Conclusion: Cleantech marketing lessons of the Tale of Two Priuses

In the US the Cash for Clunkers program defines the other half of this Tale.

The US government program paid people cash to trade in their old clunkers for new models. In theory the new models were to be more fuel efficient too –  although even the Hummer H2 made the list of eligible replacements.

Despite the rebate the Prius still cost more to own than other midsize cars. During the program Prius sales increased a little but it didn’t make the Top 10 most popular Clunker Replacements list. Neither did the H2.

In Strategies for the Green Economy, Cara Pike writes that the American Values Survey has tracked a steady decline of US interest in ecology values and a rise in fears about the economy, health care and security. These US trends are the opposite of values trends in other developed countries.

That back story played out in the Tale of Two Priuses.

So, cleantech companies face tough choices in the US. Going to market with a price premium attracts Idealists and Greenest Americans. But these segments may be too small for a product to achieve the economies of scale needed to lower prices and win in the mass market.

Or, cleantech companies can lobby to increase the prices of consumables like gasoline, electricity and water. Then the superior efficiency of their products delivers the lowest total cost of ownership. Or cleantech products can be launched without a price premium. So products enjoy a total cost of ownership advantage from Day 1. It’s a strategy that bets on rapid and seamless transition from Early Adopters to the mass market.

Lessons for cleantech marketers in the Tale of Two Priuses

Prius Japan Sales full year 2009 re-size

You don’t see change like this often.

AfterToyota’s Prius has carved out a niche in markets and stayed there, except one. In Japan, after years of modest sales, Prius leapt to the top of the sales charts in a single bound. What does the Tale of Two Priuses mean for cleantech marketers?

In all markets Toyota priced its Prius at a premium to cars in its category. Prius offered the highest gas mileage and lowest CO2 emissions. Innovators and Early Adopters have shown time and again that they will pay for performance. The early movers ramp up production which brings down costs. Then prices can be lowered to tap the price-sensitive majority without harming margins.

Of course Toyota faced some complications. It would be awkward if the low-margin Prius took share from its own higher-margin Camry. Or production costs were higher than expected so sales in the niche market failed to reach the economies of scale needed to cut prices.

Whatever the factors Toyota left the price premium on the Prius. Sales stagnated until the Japanese government reduced taxes on the most fuel-efficient cars in May 2009, and the price of gasoline ticked up. Prius became a top performer in total cost of ownership. The sales chart shows what happened. Prius became the best-selling car in Japan.

(next: What happened in the US, and what it means for cleantech product positioning and pricing)

Public policy survey a useful guide for Cleantech marketing

The Guide to the American Values Survey should be required reading for cleantech marketers.

Looking at green values through the Rogers Curve lense shows potential pricing and positioning pitfalls for cleantech products.

The Survey is a public policy tool. But a little reordering of the Survey segments to align with Rogers Curve segments makes the Survey  an outstanding resource for cleantech product positioning and pricing.

The values of Rogers’ Innovators and Early Adopters align well with the Values Survey’s Idealists and Greenest Americans, shown in dark green.

Innovators and Early Adopters are the segments where new products should get traction and the Values Survey points to a problem. Idealists and Greenest Americans only make up 12% of the population. Innovators and Early Adopters are usually over 15% of a population.

The segment next in line for product diffusion is Caretakers, shown in pale green. The Values Survey includes Caretakers among the greenies but marketers should not. Caretakers only lean toward green as long as it doesn’t cost extra. For example you will get no marketing value from lower carbon emissions – only energy savings that pay for themselves.

Next to Caretakers are the Murky Middles. Their opinions about “green-ness” are whatever the strongest opinions around them are.

And segments beyond – the Traditionalists and segments further along the curve, shown in grey and black – are very price sensitive about going green. And in many cases they are very vocal.

So, the conventional wisdom of launching new tech-based products with premium pricing can be a trap for new cleantech products. It can doom them to marginally-profitable niche markets – at best.