Hybrid strategic thinking in deregulated retail energy markets

Abstract

Purpose

The purpose of this paper is to present the results of research undertaken to test the use of traditional strategic approaches in developing competitive advantage through the assessment of the importance to small‐ and medium‐sized firms of cost and services available in a competitive retail market.

Design/methodology/approach

A survey involving 181 small‐ and medium‐enterprises provided responses to a questionnaire that measured the importance of key success factors to the customer when making a decision regarding their choice of natural gas supplier.

Findings

The findings suggest that, the use of a low‐cost strategy alone may not be sufficient to create a competitive advantage for suppliers and that a hybrid strategy of cost, service quality, enhanced communication and unbundled services will.

Research limitations/implications

The sample was limited to natural gas customers in Ontario, Canada at a specific period of time in the deregulation process reducing the ability to generalize results across other regions and other energy types. This limitation is defended by the recognition that the importance of variables measured is consistent between regions and energy types.

Practical implications

Energy suppliers can create a competitive advantage over their competition if they can differentiate themselves through the application of enhanced service quality and communications.

Originality/value

Little, if any, empirical research exists that addresses the response of customers to strategic approaches of suppliers in deregulating energy markets.

Citation

Walsh, P.R. and Sanderson, S.M. (2008), "Hybrid strategic thinking in deregulated retail energy markets", International Journal of Energy Sector Management, Vol. 2 No. 2, pp. 218-230. https://doi.org/10.1108/17506220810883225