Company Overview

SolarCity was founded by brothers Peter and Lyndon Rive, and cousin Elon Musk. The

American company is headquartered in San Mateo, California. SolarCity is an alternative, solar-

energy provider serving 19 states and the District of Columbia. Since its creation in 2006,

SolarCity has become America’s largest solar power provider (solarcity.com, 2015). Since 2013,

SolarCity has been the number one residential solar installation provider in America. As of

December 2014, SolarCity employed 9,051 people, a 107% expansion from 2013. SolarCity’s

employee growth last year was five times higher than the growth rate of the rest of the U.S.

economy (20%) as well as the solar power industry (22%) (solarcity.com, 2014). SolarCity is a

founding member of ‘The Alliance for Solar Choice’, a rooftop photovoltaic advocacy

organization (allianceforsolarchoice.com, 2015). Although SolarCity is thriving domestically, the

company has no current international operations. However, SolarCity does have internationa l

trademarks, giving them potential for future foreign growth (referenceusa.com, 2015). SolarCity

offers solar panels as an alternative energy source for residential, business and government

institutions. As of September 25, 2015, SolarCity’s net sales are $255,031,000

(marketwatch.com, 2015). The company has a 32% market share in the solar power industry

(greentechmedia.com, 2014). SolarCity’s stock price is currently declining, however, potential

growth for the company is not (nasdaq.com, 2015). Volatility is low due to minimal price

fluctuations in recent years, making SolarCity an attractive investment, as seen in Appendix A.

SolarCity solar panels are made of photovoltaic (PV) cells that convert sunlight into direct

current (DC) energy, then into alternating current (AC) energy. Energy is finally sent to an

inverter in the home’s electrical panel, allowing the consumer to use it at will. SolarCity electric

panels have a utility meter which measures the house’s energy usage. SolarCity utilizes a

‘PowerGuide’ monitoring system to help users track energy production and ensure that their

systems run smoothly. ZEP solar mounting conducts the installation for SolarCity solar panels.

ZEP ensures that the solar panels are installed properly and that the system is working smoothly;

all without any upfront cost. Users are later billed for the solar panels over an extended period of

time (solarcity.com, 2015). SolarCity uses a distributed service model which utilizes local

distributors and installation teams. The ultimate goal for SolarCity is to help customers reduce

monthly electric bills and minimize their carbon footprint. Refer to Appendices C and D for

further information about SolarCity and its competitors.

Company Objectives

SolarCity’s current stock price is $36.32 per share, and taking the company international

will not only increase global market share, but should also positively impact the price per share

of SolarCity’s stock, thereby increasing the value of the company overall (marketwatch.com,

2015). International expansion will allow for growth across every department in the company.

Rather than focusing the sales team on broad regions of both residential and commercial leads as

is done in the United States, the South African sales team will focus on households and

company-owned temporary housing for travelling businessmen. The sales team will not be

focusing on selling to corporations because large corporations in the country typically have

private power plants for their facilities. Additionally, CEO Lyndon Rive said in January 2015

that 80-85% of American SolarCity sales come from households, with commercial sales

accounting for the remaining 15-20%, making it easy to see that household sales are the most

advantageous option for the company moving into South Africa (pv-magazine.com, 2015).

Taking SolarCity to South Africa will allow for the founders and chairman of the board to begin

research and development on the existing solar panels to increase efficiency and decrease size,

thereby allowing them to fit on vehicles such as Chairman Elon Musk’s Tesla cars.

In order to break-even in the first year, South African sales will have to be no less than

R127,271,683.05 ZAR ($8,728,897.83 USD), as seen in Appendix K, which equates to less than

2.8% of SolarCity’s 2015 sales. Refer to Appendix K for further computational analysis of the

marketing budget elements.

South Africa Overview

South Africa houses around 53 million people, with an average GDP per capita of

R95,619.53 ($6,618) (data.worldbank.org, 2015). At 234.2 TWh (terawatt-hours), South Africa

is the 15th highest energy consumer worldwide and has continued to increase dramatically in

recent years (csmonitor.com, 2015). One of the most prominent trends in South Africa is the

integration of “green-energy.” Due to a rapid increase in tourism over the past decade, South

Africans are participating in as many eco-friendly practices as possible to minimize their carbon

footprints. These eco-friendly practices are heavily driven by the communal effort to preserve

resources for future generations. In South Africa, traditional Afrikaans are considered to be

collectivists. They are concerned with their close families as well as their tribes. On the other

hand, white communities tend to be more individualistic, putting the needs of their immediate

families first (trendwatching.com, 2015). Given these cultural considerations, SolarCity is able to

help both communities by saving money for individual households and conserving resources for

the country as a whole.

