Market Analysis: A Case Study

Abstract

AVORABLE electric rates in a given area are the first characteristics determining the market possibilities for electric ranges and electric storage water heaters. Adequate wiring, while applying only to specific buildings, designates the minimum electric supply equipment at the point of installation, and ranks next to rates as a market influence. Unlike electric refrigerators, food mixers and other socket appliances effected only slightly by rates, the range and water heater present a highly specialized problem to commercial marketing which is directly concerned with basic public utility operating policies, transportation of solid fuel, laws of the several states regarding trade practices, combination which have large gas property investments as well as electric operations, and several other fundamental economic factors which definitely remove these two products from the class of plug-in appliances requiring only a convenient outlet. In I931 there were slightly more than 20 million meters installed in dwelling units in the United States, yet only eight million electric meters had rates low enough to permit electric range installations. By I94I there were 25 million electric meters and 24 million (96 per cent) had rates for electric ranges. Three cents a kwh is considered favorable, and the 1941 national average was 2.2 cents per kwh. However, there are rates as low as one cent per kwh, so even though the utility industry has recognized the revenue value of this major appliance, our market study becomes more complicated because some rates are more favorable than others. The electric storage water heater found a rate market later than the range, but has been developing even more rapidly during recent years. Only 23 per cent of the electric meters were available in I935. Today approximately 70 per cent of the meters have a rate suitable for operation of a storage water heater. Domestic meters with 1.5 cents per kwh. or less rate, are considered favorable. As mentioned, the foregoing may have the deceptive appearance of simplifying the market situation from the commercial research point of view. Actually, this rapidly shifting scene on the nation's basic domestic electric rates has caused complexities requiring increased intensity in market study. For example, each of the several hundred operating utilities across the nation has its own rate and operating policy. However, each of them does not necessarily serve an identifiable geographic area. The properties vary in size from village municipal plants with a diesel driven generator, to vast business managed systems serving millions of residential and thousands of industrial customers. While rates and service conditions are widely different, even between companies adjacent to one another, they are invariably determined by public bodies; and while they change, lower rates do not always mean a ready market for appliances. Adequate wiring for ranges and water