Editorial: Demands on supply

With regard to pricing, it is an especially useless motto - part of marketers' raison d'etre is to build sufficient value into products to justify a price rise. If a price comes down, it is not because the laws of economics deem it inevitable, it is because a marketer has judged there is a benefit in doing so.

The exception to this rule has been artfully demonstrated over the past couple of weeks as gas and electricity prices have started to fall. With so many consumer and government groups keeping a keen eye on wholesale energy costs, it has become difficult for the major energy brands not to cut their prices.

British Gas was the first to blink, dropping its gas prices by 17% and electricity by 11% two weeks ago, before making a further drop in the cost of its online accounts at the weekend, in order to scoop a similar move by PowerGen. Its changes come into effect on 12 March.

It garnered some corporate karma as a result, the generally positive media reaction going a little way to correct the pummelling it has suffered over the past four years for raising its gas prices over the period by 91%.

I say a little way because it is far from certain that the former monopoly gas supplier will see the consumers who have deserted over the past few years returning in similar numbers.

Representatives of the switching websites - the industry that grew off the back of the energy price rises - have been vocal in their message to consumers to wait until rival firms have dropped prices before considering shifting suppliers.

The picture is further muddied by Npower's response. The firm, which has gleefully positioned itself as David to British Gas' Goliath as prices have risen, has discovered that the moral high ground is a risky positioning. Although it announced on Monday that it is to slice 16% off gas prices, it was fairly universally criticised for dropping electricity prices by only a meagre 3% and post-dating all changes until April 30, when many consumers are starting to turn off their heating for the summer.

It is easy to lose sight of the real impact these convoluted corporate games have on consumers. According to Energywatch, the average energy bill has risen by £441 over the past four years. For low-income families this could mean the difference between having or not having an annual holiday. While energy marketers were adjusting their spreadsheets last weekend, consumer group Citizens Advice revealed that worries over paying fuel bills soared 34% last year, second only to worries over child support arrears.

Clearly, energy companies aren't charities; it would take a unique kind of marketer to countenance selling in a price-dropping strategy to the board out of concern for cash-strapped consumers. But the fact that some form of tipping point has been reached in the effect of energy prices on consumers' lives suggests an opportunity for brands that are seen to recognise this.

The question is whether in the heat of what is essentially a media-fought battle, any brand can now stand out as being the consumer champion. It will be interesting to see the extent to which British Gas' market-leading move can translate positive PR into sales.

This article was first published on Marketing