Competitive positioning and routes to market for a high-technology innovation: the case of the novel...

Henley Business School

University of Reading

Competitive positioning and routes to market for a high-technology innovation: the case of the

novel energy storage system from CRESS

By

Saurav Mukherjee

Student Number: 83001936

Word Count: 15,651

______________________________________________________________

Management Challenge

Submitted in partial fulfilment of the requirements for the degree of

Master of Business Administration

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1. EXECUTIVE SUMMARY

Successfully entering the highly competitive and mature B2B market is a major

challenge for any start-up. It is even more challenging when the product involves

complex technical innovations. Marketing such technical innovations needs some

considerations which are typical to the high-tech environment – the uncertainties

around the product and the market, and the competitive volatility. A product success

does not only depend on the innovation and its diffusion - whether or not the

innovation is eventually accepted or rejected by the industry ecosystem, but also its

routes to market.

This research deals with these issues in the context of CRESS‟s challenge

regarding taking its innovation to the market. CRESS, a technology start-up,

designs, manufactures and supplies a novel flywheel-based system for transient

storage of electrical energy in industrial/commercial transport and energy

applications. CRESS is looking at entering UK‟s hybrid bus market. By storing and

recycling the braking energy, the hybrid bus substantially improves the energy

efficiency and reduces the environmental impact of bus transport system. Energy

storage is, therefore, a key component of such a system.

This research focuses on two key issues in this context:

1) The competitive positioning of the innovative flywheel-based energy storage

system in the UK bus market.

2) Optimal routes to market to successfully take this product to UK‟s hybrid bus

market.

Academic and practitioner perspectives relevant to these issues were investigated

and developed through the review of literature or current thinking in those topic

areas. The literature review helped design a framework for further investigation or

primary research. Primary research was conducted in terms of flexible semi-

structured one-to-one interviews, either face to face or over telephone. Total nine

senior executives from the industry (seven from the UK and two from abroad) were

interviewed on the subject.

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The findings from the primary research were compared and contrasted the literature

review. The primary research in a way ratified the current thinking and also resulted

in the following conclusions:

1) Although no competition (or no competitor) might appear to be a good spot

for a company to be in, competition actually helps the company to effectively

position its offering in the mind of the customer.

2) An innovation needs to make the „whole product‟ solution more attractive.

Such a superior solution is usually able to generate the market pull which

makes the adoption of such an innovation easier and faster.

3) Collaboration with the other members up the value chain seems to be an

optimal route to market for a start-up component supplier trying to enter a

conservative and closely-knit B2B market.

A list of recommendations for CRESS management on the competitive positioning

and suitable routes to market for its innovation was developed. Some of those key

recommendations are:

1) Retrofit market seems more attractive to position CRESS‟s ESS than the

new build market given the size and growth potential of retrofits vs. those of

new builds.

2) Positioning CRESS‟s ESS as a complementary product or extension to the

dominant battery-based energy storage systems is likely to make the market

entry and product adoption easier.

3) All claims about the performance needs to be supported with hard evidences

given the existing variable perceptions about flywheel-based ESS in UK bus

market.

4) CRESS should try to get an OEM and an operator interested in their product

and should take their product through this OEM and operator to the market,

as entering the mature and competitive bus market alone is a tall task.

5) CRESS should utilize direct sales channel for demand generation and

market information/feedback. For demand fulfilment and after-sales service,

they should leverage the system integrators or tier-1 suppliers.

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Furthermore, the limitations of this research and scope of further research have

been enumerated in the concluding sections of this report.

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2. ACKNOWLEDGEMENT

My sincere gratitude goes to my Management Challenge supervisor Dr. Susan

Rose, Henley Business School for her expert guidance and valuable feedbacks

from the preliminary to the concluding stages of this research-based project. I

acknowledge the support and encouragement which I received from my Henley

personal tutor Ms. Alison Llewellyn and our programme director Mr. Keith Heron

throughout the MBA and more so during this capstone project of our MBA.

My heartfelt thanks go to Mrs. Cath Bethel, Mr. John Woods and Dr. Rayner Mayer

of CRESS Ltd who kindly agreed to allow me carry out this interesting and insightful

project on behalf of CRESS. Their time, support, suggestions and cooperation

throughout the project have been invaluable.

I am also indebted to my classmates and friends from our FT10 cohort for their

constant encouragement and inspiration. The support provided by the academic

resource centre (ARC) and other support staff has been fantastic.

Last, but not the least, I must acknowledge the moral support and encouragement

showered on me by my mother. Without her support, I am not sure whether I would

have reached the end.

Saurav Mukherjee

Henley on Thames

Nov, 2011

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3. TABLE OF CONTENTS

1. Executive Summary ...........................................................................................2

2. Acknowledgement ..............................................................................................5

3. Table of Contents ...............................................................................................6

4. List of Figures .....................................................................................................9

5. List of Tables .................................................................................................... 10

6. Introduction ...................................................................................................... 11

6.1. Problem Definition & Focus ....................................................................... 11

6.2. Background & Context............................................................................... 12

6.2.1. About CRESS Limited ......................................................................... 12

6.2.2. The Product - the Energy Storage System ......................................... 13

6.2.3. Overall Market Context ....................................................................... 14

6.2.4. The Competition.................................................................................. 15

6.2.5. Customer & Industry Value Chain ....................................................... 16

6.3. Relevance of The Project .......................................................................... 17

6.4. Personal Objectives................................................................................... 17

6.5. Overview of the Report Structure .............................................................. 18

6.6. Aims of the Management Challenge Project ............................................. 20

7. Review of Current Thinking .............................................................................. 21

7.1. Characteristics of High-tech ...................................................................... 21

7.2. Innovation .................................................................................................. 24

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7.2.1. Types & Implications of Innovation ..................................................... 24

7.2.2. Diffusion of Innovation ........................................................................ 26

7.3. Positioning ................................................................................................. 30

7.4. Routes to Market ....................................................................................... 32

7.4.1. Direct Channels .................................................................................. 34

7.4.2. Indirect Channels ................................................................................ 35

7.4.3. Evolution in Channel Structure ........................................................... 36

7.4.4. Multi-channel Marketing ...................................................................... 37

7.5. Summary of Literature Review .................................................................. 40

8. The Investigation .............................................................................................. 41

8.1. Objectives of the Investigation ................................................................... 41

8.1.1. Investigation Questions ....................................................................... 41

8.2. Investigation Design .................................................................................. 42

8.2.1. Data Collection & Sampling Methodology ........................................... 44

8.2.2. Research Techniques ......................................................................... 47

8.2.3. Ethics .................................................................................................. 48

8.3. Findings and Analysis................................................................................ 50

8.3.1. Data Coding and Categorisation ......................................................... 50

8.3.2. Data Analysis and Discussion ............................................................. 52

9. Conclusions and Recommendations ................................................................ 60

9.1. Conclusions ............................................................................................... 60

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9.2. Recommendations .................................................................................... 64

9.3. Limitations and Scope of Further Research .............................................. 67

10. Personal Reflection .......................................................................................... 68

10.1. Experience of the Research Process ..................................................... 68

10.2. Reflection on Personal Objectives ......................................................... 70

11. Reference List .................................................................................................. 72

12. Appendices ...................................................................................................... 79

Appendix 1: Analysis of UK Hybrid Bus Market ................................................... 79

Appendix 2: CRESS Products vs. its competitive products ................................. 81

Appendix 3: Flybus Consortium ........................................................................... 82

Appendix 4: Viability of a Bricks and Clicks Model .............................................. 83

Appendix 5: Explanatory E-mail ........................................................................... 84

Appendix 6: Sample Interview Questionnaire ...................................................... 85

Appendix 7: Excerpt from Interview Transcript .................................................... 87

Appendix 8: Interview Summary .......................................................................... 92

Appendix 9: Excerpts from Learning Logs ........................................................... 98

Appendix 10: Glossary of Terms ....................................................................... 100

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4. LIST OF FIGURES

Figure 1: UK Bus Market Forecast (Mintel Global Market Navigator, 2010) ........... 15

Figure 2: UK Bus Manufactures (Mintel Global Market Navigator, 2010) ............... 15

Figure 3: Industry Value Chain - UK bus industry ................................................... 17

Figure 4: Characterizing High-Tech Marketing Environments (Mohr, Sengupta and

Slater, 2010) ........................................................................................................... 22

Figure 5: Issues in Understanding High-Tech Customers (Mohr, Slater and

Sengupta, 2006) ..................................................................................................... 23

Figure 6: Stages in the purchase process (Mohr, Sengupta and Slater, 2010) ...... 24

Figure 7: Continuum of Innovations (Mohr, Sengupta and Slater, 2010) ................ 25

Figure 8: Categories of Adopters (Moore, 2002) (Wiefels, 2002) ........................... 27

Figure 9: Innovation Decision Process (Rogers, 1995) .......................................... 29

Figure 10: Evolution of High-Tech Channels [Adapted from Gartner Group and CMP

Channel Group (1997)] ........................................................................................... 36

Figure 11: Ideal channel system for business-to-business segments buying a new

high-tech product (Coughlan et al., 2006) .............................................................. 39

Figure 12: Interviewee Selection ............................................................................ 45

Figure 13: Research Framework ............................................................................ 51

Figure 14: Hybrid bus market in UK ........................................................................ 53

Figure 15: Research Process ................................................................................. 68

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5. LIST OF TABLES

Table 1: Interviewee List ......................................................................................... 46

Table 2: Interviewees‟ perceptions of different energy storage technologies ......... 57

Table 3: PESTEL Analysis of UK bus market ......................................................... 80

Table 4: CRESS System vs. Competing Technologies [adapted from CRESS

Business Plan v2.1, 2010] ...................................................................................... 81

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6. INTRODUCTION

This section defines the management problem which is the focus of this research. It

contextualizes the issue by introducing the sponsor company and its product, their

customers and competition, the overall market environment and the industry value

chain. The relevance of this project is discussed next, followed by personal

development objectives of the author. The section concludes with a section laying

out the structure of this report.

6.1. PROBLEM DEFINITION & FOCUS

Launching and sustaining a new technological product or innovation is a challenge

to companies of any size and stature. There have been numerous instances when a

high tech innovation failed despite providing superior feature sets to its competitors

(Gourville, 2005). Whether a particular innovation or technology is accepted by the

market depends a lot on how easily the innovation is adopted by the early market

and then diffuses to the main stream market. Marketing plays a key role in

facilitating that process.

Marketing can be defined in simple terms as efforts to create, grow, maintain or

defend markets (Moore, 2002). Marketing is not a process which is considered only

after the engineering or the R&D department has developed the new innovation.

Proactive consideration and management of customer needs, wants and

expectations early in the development process is a key marketing competency. A

high-tech market is typically characterized by (1) market uncertainty (2)

technological uncertainty (Moritary and Kosnik, 1989), and (3) competitive volatility

(Mohr, Sengupta and Slater, 2010). Each of these has specific implications for

marketing of high-tech products.

This research focuses on the following two key areas in the overall context of

marketing of high-tech innovations.

1. Positioning of high-tech innovations, and

2. „Routes to market‟ or the channel strategy for such an innovation.

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Offering the correct product with correct set of benefits to the right buyers is a key to

success as during the different phases of technology adaptation life cycle (TALC)

(Moore, 2002) as different groups exhibit different expectations from the same

innovation. Therefore the competitive positioning of the innovation to relevant target

groups becomes very crucial in each phase.

A route to market is the distinct process through which a product or service can be

selected, purchased, ordered, and received by a customer (Frazier and Shervani,

1992). It also includes the locations at which the product or service is made

available to the customer, the number of levels or intermediaries involved in

delivering the product etc. The channel partners can play crucial roles like demand

generation, demand fulfilment, post sales service and market information or

feedback. Selecting a right channel strategy for a high-tech innovation in a B2B

context is a critical decision.

Positioning is considered after the market segmentation has been performed and

target segments have been selected, as positioning deals with customer perception.

Channel choices depend on company‟s marketing strategy, especially with respect

to segmentation, targeting and positioning. However, analysis and recommendation

on segmentation and targeting is beyond the remit of this research.

6.2. BACKGROUND & CONTEXT

To set the context and describe the background, company (the sponsor) information

is followed by the product description. The market context at a macro-level is

described next and then the discussion progresses to the competition. The final

subsection explains the customers and the industry value chain.

6.2.1. ABOUT CRESS LIMITED

CRESS stands for „Carbon Reduction Energy Storage System‟. It is a technology

start-up which intends to design, manufacture and supply a novel and innovative

flywheel-based energy storage system (ESS) for mobile applications in industrial/

commercial transport and energy domain. “The current stakeholders in the concept

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of flywheel energy storage are Advanced Composite Structures Limited (ACS), SR

Drives (SRD), University of Reading (UoR) and Sciotech Projects, but none of these

partners was in a position to commercialise the complete energy storage system.

The stakeholders therefore agreed at a meeting in Felixstowe in July 2009 that the

only realistic way to commercialise the flywheel energy store, was to set up a new

UK limited company CRESS with responsibility for marketing, engineering, servicing

and future development.” (CRESS Business Plan v2.1, 20101)

6.2.2. THE PRODUCT - THE ENERGY STORAGE SYSTEM

The product is a bespoke energy storage system which is able to recover and

transfer energy at varying rates in a controlled way depending upon the nature of a

machine‟s duty cycle. Such storage systems enhance the performance and

efficiency of machines whose energy use varies in a cyclic manner. These include

container cranes, city buses, wind turbine generators etc. The storage system has

been successfully deployed in the crane market (CRESS Business Plan v2.1,

20102). CRESS energy storage systems was conferred upon „Regional Winner‟

award as one of “the most commercially viable and innovative business ideas to

reduce carbon emissions” in 2010 (Shell Springboard, 2010).

This research focuses on UK‟s „green‟ or hybrid bus market as the target application

area. Hybrid electric vehicles (HEV) typically combine an energy storage device, a

power plant and a propulsion system. Energy storage devices are usually batteries,

but other possibilities include super-capacitors and flywheels. Power plants can be

internal combustion engines, diesel engines, gas turbines, or fuel cells (Emes et al.,

2009).

In bus applications, CRESS product could offer following primary benefits:

1. Cost savings - through more efficient use of energy. It is achieved by storing

the energy that is wasted while braking and re-using the same when the bus

1,2 This source is not available in public domain and has restricted access.

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starts again. Hence the frequent stop-start cycle of city buses makes it

particularly suitable for energy recycling.

2. Environmental and societal benefits - through reduced emissions of local

as well as global pollutants (e.g.CO2, SOX, NOX, PM10, PM5 etc.). It can

enable the bus to be operated in a zero emission mode over a limited range.

3. Retrofit possibility – the system may easily be retrofitted in existing buses.

Secondary benefits may include the following:

1. Reduced size of the prime energy source.

2. Can be used in parallel with a battery, complementing it for power

requirements and also extending battery life.

3. Reduced wear of the brakes (and arguably of engine and transmission).

4. Lessening the dependence on volatile fuel prices.

5. Contributing towards controlling the depletion of ever decreasing fossil fuel

supplies in the longer term through large scale deployment of such storage

systems.

6.2.3. OVERALL MARKET CONTEXT

The current context of the UK hybrid bus market is presented in Appendix 1:

Analysis of UK Hybrid Bus Market in form of a PESTEL analysis, which shows that

the hybrid and/or electric buses in the UK market have a promising future.

Figure 1 depicts the historical and forecasted absolute size of the UK bus market.

This market covers buses above 8.5 ton, coaches above 16 ton and coaches 3.5 to

16 ton. Market volume is based on new registrations.

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Figure 1: UK Bus Market Forecast (Mintel Global Market Navigator, 2010)

It shows a compound annual growth rate (CAGR) of 0.7% during 2005 to 2009

period. The CAGR forecast for 2010 to 2014 is 2.7%. Figure 2 below shows the top

bus manufactures and their market share in the UK in 2009.

Figure 2: UK Bus Manufactures (Mintel Global Market Navigator, 2010)

There are five major bus operators in the UK – the so called „big five‟. They are

Stagecoach, First group, Arriva, Go-Ahead group, National Express. There are

many smaller operators also (Bus Zone, 2011).