South Africa has become fast-paced in adopting new technological innovations. As of

2015, Eco-reverence and bettering technology have been trends to watch in South Africa . Over

the years, South Africa has become a fast-paced, technology hub (trendwatching.com, 2015).

Given this boom in technology, distribution of media to educate consumers through various

technological platforms is important. In South Africa, the highest media distribution channels are

radio (92.1%) and television (91.6%). Out of every 100 people, 41 have access to the internet,

making it a feasible channel as well (omd.co.za, 2015). In 2014, South Africa entered the list of

the world’s top 10 solar-powered countries (southafrica.info, 2015). The boom in the solar PV

industry in South Africa has opened up multiple segments to market alternative energies to.

Our primary target market is native Afrikaans who are educated, part of the working class

and live in Gauteng, South Africa. We are targeting consumers in the Gauteng region because

they account for more than one-third of total household expenditures in South Africa. Native

Afrikaans are a part of our target market because they are responsible for 42% of household

spending in South Africa, and therefore have a fair amount of purchasing power. Media is widely

consumed via the internet and mobile devices. In 2013, there were more mobile users in Africa

than the United States or Europe, and more people had access to mobile phones than electricity

(un.org, 2013). Finally, individuals in this market tend to value products that are educational and

aid the environment as well as the community (unisa.ac.za, 2015).

According to the World Factbook, in 2012, South Africa generated 47,892 megawatts of

energy, which represents the 16th highest electricity production in the world; coming in right

behind Spain and Mexico. South Africa is currently a net exporter of energy, providing 12,000

gigawatt hours of energy (GwH) to the ‘Southern African Power Pool’ while only importing

9,000 GWH. SolarCity will extract surpluses of energy from homes connected to the South

African energy grid to be resold. Although 95% of South African homes have energy, there is no

way of knowing if a home is “on-grid” until the installation team is at any given house (gov.za,

2015). Of the power provided in South Africa, 95% is supplied by the company Eskom. Around

87% of all energy in South Africa is supplied by fossil fuels, primarily coal (energy.gov.za,

2015). As a newly industrialized country, generating energy through cheap, reliable sources is

the most viable route for the economy. In 2012, South Africa invested the 4th highest amount in

renewable energy sources globally. South Africa currently only has the capacity to generate

around 1,019 megawatts of energy from solar power annually (southafrica.info, 2014).

Due to the hot, arid climate, there are significantly more cost hurdles with cooling,

producing and maintaining energy in South Africa. As a result, the country is rapidly

transitioning into renewable energy investment, and plans to provide 42% of energy used

through renewables and non-fossil fuel sources by 2040. Since 2008, South Africa has

subsidized solar energy production by lowering taxes and providing incentives to firms within

the industry. From 2012 to 2015, solar energy production in South Africa has increased from 25

to 1,050 megawatts (energy.gov.za, 2014). In January of 2014, South Africa was labeled the

‘most attractive emerging country for solar energy’ by IHS Inc. South Africa’s solar irradiance

factor greatly exceeds that of North American and European countries, making solar energy a

superior alternative to traditional methods. As of 2014, several large photovoltaic and

concentrated solar power stations have been commissioned in South Africa, with the biggest

being the ‘Jasper Solar Energy Project’. The Jasper Project power station was completed in

October 2014 and provides enough energy to power over 80,000 homes (solarreserve.com,

2015).

Current Market Situation

South Africa has faced many political and economic changes in the last twenty years, as

can be seen in Appendix B. The African National Congress was organized in 1994 to ensure

peaceful organization of policy agenda, and pro-poor spending policies have been put in place to

improve social development in many areas of South Africa (worldbank.org, 2015). South Africa

faces many energy issues, which has resulted in the creation of the Energy War Room, a

department organized by the Cabinet to address energy supplies and the diversification of

resources (worldbank.org, 2015). The Tripartite Free Trade Area, opened in June 2015, has

provided a great linkage of the South African economy to Egypt and other African countries,

ultimately giving South Africa more freedom to trade (refworld.org, 2015).

