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Practice Prize Winner—ECO: Entega’s Profitable New Customer Acquisition on Online Price Comparison Sites

Author

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  • Martin Natter

    (Faculty of Business and Economics, Department of Marketing, Goethe University Frankfurt, 60323 Frankfurt am Main, Germany)

  • Ana-Marija Ozimec

    (HEAG Südhessische Energie AG (HSE), 64289 Darmstadt, Germany)

  • Ju-Young Kim

    (Department of Economics and Management, Institute of Information Systems and Marketing, Karlsruhe Institute of Technology, 76131 Karlsruhe, Germany)

Abstract

Market liberalization of the German household electricity market has led to an excessive number of competitors (1,150 electricity providers) and volatile price dynamics on price comparison sites. To date, providers that are struggling to achieve a top ranking on price comparison sites do not appear to implement a consistent or elaborate strategy for attracting customers. We developed a pricing tool, E lectricity C ontract O ptimization (ECO), that addresses this highly competitive market situation by integrating various available data sources, such as data from price comparison sites, demographic data, and regional sales or cost data. ECO sets regionally varying one-time bonuses to attract new customers on price comparison sites with the goal of optimizing sales and profit targets or optimally allocating sales budgets. Based on two field experiments, we demonstrate that ECO’s optimization procedure reduces ENTEGA yearly sales costs for new customer business, on average, by 35% relative to previously used pricing heuristics. ENTEGA uses ECO monthly to analyze different scenarios or to set prices and one-time bonuses on price comparison sites.Data, as supplemental material, are available at http://dx.doi.org/10.1287/mksc.2015.0943 .

Suggested Citation

  • Martin Natter & Ana-Marija Ozimec & Ju-Young Kim, 2015. "Practice Prize Winner—ECO: Entega’s Profitable New Customer Acquisition on Online Price Comparison Sites," Marketing Science, INFORMS, vol. 34(6), pages 789-803, November.
    • Handle: RePEc:inm:ormksc:v:34:y:2015:i:6:p:789-803
    DOI: 10.1287/mksc.2015.0943
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    References listed on IDEAS

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    Cited by:

    1. V Kumar & Amalesh Sharma & Shaphali Gupta, 2017. "Accessing the influence of strategic marketing research on generating impact: moderating roles of models, journals, and estimation approaches," Journal of the Academy of Marketing Science, Springer, vol. 45(2), pages 164-185, March.
    2. Magdalena Six & Franz Wirl & Jaqueline Wolf, 2017. "Information as potential key determinant in switching electricity suppliers," Journal of Business Economics, Springer, vol. 87(2), pages 263-290, February.
    3. Huisman, Hester M. & de Haan, Evert & Mulder, Machiel & Wieringa, Jaap E., 2024. "The combined effect of regulators’ and retailers’ actions to stimulate consumer participation in retail energy markets," Energy Policy, Elsevier, vol. 184(C).

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