'Lite' Meter

Editor's note: Mary Lynn Spada is a principal research analyst in Boston Edison Company's DSM Monitoring and Evaluation department.

For the past decade, electric utilities have offered conservation programs to their customers. Within the utility industry, these programs are known as energy efficiency or demand-side management (DSM) programs. Many times it is more cost beneficial for utilities to encourage customers to conserve energy rather than to generate more energy at power plants or construct new plants to meet growing customer demand. Utilities do this by offering customers rebates on energy efficient products or by arranging for their homes or buildings to be made more energy efficient at little or no charge.

Boston Edison Company, an investor-owned electric utility supplying electricity to the greater Boston area, has offered energy efficiency programs to its customers since the early 1980s.

Lite Lights

A recent Boston Edison conservation effort, the "Life Lights" program, encourages customers to purchase energy efficient light bulbs for their homes. In addition to paying rebates to customers for part of the bulb cost, Edison arranges for the bulbs to be sold in convenient locations.

Boston Edison customers who participate in the Lite Lights program may acquire program-qualifying bulbs in three ways: they may buy them at local retail stores, order them through a mail order catalogue, or buy them at the company's bill payment centers, called "Energy and Environmental Centers."

In addition to these three delivery methods, the company ran a special two month promotion in 1990 called the "Lite for Sight" campaign in conjunction with the Lions Clubs, a civic organization. The purpose of this special promotion was to raise consumer awareness of energy efficient lighting in a relatively short time period. With the help of the Lions Clubs, a huge number of energy efficient bulbs were sold at extra discounted prices. The majority of the proceeds from the sales were donated to many Lions Club eye research charities.

Boston Edison's Lite Lights program is targeted at the company's more than half-million residential customers. The program is promoted through literature inserted into customer electric bills, newspaper advertising and various community relations activities, as well as through the 1990 Lite for Sight campaign. Edison projects energy savings from the bulbs based on lighting manufacturer information and estimates of average daily hours of use.

The company offers other energy conservation and efficiency programs to its customers, including home energy audits, installation of insulation, weather-stripping and hot water tank wraps, and equipment efficiency tune-ups. Similar programs are offered to commercial and industrial customers as well.

Research instrumental

Market research has been instrumental in designing, operating and assessing the impact of these energy efficiency programs. It helps determine a program's degree of success and, in turn, provides insights and answers on how to better accomplish program objectives.

In late 1990 and early 1991, Edison conducted a comprehensive study to answer questions about the Lite Lights program's four major components: program delivery, target market, promotion, and estimation of energy savings. The study's approach combined qualitative and quantitative research techniques. Qualitative techniques included a focus group and over twenty in-person interviews. The quantitative techniques included surveys of representative customer and lighting retailer groups. Because of the study's scope and detail, Boston Edison hired ERC Energy and Environmental Services Company (ERCE) to assist with the research.

PROGRAM DELIVERY

One goal of Edison's market research study was to determine the strengths and weaknesses of the three different program delivery methods and how delivery improvements could be made. Over 20 in-person interviews were conducted with key program players involved in the Lite Lights program. In-depth discussions were held with those who design, administer and market the program, people at the utility bill payment Energy and Environmental Centers and the administrator of the mail order catalogue. Edison minimized any potential response bias during the interviews by having ERCE conduct these discussions.

Boston Edison also surveyed retail stores that sell the program-qualifying energy efficient bulbs. At the same time, a survey of lighting retailers not involved with the program was also conducted.

More support

Retailers who stock efficient bulbs reported that they needed much more support from Edison in order to sell the energy efficient light bulbs. Specifically, they asked for new point-of-purchase materials and increased advertising by the company. Retailers also expressed a desire for Edison to keep them more up-to-date about available efficient lighting products and better educated about the technology so that they could answer more customer questions. This group thinks that the demand for efficient bulbs will continue to increase as the general population becomes more concerned about the environment and stable oil supplies.

The retailers who do not routinely stock energy efficient bulbs generally indicated that they do not think customer demand for these bulbs is high enough to warrant using shelf space to stock the products. Several retailers were not aware of Edison's Lite Lights program, but indicated an interest in receiving more information about it.

Interviews with the company's bill payment center managers revealed responses that were similar to the retailer survey findings. There was the clear need to provide these managers with more technical education on the bulbs so that they could answer more customer questions. In addition, these managers felt that more communication with other Lite Lights program staff would help them in their efforts to sell more bulbs.

TARGET MARKET

Since Edison's target market consists of diverse types of residential customers, the company wanted to determine if buyers of energy efficient bulbs differ from non-buyers. A second goal of the market research was to determine if customers are satisfied with the bulbs once they are in use in their homes. Quantitative methods were used to analyze the target market. First, 750 customers who had participated in the Lite Lights program were surveyed by telephone. This was a systematic sample randomly selected from Edison's list of Lite Lights program participants. In addition, the company selected an equivalent sample size of 750 customers who had not participated in the Lite Lights program. To select this latter sample, the company random dialed telephone numbers within cities and towns in Edison's service territory. Each of these sample sizes yielded survey response estimates which were precise to within plus or minus 3.5% at a 95% confidence level.

90% satisfaction

Highlights of the findings included good grades for the Lite Lights program. The survey findings revealed that 90% of customers who had purchased energy efficient bulbs were satisfied with them and the Lite Lights program, in general. Edison was pleased to discover that some customers reported purchasing efficient lights, but not through the Lite Lights program. This indicated that some customers were willing to pay market prices for efficient bulbs without the benefit of a rebate.

Demographic differences were found between customers who have participated in Lite Lights and those who have not. Eighty-five percent of program participants were home owners while 58 % of non-participants reported owning homes. Fifty-five percent of participants were high income earners while 37% of non-participants were. Seventy-six percent of participants were college graduates while 54% of non-participating customers graduated from college.