South Africa has seen significant population growth in recent years, but this trend has

begun to level out, suggesting that the country is moving toward classification as a developed

nation. The South African population is expected to grow by 1.3% and the GDP is expected to

grow by 2.0% in 2016 (ibisworld.com, 2015). Additionally, unemployment rates are falling, and

were only at 25% at the end of second quarter 2015. South Africa’s dual economy has resulted in

one of the highest inequality ratios in the world, with only 10% of the population accounting for

more than 58% of income (southafrica.info, 2015). Because of this, there are highly fragmented

markets within the nation. In 2014, South Africa was voted the world’s most attractive solar

photovoltaics market by IHS Inc., who stated that macroeconomic conditions greatly favored the

switch to solar power (renewableenergyworld,com, 2014). Within the past three years alone,

South Africa has seen a 4,200% increase in solar energy generation (From 25 to 1,050 MW);

which represents massive market potential within the newly industrialized country

(renewableenergyworld.com, 2014).

Concentrated solar power systems are currently being created in South Africa in search of

a better energy solution, and health centers in the Northwest province have adopted solar for

their facilities due to solar power’s many benefits and cost savings. The Pulida solar plant is

being built to provide clean and affordable energy to the entire town of Kimberley. In Tshwane,

the Free Public Wi-Fi network has created one of the most technologically savvy urban areas in

the world. Technological improvements are constantly being made to push South African cities

into the future (southafrica.info, 2015). Please refer to Appendix B for further detail.

Target Markets

There are four categories of customers in South Africa. The wealthiest are the white

community who primarily speak English. The next segment is the white community, primarily

speaking Afrikaans. People in this segment are those in the working class who are less educated

and live in rural areas. The third segment is the uneducated black community, which accounts for

an overwhelming portion of the population. The final segment, our target market, is the large

emerging black middle class. This segment arose at the end of the apartheid in 1994, which

created multiple opportunities for their segment. They have business advantages from the

government and speak both English and Afrikaans but prefer English because of the negative

stigma associated with Afrikaans (S. Ballard, personal communication, November 28, 2015).

SolarCity has three possible target markets within South Africa. SolarCity’s primary

target market consists of individual households which are comprised of highly educated, working

class, natives who live in the Gauteng region, primarily the black middle class. The persona for

this target market is named Emershan, depicted in Appendix F, a loving husband and father to

his wife, Sarah, and son, Richard. It is very important to Emershan that he gives Richard a stable

and happy life, so he tries to save money whenever he can. As a native South African, Emershan

is a collectivist and always thinks of his community when making decisions. The secondary

target market consists of company-owned temporary housing which is rented out to traveling

businessmen. Since this is a smaller market, fewer resources will be allocated to this segment.

Finally, the last potential market is corporations. However, many large corporation already own

their own solar power plants, meaning that it will not be useful to go after this market.

Marketing Strategy

Positioning Strategy

SolarCity plans to position itself as an affordable, high quality alternative which has high

accessibility. SolarCity will be affordable by providing financing options to customers, thereby

easing the process of purchasing the solar panels. The main feature of affordability will be

allowing consumers to integrate the purchase price of the solar panels into the lifetime of the

home’s mortgage at a low interest rate of 5% APR. In addition to providing a low interest rate

and low payment financing options for customers, the financing structure allows homeowners to

transfer the solar panel payments to future owners of the home with ease, all at a $0 down

payment. SolarCity also offers free installation and free consultations, which assists in driving

down the cost of integrating the panels into a network - further incentivizing consumers to make

the purchase. Within the United States, homeowners have decreased overall energy costs by up

to 40%. SolarCity strives to replicate these results in South Africa. SolarCity’s business model of

vertical integration will be transferred to South Africa, which includes installation, monitoring

and financing the product for the duration of its use. The ZEP Solar Mounting system will be

used to install our solar panels in South Africa the same way that it is used in The United States.

Free maintenance and monitoring is the most crucial aspect of SolarCity’s high quality

proposition. The Powerguide monitoring system ensures that the panel networks are correctly

functioning, and provide data for both the consumer and SolarCity of energy consumption levels,

as well as any problems that may arise (solarcity.com, 2015). Increasing access to the solar

panels will ultimately boost sales and assist the company in reaching its goal of being the

primary solar panel provider in South Africa.

