Managing household electricity demand more effectively

1 JANUARY 2003

Research for a recently awarded CSU PhD thesis has found that understanding how households make decisions about their electricity use could be the key to savings for governments, generators and consumers.

Dr Jodie KleinschaferResearch for a recently awarded Charles Sturt University (CSU) PhD thesis has found that understanding how households make decisions about their electricity use could be the key to savings for governments, generators and consumers.
“Because there is an increasing demand for electricity, and increasing environmental concerns about how it is generated, distributed and used, there is a need to develop more effective demand management strategies that increase the efficiency of residential electricity consumption,” said Dr Jodie Kleinschafer, a recent CSU graduate and lecturer in marketing at the CSU School of Marketing and Management in Bathurst.
“However, attempts to manage household electricity demand or increase efficiency so far have had only sporadic success, and there has been limited investigation into how households make energy efficiency choices.”
Dr Kleinschafer’s investigation examined research from both household efficiency literature and household decision-making literature, part of consumer behaviour literature.
“Most of the existing research literature had explored how decisions were made within households for the purchase of single big-ticket items, like cars, refrigerators and washing machines,” she said. “There was little that attempted to explain how households made decisions about incremental small-cost efficiency gains and savings for something like domestic electricity use which most occupants contribute to with the flick of a switch many times a day.”
The research investigated the presence of trends in household decision making across households. After her literature review, Dr Kleinschafer used nine focus groups to inform the development of a survey that was then distributed to 4 000 households in regional NSW. The results provided six key insights into household efficiency choices:
1. About 41 per cent of households do not believe that it is necessary to increase their efficiency.  This indicates the need for awareness-based campaigns if a market-wide increase in efficiency is desired.
2. The recognition of the need to alter electricity consumption in the household does not always lead to efficiency outcomes. Accordingly, it is important for marketers developing demand management strategies to include a call-to-action in their communications.
3. In contrast to need recognition, ‘information search’ is predictive of both past efficiency behaviours and household interest in demand management strategies. Thus, this is a useful point of contact for marketers attempting to influence household efficiency choices.
4. It was found that types of households differ in their use of influence strategies. This provides substantial evidence of the value of influence strategies as a basis for market segmentation.
5. Efficiency decisions are more likely to be made jointly than to be dominated by one member of the household, in keeping with the notion that decisions made cooperatively have greater efficiency outcomes. This suggests the importance of marketing campaigns that target multiple household members and promotes cooperative decision making for household efficiency.
6. The identification of ‘household norms’ as a part of the household decision making process.  Household norms are the implicit rules of behaviour that households use to simplify the decision making process. They are developed over time and can shape long-term efficiency behaviours. Household norms have not been examined in the household decision making literature previously, but the results of this research suggest that they are an important aspect of household decision making processes that should be examined more in the future.
“This information provides researchers and marketers alike with a greater understanding of how households make efficiency choices, and how those choices can be influenced to develop more successful demand management programs,” Dr Kleinschafer said.

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