PROMOTION

Boston Edison wanted to know how effective the program marketing had been, who it reached and why, whether it helped to increase the sales of efficient bulbs, and possible marketing shortcomings. In addition, the company wanted to review the results of the 1990 Lite for Sight campaign.

Individual interviews were held with several Lions Club district managers. In addition, a focus group was conducted with a group of 10-15 randomly selected Lions Club members who were actively involved in the Lite for Sight campaign. A $50 incentive was paid to each Lions Club member who participated in the focus group. Again, Boston Edison minimized any potential response bias during the focus group and interviews by using a trained focus group moderator and by having ERCE conduct the in-depth interviews.

Campaign a success

The Lite for Sight campaign was a success, selling several hundred thousand efficient light bulbs and raising over half a million dollars for charitable donations. The customer survey results indicated that consumers purchased bulbs through this two-month Lions Club campaign primarily because of sizable rebates, proceed donations to eye research, and convenient home delivery of bulbs.

One of the most significant survey findings was that the Lite for Sight campaign doubled the proportion of low-income Boston Edison customers who took advantage of the bulb rebates by purchasing Lite Lights bulbs. Understandably, low-income customers do not buy energy efficient bulbs because they are much more expensive than regular bulbs, even with utility rebates.

The survey research also found that the program's marketing- through bill inserts, newspaper advertising and community relations-had reached many customers who did not purchase efficient bulbs. Major reasons cited for not buying these special bulbs included the opinion that the cost of the bulbs was too high even with the utility rebates, concerns that the bulbs would not fit into certain fixtures because of their sometimes awkward physical features, and a general lack of understanding of the bulbs' energy saving benefits.

ESTIMATION OF ENERGY SAVINGS

Key questions regarding the bulbs' energy savings surfaced as well. Is the Lite Lights program really saving as much electricity as the company had planned it would? Are all the bulbs purchased through the Lite Lights program in use in customer homes?

With a combination of manufacturing information and estimates of daily usage, Edison had projected energy savings and expected that they would last for approximately 10 years. Edison wanted to be sure that these projected energy savings were reasonable and decided that market research data could help to determine this.

From the customer surveys, Edison discovered that only about 85 % of the bulbs sold through the Lite Lights program were currently in use in people's homes. There were several reasons why the usage level was not 100%. Customers reported that some bulbs had broken, some were stored for later use and some did not fit into fixtures. Other customers reported being dissatisfied with noticeable discolorations of light and slight delays in the time required for the bulbs to "warm up" or fully light, and thus were removing and discarding the bulbs.

The survey data also indicated that because the efficient bulbs use less electricity and cost less to operate than regular bulbs, some customers have now chosen to leave their efficient bulbs on for longer time periods during the day than they would with their regular bulbs.

Very valuable

These market research findings have proven to be very valuable to Boston Edison Company. The following are some highlights of how the research data has been used to improve the program's operations and to re-estimate the amount of energy saved.

Program delivery-Edison representatives visit retail stores regularly to keep them abreast of the program. Retailers have been given new point-of-purchase materials. New stores have been recruited as well. Meetings to introduce store staff to a new lighting promotion have also been held.

Edison now provides technical training to its staff at the company's bill payment centers so that the employees can better answer customer questions.

The program administrators have increased their communication with these centers through quarterly program updates and monthly telephone contact.

Target market-Edison has added more types of bulbs that are eligible for the utility rebates. The company will continue to add more of a variety of energy-saving bulbs to the Lite Lights program-bulbs that fit into more lamp fixtures, that are less obtrusive, and that give the best quality light.

"Boston Edison is now able to segment high-income customers as prospects for the program," says Alice Quirk, the company's program administrator who oversees the operation of the Lite Lights program. "The company is targeting cities and towns that are known to have demographic profiles similar to the participant survey data. A specially developed catalogue of energy efficient lighting products will be mailed to customers in these prospective areas."

The target market goals also include getting more residential customers to participate in this program for the first time, particularly in the low-income and rental housing segments. The 1990 Lite for Sight campaign stimulated higher participation among the low-income market and future Lions campaigns are under consideration. Boston Edison is also assessing other special lighting promotions that would make it easier for low income customers and renters to participate in this program. A crime watch pilot program is being developed in which one free energy efficient light bulb would be given away to each household in high crime neighborhoods within the Boston city limits.

New promotion-Customers who had not purchased the efficient bulbs gave three reasons for their decision: the prices of efficient bulbs were high; the bulbs were unattractive and often did not fit into fixtures; and the energy savings benefits were relatively unknown. "The market research provided very sound guidelines as the company developed its new marketing promotion," says Virginia Walker, Edison's manager of marketing communications. "It helped to determine the types and prices of bulbs which would encourage customers to try program-qualifying energy efficient light bulbs for the first time."

Based on the research, Edison's marketing staff introduced: a new "two for one" strategy that offers two bulbs for the price that this non-buying group said they would be willing to pay for one; bulbs that will fit into a variety of lamp fixtures; and a message that stresses the benefits of energy efficiency.

Energy savings

Because the research showed that approximately 85 % of the Lite Lights bulbs were in use by customers, Boston Edison revised its projected energy savings by reducing the original savings estimate by 15 %. In addition, since some customers reported using the new bulbs for more hours per day, the reduced energy savings were spread over nine years instead of the anticipated 10-year timespan.

Boston Edison Company continues to use the results of this study as a resource to better accomplish the objectives of the Lite Lights program. As long as Boston Edison offers such energy efficiency programs to its customers, market research will continue to play an important role in planning for the energy needs of the greater Boston area.