SolarCity plans to position itself as the go-to provider for solar panels in South Africa.

Offering high quality products that decrease the average electricity bill is the primary component

of SolarCity’s position in the market. By creating this value proposition, SolarCity will forge

long-lasting relationships with its customers, which will form the basis for future success.

Aligning long-term orientation with the target market will create lasting relationships, a trend

especially prevalent in a collectivist country such as South Africa. As positive word of mouth

spreads, consumers will become more motivated to purchase solar panels from SolarCity.

Pricing Strategy

According to Energy Informative, the industry average cost of solar panels ranges from $15,000-

$40,000, which includes the price of solar panel itself, a monitor system, installation and labor

costs (energyinformative.org, 2015). However, with SolarCity’s financing options, the initial

cost of purchasing their solar panel is $0 (solarcity.com, 2015). Monthly costs associated with

using the solar panels are added to the monthly mortgage rate of the home. Adding the cost to the

mortgage allows for ease of transfer in the event that the home is sold in the future. South Africa

imposes a 18.74% duty rate cost of importing products into South Africa (dutycalculator.com,

2015). Therefore, in order to account for this loss, the additional cost will be added to the

financing plan of each solar panel.

Distribution Strategy

SolarCity is a coordinated federation, meaning that it has a centralized headquarters and

multiple smaller hubs with limited customization. By utilizing this business structure, SolarCity

accounts for larger departmental costs , i.e. accounting, inventory, and marketing, only at

headquarters. Since South Africa will be a hub, inventory will be shipped from the

manufacturing facility in Buffalo, New York, which is the same as U.S. locations. Fortunately,

there are no import restrictions for SolarCity’s product or materials, which will make it easy to

ship supplies to South Africa (sars.gov.za, 2015).

Promotional Strategy

SolarCity will target households of Native South Africans in Gauteng through the use of

highly informative advertising. The marketing campaign will utilize the main distribution

channels of television and radio alongside other less heavily emphasized channels such as email,

social media, and billboards. Direct mail will not be utilized because most South Africans

consider direct mail to be wasteful and harmful to the environment. The target market, rising

middle-class black families, does not heavily use or have access to email or social media.

SolarCity will instead focus on television and radio advertising since 91.6% of households in

South Africa own a television and 92.1% of households own a radio (omd.co.za, 2013).

Advertisements will educate consumers on the pricing strategy, flexible monthly utility options,

and the short and long-term benefits of the zero cost installation fee. Advertisement examples

can be seen in Appendices H and I. A black family will be featured in the message for the target

audience to better relate, and these commercials will air during times when the target audience is

more likely to be tuning in. Television advertising will show once a week on Monday afternoons

during a popular broadcast, Mfolozi Street. Radio advertisements will occur five days a week,

during three morning spots (0600 - 0900 hr) and two afternoon spots (1700 - 2200 hr). The small

amount of emails that are sent will be directed towards the upper class. The initial email will be

highly educational on SolarCity’s services and provide backlinks, and subsequent emails will

help to provide assistance along the buying process for consumers. According to AdWeek, the

highest number of emails opened occurs on Tuesday and Wednesday; therefore, we will be

sending our campaigns to our target market during these days. All social media will be handled

with the existing marketing team at headquarters in San Mateo, California. Additionally,

SolarCity kiosks will be available at shopping malls to allow potential customers face-to-face

interaction with sales representatives to answer questions about SolarCity’s solar panels, pricing

options, and installation processes.

Although internet will not be the primary component of the marketing campaign,

SolarCity will use it minimally in South Africa. Roughly 41% of South Africans have access to

internet, and trends have showed that this percentage is increasing annually (southafrica.info,

2015). The SolarCity website will be the primary internet marketing tool, which will provide the

same information to South Africans that Americans currently see, covering everything from

product information to financing options and services provided. Contact options will also be

available online for consumers to speak to a sales representatives via email or telephone.

Providing multiple contact options will also increase the accessibility of the product, in addition

to providing information to capture sales. Utilization of social media and an email campaign will

also aid in customer awareness.

