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TAKING AMBIENT LIGHTING LEDS TO MARKET: CONSUMER PREFERENCES
A Real-World Pricing Quasi-Experiment & LCDC Experiment
Presented at the International Energy Program Evaluation Conference – Chicago 2013
Dr. Katherine V. Randazzo & Anne Dougherty, Opinion DynamicsGeorge Boomer, StatWizards LLC
Richard Greenburg & Brett Close, Southern California Edison
Why is this study different
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EM&V and program teams worked together
Comprehensive market trial: stated and revealed preferences
Quantitative and qualitative
Consumer focused
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
Research Questions
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Will consumers accept ambient-lighting LEDs? What are the barriers to LED sales?
How sensitive are consumers to price? What are price elasticities?
What are the price limits?
Given 2 major types of LEDs, Are there differences in consumer attitudes between A-Line and Reflector lamps?
What non-price factors drive sales?
What are the consumer segments related to LED acceptance?
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
Study Components
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Method Sample Size Objectives
Pricing Trial Quasi-Experiment
117 Stores from 3 Big-Box Chains
Est Price Elasticities ID effects of: Income, Retailer, Store
Location
Focus Groups 2 groups General impressions of consumer
interest in LEDs & features Test LCDC instrument
In-Home Lamp Trial 98 See where free lamps were installed Give consumers LED experience for
LCDC
In-Depth Interviews 20 Understand consumer preferences
Latent Class Discrete Choice Experiment
252 A-Line, 224 Reflector Respondents
ID purchase priorities re attributes Segment consumers
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
Presentation Name 5
Pricing Trial
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
IEPEC Chicago 2013
IEPEC Chicago 2013
Price Effects
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Average weekly sales by store-model combinations were the observations (together w/incentive & trial price, area demos)
Price and sales were logged
Fixed-effects models used for elasticities
For every 1% decrease in price, LED A-line lamp sales increased by 1.14%
For reflectors, an additional 2.12% were sold for every 1% price decrease
These figures are likely the lower bound of what elasticities are in the current market because lamps with higher incentives usually sold their entire quota quickly, then ran out
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
AD2
Slide 8
AD2 Condence this slide with the next.Anne Dougherty, 8/8/2013
Pricing Trial: Price Effects by Lamp Type and Retailer (log Price & Sales)
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IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
Non-Price Effects
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Estimated with mixed effects or multi-level model
We saw a very strong retailer effect (net of other factors)
At a $10 price, the highest-selling retailer sales were 2.9 times higher than the middle-selling retailer
At a $10 price, in the lowest-selling retailer sales were 43% of sales by the middle-selling retailer
We saw a moderate catchment area income effect
In the highest-income areas, sales were 4.1 times higher than in the lowest-income areas
In the medium income areas, sales were 2.2 times the lowest income areas
There was no effect of central versus remote store locations
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
LCDC Study
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IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
LCDC Methods
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Goals of LCDC study
Learn consumer-stated preferences for LED vs other lighting types What is the basic acceptance level of ambient lighting LED?
What are the limits of willingness to pay?
What models and characteristics are preferred?
Use this and respondent information to develop segments
Preliminaries
We visited retailer outlets to find out What they were offering
At what prices
What information was presented on packaging
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
LCDC Methods & Modeling
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71 of 252 A-Line respondents from in-home trial (experienced)
69 of 224 Reflector respondents from in-home trial (experienced)
8 Models presented in each of 8 “Stores” (separately for A-lines & Reflectors) allowing choices of which model would be purchased, which least likely to be purchased, including ‘None of the Above’ option
Lamp “Model” characteristics were assigned to produce a balanced and orthogonal design Incandescents, halogens, and CFLs
Price levels for A-Lines: $1, $5,$10,$15, $20, $30, $50, $75
Price levels for Reflectors: $5, $25, $40, $50, $65, $75, $100
Brand familiarity, Energy Star or not, glare, dimmability, life of lamp were model characteristics
Covariates for consumer characteristics included to support segmentation
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
Sample “Store” or “Shopping Occasion” (Another 4 on 2nd page)
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IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
LCDC & Interviews: Overall consumer Preferences
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Consumers treat A-Lines and Reflectors differently
Price is important to both, but after that: For A-Lines, drivers are:
Energy savings
Product Type (LED/CFL)
Long-term savings
For Reflectors, drivers are:
Product Type
Type of outlet
Brightness
At this point in the product life cycle, consumers prefer Reflectors
Consumers are distrustful of quality and longevity claims based on experiences with CFLs (based on in-depth interviews & focus groups)
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
LCDC: A-Line Purchaser Groups
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Taking Ambient Lighting LEDs to Market
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LCDC: Reflector Purchaser Groups
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
Summary of Study Findings
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Consumers treat A-Lines and Reflectors differently
At this point consumers prefer Reflectors
Consumers are very price sensitive Pricing Trial: A-line elasticity: 1.14%
Pricing Trial: Reflector elasticity: 2.12%
Pricing Trial: Prices below $20 produced good sales rates for both types
Pricing Trial: Prices above $40, produced essentially no sales
Pricing Trial: As prices fall, sales increase steeply, especially for Reflectors
LCDC: Consumers willing to pay up to $10, for A-Lines, but no more.
LCDC: Consumers willing to pay up to $30 for Reflectors, but no more
Retailer matters
Consumer neighborhood income level matters
IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
Contact Information:
Katherine RandazzoDirector of Advanced Analytics
760 729 8889 tel760 729 8888 fax
[email protected] email
3412 Santa Clara WayCarlsbad, CA 92010
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IEPEC Chicago 2013
Taking Ambient Lighting LEDs to Market
