Future of I&C Sales & Marketing: Third Party Intermediaries

Publication Date	July 2006
Publisher	Datamonitor
Product Type	Report
Pages	12
ISBN Number	not applicable
Product Code	DAT00455

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Summary

Introduction

A market is created within liberalised energy markets for Third Party Intermediary (TPI) switching assistance. As competition increases and products become more sophisticated, TPIs are able to build stronger and longer-lasting relationships with buyers, to an extent commoditising the supplier.

Scope

A comprehensive overview of factors that will enable and impede the development of a TPI sector in Europe's liberalising energy market.
An understanding of the differing motives that drive the three-way relationship between the buyer, the TPI and the supplier.
An evaluation of the supplier competencies that TPIs increasingly target in a liberalising energy market to claim their share of revenue streams.
An in-depth assessment of the future role of TPIs in the European energy sector and their projected success in different regional markets.

Highlights

The existence of a wide range of suppliers enhances TPI's broking power. A visible traded hub price for energy also assists TPIs as it gives them the ability to design products of their own and gives them a greater information/ability to negotiate with suppliers.

The trilateral relationship between buyer, TPI and supplier has conflicting interests and influences. TPIs are not integral to the supplier-buyer relationship and recognise that they must work to maximise their service offering and justify their revenue share.

Significant TPI growth in Central and Eastern Europe (CEE) is unlikely in the next two years. CEE states still have very low switching rates and are unlikely to improve significantly before 2008. There are typically higher switching rates within power markets than gas giving greater potential for TPI penetration.

Reasons to Purchase

Gain insight into future enablers and drivers of TPI development in Europe and identify potential barriers and impediments to sector growth.
Gain insight into future enablers and drivers of TPI development in Europe and identify potential barriers and impediments to sector growth.
Identify future switching rates in 20 European countries, projecting the potential growth areas for future TPI development.

Content

Catalyst
- As energy purchasing becomes more sophisticated, energy buyers are turning to third parties for assistance.
Summary
- A market is created within liberalised energy markets for TPI switching assistance. As competition increases and products become more sophisticated, TPIs are able to build stronger and longer-lasting relationships with buyers, to an extent commoditising the supplier.
Methodology
Analysis
- Buyers in newly liberalised markets will tend to seek assistance with switching.
- The differing structures and features of an energy market will determine the degree of TPI activity.
- Encouraging free market competition promotes TPI sector development.
- TPIs act as buying groups to give power to smaller customers.
- The existence of a wide range of suppliers enhances TPI's broking power.
- A three way relationship forms between buyer, supplier and TPI
- The trilateral relationship between buyer, TPI and supplier has conflicting interests and influences.
- Successful suppliers will accept the TPI channel and will also seek to connect with the largest buyers directly.
- Buyers respect the impartiality of their TPI and value their relationship with them more highly than with their supplier.
- As the energy market matures, buyer expectations of their TPI also evolve.
- TPIs attempt to control much of the interaction between suppliers and buyer.
- TPIs increasingly take their share of a supplier's service and revenue streams.
- The geographic spread and site size mix of buyers must be matched by the suppliers that wish to serve them.
- Additional complexity, cost and product options will ensure a continued market for TPIs
- It is challenging to build up a skill set previously outsourced.
- UK buyers now have stronger relationships with their TPIs than with suppliers.
- The volume of TPI business is unlikely to shrink, however, consolidation within the industry could be expected.
- The continuing need for new products ensures a sustained demand for TPI services.
- Significant TPI growth in Central and Eastern Europe is unlikely in the next two years.
- Datamonitor believes that there is potential for complete utility out-sourcing to develop.
- Ask the analyst
List of Figures
- Figure 1: Factors promoting and hindering TPI activity
- Figure 2: TPI sector development versus Market Competitive Intensity
- Figure 3: Service, Revenue and Commodity flows between the Supplier, Buyer and TPI
- Figure 4: The evolution of buyer expectation towards their TPI
- Figure 5: TPI intervention by supplier competency
- Figure 6: Customer Identification Matrix
- Figure 7: Supplier vs. TPI ratings and CSAT ratings for UK TPIs
- Figure 8: Forecast European I&C switching rates, 2008
- Figure 9: Utility out-sourcing flower