Consumer Switching Behavior In The Energy Market Of The UK: A Secondary Research Study

Relation of project with literature

In the year 1986, the government of the United Kingdom led by Margaret Thatcher took the decision to sell the British Gas Corporation. The Office of Gas and Electricity Markets (Ofgem) was created and privatization of Electricity Boards took place in the year 1990 in the United Kingdom. In the year 1996, consumers could choose their gas provider for the first time. The electricity markets were open in the year 1996. Earlier consumers could not use internet for comparison of tariffs and price of suppliers. The sales-force of suppliers opted for door-to-door sales and insisted customers to switch suppliers. In recent years, the information search process for consumers have become easier because they can compare tariffs of different suppliers from internet (oxera 2013).

The consumer switching behavior is demonstrated by consumers when they abandon a service or product and switch to a rival company. The regulators and Government of the United Kingdom have put efforts for engagement of consumers in the energy market. The year 2016, many customers in the energy market opted for switching. However, there are nearly one-third of customers in the United Kingdom who have not switched suppliers in the energy market .A majority of consumers in the United Kingdom prefer to stick to the major  suppliers of the energy market. The prime motivational factor that governs customer switching behavior in the energy market is to save money and buy services from a rival company offering a lower price (Daglish 2016). Nearly 49% of consumers in the United Kingdom find the switching process easy (statista 2018).

The methodology used is secondary research and information from books, journal articles and newspapers have been used to access information about previous research.

It is important to conduct research about consumer switching behavior in the United Kingdom. The research in this area will be beneficial to gain powerful insights about several factors like how consumers search for information prior to switching and what is the motivational factors of consumers behind switching. The research in this area is important to study the post-switching behavior of consumers.  It is important to conduct both primary and secondary research in this area (Bryman and Bell 2015). Research about consumer switching behavior acts as a tool to build knowledge in this arena and research acts as a foundation for the success of business.

The previous research related to consumer behavior in the energy market of the United Kingdom has revealed that there were few customers who demonstrated switching behavior in the energy sector though there is opportunity for financial gains which suggests that non-price factors determine the switching behavior of consumers (Oliver 2014). The factors that discouraged switching among consumers of the energy sector are the complex energy tariffs, lack of experience in switching and expectations related to the process of switching (Ahmed, Gull and Rafiq 2015). There are few consumers  who switch supplier in the energy market so that they can change their payment and tariff method which will be beneficial for them to secure better deal in the energy market. While switching suppliers in the energy sectors, few consumers in the United Kingdom do not make a comparison between suppliers and tariffs and there are consumers who search information about suppliers and tariffs but do not conduct a detailed information search. However, in the year 2015 and 2016, there has been an increase of consumers who searched for information about their energy use and existing tariff while making the decision of switching suppliers in the energy market (Brounen, Kok and Quigley 2013 )The literature provides evidence that more number of consumers were likely to search information about suppliers, energy use and tariffs with the help of their online account (Pollitt and Haney 2014). 

Research Methodology

In the United Kingdom, access to internet has facilitated the process of switching for consumers in the energy sector.  The comparison of price online is a trend in consumer behavior process that has been prevalent among consumers in the United Kingdom in recent years. According to He and Reiner  (2015), it has been found from previous research that consumers in the energy sector who had a small and medium sized supplier demonstrated more switching behavior than consumers who were with large suppliers of the energy sector. It has been found from previous research in this arena that consumers who have high educational qualifications demonstrate an increased level of activity in the energy markets and the households in the United Kingdom which make payment by direct debit are more likely to switch suppliers in the energy sector (He and Reiner  2015). The policies in the United Kingdom which focus on simplifying the energy tariffs, improve concerns of consumers about energy issues and which boost confidence of consumers to demonstrate increased level of activity related to switching affect consumer’s switching behavior in the energy market.  The consumers of Britain can choose from a wide range of suppliers in the energy sectors because these suppliers provide consumers with a wide range of deals that enable them to save a lot of money in their energy bills (He and Reiner  2015) The consumers in the energy sector of the United Kingdom demonstrate switching behavior when the perceived consumer’s value or the benefits related to switching exceeds the switching costs. The customers in the energy market of the United Kingdom can be grouped into inert customers who do not like to change suppliers, savvy customers who are aware about their tariffs, spinners who switch to a new tariff within the same supplier and Tariff Tarts are customers who demonstrate a high switching behavior in the energy marker (Calvo-Porral and Lévy-Mangin 2015).

