Ofwat has published its assessment of the costs and benefits of retail competition for household water customers.
Quantitative benefits are easier to evaluate than qualitative ones, so it’s no surprise that the analysis focuses on cost savings and efficiency gains, with limited analysis of the non-financial benefits.
Experience from the energy and telecom markets tells us that when price becomes the primary driver of competition, the market can be viewed as consisting of two main segments:
Ofwat’s analysis shows that in the best scenario, household competition will deliver savings of around £8 per household per year and in the worst scenario it will increase costs by nearly £3 per year per customer. Even if the market passed all the financial savings through to customers in the form of lower prices, the case for competition based on cost savings alone is marginal.
Which brings us back to the non- financial benefits. Other markets, telecoms especially, have competed on a number of other fronts: brand values, additional features and value-added services, for example. Whilst bottled water brands have successfully been able to differentiate, it remains to be seen whether that is possible in water supply. Incumbents and new entrants are going to require some very innovative marketing if they are to make a success of a competitive household water market.
Augmented Reality (AR) is finding valuable applications in business. Construction firms and estate agents are using AR to visualise planned developments, utilities are investigating the use of AR to visualise the location of underground pipes and cables. But, as is often the case nowadays, the consumer market is taking the lead. Pokémon Go has become a global AR phenomenon within months of launch, but is it just a game? A survey by the SLANT agency (here) has looked at how Pokémon Go players interact with local businesses whilst they play, with some interesting conclusions.
Businesses can place lures at their location to attract players in and it looks to be working. Slant found that 58% of players visited a business because there were lures placed there and almost half of those stayed at the business location for 30 minutes or more. The average spend of players making purchases was found to be $11.30. In the future we should expect businesses to be just as willing participants in AR games as players, especially as games providers exploit more of the available levers:
Andrew Keevil assists technology companies with strategy and marketing, specialising in new proposition development.