but since market penetration will increase, so will revenues
s s a aes ,
Year Type Water rate % Increase
20 5
0 M er r t (perm3
et ed ae ) $0.6577 40
.8 %
20 6
0 M er r t (perm3
et ed ae ) $0 0
.70 6 80
.3 %
20 7
0 M er r t (perm3
et ed ae ) $0 1
.753 7.3 %
0
20 8
0 M er r t (perm3
et ed ae ) $0 0
.8 15 6.42%
20 9
0 M er r t (perm3
et ed ae ) $0 4
.8 67 5.65%
2010 M er r t (perm3
et ed ae ) $0 8 8
.8 8 4.97%
J y9, 20
ul 12

9. S hould Neptune continue working with City of
Richmond?
…Through a new bidding process!
• W inning anewRequestforpr lw lal t a ustpr a suppor fut e maket a pr ion init t es t
- - oposa il low o dj ices nd t ur r ing nd omot iaiv o
a e newest bl obj iv
chiev a ished ect es
• A a yv unt pr a t M t mil compl
nd… ppl ol eer ogr m o ulifa y exes
J y9, 20
ul 12

10. Let’s start from Neptune’s Income S tatement
• T pr ectgiv Income St t
o oj en aementunt December20 7, w need nextconsider t
il 0 e aions:
 1,920dev inst led unt Nov
ices al il ember20 7
0
 2,0 dev t be inst led dur 20 7(pr ect
13 ices o al ing 0 oj ed)
• So,
Jan ‘07 – Dec ‘07
R enues
ev $562,728
COGS ($3 0
11,3 5)
$ 251,423
Fixed expenses
G a &A
ener l dminist aiv
rt e ($8 3
5,14 )
Consuma e Suppl
bl ies ($117,905)
( $ 203,049)
Net Operating Profit $ 48,374
J y9, 20
ul 12

11. Projected future Income S tatements
• Consider t
aions:
 2,610dev t be inst led in 20 8 2,64 , in 20 9; a 2,64 , in 20
ices o al 0; 0 0 nd, 0 10
 Since l - owequipment al R
owfl s low ichmond t sa e 8 ofconsumpt Nept ca incr se it unitpr up t 8 5% in 20 8
o v % ion, une n ea s ice o %: 0,
6.5% in 20 9a 8 in 20
0 nd, % 10
 Infl t a s COG G a &A
aion* ffect S, ener l dminist aiv a Consuma e Suppl
r t e nd bl ies
 Due t mor effor on maket ca ign, G a &A
o e t r ing mpa ener l dminist aiv incr ses bya iona 10
r t e ea ddit l %
• So,
2008 2009 2010
R enues
ev $766,098 $785,974 $797,0 4
4
COGS ($4 ,198
13 ) ($4 9,4 9)
0 8 ($415,526)
$ 352,900 $ 376,485 $ 381,518
F expenses
ixed
G &A
en. dm. ($95,8 )
78 ($93 8
,93 ) ($95,322)
Cons. Supp. ($156,497) ($153 3 )
,3 0 ($155,590)
( $ 252,375) ( $ 247,267) ( $ 250,913)
Net Operating Profit $ 100,525 $ 129,217 $ 130,605
J y9, 20
ul 12 * htp:/w w aeinfl t
t / w .r t aion.com/ aion-r t ca dahist ica-infaion-ae.php
infl t ae/ na - or l l t r t

12. Recommendations for Neptune
• Apply for a new bidding process
• Pr fa s a st t ics t Cit ofR
esent ct nd aist o y ichmond (W W negot t
in- in iaion)
• Keep in pl ce curentmaket a oa
a r r ing ppr ch
 F styea guaa ee
ir r r nt
 F ee w t conser aion dev
r aer vt ices
 F ee a no- ssl inst laion a ma ena
r nd ha e al t nd int nce
• Pr r anewpr ion pl n
epae omot a
 Incr se fr
ea equencyofbiling (e.g. quat l t r ise peopl a aeness a pr a benefit (a t ow monet r benefit
l rery) o a e wr bout ogr m’s s nd heir n ay )
 Eiminae non- ofit bl init t es (ev l t bet een open houses a bookl s), a a ocae t r ces t cust ser ice
l t pr a e iaiv auae w nd et nd dv t hose esour o omer v
(doort door
-o- )
• R ce t a t t
einfor r ining o echnica per
l sonnelt spr d a ae w d ofmout
o ea ccur t or h
 T a oid popul t bot misunder a a misconcept r r v unt pr a
ov aion h st nding nd ion egading ol eer ogr m
• Cha design ofdev (gr l
nge ices een id)
• St r apil t a yv unt pr a t M t fa ycompl (since 20 9)
at ot o ppl ol eer ogr m o uli- mil exes 0
J y9, 20
ul 12