The forthcoming deregulation of the gas market means plenty of
opportunities for public relations firms as 15 companies battle for
their share of the market
Half a million households in the south-west of England will, from 29
April, be able to choose which company supplies their gas in a test run
for deregulation of the gas market in the rest of the country.
Not surprisingly, it has led to fierce competition between the 15
companies vying to sign up households0 - and among PR agencies itching
to get a slice of the business.
Regional agencies have been the initial winners because of their
knowledge of the media in the south-west but, as the gas companies start
to turn their sights on the national roll out in preparation for total
deregulation in 1998, rich pickings for the big agencies are also on the
Key Communications and GCI London were the latest firms to pick up gas
work when they landed accounts for Calor Gas last week.
The task facing the gas companies is far from a push-over. As Total Gas
Marketing’s development manager (business), Chris Bourke, says: ‘People
are asking who are all these new companies. They are trying to evaluate
companies apart from price, but the vast majority of companies are much
of a muchness.’
Nor are entrants to the gas market helped by the generally poor image of
utilities, which, particularly in the gas industry, hasn’t been helped
by the negative coverage surrounding outgoing British Gas chief
executive Sir Cedric Brown.
The public castigation last week of one of the key competitors, SWEB
(South West Electricity Board), by the Gas Consumers Council and Devon
County Council’s Department of Trading Standards, for its alleged high
pressure door-to-door sales, hasn’t helped either. Added to this
backdrop is the fundamental problem of overcoming householders’ fears of
Uncertainty about the launch date for the trial has also created
problems for the gas companies. It was only last week that the
industry’s watchdog, Ofgas, announced that the start of the trial had
been shifted from 1 April to 29 April. Companies have had to go back to
households which have signed up with them to explain what the delay
means to their next bill.
As if all this wasn’t enough of a set-back, there is the further
difficulty of trying to promote a non-visual, commodity product. Price
has become the key differentiator, with customer service running in
So, who’s winning the battle? At this stage it really is too early to
SWEB, started out as favourite because, as it is the local electricity
supplier, it is a well-known name in the area. Consequently, SWEB hasn’t
used external PR agencies or advertising campaigns, concentrating its
low key approach on county fairs and handing out leaflets.
However, it has certainly done itself no favours by its alleged pressure
sales tactics. It is also having to fight off resentment of its US
ownership. SWEB’s head of corporate communications, Jim Moir, says that
door-to-door sales have now been halted. He doesn’t believe that the
company’s image has been badly damaged, pointing out that 40,000 people
have now signed up.
The much less well-known Amerada Hess, on the other hand, appears to be
doing quite well. Amerada Hess marketing director Malcolm Breton says he
anticipated the potential for problems with door-to-door sales, because
he had seen similar practices when working in the life assurance
business, and turned it into a selling point by not doing direct sales.
Long before the complaints about SWEB started rolling in, Amerada Hess
had sponsored police leaflets warning about the dangers of door-to-door
‘In the short term it means I don’t have 41,000 customers but those I
have are happy and unlikely to leave because they weren’t pressured into
their decision,’ says Breton.
Plymouth-based Coleridge PR has been handling regional public relations
for the Calor/ Texaco joint venture Calortex. Coleridge account director
John Hitchens points out: ‘There is only one daily and three evening
papers, so much of the press is local and parochial. We’ve concentrated
on working out the savings each town would make if they switched to
Calortex,’ says Hitchens. The local angle has allowed Hitchens to make
the most of Calortex’s strong regional network of outlets at a time when
British Gas has been closing showrooms around the country.
For British Gas’ PR team, it’s a difficult time. Due to its monopoly
position, it is hamstrung by regulations about what it can and can’t do
in the lead up to deregulation. Consequently it has been unable to
announce its price structure, which has been key to its competitors’
campaigns. It is also tight-lipped about its plans for using additional
PR agencies and campaigns.
‘While we are not standing on doorsteps, we are sending out literature
to customers and setting up help lines and saying to customers that they
do not need to do anything on 29 April,’ says Neville Barltrop, British
Gas trading media relations manager.
Amerada Hess’ Breton says independent research he commissioned three
weeks ago shows that only three companies have brand awareness of more
than five per cent. Not surprisingly, British Gas topped the table,
followed by SWEB. Amerada Hess trailed closely behind in third place.
Now that a firm start date has been set for the start of the trial, the
PR machines will crank into full life. Win or lose in the regional
trial, the experience will prove invaluable to the gas companies as they
gear up for the big test - the national roll out in 1998.