6.2.4. THE COMPETITION

The flywheel-based ESS is a novel innovation. There are not many players in the

UK who are presently producing flywheel-based ESS commercially. However, other

competing systems based on batteries and super capacitor technologies are

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available in the market. The CRESS system has the potential to be regarded as

better than those (both technically as well commercially).

The batteries suffer from limited lifetime (lifetime of 3-5 years compared to a bus life

time of 20 years or more, thus substantially increasing the replacement and

recycling cost) and have environmental concerns regarding their disposals. Super

capacitors can capture bursts of energy. They are used in wind up radios and

torches where they perform excellently, but when scaled up to store 1 kWh at 600V,

they become considerably less manageable.

The CRESS system may also operate in parallel to the conventional ESS like

battery (thus extending the battery lifetime).

In the UK, the Flybus consortium has developed a flywheel-based energy storage

system and successfully integrated the prototype hardware into an Optare Solo

Midibus. The Flybus system, which should cost significantly less than current

electric hybrids, uses a Ricardo „Kinergy’ flywheel as the energy storage medium

and a Torotrak continuously variable transmission (CVT) as the means of

transferring energy between the wheels and the flywheel (Flybus project, 2011).

More details about Flybus consortium may be found in Appendix 3: Flybus

Consortium.

Appendix 2: CRESS Products vs. its competitive products presents a comparison

between the competitive offerings with CRESS system.

6.2.5. CUSTOMER & INDUSTRY VALUE CHAIN

The potential customer base includes technology providers, system integrators, bus

manufacturers (OEM) and bus operators, each of whom may benefit in a different

way from adding storage to their system. Figure 3 depicts the industry value chain.

The ESS would allow system integrators or technology providers to provide more

efficient and greener systems. This would help the bus OEMs to gain technology

leadership, which can lead to higher market share and margin for them. Bus

operators would be able to reduce cost and meet strict environmental norms put in

17

place by the governmental agencies. The bus operators operate under the

guidelines of local councils, Transport for London (TfL) and other regulatory bodies.

Figure 3: Industry Value Chain - UK bus industry

6.3. RELEVANCE OF THE PROJECT

This project is relevant to CRESS as it is likely to inform them in creating a

compelling business case with an aim to obtain support from venture capitalists and

other sources of funding. This project can particularly provide them with the

following benefits:

Initial high-level overview of the market opportunity in UK bus market.

In depth look at competitive positioning of their ESS.

Analysis & recommendation on suitable routes to market for the product.

6.4. PERSONAL OBJECTIVES

The key personal objectives of the author are enumerated below:

I. Subject based Learning - The project allows the author to gain real insights

in the areas of marketing of high technology products and innovation. It

Component Suppliers (e.g. CRESS Ltd. etc.)

System Integrators / Technology Providers (e.g. BAE Systems, Siemens, Torotrak etc.)

Bus Manufacturers (e.g. Alexander Dennis, Volvo Bus, Scania, Optare, MAN etc.)

Bus Operators (e.g. Reading Buses, Stagecoach etc.)

Passengers

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provides him a great opportunity to enhance the understanding of the

diffusion of innovation and the product adoption process in high-tech sphere.

II. Practical Exposure - Marketing is a critical topic which every successful

executive should understand well, whether or not s/he plays a marketing role

in the organisation. Author had limited exposure to marketing, especially

about how marketing is integrated from nascent stages of product

development and plays strategic role throughout the product life cycle.

III. Research Skills - This project would provide an opportunity to learn the

necessary skills to perform a research at the master‟s level. The skill set

would comprise of selecting suitable investigative approach, setting a clear

research objective and research questions, interviewing senior executives to

collect primary data, performing relevant literature review or the secondary

research and analysis of research data to formulate logical, appropriate and

actionable recommendations.

IV. Personal Development - Author plays a dual role of a researcher and a

consultant in this project. It provides him with a good platform to hone active

listening skills, stakeholder management skills and project management

skills. The success of a project depends not only on the quality of the final

outcome but also on whether the project is completed within the limits of the

budgeted resources – time, effort, money etc.

6.5. OVERVIEW OF THE REPORT STRUCTURE

The Terms of Reference (TOR) of the Management Challenge (Henley Business

School, 2011) take into account the following objectives:

i. The objectives of Henley MBA Programme;

ii. The objectives of the Sponsor Organization, CRESS Ltd., which are:

1. Developing a competitive positioning for CRESS‟s technological

innovation in the bus market.

2. Evaluation of suitable routes to market for this innovation and

recommendations about the most optimal route for CRESS.

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iii. The Personal Objectives as outlined above in section 6.4.

The primary purpose of this report is to address the above terms of reference and

central research questions. The first section of the main report, section 7 – „Review

of Current Thinking‟ examines the theoretical and practical perspectives relevant to

competitive positioning and route to market or channel strategy. These are used to

inform the investigation. These perspectives are investigated through academic and

practitioner literature and various online journals and websites.

Section 8 introduces the practical research-based „Investigation‟, outlining the

methodology, key objectives, and the research philosophy, design and strategy

undertaken to meet these objectives. The primary data for the „Investigation‟ is

taken from a number of semi-structured interviews with senior management of

CRESS and a number of their potential customers and others along the value chain.

The objectives and specific questions intended to be answered by the investigation

are outlined and the design methodology and overall strategy are presented.

Consideration is also given to how well the objectives set out for the investigation

have been met and the limitation of this research. Then „Findings and Analysis‟

subsection follows where the primary data is discussed, analysed and interpreted.

In section 9, conclusions and recommendations are drawn from the review of

current thinking in section 7 and from the analysis of the investigation in sub-section

8.3.

The final section of the main body of this report, section 10 is a „Personal Reflection‟

on the Management Challenge experience, an evaluation of the findings and a

review of where improvements might be made to the processes and methods

undertaken in the earlier two sections. This section also considers the personal

journey undertaken during the Management Challenge and how the experience has

enabled and facilitated the achievement of the personal objectives outlined in

section 6.4.

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6.6. AIMS OF THE MANAGEMENT CHALLENGE PROJECT

It is expected that the deeper understanding of the subject areas gained through

this management challenge project would allow the author to make key

recommendations to CRESS on the following two areas.

1. Competitive positioning for CRESS‟s novel energy storage system in UK‟s

energy-efficient hybrid bus market.

2. Optimal route(s) to market for CRESS to bring this innovation to UK‟s


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7. REVIEW OF CURRENT THINKING

In order to understand the competitive positioning and suitable routes to market for

a high-tech innovation, the distinct characteristics of high technology market needs

to be examined first. Also a critical review of innovation is necessary to develop a

good appreciation of the topic areas. This section on literature review thus begins

with a discussion of characteristics of high technology; then innovation in

technology sphere is analysed. The section on innovation then leads to the

positioning, which is a strategic marketing activity and a central topic of this

research. The literature review concludes with a discussion of routes to market in

high-tech context. This whole section is set in the context of B2B or industrial

market setting.

7.1. CHARACTERISTICS OF HIGH-TECH

Technology is a broad concept about using scientific and engineering tools and

knowledge to create solutions to problems (Capon and Glazer, 1987). High

technology refers to cutting–edge or advance technology in current day‟s reference

(Mohr, Sengupta and Slater, 2010). A product which is high-tech today would

usually become primitive in sometime in future.

As alluded to in section 6.1, a high-tech environment typically displays three major

characteristics, e.g. market uncertainty, technological uncertainty (Moritary and

Kosnik, 1989) and competitive volatility.

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Figure 4: Characterizing High-Tech Marketing Environments (Mohr, Sengupta and Slater, 2010)

Though some cases might display one or two of the three characteristics, most

cases have simultaneous presence of all three. The intersection of these three

typifies a high-tech market environment (Mohr, Sengupta and Slater, 2010). In the

case of flywheel-based ESS in UK‟s hybrid bus market, all the three characteristics

are present simultaneously.

Market uncertainty refers to the ambiguity around the type and extent of customer

needs that a particular technology satisfies. Technological uncertainty is the

doubt whether the technology or the company providing it can deliver its promise

(Moritary and Kosnik, 1989). Competitive volatility refers to the intensity of change

in competitive landscape and uncertainty about competitor and their strategies.

Figure 4 lists the sources of each of the three factors.

Many high-tech firms suffer from three types of marketing myopia (the tendency

to be narrow-minded or short-sighted about the sources of competition) (Mohr,

Slater and Sengupta, 2006):

1. “Our technology is so new that we have no competitors.”

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2. “The new technology being commercialized by new competitors will not pose

a large threat.”

3. “That competitor is in a different industry, its strategies don‟t/won‟t affect my

business.”

High-tech firms need to be aware of this pitfall as this might impact the firm‟s

competitive positioning.

To understand the motivations of customers to buy technological product, firms

should examine at least the six critical issues as shown in Figure 5 below.

Figure 5: Issues in Understanding High-Tech Customers (Mohr, Slater and Sengupta, 2006)

Cahill and Warshawsky (1993) and Cahill, Thach and Warshawsky (1994) argue

that the buying decision for technology products is the same as any products. On

the other hand, Judge (1998) posits that conventional consumer behaviour models

“don‟t go far” when it comes to high-tech product and services. However, basic

models of consumer (B-to-C) or organizational (B-to-B) buying behaviour (Figure 6)

Process of adoption and diffusion

Crossing the chasm

Segmentation, Targeting, and Positioning

Timing of upgrades and migration

Consumers' paradoxical relationships with technology

Steps in the purchase process

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may provide a useful starting point in understanding the behaviour of technology

buyers.

Figure 6: Stages in the purchase process (Mohr, Sengupta and Slater, 2010)

The next step is to understand the process of innovation diffusion and adoption.

Section 7.2 deals in detail with this process and also touches upon „chasm crossing‟

(Moore, 2002).

7.2. INNOVATION

Innovation is argued as a means for creating and delivering a differentiated,

uniquely superior value offering. Though „invention‟ - the notion of novelty, is central

to innovation, it does not sufficiently describe innovation. Innovation is not only

about novelty; it also encompasses the realization of value creation and value

delivery. Hence, innovation may be defined as:

Innovation = invention + realization of value

This definition implies that great ideas and invention are not enough; the innovative

ideas must lead to some realization of value (Tovstiga, 2011).

7.2.1. TYPES & IMPLICATIONS OF INNOVATION

Innovations may be classified in several ways, such as incremental versus

breakthrough (radical), product versus process, architectural (platform) versus

component (modular), sustaining versus disruptive, business strategies versus

marketing etc. Mohr, Sengupta and Slater (2010) focus on incremental versus

breakthrough classification in the area of high-tech innovation as shown in Figure 7.

Incremental innovations are continuations of existing products, methods or practices

in terms of minor improvements and respond to short term goals. They are

evolutionary as opposed to revolutionary. Breakthrough (radical) innovations are

Problem Recognition

Information Search

Evaluate Alternatives

Purchase Decision

Post-purchase

Evaluation

25

different than existing practices and perceptions. They are discontinuous or

revolutionary in nature. They generate competitive advantage through superior

functional performances.

Figure 7: Continuum of Innovations (Mohr, Sengupta and Slater, 2010)

The differences between incremental and breakthrough innovation have major

implications from supply chain and marketing strategy perspectives (Mohr,

Sengupta and Slater, 2010).

Many breakthrough innovations may occur at supplier levels in the supply chain

rather than in the user level, where the innovations may seem incremental in nature.

Any hybrid driveline containing flywheel-based ESS would still be a hybrid driveline.

The end users (e.g. drivers, passengers, operators etc.) would not apparently know

which type of ESS is resident in the bus.

As described in Figure 7, it is a „continuum‟ of innovations. CRESS‟s product is tilted

towards breakthrough innovation – there had been lot of R&D in the lab, it provides

superior performance over existing battery or super-cap technology, it is currently in

supply-side market relying on technology push etc.

The processes that are used to manage incremental innovations are not only „not

applicable’ but also may be detrimental to the management of the radical innovation

(Leifer et al., 2010). Managing these two types of innovation requires different tools,

26

structures, processes etc. “Market planning that explicitly recognizes and accounts

for the strategic distinction between market-driven and innovation-driven research

goes a long way toward yielding better corporate performance.” (Shanklin and

Ryans, 1984)

Appropriate marketing strategy is contingent upon the type of innovation. Mohr,

Sengupta and Slater (2010) suggest a contingency theory for high-tech marketing.

Nature of interaction between R&D and marketing depends on type of innovation as

technological prowess is a key in supply-driven market and the original market that

the company seeks to pursue is critical (Shanklin and Ryans, 1984). Type of market

research tools needs to be carefully selected as gathering marketing data to guide

the development and marketing of breakthrough products can be difficult.

Advertising plays a crucial role as marketers must educate the customer and

stimulate the demand in a commercial market for a breakthrough product. Then

there is pricing. Customers may be willing to pay a premium for the significant

advantage provided by the technology.

7.2.2. DIFFUSION OF INNOVATION

Rogers‟ (1995) theory on diffusion of innovation identifies four elements of the

diffusion system for successful adoption of a product – innovation itself, channels

of communication, the social system and time. These all need to converge to

ensure that flywheel-based ESS achieves its potential.

According to Rogers (1995), an innovation is not evaluated on the basis of the

scientific research by experts but by the subjective evaluation of peers who have

adopted the innovation. The time it takes for the innovation to be adopted is based

on the process through which an individual passes from first knowledge of the

innovation to a decision leading to acceptance or rejection and confirmation of the

decision. A firm‟s innovativeness is the degree to which it is positioned to adopt a

new idea compared to others in its peer group, the social network. A social system

is a set of interrelated units that are engaged in joint problem solving to accomplish

a common goal. The social and communication structure facilitates or impedes the

27

diffusion. An aspect of social structure is norms, the established behaviour pattern

for a social group or an ecosystem. For CRESS when it wants to enter the hybrid-

bus market in UK, the social group or the ecosystem consists of the members of the

value chain as described in Figure 3 and other influencer bodies like authorities who

regulates the environmental issues, controls the grants, the transport planners etc.

(Appendix 1: Analysis of UK Hybrid Bus Market analyses the market situation in

detail).

Rogers (1995) categorized adopters of innovators as follows:

Innovators (technology enthusiasts) – 3.5% of all adopters,

Early adopters (visionaries) – 12.5% of all adopters,

Early majority (pragmatists) – 34% of all adopters,

Late majority (conservatives) – 34% of all adopters, and

Late adopters (sceptics) – 16% of all adopters.

Moore (2002) and Wiefels (2002) have taken further the pioneering work of Rogers

(1995) on diffusion and adoption of innovations. As Figure 8 depicts, they have

adapted the innovation diffusion in the context of the high-tech market.

Figure 8: Categories of Adopters (Moore, 2002) (Wiefels, 2002)

Given the nascence of flywheel-based ESS in hybrid buses, this technology

currently is at early market stage.

28

Rogers‟ (1995) diffusion of innovation approach suggests six fundamental

characteristics of new technology that promotes its usage and adoption. Those are:

Relative Advantage – the degree to which an innovation is perceived as

being better than the idea it supersedes.

Compatibility – with users‟ work patterns, systems, processes, values and

past experiences.

Complexity - the relative ease or difficulty to start using the innovation.

Triability – the ability to try out an innovation on a limited basis.

Ability to communicate product benefits - the ease and clarity with which

the benefits of owing and using a new product can be communicated to

potential users.

Visibility – the degree to which the results of an innovation is visible to

others and its positive effects on the adoption of the innovation.

CRESS‟s product promises to offer relative advantage over competitive

technologies; it can be compatible to any hybrid driveline which offers electrical

connectivity and it seems to be not much complex. However, it is important to

deliver on all the above areas to drive its adoption.

Figure 9 describes the stages involved in a decision-making process starting from

knowledge of an innovation, to forming a pursuant attitude towards the innovation,

to a decision to accept or reject, to confirmation. It is important to note the role of

communication sources or channels at every stage of the decision making process.