Public Relations Strategy

SolarCity will bring all existing public relations strategies to South Africa. SolarCity’s

GivePower Foundation donates solar power systems and batteries to schools in underdeveloped

countries without electricity (solarcity.com, 2015). For every megawatt (approx. 160 homes) of

residential solar power installed, one school is given solar power. The GivePower Foundation

was created in 2010 with funding from the Musk Foundation (solarcity.blog.com, 2015). As of

2015, GivePower has helped over 500 schools, exceeding its initial goal by 25%. SolarCity, like

the natives, is invested in doing what is best for not only the country as a whole, but the global

community. SolarCity will also expand its Solar Ambassador program when launching

internationally. The referral program allows an existing customer to receive $250 USD (R3,635

ZAR), and the new customer receives one month of free service. SolarCity believes that it is not

only important to help the community as a whole (i.e., referring others who receive benefits), but

also to help individuals save money on their energy bills (i.e., $250 USD for referring)

(solarcity.com, 2015). As of February 2014, internationally well-known musician, Akon, with

co-partners Thione Niang and Samba Bathily, launched the Akon Lighting Africa project

(akonlightingafrica.com, 2015). The goal of this project is to use innovative solar-powered

solution that will provide clean and affordable electricity to the 600 million Africans who are

currently without it. Currently, Akon Lighting Africa has eight partners who are striving to make

this goal possible, but none of these partners are solely focused on solar powered electricity for

residential purposes. By partnering with Akon Lighting Africa, SolarCity will be able to use

Akon’s large presence in both the U.S. and South Africa to carry over the established factors

(i.e., high-quality, low-cost) that SolarCity is known for from the U.S. to South Africa.

Partnering with this initiative allows SolarCity to further demonstrate that it is invested in the

people of South Africa.

Market Research Strategy

While establishing itself in South Africa, SolarCity plans to take advantage of market research in

order to further segment the primary target market into new housing and existing housing

segments. By going after new housing, SolarCity will be able to target its advertisements to

architects as a selling point that will ultimately help the community as a whole.

Action Programs

Please refer to the marketing timeline in Appendix J for a detailed layout of marketing

communication release dates. For information regarding costs associated with all marketing

programs, salespeople and projections, please refer to the financial notes in Appendix K. As

explained on page XX, SolarCity’s business structure designates all large departmental actions

(i.e. accounting, marketing, inventory) to headquarters, and thus are not included in budget

forecasts for the South African expansion.

SolarCity will build awareness by utilizing radio and television spots during periods of

high listening and viewership. The awareness stage will focus on educating the consumers and

establishing SolarCity as a thought leader in the solar panel industry, which will establish

credibility for the company. SolarCity will also have a team of 337 sales representatives

responsible for South Africa so that customers can speak directly to a representative once they

gain knowledge and interest of the product. For consumers with internet access, SolarCity will

also be running online campaigns and will make the company website accessible to South

Africans for further research. Customers who have learned about the product and are ready to

begin making a purchase decision will speak directly to the South African sales team. Doing so

will allow for trust to be established between potential customers and an individual

representative that can be reached directly if questions or concerns arise.

Controls

Controls will be handled primarily at headquarters. Office managers in South Africa locations

will be responsible for monitoring their sales teams for weekly quotas. Additionally, salespeople

will attend fortnightly progress meetings with their office managers in order to view previous

progress and establish goals for the upcoming weeks. Office managers inturn report to

headquarters during video communications. During these meetings managers will talk about

office progress, future growth, and how to motivate their sales team.

Conclusion

Given SolarCity’s industry knowledge and tools developed, it is posed to make a successful

entrance into South Africa’s market. By following this plan, SolarCity will exceed its financial

goals, needing to account for 2.8% of 2015 sales to break-even. With the combination of

SolarCity’s high-quality product and South Africa’s plan for renewable energy growth, there is a

large market share waiting to be claimed. SolarCity will play a pivotal role in helping South

Africa attain its energy goals of the future, as well as helping future generations of South Africa.

By completing this marketing plan, we have learned that endless international market

opportunities that will help better the world. Additionally, we learned that an entire marketing

plan can be changed based on certain cultural characteristics of a country. It is also important to

understand who you are targeting to and how your product can help benefit them.

If we were to prepare to complete a new business plan for South Africa we would research an

organization which would help reduce the vast uneducated black community which resides in

South Africa.