The research methodology that can be proposed to be used is secondary research. For this particular research, qualitative analysis can’t be used because proper response can’t be obtained by conduction of a survey. The research outcome will be based on the findings of primary research materials available online and offline.

The research philosophy that can be used for this research is positivism research philosophy. This philosophy helps in the investigation of the topic in a critical and logical manner. The positivism research is objective and requires less interaction with participants of the research. The realism and interpretivism philosophy will not be used for the research because human perception is the basis of these philosophies and outcome may differ from one person to another (Flick 2015). The research will be based on theories and concepts that already exist and do not propose any new concept. Thus deductive research approach will be the basis of this particular research study. The models and theories of primary research on the topic of consumer switching behavior in the energy market of the United Kingdom will be used for this research (Flick 2015). The development of new models and theories is dependent on the perception of an individual and might vary from one person to another (Taylor, Bogdan and DeVault 2015).Thus inductive approach will not used for the research study because it is not feasible to propose new models.

The analytical or descriptive research design will be used for this particular research topic to conduct an in-depth analysis of the already existing concepts and theories of the research topic. The explanatory research design which focuses on developing a relationship between two variables is not applicable for this research topic(Panneerselvam 2014).Exploratory research design will not be chosen for this particular research topic because the research design is applicable in the initial stage of a study (Panneerselvam 2014).For this particular research, the consumer switching behavior in the energy market of the United Kingdom in the contemporary situation will be studied and thus descriptive research will be suitable for the research study. The research study will make use of secondary sources of data and the information for the research topic will be obtained from books, news articles and peer-reviewed journals. Summary and synthesis of information from primary sources will be used as data sources for this particular research study. The complete research will be based on academic purpose and theories and concepts about the study are appropriately cited.

The resources that will be used for the research are books, peer-reviewed journal articles, data from reputed government sites of the United Kingdom, the news articles which are published in recent years about consumer behavior of energy market of the United Kingdom. The reputed search engine like Google scholar will be used to access the literature, books and scholarly articles for this particular research. The library database of educational institution and peer-reviewed journal articles will be required to search historical information and data of this research topic. The offline resources like library, hard-copy of newspaper and magazines acted as prime resources for this research.

References

Ahmed, Z., Gull, M. and Rafiq, U., 2015. Factors affecting consumer switching behavior: Mobile phone market in Manchester-United kingdom. International Journal of Scientific and Research Publications, 5(7), pp.1-7.

Brounen, D., Kok, N. and Quigley, J.M., 2013. Energy literacy, awareness, and conservation behavior of residential households. Energy Economics, 38, pp.42-50.

Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA.

Calvo-Porral, C. and Lévy-Mangin, J.P., 2015. Switching behavior and customer satisfaction in mobile services: Analyzing virtual and traditional operators. Computers in Human Behavior, 49, pp.532-540.

Daglish, T., 2016. Consumer governance in electricity markets. Energy Economics, 56, pp.326-337.

Flick, U., 2015. Introducing research methodology: A beginner’s guide to doing a research project. Sage.

He, X. and Reiner, D., 2015. Why do more british consumers not switch energy suppliers? The role of individual attitudes.

Oliver, R.L., 2014. Satisfaction: A behavioral perspective on the consumer. Routledge.

oxera (2013). The Thatcher privatisation legacy: not quite what she planned?. [online] Oxera.com. Available at: https://www.oxera.com/Oxera/media/Oxera/downloads/Agenda/The-Thatcher-privatisation-legacy_1.pdf?ext=.pdf [Accessed 30 Jan. 2018].

Panneerselvam, R., 2014. Research methodology. PHI Learning Pvt. Ltd..

Pollitt, M.G. and Haney, A.B., 2014. Dismantling a competitive retail electricity market: Residential market reforms in Great Britain. The Electricity Journal, 27(1), pp.66-73.

Solomon, M.R., 2014. Consumer behavior: Buying, having, and being (Vol. 10). Upper Saddle River, NJ: Prentice Hall.

statista (2018). Energy supply switch ease in the UK 2017 | Survey. [online] Statista. Available at: https://www.statista.com/statistics/779512/ease-of-switching-energy-supplier-united-kingdom-uk/ [Accessed 30 Jan. 2018].

Taylor, S.J., Bogdan, R. and DeVault, M., 2015. Introduction to qualitative research methods: A guidebook and resource. John Wiley & Sons.