Competition in the German Electricity Retail Business: Innovation and Growth Strategies

Torsten Amelung

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: This paper describes the development of the competition of electricity retail in Europe in general and the situation in Germany in particular. The competition in the retail business has been forcing electricity retailers to spend increasing resources on marketing, sales and customer service. This has led to a fierce competition both especially in Germany as price transparency is quite high. Short-term price adjustments by retail companies are led by behavioral patterns that follow the logic of the prisoner’s dilemma. Suppliers view marketing and sales expenditures as a short-term investment, thus weighing costs of winning new customers against the risk that customers might switch again in the medium-run. In order to escape this short-term competitive pressure, an increasing number of retail companies in the German electricity retail market focus on the diversification of their activities by offering new product lines such as distributed energy solutions, services for e-mobility and facility management. Moreover, there is a trend towards investing in the development of a brand to increase customer loyalty.

Keywords: short term competition; second-mover-advantage; product versioning; diversification; distributed energy solutions; brand strategy; digitalization; affiliate marketing (search for similar items in EconPapers)
Date: 2020, Revised 2020
New Economics Papers: this item is included in nep-com, nep-ene, nep-eur and nep-ind
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:215622

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