Hence it is imperative for a firm bringing a high-tech innovation to the market to

have an integrated communication strategy to support the adoption all along the

process. A communication channel is the means by which a message gets from a

source to a receiver. It can be either interpersonal or mass media in nature and can

originate from either localite or cosmopolite sources (Rogers, 2003). Mass media

channel is more important at the knowledge stage whereas interpersonal channels

are more important at the persuasion stage. This can have an implication for

CRESS‟s routes to market choice. Similarly, cosmopolite channels are more

29

important at knowledge state whereas localite channels play more important roles at

persuasion stage in the innovation process. In an ideal case for CRESS, the

ecosystem of hybrid buses should advocate the adoption of flywheel based ESS.

That way, the buyers of this innovation would feel much more comfortable in taking

the buy-decision. Finally, the time refers to innovation-decision period – the length

of time an individual or an organisation needs to go through the innovation-decision

process.

Figure 9: Innovation Decision Process (Rogers, 1995)

Next step in understanding high-tech market (Figure 5) is about the „chasm‟. Moore

(2002) suggests a two-pronged approach to „cross the chasm‟ (i.e. to move from

early to mainstream market), keeping the buying motivations of the pragmatist

customers in mind:

30

1. Identification of a beachhead, a single target market from which to pursue the

mainstream market.

2. Partnering to develop a whole product solution to provide the customer with a

seamless experience in buying and using the high-tech product.

Then come the segmenting, targeting and positioning or the STP. Mohr, Sengupta

and Slater (2010) suggest the following steps in high-tech marketing for STP.

1. “Divide possible customers into groups”

2. “Profile the customers in each segment”

3. “Evaluate and select a target segment”

4. “Positioning the product within the chosen segment”

Since this management challenge particularly focuses on positioning, section 7.3

delves deeper on the positioning issue.

Customers of high-tech products and innovations utilize upgrades and migration

paths to avoid the obsolescence that happens to today‟s high-tech innovation due to

the advent of tomorrow‟s high-tech innovation. Also customers face many

paradoxical relationships or unintended consequences (which might not necessarily

be bad) with a new high-tech product. Technology marketers should at least be

aware of the presence of such paradoxes which the customers face (Mohr,


7.3. POSITIONING

Positioning is the act of designing the company‟s offering and image to occupy a

distinctive place in the minds of the target market (Ries and Trout, 2000). The goal

is to locate the brand or the product in the minds of consumers to maximize the

potential benefit to the firm.

Good brand positioning helps guide marketing strategy by clarifying the brand‟s

essence, what goals it helps the customers achieve (how it addresses their „genes

of meaning‟) and it does so in a unique way (Marsden, 2002).

31

The result of positioning is the successful creation of a customer-focused value

proposition (Kotler et al., 2009). Positioning enables both the buyer and seller gain

from being effective and efficient, as the buyer gets the right offering at a right price

and the seller supplies the offering cost effectively. It requires that similarities and

differences between brands be defined and communicated, as positioning is based

on customer‟s perception and is always relative to competitors (Mohr, Sengupta and

Slater, 2010).

Defining category membership – market offerings with which a brand competes

and functions as close substitute – is a good starting point towards creating a

competitive frame of reference for positioning (Kotler et al., 2009). The next step is

to define appropriate points-of-difference (POD) and points-of-parity (POP) (Keller,

Stenthal and Tybout, 2002). PODs are attributes that customers strongly associate

with a brand, value positively and do not find in competitive brands (Kotler et al.,

2009). POPs are associations that are not necessarily unique, but in fact may be

shared with other brands (Brunner and Waenke, 2006). POPs come in two basic

forms – category POP (which represents necessary but not sufficient attributes) and

competitive POP (which helps negate competitors PODs).

For CRESS, the category POPs for its products are its ability store and recycle

energy reliably and the ability to fit in current scheme of things in a hybrid bus and

its driveline. The competitive POPs may be the cost and associated payback time,

etc. The PODs can be the higher fuel saving potential, lifetime of its product, the

environmental and other operating benefits etc.

As per Kotler et al. (2009), the typical approach to positioning is to inform customers

about the brand‟s category membership before stating its POD. There are three

main ways to convey the category membership - announcing category benefits,

comparing to exemplars and relying on product descriptors. Positioning of a new

technology is usually achieved by focusing on how it fits within existing market

categories by referencing the older technology to be displaced (Mohr, Sengupta and

Slater, 2010). In the case of CRESS‟s offerings, the „older‟ technologies could be

batteries and super capacitors.

32

Two important considerations in choosing the POD are that the customers find the

POD desirable and that the firm has the capability to deliver on it. One common

difficulty in creating a strong, competitive brand is that many of the POPs and PODs

are negatively correlated, e.g. simultaneously delivering low price and high quality.

If the product violates the categorical scheme of market place, it creates confusion

among the customers as well as the channel partners. As the new technology is

adopted by customers and beings to diffuse in the market, competition based on the

new technology would develop. Relative positioning strategy should reference this

brand competition. In the late stages of the adoption process, the market leader

needs to create new products to cannibalize its old products (Moore, 1999).

Couple of tools which companies can use to formulate its positioning strategies are

multi-attribute models and perceptual maps.

A multi-attribute model collects data from a customer sample about the relative

importance of the product features and benefits in their technology purchase

decision. It then assesses the company versus its competitors. A perceptual map

uses similar data, but consolidates multiple attributes into two higher-level

attributes. It produces a simple visual graphic of a company‟s offering versus the

competition. It can also display the customers‟ ideal point of preferences (Mohr,


To sum up, in the words of Moore (2002):

1. “Positioning, first and foremost, is a noun, not a verb.” It‟s an attribute

associated with a product or a company.

2. “Positioning is the single largest influence on the buying decision.”

3. “Positioning exists in people‟s heads.”

4. “People are highly conservative about entertaining changes in positioning.”

7.4. ROUTES TO MARKET

„Routes to market‟ is the marketing channel through which the product or service

reaches the end customer. Coughlan et al. (2006), Kotler et al. (2009) define a

33

marketing channel as “a set of interdependent organizations involved in the process

of making a product and service available for use or consumption.” Manufacturers,

intermediaries and end-users are the key members of marketing channels. Channel

design or choice and channel implementation are two crucial steps in creating

effective (i.e. demand satisfying) and efficient (i.e. cost-effective) routes to market

(Coughlan et al., 2006).

The channel network performs four key functions for the organisation (Dolan, 1999)

(Rangan and Bell, 2006):

demand generation

demand fulfilment

after-sales service

information or market feedback

Power and control are key factors in the efficient working of a channel network

(Henley Business School, 2011).

Channel structure refers to the types of members in the channel, number of levels

and companies involved in the flow of product from manufacturer to the end user

and the number of distinct channel that coexist in the market (Coughlan et al.,

2006). Depending on the structure, channels may be classified in three types –

direct, indirect and hybrid.

In case of a direct channel, a manufacturer sells directly to the customer via its

own sales force, through company-owned stores or via internet. The direct channels

are sometimes referred to be „vertically integrated‟ when successive channel

stages are integrated into single ownership (Doyle and Stern, 2006).

An indirect channel is one in which a manufacturer uses intermediaries to market,

sell and deliver products to the customer. They are sometimes referred to as

„market-based‟ channels. Use of intermediaries gives rise to contact efficiencies.

Contact efficiency is the decrease in the number of transactions (contacts) that

34

occurs between vendors and customers when an intermediary is added (Mohr,


In mid-range between vertically integrated to market-based channels are

contractually administered channels, such as franchises and cooperatives.

A firm may choose a combination of direct and indirect channels to get its products

to its customers. This is also referred to as hybrid channel, dual channel,

concurrent channel and multi-channel marketing (Mohr, Sengupta and Slater,

2010).

Research shows that in B2B scenarios, concurrent channels are more prevalent

when (Vinhas and Anderson, 2005):

Market size and growth are strong.

The offering is perceived as less standardized.

Customers don‟t form buying groups to increase their bargaining power.

Customers‟ needs and buying behaviour are stable across purchasing

occasions.

In designing the channel structure, marketers of high-tech products need to assess

the channel preferences of their customers and the likely outcomes of customers‟

choices. Channel attributes that affect customers‟ channel selection include ease of

use, price, search effort, service information, quality, aesthetic appeal, convenience,

assortment and enjoyment (Neslin et al., 2006).

7.4.1. DIRECT CHANNELS

High-tech companies usually adopt a direct sales model for their largest customers,

for those with complex buying needs or in key geographies (Mohr, Sengupta and

Slater, 2010).

Though direct sales using a sales force can get expensive, it gives company the

complete control over the selling process and customer relationship management

(Mohr, Sengupta and Slater, 2010).

35

Sales over own website or bricks-and-clicks model of distribution makes sense

under certain conditions related to the product type, company‟s resource and

capabilities, sales process etc. If those conditions are not met, this model may

prove problematic (Mohr, Sengupta and Slater, 2010). A selected list of such

conditions is presented in Appendix 4: Viability of a Bricks and Clicks Model.

Company-owned Retail Outlets is the other direct channel which high-tech

companies use. This channel had a mixed success (Mohr, Sengupta and Slater,

2010). Direct retail channels provide high-tech companies with full control over the

execution of their marketing strategy and also set a benchmark for the indirect

channels to aspire to.

7.4.2. INDIRECT CHANNELS

These include intermediaries between the manufacturer and the end-customers.

B2B intermediaries provide the organisation with access to the market and ensure

immediacy of stock, availability of product information, and pre- and post-sales

support in relation to spares installation, spare parts or ongoing service (Kotler et

al., 2009).

The key issues to consider while utilizing indirect channels include:

1. Type of intermediaries: A variety of intermediaries are available to high-tech

companies including distributors, resellers etc. Value-added resellers (VARs)

and system integrators are often more effective in serving the business

customers (Mohr, Sengupta and Slater, 2010).

2. Number of intermediaries: While deciding the number of intermediaries to use,

the degree of coverage (the region or the territory covered) and the degree of

intra-brand competition (where dealers in the same area compete with each

other to sell the same product) are traded off. Having many dealers might

increase market coverage, but intra-brand competition often leads to price

competition which may damage the manufacturer‟s reputation and perceived

quality in the market. Vertical or territorial restrictions can be used to inhibit

36

intra-brand competition and promote harmony among channel members (Mohr,


7.4.3. EVOLUTION IN CHANNEL STRUCTURE

Figure 10 depicts a typical evolution of channel structure over the technology life

cycle (Gartner and CMP Channel Group, 1997). In the initial days, sales strategy

focuses on OEMs, independent vendors and integrators as the product strives to

gain support and acceptance in the market. Once the technology starts appealing to

the „early adopters‟, VARs become a key channel. VARs and early adopters

determine whether a new technology makes a strong impact in the market. As the

technology approaches a critical mass and enters a high-growth phase, a fairly

traditional dealer channel becomes more effective. At this point, earlier channel

members may switch over to newer technologies and opportunities, while still

supporting the current technology to serve the existing customer base. Once the

technology reaches maturity and gets standardized, mass merchants become

increasingly important.

Figure 10: Evolution of High-Tech Channels [Adapted from Gartner Group and CMP Channel Group3 (1997)]

3 In „Marketing of High-Technology Products and Innovations‟ by Mohr, Sengupta & Slater (2010)

37

If the market is composed of business customers with an installed base of existing

technologies, customer faces challenges in migrating to new technology and so

becomes more conservative and thus requires more personal selling (Mohr,


Moore (2002) opines that direct sales channel is most effective in creating demand

for a new product and to cross the chasm. However, he points out that the volume

and predictability of revenues determines whether a direct-sales model is even

viable or not.

Direct marketing is most successful in B2B technology companies when the

following conditions are satisfied (Hamilton, 2005):

1. Holds a central view of the customer: who is s/he and how does s/he buy.

2. Can articulate a clear understanding of the company‟s unique selling

proposition.

3. Is integrated with other marketing disciplines.

4. Is integrated with other business functions.

5. Is systematic and measurable in approach.

6. Is accountable as an ongoing, long term investment.

7. Have enough organisational and financial resources to execute well.

Retail channel model may be successful in mainstream market, but is does not

create demand and does not help develop the whole product (Moore, 2002). It is

better suited when customers are looking for a channel to fulfil demands.

7.4.4. MULTI-CHANNEL MARKETING

Neslin et al. (2006) define multichannel marketing or management as “the design,

deployment, coordination and evaluation of channels to enhance customer value

through effective customer acquisition, retention and development”. Multi-channel

marketing has become a major force in B2B distribution channels (Rosenbloom,

2006).

38

With multi-channel marketing comes the challenge of channel conflict. This

resistance conflict arises from cannibalization or displacement of sales from one

channel to the other. However, multi-channel marketing is consistent with best

practices of distribution strategies (Mohr, Sengupta and Slater, 2010). The

objectives of concurrent channels are to increase market coverage while

maintaining cost efficiency and minimizing conflict (Moritary and Moran, 1990).

Mohr, Sengupta and Slater (2010) suggest the following two-step strategy to

achieve these objectives.

Step 1: Gather Market Data – Solid data and analytical rigor along with logic and

quantification are critically important in allocating appropriate channel resources and

communicating the distribution strategy to the organization. As a guideline, more

than 30% of revenue in conflict between multiple channels tends to become

unmanageable, resulting in dissatisfaction of the customers and the marketing

personnel as well (Vinhas and Anderson, 2005). Hence, without clear evidence of

incremental revenue, the financial costs and the morale costs of adding more

channels are hard to justify.

Step 2: Work towards Harmonization Following Contingency Theory –

Contingency theory implies that no single channel can be used for optimal

performance. Moritary and Moran (1990) suggest the following steps to implement

contingent theory to manage hybrid channels.

a. Identify target customer segments – Decision about where to purchase a

product (or service) depends not just on what is being bought but also on how it

is being bought, the service outputs. Service outputs are the productive output of

marketing channel, over which end-users have demand and preference

(Coughlan et al., 2006). Coughlan (2006) suggests that segmenting market by

service output demands is a useful tool for channel design because the resulting

groups of end-users are similar in terms of the channel that best serves their

needs.

39

A channel structure in B2B sector involving high-tech product proposed by him is

depicted in Figure 11, which shows that VARs and dealers are best positioned to

serve the full service customer segment.

Figure 11: Ideal channel system for business-to-business segments buying a new high-tech product (Coughlan et al.,

2006)4

b. Delineate the tasks or functions that must be performed in selling to

those segments - The tasks may be delineated in terms of the selling cycle

or sales process – lead generation, sales prospect qualification, presales

activities, closing the sale, post-sales service and support and ongoing

account management. Hybrid channel strategy should include both „front

end‟ (sales and sales support) and „back end‟ (order processing, inventory,

customer care etc.).

c. Allocate the best channels to those tasks – Channels need to be

harmonized to best meet the customer needs. Channels should be combined

to optimize cost and coverage relative to their tasks for their particular

customer segment.

4 Original Source: Rick Wilson, Chicago Strategy Associates, © 2000.

40

In essence, clear boundaries need to be established about who owns which

customer. Also harmonizing the price across channels (to the extent possible) helps

in minimizing cross channel conflict.

In addition, effective multi-channel marketing must consider the tenor of relationship

with channel partners, company‟s customer relationship management (CRM)

practices, compensation structure (reinforcing the channel strategy) and

communication with all channel members (Mohr, Sengupta and Slater, 2010).

7.5. SUMMARY OF LITERATURE REVIEW

In summary, a high-tech environment is characterised by market uncertainty,

technological uncertainty and competitive volatility. Primary research on these

dimensions would help understand the high-tech environment in the context of

hybrid bus market in the UK. Most relevant issues related to technical product

purchase, in this project, are customer motivation, product adoption and diffusion of

innovation and positioning. Successful adoption of an innovation depends on the

innovation itself, associated communication channels, the social system and time.

Therefore, the primary and secondary research would focus on these in particular.

Proper positioning enables a win-win situation for both the buyer and the seller.

Positioning is based on customer perception and is always relative to competitors.

For successful positioning, the points-of-parity (POP) and the points-of-differences

(POD) should be effectively communicated after defining the category membership

of the product.

Channel design and channel implementation are two key steps to create an

effective and efficient routes to market. Channels can be broadly categorized in

three types – direct or vertically integrated, indirect or market-based and hybrid or

concurrent or multi-channel. Value added resellers (VAR) and system integrators

are often most effective in serving high-tech business customers. Though multi-

channel marketing is a major force in B2B scenario, it comes with the challenge of

channel conflict.

