Energy Bulletin: with Bismark Ameyaw and Amos Oppong

A proposed guideline for foreign investors to tap into the solar resource in Ghana: the case of effective human resource and pricing.

In the previous issues, we shed light on some key pillars that are pivotal in harnessing the solar energy in Ghana. In this issue we propose two more indicators; namely effective human resource and differentiative pricing of solar-energy services. We show effective human resource at various levels of the solar-energy supplying chain, and use of various niche-targeting market pricing could help maximize returns in the solar sub-sector.

Human Resource

Considerable nexus exists on the quality of a company’s workforce and business prospects [1,2]. The fierce competition in the market and pressure on making profits has heightened the need for highly skilled, motivated, and easy-adapting workforce; and implementing core practices of human resource management (HRM) strategies are usually used to support and develop the labor component of the business. Setting up a solar energy firm and succeeding requires the availability and use of a trained workforce. The average consumerthat relate to the needs of the solar energy services exist. These HRM strategies can also help the firm to be competitive and even enjoy economies of scale in the long run. In the case of Ghana, firms must employ trained and experienced employees or employ then train the inexperienced ones. The proximity of workforce to consumers to respond to the requests of consumers and the tenacity to offer credible information to the users must also be checked. Flexible work practices and high commitment to work culture must be encouraged as all these help in improving the productivity of a firm [3]. Human resource development (HRD) in the area of solar energy establishments can be highlighted as HRM’s core strategic objectives and can be reinforced through introducing and orientating renewable energy technology courses at second cycle and tertiary levels and provision of attractive salary package to solar energy scientists and engineers [4]. So far such prerogatives have not been made at the government level as a means of boosting investors’ confidence in solar energy exploration even though its importance was realized two or three decades ago [5]. However, the prospects can be fully realized by the availability of technology, investment capital, human expertise and the other resources along with a long-term driven renewable solar energy policies [6]. Pirasteh et. al. [7] argue that in addition to improving the quality of installation and technology used; honesty and dedication, and periodic training and development to human resources component of the organization, leads to expert entrepreneurship and enhances output.

Pricing

One priority to consumers and customers is value for their money and they estimate it by comparing the quality of a product – herein solar energy – with the price. Value proposition is the sole justification and the acting value from the customer’s point of view for product quality [8–10]. Pricing is one of the biggest barriers to growing the solar marketplace hence firms must ensure that prices paid by custom­ers commensurate with their quality expectations and investors should have clear objectives of what they want the pricing strategy to achieve. Generally, consumers lack understanding of the overhead cost associated with a product but they can be given a fair knowledge of the importance of the product in a way that is certifying to them for value of money [11–13]. Strategic and effective pricing methods that meet the needs of customers facilitate the exchange process and must inculcate customer concerns [14]. In most cases, exclusive external factors beyond the internal cost control mechanism mislead investors regarding pricing decision for customers’ choice. The terms pricing mechanisms and pricing policies are often used interchangeably in literature, describing the same processes [15]. However other existing works have also expressed that real-time pricing (RTP); which dynamically based on ready market supply and demand can propose better business prospect and reduce customer dilemma over the flat-rate system which in reality account for customer own autonomy in bargaining with the quotation price. None the less, RTP may lead to certain grid stability issues [16,17] since many users may shift their loads to a low-price period at the same time of use. It has been shown that employment of inclining block rate (IBR) design under suitable pricing criteria can help maintain the solar stability without focusing on the retail pricing, but as good commodity where the end user feels that the product is doing something good for the environment. To devise successful solar pricing strategies it is expedient to understand the invisible forces that determine the success of pricing strategy [18]. Strategic positioning companies having the habit of constantly seeking for innovative ways to price their product on operational activities significantly outperform their competitors [19]. The concept pricing is constantly maturing and is becoming the top subject for most emerging businesses, but it is still not successfully exploited by many managers. Ingenbleek and Lans [20] have found that some firms do not follow any of the strategies directed by pricing theory and that others engage in practices for no clear strategic motives. Finally, some firms also fail at recognizing a pricing strategy successfully. Pricing is one of the most demanding marketing decisions performed by most operational managers [18,20].

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Hinterhuber and Liozu [21] proposes seven pricing strategies: (i) Good-better-best market segmentation, this offers consumers a large number of differentiation  at varied  price points in order to address wide demand of customers with large differences in willingness to pay; (ii) Needs-based market segmentation, guarantees the company to offer a multitude of products in the premium as well as in the start-up stage since these products are geared toward defining the ulterior  need of customers; (iii) pay-for-performance pricing, in this pricing facility, the seller is paid according to performance outcomes determined jointly with the customer; (iv) pricing to drive market expansion, here instead of drive competition for market share, the pricing tool expands the overall market share by gaining more customer base; (v) new metrics Innovative pricing strategies align pricing with customer goals- firms bring into line the basis of their own pricing strategies with clearly defined customer outcomes. This attentiveness orientation enables high satisfaction for customers, thus overcoming resistance from customers to a change in pricing method; (vi) zero as a special price strategy uniquely focus on capturing customer attention to penetrate into the market to gain high customer and market base; (vii) participative pricing with this type of strategy, recent advances in information technology enable the customer to take an active role in determining pricing. Hinz et. al. [22], and Shapiro & Zillante [23] view participative pricing comes in two forms: name your-own-price and pay-what-you-want. Name-your-own-price (NYOP) mechanisms ask customers to submit a bid price for a product. Consumers may perceive higher discount rates than prevailing market rates or than discount rates for energy supply investments. Understanding the true value of any business decision requires that you weigh the total benefit against the total cost of that decision, whether you are upgrading machinery, purchasing land, or installing solar technology must create an enabling environment to providing payment system such as premium discount rate, discount pricing or bargaining pricing to boost consumer interest. Application of defence pricing, which offers quantity discount tactics, such as bulk discounts, ordering discounts, two-part pricing, and steep discounts are effective tactics can be used when dealing with alterations in price, sensitivity analysis, costs, and competition strategies. However, perspectives can offer after sale services and trust of warranty for a specific term of installation to avoid emotional and interest breach of violation. Therefore, in attempt to price solar products strategically, feasibility analysis must differentiate among various market segmentation in the selected regions. The key to effective pricing is the same as the key to effective product, distribution, and promotion strategies [14]. Research and Development team must work to understand consumers and price their products in relation to consumers’ needs if transactional close deals are to be met [24]. However, one cannot overemphasize the fact that the price must be reasonable enough to support the strategic vision of the business, including meeting stakeholders’ interest since price remains the primary source of revenue for being in business.

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Bismark Ameyaw

BISMARK AMEYAW is a researcher at University of Electronic Science and Technology of China and a referee to a number of prestigious peer-review journals. He specializes in modelling and forecasting the dynamic links in energy policies and the economy. He writes, teaches and consults on energy-related issues. He serves as an editorial board member and a reviewer for a number of prestigious international journals. You may contact him through: E-mail: 201714110101@std.uestc.edu.cn; kofiameyaw9@hotmail.com; 3101153683@qq.com

 

AMOS OPPONG is a researcher at University of Electronic Science and Technology of China and a referee to a number of prestigious peer-review journals. He specializes in modelling and forecasting the dynamic links in environmental, energy and the economy and policy analysis. He has rich research experience in diverse fields assisting research projects on mining, agriculture, sectoral energy demand, economy-wide energy demand and supply, trade, environmental cooperation, air pollution and climate change. You may contact him through: Email: 201714110129@std.uestc.edu.cn; oamos@rglobal.org

 

 

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