Development of a marketing plan for the South African solar energy market

Research Paper (postgraduate), 2013

20 Pages, Grade: 1,3


Table of contents

1 Introduction

2 Environmental analysis
2.1 PESTLE analysis
2.2 Near environment analysis
2.3 Industry analysis – Porter’s Five Forces

3 Strategic analysis
3.1 SWOT analysis for Diehl Controls
3.2 Gap analysis

4 Development of a marketing plan
4.1 Target market selection
4.2 SAVE – Marketing mix

5 Conclusion


1 Introduction

One of the current megatrends that developed during the last years was the increasing global demand for energy due to a continuous economic growth in the emerging markets. As a consequence, the availability of natural resources declines steadily. Therefore renewable and sustainable energies like solar, wind or water technologies become more and more important, both in industrialized and emerging markets.

As a specialized manufacturer for renewable energy systems, Diehl Controls is established in the European market for building up energy-efficient solar energy plants. With regards to the company’s growth strategy, emerging markets have become increasingly important, as high market potentials are estimated for countries like South Africa. Therefore, the following term paper describes the development of a marketing plan for Diehl Controls in order to enter the South African solar energy market. Based on an environmental and strategic analysis, the marketing plan concentrates on the SAVE model to describe the strategic implications for the company.

2 Environmental analysis

In the following chapter the current environmental situation of South Africa is described by using the PESTLE model.

2.1 PESTLE analysis


South Africa is a unitary, presidential republic, consisting of nine provinces. The political party that governs the country is called ANC. The country has been a democracy for almost two decades. With the tension between the conservative and innovative part of the population South Africa’s political situation seems destined for a political clash. Bribery is considered for being a problem to be solved (CIA World Factbook, 2012, Business Teacher, 2007).


South Africa is an emerging market which is rich of natural resources. It has well-developed sectors aligned to western-standard in finance, legal, telecommunications, energy and transportation. The stock exchange in Johannesburg is the 15th largest in the world. The country’s GDP in 2012 was about $578 Billion and therefore is the largest economy in Africa. It belongs to the G8+5, a conglomerate of the governmental leaders of the top eight western economies plus the top five emerging economies, also called BRICS. South Africa’s GDP is predominantly produced in the service sector, accounting for 65 percent of the GDP. 32 percent is gained from the industry sector and only 2.4 percent from the agriculture sector. The industry sector is widely spread, focusing on mining, automobile industry, metalworking, machinery, textiles, iron and steel, chemicals, fertilizers, foods and commercial ship repair.

The last years were dominated by economic growth with an inflation rate of 5.2 percent in 2012. Between 2005 and 2007 the annual economic growth rate increased to 5 percent but decreased to 2.6 percent in 2012 due to the ongoing global economic crisis (CIA World Factbook, 2012, Business Teacher, 2007).


South Africa´s population amounts to about 49 million inhabitants whereas four main languages exist. The country is culturally diverse, having different ethnic groups. Political, economic and social inequities of the past have resulted in high poverty rates, high levels of illiteracy as well as an unemployment rate of 22.7 percent in 2012. These are major reasons why South Africa is ranked within the top ten countries in the world for social inequality. Concerning the health environment of the population, an estimated 5.6 million people are infected with Aids in South Africa (CIA World Factbook, 2012, Business Teacher, 2007).


After mining had become the starting point for economic development, South Africa positioned itself as the technological leader in Africa. Currently, a mentionable amount of internationally operating companies is established in the country and promotes the technological progress. However, in the energy sector the country still struggles with an insufficient developed infrastructure. Although the world´s largest coal-fired power stations and the first nuclear power station in Africa are located in South Africa, efficient power demand management systems have not been installed yet. Furthermore the power grid reliability needs to be improved continuously.


The legal system in South Africa contains parts of Roman-Dutch civil law as well as English Common Law and customary law. Concerning business activities, import policies in South Africa deter certain types of goods entering the country. Under the Import and Export Control Act of 1963, the Ministry of Trade and Industry controls the import of certain goods into South Africa.

South Africa has increasingly opened its market since 1994 by reducing tariff rates and non-tariff barriers. To comply with the WTO commitments, it has reformed and simplified its tariff structure by reducing tariff rates on imported goods from more than twenty percent to seven percent (BMWI, 2012). South Africa has also signed a free trade agreement with the European Union for twelve years.

Currently, various types of incentive programs for investors have been installed by the South African government. Industrial Development Zones have been established to attract investors entering the South African market. These zones are located nearby airports or seaports to make it more convenient for the industry to export manufactured goods overseas.


South Africa has an area of 1,219,090 km² and a coastline of almost 2,800 km at the South Atlantic and the Indian Ocean. The interior of South Africa is a vast, flat, and sparsely populated scrubland, called “Karoo”, which is drier towards the northwest along the Namib Desert. By contrast, the eastern coastline is lush and well-watered, which produces a climate similar to the tropics.

The infrastructure is well developed. South Africa has got several international airports and a very well established transportation network with highways and large seaports.

2.2 Near environment analysis

The solar energy market in South Africa strongly develops since several years, although it is significantly behind those of other countries. An analysis from Frost & Sullivan finds that the market earned revenues of US$21.6 million in 2010 and estimates this to reach US$29.8 million in 2014. During the next 20 years, further capacities of 8.400MW are expected to be installed. In general the South African solar market is influenced by multiple factors.

illustration not visible in this excerpt

Figure 2 - 1 : Forecasted energy demand in South Africa until 2030 in GW

Economic factors

As energy prices are rising rapidly due to the increasing electricity demand in South Africa, industry and government are under strong public pressure to extend the existing grid capacity. Currently 88% of the country's supply of electricity is generated by coal. Renewable energies play a quite unimportant role, as well as high market potential for wind and photovoltaic power plants exist. Referring to the governmental resource plan for electricity, the capacity for coal power plants is to be reduced to 48% of the total production capacity by 2030. Therefore, an annual installation of 300MW solar photovoltaic from 2012 is ongoing.


Excerpt out of 20 pages


Development of a marketing plan for the South African solar energy market
University of Cape Town
Catalog Number
ISBN (eBook)
ISBN (Book)
File size
1495 KB
marketing, strategy, photovoltaics, solar, energy, South Africa
Quote paper
Dipl.-Wirtsch.-Ing. Christian Biewald (Author), 2013, Development of a marketing plan for the South African solar energy market, Munich, GRIN Verlag,


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