41

8. THE INVESTIGATION

This section describes the research design and methodology employed in this

study. It also describes how the research was planned, designed and conducted.

8.1. OBJECTIVES OF THE INVESTIGATION

The research objectives of the investigation were to use evidence based research

to gain an in-depth understanding of diffusion and adoption of high-tech innovations,

positioning and routes to market of such innovations. The understanding was then

used to draw key recommendations for CRESS, the sponsor of this project. In

section 7, the review of current thinking based on academic and practitioner

literature laid the groundwork for positioning of high-tech innovations and their

routes to market.

A basic research strategy was used to explore and understand the nature of the

high-tech innovation and how CRESS can effectively position its novel energy

storage system (ESS) to its target customer in B2B segment, UK‟s hybrid bus

sector and suitable routes to market for its ESS. The outcomes of this research are

likely to inform the business case which CRESS intends to present to venture

capitalists for funds.

8.1.1. INVESTIGATION QUESTIONS

The primary research objective was to answer the following questions related to

high-tech innovation by exploring the topic areas like diffusion and adoption of high-

tech innovation:

1. How should CRESS position its ESS to its target customers in the „green‟ or

energy-efficient hybrid bus market in the UK?

2. What should be the optimal route to market for CRESS‟s innovative energy

storage system?

42

Business strategy for start-ups like CRESS with strengths in product innovation is

heavily dominated by product development and marketing strategies. In order to

answer the two aforementioned questions, the investigation focussed on collecting

data around the following key themes:

1. Market trend, drivers and potential

2. The innovation itself

3. Competitive products or technologies

4. Distribution channels

The investigation objectives were designed to generate ideas and

recommendations from the data collected and were therefore exploratory in nature.

The objectives were also based on understanding why a technology is adopted and

becomes dominant over other competing technologies, rather than examining the

behaviour of people or events related to any particular technology or innovation. In

order to fulfil the key objectives and understand the data collected the following

research design methodology was adopted.

8.2. INVESTIGATION DESIGN

This investigation was concerned with building an in-depth understanding. As the

data collection progressed, additional insights and deeper understanding of the

topic areas were expected to be generated. These insights and/or understandings

were to be used to fine-tune the structure or themes of succeeding the data

collection exercises. Therefore a flexible research design was adopted ahead of

fixed design which is generally more concerned with pre-specified data collection

and analysis procedures (Robson, 2002).

Data can be divided in to two types - qualitative and quantitative. Both can capture

narrative and/or numeric data using observation, trained interviewers and/or

technology. Qualitative research however is usually conducted from an interpretivist

perspective, concerned with interpreting and understanding phenomena through the

meanings people attach to them (Greenhalgh, 2001).

43

Qualitative research is often captured in narrative form and works from the more

general to the more specific. This helps in probing the relevant areas in more detail.

It is based on inductive reasoning which starts with a conceptual framework using

the data to understand better and narrow down into more specific hypotheses. The

hypotheses may ultimately be able to be tested with specific data obtained from

quantitative research (Hair et al., 2007).

A qualitative research methodology was selected for the research design as the

study was exploratory in nature. The study focused upon understanding the views

and experiences of business leaders in relation to adoption of innovation, it‟s

positioning and suitable routes to market. This was consistent with an interpretivist

position and constructionist orientation. On the continuum of inductive vs. deductive

approach, this research was partly inductive and partly deductive. With qualitative

data, different phenomena can be related more easily. E.g. the effect of fuel price

on the demand of hybrid components in an energy-efficient bus could be explained

more easily in an interview than through survey questionnaires and subsequent

statistical analysis. Qualitative data is also more likely to lead to serendipitous

findings to help researchers get beyond initial conceptions and generate or revise

conceptual frameworks (Miles and Huberman, 1994). Some researchers have

criticized qualitative research as being „soft‟, lacking rigour and being inferior to

quantitative research (Hair et al., 2007) but qualitative research is generally a

source of well-grounded rich descriptions and explanations of processes and local

context (Miles and Huberman, 1994). The local context (UK context) was

particularly important for this research.

To organise and simplify complex phenomenon such as diffusion and adoption of

high-tech innovations, a flexible research design such as interview study was more

appropriate than other qualitative approaches such as ethnography (Hair et al.,

2007) as it aimed to generate theory and recommendations from the data that was

systematically gathered and analysed through the research process (Strauss and

Corbin, 1998) (Robson, 2002).

44

Constructing theories to understand phenomena began by focusing on an area of

study and then gathering data from a variety of sources including interviews (which

lasted on average 45 minutes to one hour), observation and field notes. The data

was then analysed using coding and theoretical sampling procedures and

summarised in a report. Data collection and analysis proceeded simultaneously and

iteratively as the research progressed. Therefore, when findings highlighted issues

which warranted further investigation, the analysis of earlier interviews in the study

influenced the focus of later interviews. Interviews were summarised and analysed

immediately following each interview allowing any emerging findings to influence

and shape future interviews.

8.2.1. DATA COLLECTION & SAMPLING METHODOLOGY

Qualitative data collection methodology can be employed through interviews or

observations (Hair et al., 2007). Interviews were selected for primary data collection

as they are particularly useful for enabling respondents to give detailed responses

about complex issues and where a lot of elaboration is necessary to understand

concepts (Bowling, 2002). Interviews also enabled the researcher to obtain

feedback to better understand why something happens and were more flexible in

where and when they can be conducted – an important consideration for this

investigation.

The nature of the interview could range from being highly structured to being highly

unstructured. A balanced approach using semi-structured interviews was used

allowing the interviewer to exercise initiative in following up on answers to particular

questions with related but unanticipated questions that were not originally included.

In semi-structured interviews the interviewer has a list of issues and questions to be

discussed but has some flexibility in the order of topics covered and can adjust the

interview to elaborate on the issues raised (Denscombe, 2003).

The issues under investigation were not limited to one type of company in the

industry. Therefore a sample group with participants from different players along the

industry value chain (referring to Figure 3) was selected to generate broader and

45

rounded insights and experience. Non-probability judgement sampling was used to

select the companies based on the researcher‟s judgement and CRESS‟s

recommendation that they effectively represented the target population. The exact

samples were not pre-defined but an iterative process was followed (Glaser and

Strauss, 1967). This sampling technique has its limitations as it suffers from

selection bias and the findings cannot be generalised to the target population with

the same degree of confidence than with probability samples (Hair et al., 2007).

Although the selection was not statistically representative of the population, it was

relevant to the research questions and was theoretically informed. Also the

researcher could complete the interviews quickly, conveniently and cost effectively.

Figure 12 presents the type of companies and institutions whose senior

executives (average industry experience of over 15 years) were interviewed for this

investigation:

Figure 12: Interviewee Selection

To ensure the data collected is of a high level of relevance and applicability to

CRESS, the target population consisted of mainly senior executives in energy-

efficient hybrid bus industry. Individuals at this level were expected to have a clear

understanding of the company business decisions, processes and adoption of

UK hybrid bus market -

Flywheel-based ESS

from CRESS

The Sponsor - CRESS

A major bus operator in the south-east of

England

Five bus manufacturers

from UK & abroad

UK government's advisory group on

low carbon transport

46

innovation. The functional role of the interviewee was also important as this must

expose them to product and market strategy of the business. Therefore roles within

commercial and general management arena were concentrated on. The researcher

received a list of such contacts from CRESS. He contacted the prospective

interviewees over e-mails seeking their participation. A sample explanatory e-mail

may be found in Appendix 5: Explanatory E-mail. Also, the researcher tried to utilize

other channels like requesting the research participants for reference etc. Below is

the list of the roles and organisations of the interviewees along with codes for easy

identification of the interviews:

Interview

Code

Role Organisation

CR1 Chief Executive Officer Project Sponsor, CRESS

CR2 Director Project Sponsor, CRESS

MFG1 Product Planning Manager A bus manufacturer from UK

MFG2 Sales Director A bus manufacturer from UK

MFG3 Technology Sales Manager A bus manufacturer from UK

MFG4 Product Specialist & Bid Manager A bus manufacturer from Italy

MFG5 Head – Customer Care A commercial vehicle manufacturer

from India

BOP1 Chief Executive Officer &

Managing Director

A bus operator from south east of

England

ADV1 Deputy Director UK Govt.‟s advisory group on low

carbon transport

Table 1: Interviewee List

Informed consent from the participants was obtained prior to the start of the

interview. Paper based consent was obtained in case of face-to-face interviews,

47

whereas in the cases of telephonic interviews verbal and/or e-mail consent was

secured.

In total, nine interviews from eight companies were conducted in October –

November 2011 timeframe (five face-to-face and four over the phone). Out of this

nine, five were from OEMs. The reason behind the higher percentage of

interviewees from this group is that it is the bus where the ESS needs to be finally

deployed. Hence more emphasis was given to find out their views. Another two

interviews (representing the views of system integrator group) would have been

ideal. However, the nine interviews generated sufficient insights and in the later

interviews, the researcher found more repetition of the points from the earlier

interviews than new insights. Due to the time constraint and difficulties in access,

more interviews could not be conducted.

8.2.2. RESEARCH TECHNIQUES

Semi-structured interviews are more difficult to conduct than fully structured

interviews, as the interviewee‟s responses cannot be predicted and therefore the

response of the interviewer has to be improvised, requiring preparation and agility

(Wengraf, 2001). Consequently, semi-structured interviews necessitate careful

preparation before the session, discipline and creativity during the session and time

for analysis and interpretation following the interviews (Wengraf, 2001). This was all

considered during the planning stage of the study and various skills were required

to conduct the interviews including establishing an appropriate level of rapport

(Seidman, 1998).

Open-ended questions were used to define the area to be explored but also allowed

the interviewer or interviewee to diverge so that particular areas can be followed up

in more detail. Maintaining a standardized approach to the semi-structured

interviews ensures responses are comparable between interviews. This approach

may result in unexpected and insightful information coming to light, thus enhancing

the findings (Hair et al., 2007).

48

An interview guide containing the full list of planned interview questions is shown in

Appendix 6: Sample Interview Questionnaire. Depending on the background of the

interviewee, certain questions were either posed or skipped from certain interviews.

These questionnaires were created on the basis of the literature review and

understanding of CRESS‟s requirement. The interview began with ice-breaking

questions on the industry and market outlook. Figure 3: Industry Value Chain - UK

bus industry informed these questions. Then the interview progressed to issues

pertaining to product adoption factors, informed based on Figure 4: Characterizing

High-Tech Marketing Environments and Figure 9: Innovation Decision Process

(Rogers, 1995). Figure 11: Ideal channel system for business-to-business segments

buying a new high-tech product (Coughlan et al., 2006) and literature on routes to

market in section 7.4 formed the basis for questions on channel strategies.

Researcher concluded the interview enquiring about whether the interviewee had

anything else to add, if the researcher had missed any important points and with a

note of thanks. In some cases, telephonic follow-ups were carried out to clarify

researcher‟s understanding on any particular issue and to seek further information

on it.

8.2.3. ETHICS

Ethical dimensions of experimental designs are always important but they become

especially relevant during research studies (Hair et al., 2007). Privacy issues were

addressed as part of the informed consent process and details of how data would

be kept confidential were described to each participant.

Participants were informed about the nature of the research and it was made clear

that they should not feel that they were being forced to participate in the research

study. Interviews were collected in the form of notes and recordings of interviews

were only taken with the permission of the interviewee. In couple of cases the

interviews could not be recorded.

Copies of the recording were kept to provide the opportunity to clarify points if

necessary at a later date. The recordings were subsequently transcribed for the

49

purpose of detailed analysis. A sample transcript may be found at Appendix 7:

Excerpt from Interview Transcript. Notes from the interview and the recording

transcripts were grouped into the question themes. The recordings helped to have a

fair reflection of the interviews and to enhance the interview notes.

Data collected for the investigation were treated in the strictest of confidence.

The anonymity of participants was protected as individuals were not identified at

any point in the study and were not disclosed in any electronic or paper based

submissions to Henley Business School or to the sponsor. Company descriptions

and job titles were used to identify the target market but individuals‟ details were

kept anonymous.

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8.3. FINDINGS AND ANALYSIS

The objective of qualitative data analysis is to identify, examine, compare and

interpret patterns and themes (Hair et al., 2007). In this research-based project,

data collection and analysis were carried out in parallel. Therefore, these are

grouped together in this section.

8.3.1. DATA CODING AND CATEGORISATION

The data generated through the semi-structured interviews were collected,

organised and reduced to make it more manageable and understandable. This

process required choices about what should be emphasized, minimized and

eliminated based on how each interviewee responded to the positioning and

channel decisions in the context of diffusion and adoption of technological

innovations in the case of flywheel-based energy storage systems in UK hybrid bus

market. The reduced data was categorised in four broad research themes – the

hybrid bus market in UK, flywheel-based ESS, competition and routes to market.

In order to analyse these themes a deductive coding process was used to link the

useful theoretical frameworks identified while reviewing the current thinking (section

7) with the interview responses.

This provided a framework for analysing and interpreting any patterns and themes

from the data and relating them to the literature. During this coding process, it

became evident that significant amount of data was assigned to these codes and

therefore additional codes or sub-codes were identified to refine the initial thematic

coding. Figure 13 describes the framework.

51

Figure 13: Research Framework

The codes and descriptions of each category are discussed below.

1. UK Hybrid Market (MKT) – relates to overall market potential, trend and

drivers. This was further subcategorised as below:

a. General (GEN) – general and relevant comments about the bus

market, types of green or energy-efficient buses and their future.

b. Demand or Volume (VOL) – Hybrid bus volumes (at present and

future potential), the demand drivers for hybrids in UK market and

scope of retrofitting a bus as a hybrid bus with certain type of ESS in it

vs. new builds.

c. Adoption factors (ADOP. FAC) – deals with the factors driving or

hindering the adoption of green buses.

2. Flywheel-based ESS (FW ESS) – relates to the innovation itself. This was

further subcategorised as below:

a. Perception (PERCP) – existing perceptions about the innovative

technology (flywheel systems from CRESS and similar ones), both

positive and negative.

Research Themes

UK Hybrid Market

General

Demand

Adoption Factors

Flywheel-based ESS

Perception of FW ESS

Benefits

Competition

Batteries

Super capacitors

Routes to Market

52

b. Benefits (BEN) – refers to benefits offered by this innovation (majorly

from CRESS‟s point of view) and expected benefits from this

innovation (from market point of view).

3. Competition (COMP) – relates to competitive technologies. This was further

subcategorised based on the competitive technology as below:

a. Battery technology (BATT)

b. Super capacitor technology (SCAP)

4. Routes to market (RTM) – relates to distribution channels, channel partners

and go-to-market strategy.

The categorised and summarised data is displayed in Appendix 8: Interview

Summary.

8.3.2. DATA ANALYSIS AND DISCUSSION

Total nine interviews (average 45 minutes to one hour duration) were conducted

with senior executives with over average 15 years of relevant industry experience

and holistic understanding of the industry. Some cases provided more insights of

the competitive landscape of the energy-efficient UK bus market; whereas some

generated more insights on channel strategies. The following analysis and

discussion of interviews are based on the research findings presented in Appendix

8: Interview Summary.

The Hybrid bus market in UK

UK bus industry is a mature industry. As the deputy director of an advisory group of

UK Govt. on low carbon transport (ADV1) puts it – “Bus market itself is

commercially driven. They want low risk, high reliability, low cost.”

The size of the hybrid bus market is very small. UK-based bus OEMs and Govt.‟s

advisory group (MFG1, MFG2, MFG3, ADV1) reckon that by 2012, there would be

around 500-600 hybrid buses on the streets of UK. Data from MFG3 suggests that

53

595 hybrids in service or on order (excluding the original 56 from Transport for

London, TfL) are split between the manufactures as shown in Figure 14.

Figure 14: Hybrid bus market in UK

The interviews with the UK-based executives suggest the following to be the key

drivers behind UK‟s energy-efficient buses.

1. Fuel Price – All interviewees see the fuel price to be a key issue for the bus

operators. According to them, the price of diesel is most likely to go up or in

optimistic situations, stay at the current level; but it is unlikely to reduce. The

project sponsors (CR1 and CR2) reckon that the price of diesel might double

in next 5 years. Therefore, anything that reduces fuel consumption or the fuel

bill would get the operators interested. Hybrid fits this category.

2. Green Bus Fund – This allows the purchase of low carbon emitting bus

(LCEB) (more details about LCEB may be found in Appendix 10: Glossary of

Terms) at the cost of a standard diesel bus by reimbursing the price

differential (which is around £80k to £110k depending on whether it is a

single or double-decker). Details about green bus fund may be found in

Appendix 10: Glossary of Terms. Most of the hybrids were/are purchased

utilizing this grant. A bus operator (BOP1) informed “we looked around for it

(the hybrid buses) only due to green bus fund; otherwise we would have

never looked at it”. There have been two rounds of green bus fund in the UK

till date. However, there is no surety that this fund would continue post Mar,

2012. Bus manufacturers (MFG1, MFG2 and MFG3) see an imminent sharp

drop in hybrid bus purchase due to this. With no green bus fund, the

57% 18%

25%

Alexander Dennis (339) Volvo (108) Optare (148)

54

operators may only buy the green buses if they are able to get a very good

payback on the extra investment. BOP1 reckoned that the payback period

would be as high as 11 years if there were no green bus fund and therefore it

did not make economic sense for him to buy any hybrid buses with no green

bus fund. MFG3 opined that without any subsidy the market would probably

be quite subdued, really built around the TfL's demand, which currently

probably would be 100 a year.

3. Bus Services Operators Grant (BSOG) – At present, the fuel subsidy is

provided per litre basis. Also, a low carbon emitting bus is entitled for an

additional 6 pence/km. The interviewees anticipate BSOG to change from

pence/litre to pence/km or pence/passenger-km basis. This would catalyze

the adoption of energy-efficient hybrid buses as these buses cover more

distance per litre of fuel.

4. EURO 6 – This regulation would make the diesel engines more costly, thus

increasing the cost of diesel buses and reducing the cost differential between

the diesel and hybrid buses. So, in an indirect way, this makes the case

towards the hybrids.

Based on the above factors, the interviewees suggested that post Mar, 2012 (when

the Green Bus Fund ceases funding further buses) the production of new hybrid

buses would grow very slowly, if at all it grows. MFG1 pointed out that diesel

buses have “at least another good 20-30 years ahead of them”. According to the

CEO and MD of a bus operator (BOP1), though there are alternate energy-efficient

and environment friendly buses available in the market, “none of them is terribly

attractive as long as diesel is readily available and the price is even today’s price.”

One of the interviewees (CR2) suggested that around 2020, full electric buses

would likely be competing with standard diesel buses. BAE Systems expressed

their view about future being all-electric (Lawrence, 2011)5. However, most of the

interviewees opined that the industry is not yet ready for full electric. There would be

5 During the workshop in „Coach & Bus Live 2011‟ expo in Birmingham

55

limited numbers of full electric buses in coming years – may be in niche areas like

„Park and Ride‟ etc.

On the hand, the retrofit market in UK seemed more interesting. Retrofit market

can give the biggest volume base as there are around 40,000 buses in the UK with

around 20,000 of them being double-deckers. Technically retrofitting flywheel-based

ESS may happen when the battery pack in an existing hybrid is replaced or when a

standard diesel bus is converted into a hybrid. According to MFG1, “To get 100 kits

(1/5th of the total hybrid market) on road & get real on-road experience, it is easier to

look at 3-4 years old EURO4 double-deckers. No one (in the coming 3-4 years)

would want to convert a brand new hybrid to suit this box.” According to MFG2 (who

had good understanding of Flybus project), it is relatively easy, straight-forward and

cheaper to convert a diesel bus to a flywheel-based hybrid. However, an operator

(BOP1) suggested that it can be tried out when batteries are replaced in an existing

diesel-electric bus. Midlife of a bus is a suitable time point to perform this. In

London, the opportunity would likely appear when the bus operators need to renew

their contracts with Transport for London (TfL).

Energy Storage Systems (flywheel system & competitive technologies)

It was apparent from all interviews that battery is the dominant energy storage

technology in current hybrid buses. According to the head of customer care of an

OEM from India (MFG5), the success of hybrid technologies would depend heavily

on battery technology.

As it came out from the interviews, the flywheel based storage systems carry the

burden of negative perception about this technology from the past. The

expectations from a flywheel-based ESS, as expressed by the interviewees, are

summarized below:

1. These need to be trialled in a bus as a „whole product‟ on road and the

performance data needs to be utilized to support its adoption.

2. It should provide quicker payback for the operator.

3. It should provide better fuel saving.

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4. It should offer higher power density compared to other technologies.

5. Size and location – it should fit in the bus without compromising passenger

space.

6. It should be light weight and durable. Previous flywheel-based systems were

big and bulky.

7. Safety – a flywheel rotating at 15,000 revolutions per minute (rpm) raises

safety concerns in public transport.

Three major energy storage technologies came across in the interviews – battery,

super capacitor and flywheel. The perceptions of industry leaders (both positive

and negatives) of these technologies are summarized below in Table 2. Some of

these perceptions are not specific to the ESS being developed by CRESS.

Technology Positives Negatives

Batteries

i. Dominant technology at

present.

ii. Tested and proven on road.

iii. Recent improvements

seems promising, e.g. Li Ion

technology – lighter, more

durable, better fuel savings

i. Achilles hill in hybrid technology

– lifetime of about 5-6 years and

therefore replacement cost.

ii. Costly solution – resultant

payback period for the bus is in

the range of 9-10 years.

Super

capacitors

i. Being used on road in some

buses (e.g. Optare buses)

ii. Longer lifetime than

batteries.

i. Too costly - price needs to

come down.

ii. Relatively new technology in

experimentation phase.

iii. Issues with scaling, mass,

durability and control.

Flywheel

i. Cheaper to manufacture, so

payback period should be

shorter.

ii. No replacement required

over the lifetime of a bus.

i. Not proven on road.

ii. Promised a lot, but not

delivered.

iii. Size & space – big size, may

not fit in available space in buses.

57

iii. Possibility to be used in

parallel with batteries is

attractive.

iv. Engineering principle

behind this mechanical ESS is

well understood compared to

chemical engineering behind

battery technologies.

v. Awareness about FLYBUS

project. The system is about to

hit the road.

vi. Sounds good as another

option.

iv. Lower fuel saving potential

(<30%) leading to not being able

to secure the LCEB certification

and loss of grant money.

v. Not enough energy (c.a. 200

kW) may be stored on the

flywheel.

vi. Heavy.

vii. Gyroscopic issues – safety

concerns.

Table 2: Interviewees’ perceptions of different energy storage technologies

Routes to Market

The CEO and MD of a bus operator based in south-east of UK (BOP1) opined that

“the key to this (to get the flywheel-based ESS successfully to the market) is to get

an operator and a manufacturer interested.” In his opinion, this effort should be front

ended by a bus manufacturer who is prepared to create and bring the complete

product in the market. This summarises the sentiments of the operators and

manufactures to have the „whole product‟ (i.e. the bus a whole) tried and tested on

road. He also suggested that though this innovation should ideally be championed

by an OEM, getting a big and powerful user (e.g. TfL) interested can be really

helpful as OEMs would almost always be willing to listen what their big customers

are saying (i.e. big players who can generate or influence big-ticket or volume

orders and thus might be able to justify the cost associated with a new technology).

The bus market in the UK is “very conservative” and closely knit in terms of

business relationships. UK-based manufacturers were unanimous as being market

driven. Most of the manufacturers (both from UK and from abroad) echoed the view

58

of the bus operator (BOP1) that “manufacturers in Britain or Europe or probably

worldwide won't do things if they don't see market coming”. On the other hand, the

operators depend on the manufacturers for the technology choice and upgrade

paths. The OEMs provide all the post-sales support thorough guarantee and

warranty in the initial years after the sale and then maintenance support through

annual maintenance contracts.

As it was evident from the interviews, some OEMs are completely „vertically

integrated‟. Volvo is an example of such an OEM. They design the complete

driveline themselves and closely control the development process. They own the IP.

At present, such OEMs are few in number in the UK. According to the deputy

director of UK Govt.‟s advisory group on low carbon transport, other companies

might take the route to secure the IP. Volvo is an example of such an OEM.

However, other OEMs like Alexander Dennis, Optare etc. work closely with their

tier-1 suppliers or the system integrators like BAE Systems, Siemens etc. They

totally rely on the system integrators regarding any component decision. The

partnership or collaboration between Alexander Dennis and BAE Systems is an

interesting case. BAE supplies ADL the complete driveline – their proprietary

HybriDrive® propulsion system (BAE Systems, 2011). ADL just assembles the

components i.e. motor, generator, power control system (PCS) and the ESS in it.

ADL uses Li-Ion batteries not only because that is an advanced battery technology

with many advantages, but also because that is the ESS, BAE recommends.

Therefore, any ESS which comes to their hybrid buses needs to be approved by

BAE. However, Optare works with multiple suppliers, including system integrators.

But they also depend on their system integrators for any technology decision

especially regarding the storage technology in a regenerative braking system. The

India-based OEM suggested that it‟s not a good idea for an OEM to skip to tier-2

suppliers (though some time this happens). In his opinion, a tier-2 supplier is

unlikely to match the capabilities of tier-1s. As the Italy-based OEM puts it, the

OEMs would only involve appropriate suppliers in maintenance and repair work and

the OEM would directly interface with the operator and play the co-ordinator role in

59

such cases. Therefore they need to have the trust in the capabilities of their

suppliers. Prior experience and brand of such a supplier helps in generating the

trust.

As it was revealed during the interview with MFG1, the purchasing systems of the

OEMs are usually geared towards purchasing in bulk, which also creates some

leverage for price negotiation on behalf of big business buyers. Bulk order happens

after an innovation is adopted as a mainstream. Therefore the pricing & targeting

decisions need to be made keeping this characteristic of the purchase process in

mind.

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9. CONCLUSIONS AND RECOMMENDATIONS

This section recapitulates the key findings of this research and compares them

against the following objectives, which were set out earlier in section 6.6.

1. Competitive positioning for CRESS‟s novel energy storage system in UK‟s


2. Optimal route(s) to market for CRESS to bring this innovation to the market.

Based on the compare and contrast between the literature review and primary

research data conclusions are drawn. A number of recommendations for CRESS

management are made in the next section. This section concludes with a critical

analysis of the limitations of the study and suggestions for further research.

9.1. CONCLUSIONS

As explained in earlier sections, this research was carried out using the semi-

structured interviews. Collating and analysing data from such interviews was bit

challenging as the interviewees showed different levels of interests to different

questions. Also exactly same questions could not be asked in all the interviews as

the interviewees were selected from different stakeholder groups.

On the contrary, the semi-structured interviews, especially the face-to-face ones

(which also allowed observation of emotions of the interviewees), generated more

information than originally intended. E.g. during the review of secondary data from

internet or from the visit to „Bus and Coach‟ event in Birmingham, it was apparent

that Alexander Dennis Ltd (the bus manufacturer) and the BAE Systems (the

system integrator) were in a partnership. However, the level of their mutual trust,

respect and dependency on each other were apparent only through the interview

process. This was a critical piece of information which could not have been

generated through a survey questionnaire or through a formal and predefined

questionnaire.

61

The work of Mohr, Sengupta and Slater (2010) on characteristics of high-tech

environment was substantiated through this research. The market uncertainty was

apparent through the limited market potential – especially with retrofit market

emerging as more promising through the interviews, the uncertainty on how this

innovation would be adopted etc. Competitive volatility was apparent though there

were not many named competitors. But the innovation has competitive technologies

like batteries, super capacitors etc. It is interesting to note how the idea of

collaborating with the batteries has resonated well with many interviewers. Lot of

technical uncertainty was sensed during the primary research. The previous

unsuccessful attempts of flywheel-based solution were major reason behind that.

The need for high quality service was partly evident when the OEMs displayed their

strong preference of working with their existing system integrators.

Rogers‟ (1995) work on innovation decision process was corroborated to a great

extent through this research. Some interviewees had better prior knowledge of

flywheel-based energy storage technology than others. It was evident from their

responses that this technology was tried earlier, but was not able to make the

intended impact. This negative pre-conception might go a long way in the final

adoption or rejection decision of this innovation, as the respondents were from

senior level and decision making backgrounds in their respective organisations.

Figure 9 suggests how sources and channels of communication impact the

acceptance or rejection of an innovation.

Four out five perceived characteristics of innovation identified by Roger (2003)

identified were quite evident from the interviews with the senior executives from the

bus industry in the context of the innovative flywheel-based solution for energy

storage.

From the interviews, it was apparent how receiver and social variables (referring to

Figure 9) like perceived need of the innovation; tolerance of deviancy etc. positively

influenced the adoption of hybrid buses (albeit on a limited basis) by UK bus

operators. The oil price, regulations, environmental norms etc. made the hybrid

buses a reality on the streets of UK.

62

Moore‟s (2002) principles about positioning (described in section 7.3) was validated

through the interviews with the executives having the experience and/or knowledge

of previous flywheel-based systems and batteries.

Regarding the routes to market, the research proved the critical roles that the value

added resellers (VAR) play to bring this kind of products to market. This relates well

with the nature of the innovation, the ecosystem of the industry and the importance

of VAR or system integrators (also called as tier-1 suppliers). Though the prior

researches (explored during the literature review) showed that concurrent or

multiple channels are usually more successful in B2B scenarios, the primary

research suggested pursuing this market primarily through VARs. The research of

Vinhas and Anderson (2005) suggested multi-channel approach to be prevalent in

B2B scenario when the market size and growth are strong. That not being the case,

it is not a surprise that the interviews did not really suggest a multi-channel

approach in this case.

To summarize, the key conclusions are described as follows:

I. Although no competition (or no competitor) might appear to be a good

spot for a company to be in, competition actually helps the company to

effectively position its offering in the mind of the customer.

The recent Flybus project has not only validated that despite the false starts in the

past, the flywheel-based ESS is still an innovation with good prospect, but it also

has provided the customers a more similar basis to compare. Though the CRESS

product is different than Flybus product (e.g. electrical coupling vs. mechanical

coupling), Flybus product would help the customers know what to expect or

probably what to pay for similar product. Otherwise, the competition would mostly

be limited to the alternate technologies (existing dominant battery technologies or

super capacitors, in this case). This makes it easy for the customers to buy the

flywheel-based ESS by uniquely positioning the product relative to the available

alternatives in the mind of the customers.

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II. An innovation needs to make the ‘whole product’ solution more

attractive. Such a superior solution is usually able to generate the

market pull which makes the adoption of such an innovation easier and

faster.

The end users and/or the end customers interact with and pay for the whole product

or the whole system. In situations where the innovation occurs somewhere deep

inside the supply chain, an innovative and advanced component cannot make a big

enough impact on its own. E.g., in order to find its rightful place in the ecosystem,

the flywheel-based ESS needs to fit properly in the scheme of things in a hybrid or

an electric bus. The final product i.e. a hybrid bus with such an ESS also needs to

perform on all the five perceived characteristics of an innovation as defined by

Rogers (2003) to get the end customers i.e. the bus operators interested. That

would generate the market pull, which together with the technology push from the

suppliers would make it easy for the bus manufacturers adopt this technology.

III. Collaboration with the other members up the value chain seems to be

an optimal route to market for a start-up component supplier trying to

enter a conservative and closely-knit B2B market.

The previous conclusion can be logically extended to the collaboration with partners

and allies to be able to provide a complete solution. There is more than one reason

for that. It is unlikely for a start-up to possess all the required competencies to be

able to field the total solution on its own. The collaboration helps in displaying the

required credibility as a provider of the product or the system to the target

customers. In a conservative and closely-knit industrial market such as UK‟s bus

industry, the bus OEMs shows a strong preference to work with system integrators

as their direct suppliers. Therefore, partnering with system integrator seems to be

an optimal route to market. Communication remains the key for both collaboration

success as well as creation of awareness for the innovation. Collaboration and

communication become crucially important to achieve both market pull and

technology push, and maintain the balance between the two.

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9.2. RECOMMENDATIONS

Based on the conclusions drawn from the review of the current academic thinking,

marketing literature and interviews with senior executives in the bus industry

(majority being UK-based and a couple from abroad), a number of

recommendations has been developed for CRESS on the areas identified in section

6.6, i.e. competitive positioning and optimal route(s) to market.

1. Competitive positioning for CRESS’s novel energy storage system in UK’s

energy-efficient hybrid bus market:

i. The current size and growth potential of the new builds of hybrid buses do

not seem a very attractive proposition. Rather the retrofit market seems more

practical. This judgement, however, is based on the understanding that no

further rounds of green bus fund or similar grants would be available post

March, 2012 and that would impede the growth of hybrids. If, due to any

reason, the scenario changes (i.e. the new hybrids become commercially

viable for the operators), there would be a surge in demand for these buses.

Then targeting the new builds might become interesting.6

ii. To begin with, the category membership of the flywheel-based ESS needs to

be stated clearly, so that the customers can easily relate the product, i.e. a

flywheel-based electro-mechanical energy storage system for the hybrid or

full electric bus. This is the minimum amount of positioning required as the

potential customers would not be able to seek out the product unless they

know what category to look under.

iii. Whether to select the current battery technology as an alternate or

competitive technology is a critical decision. Batteries are the dominant

technology in this market and occupy a favourable position in customer mind.

Being positioned as a complementary product, rather than an alternate

product, might make the market entry and product adoption easier.

6 As this report is being written, UK govt. announced £25m to promote low carbon

buses and £8m to pump prime low carbon HGV (heavy goods vehicle) technology (Low Carbon Vehicle Partnership, 2011).

65

iv. The key differentiators (PODs) for this ESS (i.e. faster payback due to higher

fuel saving potential, the ability to complement the current dominant

technology etc.) need to be clearly defined. Some of these PODs might

become a POPs when new competitors (new suppliers of Flywheel-based

ESS) enter the market. Flybus came across as the one which is in the mind

of customers currently. However, it is advisable to choose PODs in a way

that is not disturbed by the entry of new competitors. PODs help the

customers uniquely place the brand in their minds.

v. The point-of-parities (POPs) would be the compatibility of the ESS with the

driveline (i.e. being able to be connected through an electrical interface), the

space requirement (ability to fit in the bus without compromising passenger

space or increasing the complexity of the overall system), safety of operation

etc. POPs and PODs help customers know what they are buying for. These

also help to put the product in a comparative context.

vi. All the claims about the product need to be supported with evidence. The

OEMs and the operators are interested in results from road trials. In absence

of these data, lab and simulations results should be presented in a way to get

them interested in trialling this technology. Also the success of this

technology in the crane market might work as a reference in such cases. It is

to be noted that there are some negative perceptions in the market about this

technology. Therefore the claims are likely to be scrutinized even more and

need more evidence-based support and persuasion.

Following Moore‟s (2002) guidelines about positioning such a new product, a

sample positioning statement is developed below for this particular case. This may

be updated or amended accordingly as it depends on multiple variables which may

change in any combination:

“For the system integrators or VARs dissatisfied with the limitations of the current

ESSs in the bus industry, we offer a flywheel-based electro-mechanical ESS to be

retrofitted in a standard diesel bus or be replaced in an existing bus, providing

higher fuel saving potential, quicker payback and greener solution unlike the current

66

costlier and complex alternatives which requires regular replacements and

maintenance. Our ESS is designed to be easily integrated in the bus driveline.”

2. Optimal route(s) to market for CRESS to take this innovation to UK hybrid

bus market:

i. Taking this innovative energy storage system all alone to the bus market

would be a tall task for any start-up. Getting an operator and its OEM (or

vice-versa) interested should be the first step. They can be the beachhead

target for CRESS. Targeting multiple operators and/or OEMs might result

into spreading itself too thin. In the UK, the bus industry has long tail in terms

of operators and manufactures (though there are only three major OEMs

currently who produces hybrid buses). Targeting a relatively smaller player

who is interested in leveraging technology leadership to gain market share

and/or more profit would be mutually beneficial. They are likely to be more

innovative, less risk averse and thus more willing to try the innovation than

the bigger counterparts.

ii. If the chosen OEM displays a high degree of vertical integration, their

research & development (R&D) or technology transfer or innovation group

(whichever group they revert to for any technology decision) need to be

approached. In cases, they might fund the development also. But they are

likely to seek to own the IP of the product. Therefore it depends on CRESS‟s

strategy whether this route needs to be adopted or not.

iii. Otherwise, the system integrator or the VAR for the targeted OEM needs to

be convinced. Collaboration with them is necessary. The OEMs listen to two

parties – the operators, who are their direct customers and their system

integrators as they trust the system integrators for any such technology

recommendation. Operators usually do not involve in the technology

decisions. Hence this 1-level channel is the best way forward. Also

customers cannot feel completely secured in buying a product until they

know it comes from a vendor with staying power who will continue to invest in

67

this product category. The brand reputation of the system integrator also

helps.

iv. In addition to the indirect route to market suggested in the previous point, a

direct channel also needs to be adopted. The primary responsibility for the

direct sales channel should be demand generation and market feedback,

whereas the indirect channel should be responsible for demand fulfilment

and after-sales service. It is important to delineate the responsibilities in

order to avoid any probable channel conflict.

9.3. LIMITATIONS AND SCOPE OF FURTHER RESEARCH

This research focused on positioning and routes to market for a high-tech

innovation. Positioning is a strategic activity in marketing, whereas routes to market

involve decisions at tactical level as well. However, these topics cannot be treated

in isolation. E.g., for successful positioning of a product or service, one needs to get

segmentation and targeting right. Although, the hybrid bus market is one of the

target application areas for CRESS, the customers in the bus market also needs to

be further sub-segmented. Further research may be conducted to find out an

optimal way to segment this market. It might be useful to look segmenting the

market as per Roger‟s classification of innovation adoption categories. Rogers‟

(2003) & Moore‟s (2002) work have explained how these categories are different

from one another in terms of their preferences.

Interviews could not be conducted with the system integrators. Access to them

could not be secured despite multiple attempts through various channels. They are

one of the key players in the value chain of the bus industry. The knowledge and

experience level of available interviewees from UK‟s energy efficient hybrid bus

market covered the views and opinions from system integrators in fair detail.

However, it would probably be better to talk to the system integrators to understand

their needs in more detail to successfully position this innovation to the bus market.

Therefore, this research may be further enhanced by conducting additional

interviews with the system integrators.

68

10. PERSONAL REFLECTION

This project has been quite a fascinating and learning experience for the author as

this was the first time the he undertook a project of this nature. This section

discusses the reflective component of the author‟s learning experiences from

conducting the research project. Author‟s experience of the research process is

followed by the reflection of author‟s personal development objectives. Supportive

evidence from learning journal is presented in Appendix 9: Excerpts from Learning

Logs to demonstrate how this research project enabled active and reflective

learning during this venture.

10.1. EXPERIENCE OF THE RESEARCH PROCESS

A project-based approach was adopted for the research process. Figure 15 depicts

the key activities of this project. Though the activities are shown sequentially, some

of the activities can be and were carried out in parallel.

Figure 15: Research Process

In the scope definition phase, a stakeholder analysis was performed. The

expectation setting was done through meetings and e-mail exchanges. The

interests of the key stakeholders, available time and resource were considered

during that stage to define the research problem. A formal project proposal was

then submitted to Henley Business School. It included a brief literature review as a

Scope Definition Literature Review Collection &

Analysis of Primary Data

Derivation of Conclusion &

Recommendations Report Writing

69

starting point for this project. A research strategy involving semi-structured

interviews was chosen by the author as part of the proposal.

Due to the commercially sensitive nature of the topic, a tripartite non-disclosure

agreement (NDA) was reached among the sponsor, the university and the author.

Scope creep, schedule overrun and accessibility to people are the frequent issues

in these projects. Author tried to keep a watch on these areas.

In the literature review phase, detailed literature review covering both academic and

practitioner literature was undertaken. The objective was to focus on more recent

(last 10-15 years) articles. However, a few older articles were found which still

seemed to be very relevant. Hence those were also included. Initially, innovation,

positioning and routes to market in B2B context were selected as key research

areas. However, as the research progressed, the research was further

contextualized in high-tech sphere where a start-up is aiming for an early market.

This sharpened the focus and also helped in fine-tuning the interview

questionnaires. The visit to „Coach and Bus Live‟ tradeshow in Birmingham helped

develop better understanding of the industry and gave more insights. Author visited

„Great British Business Show‟ in London to have a sense of the thinking of

successful entrepreneurs and business leaders from different industry sector on

positioning, channel strategies etc. (specifically in UK start-up context).

The primary data collection or the interview process was the most critical phase.

Different stakeholders in the UK energy efficient bus market were selected as the

target population for interviews. They provided a well rounded perspective of the

issue at hand. CRESS management was very helpful in connecting with the right

set of senior executives. It was important to establish a level of trust, credibility and

rapport during the preparation stage while setting up the interviews and also during

the initial minutes of the interviews. The references of CRESS senior management,

the business school & the supervisor were instrumental in achieving that.

It was a valuable experience for the author interviewing senior executives and gain

from their insights. It was interesting to note the varied perspectives (though the

70

variations were not huge) and perceptions (especially of technologies) of these

executives. The questions used for the interviews were adapted over time and

varied from interview to interview depending on the interview responses.

10.2. REFLECTION ON PERSONAL OBJECTIVES

Section 6.4 described the personal objectives which the author set out to achieve

during this project. A learning log was used to make note of his experiences.

I. Subject based Learning – This project has enabled author to gain deeper

insights about adoption and diffusions of innovations and better

understanding of unique characteristics of high-tech innovations. The

practical insights like positioning is all about the small space that an offering

can occupy in customer mind, the importance and relevance of different

channel strategies during various life cycle stages of an offering etc have

been of great relevance. In past author designed and developed a „failure

simulator‟ for automotive electronic control systems. Despite the technical

superiorities of the product, it did not reach its full adoption potential. The

learning from this project has enabled the author to relate that to „chasm

crossing‟ and positioning issues.

II. Practical Exposure – Interactions with sponsors gave the author a first-hand

experience on how marketing plays such a strategic role for a new product,

specifically a high-tech innovation. Working with entrepreneurial technology

start-up in itself has been an extremely valuable experience.

III. Research Skills – If the author has to choose a single skill related to primary

research, then that would be the interviewing skills. Being able to ask a

relevant question and then listening actively to the senior practitioners and

industry experts, is itself a learning journey. It was tempting at times to cross-

question them to gain deeper understanding of any issue. But, with the

benefit of the hind-sight, author feels that given the time constraint and also

the holistic or strategic nature, he was able to gain more by biting his tongue

more often than his usual. Sometimes going with the flow probably helps.

71

IV. Personal Development – Though the author was able to develop upon his

active listening skills (which helped him in note taking and data analysis),

author exceeded the planned timeline. Given very little prior experience in

this kind of research activities, author was bit unsure in the planning stage.

More than once, it was felt – “wish I had more time...” The key stakeholders

were proactively kept informed.

72

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12. APPENDICES

APPENDIX 1: ANALYSIS OF UK HYBRID BUS MARKET

Political

UK government‟s change in fuel subsidy, the Bus Service Operators‟ Grant

(BSOG) (UK Parliament, 2011) and a £30million fund, called the Green Bus

Fund (Department for Transport, 2011) has created an immediate market in

the UK for over 300 clean buses.

Economical

The price of fossil fuels is likely to increase in coming years, thereby making

the operation of diesel buses more uneconomical.

Societal

There has been an increased societal consciousness about the environmental

concerns and mode of sustainable transport.

Technological

A number of clean technologies has emerged (e.g. energy recycling,

renewable energy, green building, green infrastructure, green transportation

etc.) and investment in these technologies has been increasing significantly

(Bloomberg, 2008).

Environmental

In 2010, a scientific study commissioned by London Mayor estimated that air

pollution was responsible for 4,267 early deaths in the UK capital, through

long-term exposure (Miller, 2010).

Then there is global concern on climate change and reduction of carbon

emission. The UN has developed UNFCCC (United Nations Framework

Convention for Climate Change) to respond to these issues and put the onus

on the developed countries (referred to Annex I countries), like the UK to lead

the way to tackle the environmental issues (Secretariat of UNFCCC, 2011).

Legal

In 2008, UK passed legislation in form of „climate change act‟ introducing long-

80

term legally binding framework to tackle the dangers of climate change. It has

set a target of at least an 80% cut in greenhouse gas emissions by 2050, to be

achieved through action in the UK and abroad. Also a reduction in emissions

of at least 34% by 2020 is to be achieved. Both targets are against a 1990

baseline (Department of Energy & Climate Change, 2011).

EURO 6 regulation, which comes in to force on 1st September 2014, imposes

stricter emission norms (e.g. additional reduction of 50% compared to EURO 5

norm) on passenger vehicles, commercial vehicles, vans etc. running on

petrol, diesel, natural gas or liquefied petroleum gas (LPG) (The European

Commission, 2010).

Table 3: PESTEL Analysis of UK bus market

81

APPENDIX 2: CRESS PRODUCTS VS. ITS COMPETITIVE PRODUCTS

CRESS Batteries Capacitors Flybus

System Separate

flywheel and

motor/generator

Lead acid Super

capacitors

Separate

flywheel and

motor/generator

Peak power (kW) 140, continuous

90 kW

100 100 60

No load losses (kW) 2.5 n/a n/a ?

Fuel Savings Up to 50% ? ? 10%

Stored energy (kWh)

at max. operating

speed

0.8 30 2.5 ?

Maximum operating

Speed (rpm)

15000 n/a n/a 60000

Mass (kg) excluding

power convertor

350 2000 300 27 (?)

Number of full

discharge cycles

1,000,000 3,000 10,000 1,000,000

Storage efficiency (%)

excluding no load

losses

90 70 95 ?

Table 4: CRESS System vs. Competing Technologies [adapted from CRESS Business Plan v2.17, 2010]

7 This source is not available in public domain and has restricted access.

82

APPENDIX 3: FLYBUS CONSORTIUM

Part-funded by the UK‟s Technology Strategy Board as part of its Low Carbon

Vehicles initiative, the Flybus consortium brings together engineers from bus maker

Optare, engineering consultancy Ricardo and traction drive technology specialist

Torotrak. Automatic transmission supplier Allison Transmission Inc is also

participating in the project on a self-funded basis. This programme involves a

flywheel-based mechanical hybrid Kinetic Energy Recovery System (KERS) for

fitment to buses and commercial vehicles. This is a demonstration project.

The successful development of a mechanical hybrid system suitable for commercial

vehicle applications will provide UK industry with a significant opportunity to

manufacture and sell 'green hardware' for both newly-built vehicles and existing bus

and truck fleets across the world.

Whilst electric hybrid systems have already been developed for bus applications

and have demonstrated useful fuel savings, such chemical battery-based solutions

add considerable weight and complexity, lead to increased whole-life costs due to

regular battery replacement and also raise associated environmental and disposal

issues. In contrast, mechanical hybrids have been shown to offer up to twice the

efficiency of a typical battery-based electric hybrid system in a package that is half

the size, half the weight and a quarter of the cost. (Motorsport Industry Association,

2009)

83

APPENDIX 4: VIABILITY OF A BRICKS AND CLICKS MODEL

Kirsner (1998) suggests to consider the following factors before adopting a bricks-

and-clicks or distribution over own website by companies.

Does the company have the resources and capabilities to develop and

operate an industry-standard e-commerce platform providing excellent user

experience and making money?

Does the company currently sell products through catalogue?

Do the products need any configuration or system integration?

Are the products easily installable and maintainable?

Is the sales process clear-cut and non-consultative?

Does the company have an existing infrastructure to support direct sales

(e.g. order fulfilment, returns, customer service etc)?

Do the customers usually know what they want when buy or do they need

information about competitors‟ products and product benefits from a 3rd

party?

Is the company willing to promote the website enough to attract sufficient

prospects?

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APPENDIX 5: EXPLANATORY E-MAIL

Dear XXXX, I am Saurav Mukherjee, an MBA student at Henley Business School. I received your contact details from YYYY. As part of my MBA, I am currently undertaking a research-based project in the areas of „competitive positioning‟ and „routes to market‟. The intentions behind this study are two-fold:

1) To enhance my understanding about the above mentioned topic areas, and 2) To make some key recommendations to a technology start-up, CRESS who has

kindly allowed me to carry out the research on behalf of their organization. CRESS designs, manufactures and supplies a novel flywheel-based system for transient storage of electrical energy in industrial /commercial transport and energy applications.

I intend to explore the energy-efficient green bus market in UK, as this is one of the potential application areas for the CRESS‟s innovation. Hence I would like to request your participation in this study. For the purpose of the study, I would be interviewing you on the above mentioned topics related to the „green‟ bus industry. The interview should take no more than one hour of your time. The interview will be recorded to ensure accurate retention of data which will be transcribed. If audio recording poses a problem to you, I would try my utmost to collect data without it. Your participation in the study will remain anonymous and confidential. We appreciate the pressure on your time and the interview can take place at a time convenient to yourself. If you are able to participate in the study please contact me at: [email protected]. With warm regards, Saurav Mukherjee Supervised by: Supervisor details Sponsored by: Sponsor details

mailto:[email protected]

APPENDIX 6: SAMPLE INTERVIEW QUESTIONNAIRE

Questions Information Outcome Particularly

relevant to?

How do you see the „green‟ or the „hybrid‟ bus

market develop?

Market Trend/Market

Potential

All

What drives the adoption of green buses? Market Drivers, Product

Adoption Factors

All

Different types of buses are currently available in

the market like standard diesel, diesel hybrid, full

electric etc. In your opinion, which of these would

be become dominant in the market? Why?

Market Trend, Dominant

technology, Product

adoption

All

What benefits do the green buses offer you as a

bus operator? Is there any disadvantage or

negative side effect of green buses?

Product Adoption Factors Bus operators

What are the additional expenses you need to

incur with a green bus and how does that impact

the adoption of green buses?

Product Adoption Factors Bus operators,

OEM

Compared to a standard diesel bus, is any special

type of maintenance required for a green bus? If

yes, who provides those services – do you do that

in-house?

Cost implication, product

adoption

Bus operators

What are the operational issues, if any, with a

hybrid bus faces compared to a normal bus?

Product Adoption Factors Bus operators

How is the planned reduction of BSOG/GBF going

to impact the bus operators?

Industry outlook All

What kind of ESS do you use in your buses? Have

you trialled or evaluated any other type? What

would you consider before adopting such

technology?

Product features/ relative

advantages/ competitive

technologies

OEM

What is your or your company‟s involvement w.r.t.

the driveline related issues in green buses? Do

you request the system integrators to provide you

with a specific type of ESS over the other? If yes,

on what basis that recommendation is made?

Technology adoption,

Decision

making/influencing, Routes

to market

OEM

In your opinion, who are the major influencers to Product adoption, Routes All

86

select one type of storage system over the other? to market

How is your company adopting/planning to adopt

the green bus?

Adoption of innovation –

Roger‟s curve, Positioning

strategy

Bus operator,

OEM

How do you perceive the passengers‟ attitude

about green buses?

End customer perception –

adoption criterion

All

What is your expectation regarding the cost or

payback period from an ESS or a hybrid bus as a

whole?

Product Adoption – cost

implication

OEM, operators

The flywheel based ESS needs no replacement.

This system might be retrofitted in a hybrid bus

and as well on a diesel bus. How do these

possibilities sound to you? Do you think these

features would interest the market?

Product features - adoption All

How should a tier-2 supplier, who wants to supply

these types of ESS, approach bringing a new

innovation to the market? Whom they need to talk

to and convince first?

Routes to market All

Finally, would you like to add anything that you

think I should be aware of?

Catch all All

87

APPENDIX 7: EXCERPT FROM INTERVIEW TRANSCRIPT

Saurav How do see this green or hybrid buses in the UK develop over next 5 years?

Interviewee It depends very much on the potential govt. subsidies - how many are funded

by the GBF for example. That would give 100-150 hybrid vehicles each year.

Without any subsidy, the market would probably be quite subdued, really

built around the TfL's demand, which currently probably would be 100 a year.

It depends on their level of funding really. And also what happens to the

BSOG, which is being reduced by 20% in 2012. If that gets reduced further in

subsequent years, then the attractiveness of hybrid would go up and

therefore the market will improve. But if we are stick with the current regime,

then probably say 100-150 a year.

Saurav And this till another 5 year, say till 2015 or so?

Interviewee Probably, unless there is any political intervention.

Saurav In the market, different types of green buses are currently available, e.g.

diesel-hybrid, dual fuel, full electric etc. In your opinion, which amongst these

would become dominant or would there be an equal share of all these in the

market?

Interviewee Most of the vehicles we have seen so far are hybrid and very few are

electric, because they do not have enough energy density in the batteries in

the main stream bus routes. Eventually electric buses hitting the market in

any great volumes is low, except a few niche P+R, where you can still

charge up at the end of each journey. Bio-methane is very much dependent

on where it can get the fuel. You can see only very few fuel sources, only a

handful. The main would be hybrid-diesel electric.

Saurav In diesel hybrids, we have this series and parallel configurations. I think ADL

uses series, whereas few companies do parallel also.

Interviewee In UK, everybody is series, other than Volvo, who has gone parallel. The only

exception to that is Optare. There are 10 Optare tempos running in London

which use parallel. They've got the Allison EP50, EP40 cc also. They're not

going to buy any more of those. ADL got 57% (339); Volvo got about 18%

(108) of low carbon buses, and Optare 25% (148) as of couple of months

ago. There are total 595 hybrids are on service or on order. This excludes

the original 56 hybrids in London.

88

Saurav Diesel price is a major driver. The current global scenario is that the price is

not going to come down probably.

Interviewee Yeah, it can't go down. It can only go up. That will make a big difference to

the cost of ownership to the hybrid.

Saurav In these diesel hybrid buses, you use some kind of ESS. Some companies

use batteries.

Interviewee We use batteries - Li-Ion batteries. No other technology.

Saurav Some other companies use super-caps and this kind of FW-based

mechanical batteries.

Interviewee There aren't any in the service with FW. And they are only experimental at

the moment. The Volvo uses the Li-Ion battery, Optare uses ultra-caps. Look

at the size of Li-Ion batteries; they are coming down quite nicely, whereas for

ultra-caps there is scope for the price to come down to a reasonable level.

Saurav So, pricing is one of the key factors in deciding which the technologies to

adopt?

Interviewee I think so, yeah. Price is always important.

Saurav Regarding battery technology, you need to replace the battery every 5-6

years, despite the advance in battery technology. But FW-based ESS would

not require any replacement.

Interviewee Yes, in theory. It‟s a mechanical component. There might be wear and tear.

We do not know yet.

Saurav That means you need to trial this on road, before making any decision.

Interviewee Yes. FW is big enough for bus. In theory, they are available for years.

They've never really been marketed properly. They've never hit the street

that way. The first one is about to come out, I think – that‟s the FLYBUS

thing. Space is the big issue as well. Buses are there to carry passengers,

rather than driveline.

Saurav What about the fuel savings? I think that the battery or super-cap based ESS

is giving around 30% currently.

Interviewee That‟s about the right range. That‟s what we see in the trial and on the road.

Now we have around 375 on the road.

Saurav This FW-based ESS is promising to give more than that, around 50%.

Interviewee That is very, very ambitious. I think that I have seen around 15-20% using

FW-based system, but nothing near 50%. We need to see that in service

89

first.

Saurav Regarding the driveline, do you develop it yourself or do you work with some

supplier or partner who develops the same?

Interviewee We buy hybrid systems from BAE Systems.

Saurav Does BAE do the entire system or you give the specification?

Interviewee No, they do it completely. It is their system. We buy from them the motor, the

generator, the PCS (power control system) and the ESS - the battery. We

buy those four discrete lumps and integrate in to the bus ourselves. We did

ourselves before. But getting something reliably is very difficult.

Saurav Regarding the ESS, is it their decision to use a certain type of ESS i.e.

battery, super-cap etc. or is it you who goes and specifies Li-Ion batteries,

because you think that those are good?

Interviewee No, we buy the turnkey systems of BAE Systems. Therefore we take

whatever they'd recommend. And they are using Li-ion.

Saurav Now coming to adoption of any new technology or innovation - who

influences the adoption - bus operator, you as an OEM, or the suppliers?

Interviewee It‟s probably the customers, i.e. the bus operators. They have the most

influence on us. Their recommendation has nothing to do with passengers

really. They see how economic you make the bus.

Saurav What is your plan regarding this green buses - are you reducing the

production of diesel buses etc.?

Interviewee No. We'll build what market wants. Hybrid buses is about 10% of our

production this year, probably a little bit less next year. We'll build what our

customers want end of the day.

Saurav How should a tier-2 supplier, who wants to supply these types of ESS,

approach bringing a new innovation to the market? Whom they need to talk

to and convince first?

Interviewee If it is for us, then it has to come through BAE systems. It is not something

we'd do ourselves. We're dependent on BAE if it is alternate ESS. We'd do

nothing that would compromise BAE's position. They'd have to approve the

ESS.

Saurav How does retrofitting a FW-based ESS on an existing bus sound, when the

battery needs to be replaced? Or does it have to come on a completely new

bus?

90

Interviewee Certainly for a double-decker, that has to be a new bus. It depends on where

the hybrid components are. You might be able to do it in a diesel single-deck

bus, but not on double deck.

Saurav Why is that so?

Interviewee Because of the way the gear box is all inside it. In single-decker it's inline

driveline. It‟s like that there is no spare space available in double-decker.

And somehow you need to get an angle drive. I don't think anybody done

that, the flywheel system yet.

Saurav In your opinion, what are the key success factors this FW-ESS must look into

if they have to go in this diesel hybrid?

Interviewee Most important thing is to make it economically viable. First of all, how much

it‟s going to cost. Then, whether a FW-based bus would get a LCEB

certificate. For that it needs to demonstrate 30% fuel consumption

improvement over a standard EURO 3 diesel bus. If it can get that, the

operator can get that additional 6p/km grant. That‟s quite significant. I don't

think that any of the FW-based system would be able to achieve that. There

is not enough energy that can be stored in the FW. In diesel-hybrid, you can

put 200 KW into a Li-Ion battery pack. I don't think that you can get 200KW

into a FW. And it will be very big FW.

Saurav Is there a particular payback period that you expect from batteries which you

might expect from the FW as well?

Interviewee We are giving a payback, under the current regime, of about 8-9-10 years

depending on the duty cycle. But the FW systems are going to be lot

cheaper. So it should be a lot less. Ideally, you need to get the payback less

than 5 years of operation.

Saurav Does it pertain to only London or all over the UK?

Interviewee Outside London, it could get away with little bit more. London bus contracts

bus last for 5 years, possibly extended to 7.

Saurav FW-system can work in parallel with existing batteries. In that case, it works

as a range extender for the batteries increasing their lifetime.

Interviewee If that‟s possible, that would be great. So far, FWs have promised lots, but

delivered nothing. They've been talking about FW-based buses for year and

years and years. But only now, some of the prototypes are coming out. It

would be interesting to see them on the street and put some miles behind

91

them.

Saurav So CRESS in that case should work with both BAE & you to put the ESS in

the bus and test on road. Then if some operator wants to try it, that‟s great.

Interviewee Yes, it has to be on a trial basis first. The bus industry is very conservative. It

wants to first see on trial basis for 5-6 months, that whatever it promises, it

actually delivers.

92

APPENDIX 8: INTERVIEW SUMMARY

INTERVIEW HYBRID MARKET FW ESS COMPETITION RTM

GEN VOL ADOP. FAC PERCP BEN BATT SCAP

MFG1

Bus transport

is not priority

for public

authorities.

Diesel engine

has another

good 20-30

years ahead

of it.

Diesel-

hybrids not a

stop-gap

solution. It

delivers fuel

savings, not

complex,

maintenance

similar to a

diesel bus.

Retrofit

decision is

likely to be

taken by the

operators.

Around 500

hybrids on

UK roads in

2012 & very

slow growth

there on.

Retrofit can

give the

biggest

volume

base.

Retrofitting

FW-based

ESS into

new hybrids

during

battery

replacement

is a remote

possibility.

Discontinuance

of Green Bus

Fund (GBF)

from Mar, 2012

likely – would

deter the

adoption.

EURO6 to

increase the

cost of diesel

engine – sales

likely to fall.

Likely

modification of

BSOG – makes

hybrids more

attractive.

Substantial

additional initial

cost (£80k –

£110k) makes

hybrids

commercially

non-viable

without any

grants.

It‟s not a

new system

– heard

about this

way back in

1979, BP

technology

Probably

there is

market for

this now.

Payback within

5 years

(especially for

London).

Packaging –

safety + space

limitation on a

bus.

Size & weight –

should fit in

scheme of

things.

Durability of the

FW material.

Should

generate

significant fuel

savings.

Should be easy

to integrate.

Dominant

technology,

uses in own

buses.

Regular

replacement

(every 4-5

years) due to

limited lifetime.

Fits nicely in

the bus,

significant

technological

improvements

in recent times

– Li-Ion

technology.

Uses in some

buses in their

North America

market.

Strong vertical

integration in

Europe.

Competitors

working with

system

integrators like

BAE, Siemens,

and Allison etc.

Operators turn to

OEMs for re-

engineering,

retrofit etc.

A new tier-2

supplier needs to

break into OEMs

through

suppliers of

automatic

transmission

systems.

Purchasing

system biased

against the start-

ups due to small

sales volume.

Depends usually

on central

development

dept., technology

group,

technology

transfer group to

scout for

innovative ideas.



MFG2

It supplies

both full

electric as

well as

diesel-

hybrids.

For financing

companies,

the 2nd

life of

buses is also

important.

Passengers

140 from

them to come

on road by

Mar, 2012

through GBF.

Retrofit would

be a bigger

market for a

payback if it

can be done

at a

commercial

level. It can

Govt

sponsorship

through GBF

EURO6 would

make electric

non-hybrids,

as otherwise

you still need

the engine.

Payback – in a

way related to

the lifetime of

Flybus is

probably the

easiest way

to bring

hybrids to

market.

Still in

experimenta

l phase.

Less capital

cost.

Easy to convert

current diesel

vehicles,

doesn‟t have to

be a brand new

vehicle.

Other big

manufacturers

use battery

technologies.

Use super caps

ESS in their

hybrids.

Super caps are

on the roof, so

it does not take

space in the

vehicle like the

battery does.

Maintenance &

repair of hybrids

is taken care of

by the OEMs

due to special

training required

to handle high

voltage.

Hybrid

components are

subcontracted to

companies like

Valence, Actia,

93

are aware

whether they

are on a

green bus –

due to advert

and quieter

operation.

give much

quicker

payback.

Retrofit

possibility at

the end of

contract in

London.

battery.

System

integrator

influences the

technology

choice.

Innova, Siemens

etc & the

company

assembles it.

Listens to

system

integrator. But

vehicle test is

necessary

before adopting

a new tech.

Partnerships

with suppliers,

protecting

themselves with

owner‟s

agreement.

A component

supplier needs to

get in touch with

the engine

suppliers to

ensure that they

do not invalidate

the warranties.

MFG3

Diesel-

electric hybrid

to be the

main type of

hybrid on

road.

Builds

whatever the

market

wants.

Bus industry

is very

conservative.

100-150 per

year under

current

regime.

Without the

GBF, TfL can

still think on

its own and

can see

another 100

hybrids in

addition to

those

supported by

GBF.

Total hybrids

on UK streets

= 595 (ADL-

57%, Volvo-

18%, Optare-

25%) + the

original 56

hybrids in

London.

Retrofit might

be possible

on single-

deckers, not

on double-

deckers.

Govt subsidies

– GBF.

BSOG to be

reduced by

20% -

attractiveness

of hybrids to

go up.

Diesel price

can only go up

– would make

big difference

to the cost of

ownership of

hybrids.

Price is

important in

deciding which

tech to use in

buses.

Bus operators

have the most

influence,

nothing to do

with

passengers,

depends on

how economic

is the bus.

Available for

years, never

really been

marketed

properly,

never hit the

street that

way.

The first one

is about to

come out –

the FLYBUS

Mechanical

component

– might be

wear and

tear.

Too big for

buses.

Around 50%

fuel savings

is very, very

ambitious

target.

Don‟t think

that it‟s

possible to

store

200KW on a

flywheel.

Space is a big

issue.

Needs to be

economically

viable – need to

get the payback

in less than 5

years, may be

little more

outside London.

Should be able

to get the bus

LCEB

certification –

min 30% fuel

savings.

Working in

parallel with

batteries is a

good idea.

Need to see

them on the

street for 5-6

months and put

some miles

behind them.

They use Li-Ion

only.

Size of

batteries

coming down

nicely.

Need to replace

in every 5-6

years.

Over 30% fuel

savings.

Some

companies use

ultra caps.

Scope for price

to come down

to a reasonable

level.

Buys complete

hybrid system

from BAE –

motor, gen, PCS

& ESS –

assembles in the

bus.

Completely

depends on BAE

for hybrid tech –

including type of

ESS to use.

Very close

partnership with

BAE, won‟t do

anything that

compromises

BAE‟s position.

Any new ESS

needs to be

approved by

BAE first.

94

FWs have

promised

lots, but

delivered

nothing.

MFG4

Italy is

playing catch

up with other

EU countries

in the hybrid

game.

Can‟t

comment on

UK market

Ministry of

environment is

major

influencer.

Payback –like

to have same

payback as

standard

diesels.

Depends on

cost.

Product

availability.

Not much

aware of

this

technology.

Not thinking

of adopting

this.

Preferred

storage

technology.

Should work for

at least half of

bus lifetime,

lifetime is a

concern.

Li-Ion

technology

offering

improved

lifetime.

Relatively new

configuration.

Does not develop the driveline/ transmission systems themselves.

Works with

vendors for the

transmission

system.

Vendors play key roles in technology selection.

Coordinates with

suppliers to

provide

aftermarket

support and

services to the

operators.



MFG5

Success of

hybrid

technologies

depends

heavily on

battery

technology

Can‟t

comment on

UK market.

Retrofitting

advanced

ESS on a

driveline is a

good idea.

Drivelines

also should

be designed

to supports

the retrofit

possibility.

Economic

conditions.

Environmental

norms.

Sounds good

as an

emerging

technology

Results from

road tests and

trials.

Standard

technology.

Still in

experimentatio

n phase.

OEMs usually

procure the

drivelines from

the vendors.

Refers to tier-1

suppliers for

recommendation

on new

technological

developments –

due to trust, long

standing

relationship &

technological

leadership of

tier-1s.

OEMs usually

won‟t jump to

tier-2 skipping

tier-1s – tier-2s

are not able to

match the

capabilities of

tier-1.

CR1

The market is

still quite

early.

Current time

might be the

beginning of

rapid

expansion or

just the

testing

phase.

The oil price.

Governmental

policy on use of

oil.

Macro-economic

factors to drive

CRESS ESS

is an electrical

storage

device,

though it

stores energy

mechanically

– established

Provides

energy

storage

facility.

High power

rating for its

size, costs

Offers low

power rating

and heavy, thus

reduces fuel

efficiency.

Regular

replacement –

Seeing some

traction at the

moment.

General debate

about slightly

longer lifetime

than batteries –

If there‟s no real

retrofit

opportunity, it

makes more

sense to talk to

the OEM‟s

because the

conversation in

95

Crane

application

shown lots

of retrofit

opportunity.

Majority of

the existing

fleets are

just straight

diesel, not

diesel

electric and

therefore

there won‟t

be an

immediate

retrofit.

Stronger

opportunity

for new build

than retrofit

(gut feeling)

the adoption. way in the

market to

store energy.

Disadvantage

of the Flybus

ESS - it has to

integrate quite

closely with

drive train,

and so, it is

relatively

difficult to

retrofit.

Bit too early

know how the

mechanical

flywheel will

compare with

the electrical

flywheel

energy store.

3-4 years of

first mover

advantage

may be

expected in

UK.

People are

aware of

batteries and

super

capacitors,

but not much

on flywheel

based ESS.

and weight.

Correct power

rating for

pretty much

any standard

bus design.

Longer

lifespan –

equal to or

more than

vehicle

lifetime.

Doesn‟t

depend on

charge-

recharge

cycles.

Minimal

maintenance.

Customisable

control

strategy

providing

optimal

performance.

Prognostic

possibility.

Easy to

retrofit – just

needs an

electrical

motor in the

drive-train,

and no

mechanical

connection.

Can work in

parallel with

the batteries,

significantly

improving

battery

lifetime.

Multiple

advantages of

the whole

system: same

size of bus,

range and

acceleration

with smaller

engine, fuel

tank, can

carry more

every 3-4 years.

Environmental

cost of battery

disposal.

Lifetime can be

dramatically

reduced

through wrong

charge/discharg

e cycle.

about 4 years.

Very costly.

Quite difficult to

control the

discharge

cycles.

the short term is

primarily about

new builds.

The ultimate

benefit to the

end user and it‟s

potentially to

anyone along

the value chain

is better fuel

economy.

96

passengers

and can be

produced at

lesser cost.

Longer

guarantee –

say 5 years.



CR2

Electric bus

with no diesel

engine and

battery-FW

ESS is the

future.

By 2020,

electric

buses would

be

competing

equally with

diesel

buses.

Can be

retrofitted to

any type of

bus – diesel

or hybrid.

Retrofitting

can happen

at the mid

life of a bus,

along with

downsizing

of the engine

(to recover

the

additional

space)

Increasing fuel

price would

push the

demand for

hybrids.

BSOG review to

help hybrids.

Payback inside

the lease or

contract period

would make

hybrids more

attractive.

Technology is

not a barrier for

the adoption of

green buses.

Not worried

about what

other

competitors

(flywheel-

based system

providers) are

doing.

FW systems

are

complementar

y to batteries -

Battery

supplies the

range, FW

supplies the

acceleration

or

deceleration.

Adoption of

FW-based

ESS would

depend on

customer pull.

Fuel savings

(up to 50%)

Increased

operational

efficiency

Payback time

- 5 to 7 years

Range

extension of

batteries

Guarantee/wa

rranty for 2/3

years, then

annual

maintenance

cost.

Needs an

electrical

interface to be

connected to

the driveline.

ESS can be

fine tuned

depending on

the route

profile –

added

advantage to

the operator.

Batteries are

not necessarily

competitors;

they are part of

long term

solution.

Not seen as a

serious

competitor.

Issues with

scaling, cost,

mass, durability

and control.

Collaborative/

consortium

approach

required.

OEMs have to

be involved.

Scenario 1 -

Operators

demanding the

solution from

OEM.

Scenario 2 -

Operators

demanding the

solution from

OEM, who in

turns asks its

system

integrators (tier-

1).

ESS need to

come back to

CRESS for any

refurbishment.



BOP1

Replaces

buses every

8 years, so

2nd

life cost of

a bus is also

important.

25-30% fuel

savings in

diesel-

hybrids.

No other

alternative is

as attractive

When

batteries

need to be

replaced, the

flywheel

based ESS

may be

retrofitted.

Retrofit is a

good idea

given the

market size.

GBF allows

buying hybrid

almost at a cost

of a diesel.

Without this,

would not have

purchased any

hybrids.

Payback to be

as high as 11

years with no

GBF.

Depends on the

cost of a hybrid

Came

across this

in 1991/92

in Munich,

also in some

trolley buses

in Basel.

Did not pick

up.

Gyroscopic

issues.

Huge and

heavy.

Small & light,

not to impinge

on operational

capabilities.

Higher power

density.

Higher fuel

saving potential.

Fit in available

space in the

bus.

All buses from

ADL, which

uses Li-Ion

batteries.

Li-Ion offered

big

improvements,

resulted in

lighter and

more durable

batteries and

improved fuel

efficiencies.

Not used in

current fleet.

Buys „whole

system‟ from

ADL. ADL is

responsible for

everything. For

anything related

to hybrid, BAE is

called for. BAE &

ADL need each

other.

A new supplier

needs to find a

big and powerful

user.

97

as long as

diesel is

readily

available and

the price is

even today's

price.

vs. its diesel

equivalent.

EURO6 – the

cost of engine

goes up, can

help in bridging

the gap between

the hybrid & a

standard bus.

Rising fuel cost

would help

hybrids.

Passengers

won‟t pay for

green.

BSOG reduction

to support

reduced

dependency on

diesel.

Still needs to be

replaced every

six years, not

perfect!

Key is getting an

operator and an

OEM interested.

Should be front-

ended by an

OEM.

OEMs listen to

the operators as

they don‟t

anything if there

is no market.



ADV1

Opportunity

exists for gas

buses.

Full electric

buses would

be very

limited.

Certain

amount of

retrofitting is

going on.

Needs to be retrofitted in a relatively unobtrusive way.

In London,

the

opportunity is

at the

renewal of

the contract.

Midlife

opportunity in

a hybrid -

around 500-

600 such

buses

currently in

the market.

UK bus

market (std

+ green)–

4000,

London –

500 (new

buses per

year)

Overall bus

sales would

drop

GBF to put

around 550

hybrids on

street by

Mar-Apr,

2012

Diesel price

BSOG review to

help the hybrids

TfL unlikely to

subsidize the

purchase of

large number of

advanced

vehicles.

Local authorities

– environmental

concern

GBF

EURO6 engines

costlier –

buying ahead of

time

Passengers are

indifferent to the

greenness of a

bus.

Payback

expected in 5

years.

Non-availability

of performance

data of trial

buses hinders

the adoption.

Has a very

good chance

in coming 10

years.

FLYBRID

comes to

mind as the

most

obvious.

Engineering

principle

behind

mechanical

ESS is well

understood,

compared to

chemical

engineering

involved in

battery

technology.

Achilles heel in

hybrids.

Lifetime is an

issue.

According to

TfL trials, no

degradation in

battery

performance.

98

APPENDIX 9: EXCERPTS FROM LEARNING LOGS

The Beginning 25th Aug, 2011

It‟s final and decided now. I have a challenge – the management challenge. My

sponsor, my supervisor and I agreed to pursue this project. The scope is more or

less defined. I have few ideas on how to go about it. Now the real thing!!

Divide & Conquer 13th Sep, 2011

This is really going to be a challenge – how to digest this whole thing? The

„manager as investigator‟ module, which is very important from MC perspective, is

proving a little more challenging than expected. I am trying hard to imagine myself

writing the „conclusion‟ sections of the report! I need to approach my MC section by

section, at least to start with. It‟s good that I requested Susan to have a look at my

interim work products, so that I can take any corrective measures at the earliest.

Many have travelled this path, so I feel that it should be ok! (Faith/self-belief helps.)

Cape Town 21st Sep, 2011

This is an interesting phase. I am channelling my energy, intellect and experience in

this project with the NGO. Leading the team brings additional responsibilities. Cape

Town is fantastic. But thinking about the MC standing at the top of the table

mountain and looking at the purple tinge of the setting sun as it immerses itself in

the Atlantic is not what I originally imagined to be doing. But it gives me inspiration

& imagination. Prioritisation is really of priority!! I need to talk to Susan & John about

the additional weeks which I would require to complete this task.

What & Why of Lit Review 12th Oct, 2011

Reading and collating books, journals, articles etc., deciding which one to read and

more importantly which one NOT to are significant tasks in themselves. But this

reading is coming out to be much more interesting than I have imagined. But

reading fast and deciding NOT to read an interesting piece of work are two most

critical skills at this stage, I suppose! I need to get my interview questions from here.

The literature review is giving me the themes around which to base my

questionnaires, but not the actual questions – do I really need to have pre-defined &

fixed questionnaires? It‟s nice to have some flexibility around the actual questions.

99

Semi-structured qualitative research vs. quantitative survey is becoming clearer in

terms of their practicalities.

My 1st interview - John, CRESS CEO 20th Oct, 2011

I am ready with my armoury of questionnaire. Reviews by my supervisor and the

sponsor make me feel confident that I am on right track. Today, I interviewed John

and recorded the interview on my phone. This telephonic interview with John has

helped me in getting few other things sorted out, like using a headset instead of

using the speaker mode etc. would help the interviewee as well as me.

Interviews 7th Nov, 2011

It is getting more challenging to get as many interviews as I initially thought. The

interviewees are really helpful and co-operative. Some of them have been kind

enough to put me in contact with other potential interviewees! It‟s great to learn

directly from the business leaders. Getting involved in a meaningful conversation on

a business topic with them is an experience in itself.

Final thoughts 1st Dec, 2011

It‟s finally done!! I am positive about the outcome of my efforts. I keep my fingers

crossed till the results are announced and before I can call myself an MBA. MC is

truly a capstone project for MBA. It has been a journey of learning and discovery –

the academic side, the practitioner angle, the cultural exposure and the vicissitude

of energy, optimism and inspiration. I thank all those who have helped me and

inspired me through this journey.

100

APPENDIX 10: GLOSSARY OF TERMS

BSOG (Bus Services Operators Grant) - BSOG, previously called Fuel Duty

Rebate, is paid to the bus operators to reimburse some of the duty paid on the

fuel consumed in operating eligible local bus services and help keep fares down

– in effect it is an indirect passenger fare subsidy. The rates are set by DfT (for

England), Scottish Parliament and National Assembly of Wales. Currently it is

payable per litre. In 2009, 80% of duty on diesel was rebated. Since 2008/2009,

the secretary for state of transport has announced proposals for series of

changes in BSOG to encourage operators to improve fuel efficiency and lessen

the environmental impact.

EURO 6 - In order to reduce vehicular pollution, this regulation introduces

common requirements for emissions from motor vehicles and their specific

replacement parts. All vehicles equipped with a diesel engine will be required to

substantially reduce their emissions of nitrogen oxides (NOx) as soon as the

Euro 6 standard enters into force. Emissions from cars and other vehicles

intended to be used for transport will be capped at 80 mg/km (an additional

reduction of more than 50% compared to the Euro 5 standard). Combined

emissions of hydrocarbons and NOx from diesel vehicles will also be reduced.

These will be capped at, for example, 170 mg/km for cars and other vehicles

intended to be used for transport. The Euro 6 standard will come into force on 1

September 2014 for the approval of vehicles, and from 1 January 2015 for the

registration and sale of new types of cars. (The European Commission, 2010)

Green Bus Fund - The Green Bus Fund would provide £30m over two years to

encourage the purchase of hundreds of low carbon emission buses throughout

England. It is open to bus operators, local authorities in England, Passenger

Transport Executives (PTEs), Transport for London (TfL), and companies

leasing/renting buses to these bodies to compete for funds to assist towards the

additional cost of low carbon emission buses. Successful bidders must be ready

to place orders for low carbon buses within the period in which funding are

available. The DfT assesses the bids according to the size of the grant claimed,

101

environment benefits delivered, the routes etc. The DfT stress that there can be

no guarantee of funding after March 2011. 24 winners are sharing £30 million

from the 2009 scheme which is helping to support the purchase of 350 new low

carbon buses. 14 winners are sharing the £15 million from the second round

which will help to support the purchase of around 170 new low carbon buses in

England. (Department for Transport, 2011) (Low Carbon Vehicle Partnership,

2010)

LCEB (Low Carbon Emission Bus) - The definition of a LCEB was developed by

LowCVP members and is based upon the GHG emissions from the vehicle and

from the fuel production (Low Carbon Vehicle Partnership, 2011). A Low Carbon

Bus produces at least 30% fewer Greenhouse Gas Emissions than the average

Euro 3 equivalent diesel bus of the same total passenger capacity. The

Greenhouse Gas (GHG) emissions will be expressed in grams of carbon dioxide

equivalent measured over a standard test, and will cover "Well-to-Wheel"

(WTW) performance, thereby taking into account both the production of the fuel

and its consumption on board. Currently 327 LCEB are on the road in the UK.

The LCEB emission target is expressed as a function of total passenger capacity

and is expressed as:

GHG (g/km) = 6.28 x total number of passengers + 502

Competitive positioning and routes to market for a high-technology innovation: the case of the novel...

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