Moritz Loock
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Prof. Dr.
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Loock
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Moritz
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moritz.loock@unisg.ch
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+41 71 224 2586

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  • Publication
    Paying for flexibility - Increasing customer participation in demand response programs through rewards and punishments
    ( 2014-09-03)
    Gamma, Karoline
    ;
    Loock, Moritz
    ;
    Cometta, Claudio
    Steering electricity demand will be a crucial aspect for guaranteeing energy system reliability when the share of fluctuating electricity supply from renewable energy increases. Thus, demand response programs (DR) play an important role in future energy systems (Hancher, 2013). However, an open question evolves around the question of how to best help customers to accept these programs (Hancher, 2013; Steg & Vlek, 2009, EU, 2003; He, Keyaerts et al., 2013). It is commonly assumed that customers should be financially compensated when they participate in DR (Hancher, 2013; DOE, 2006). This translates into understanding "Paying for flexibility" as rewarding DR participants for the provided flexibility. However, "Paying for flexibility" could also be understood in the way that customers will have to pay if they still want to have the flexibility of using electricity whenever and wherever they want in the future. In this case, DR would - instead of rewarding customers for participation through financial compensation - punish those customers who do not participate through the introduction of service fees. Similar to rewards, punishments are a measure of operant conditioning to influence behaviour (Skinner, 1938) and they have effectively been used in various social systems, e.g. traffic fines for speeding. In the light of recent theories of decision-making that distinguish between heuristic or "automatic" and information-based or "deliberative" decision-making processes (Weber & Johnson, 2009), the paper at hand investigates the role of punishment and reward for consumer acceptance of DR. Due to the common assumption that rewards are the appropriate intervention to increase customer acceptance of DR (Hancher, 2013; DOE, 2006) which is in line with established views in environmental behaviour (Osbaldiston & Schott, 2012; Kazdin, 2009; Steg & Vlek, 2009; Iyer & Kashyap, 2007; Abrahamse et al. 2005; Geller, 1995), electric utilities are inclined to design DR based on rewards. However, in an experimental study with 151 undergraduate students in their role of energy consumers at a business school in Switzerland, we find that DR schemes based on punishments are more effective in increasing customer participation in the program compared to DR schemes based on rewards. These findings can be explained with prospect theory and loss aversion (Kahneman & Tversky, 1984). We also find that there is no significant effect of punishments and rewards on customer loyalty towards the firm and attitude towards joining the DR. Thus, punishments are more effective in increasing customer participation without jeopardizing the loyalty of a company's customer base and the consumer's attitude towards joining DR. Additionally, they appear more efficient from an economic point of view as they result in lower costs (Balliet et al., 2011; Gächter, 2012): whereas the variable costs for reward-based DR increase with each participating customer, there are no variable costs for punishment-based DR. Based on our findings we encourage firms, policy makers and research not to be afraid of environmental fines and optimize the design of their customer intervention measures.?
    Type: presentation
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/86406
  • Publication
    Customer value of smart grids: Empirical evidence from a cross-European-country study and implications for business models
    ( 2011-06-22)
    Loock, Moritz
    ;
    Curtius, Hans
    An aspect of paramount importance in this regard is that smart grid business models meet consumer expectations. Especially along with increasing market liberalization energy firms need to understand and react upon consumer preferences. Thus, an investigation of consumer preferences and conclusions of how those might affect business models in the field is of interest. However, we still only poorly understand consumer preferences in the field of smart grids and how those preferences differ across different consumer typologies and different countries. Thus we ask, what are customer preferences in the field of smart grids and how do customer preferences differ between different customer types and across countries? From earlier research we learned that not only technology but business models are relevant for the establishment and further diffusion of clean technology in general (e.g. Boehnke, 2007; DISTRES, 2009; Frantzis et al., 2008; Loock, 2010a; Schoettl & Lehmann-Ortega, 2010; Wüstenhagen & Boehnke, 2008). However, when it comes to smart grids we have only found limited research that indicates which business model configurations exist and which of these different consumer types would prefer (Forsa, 2010; Kaufmann, 2010; Kranz, 2010). For a thorough evaluation of the benefit of certain business model configuration a deep understanding of customer preferences is a precondition. A suitable analytic frame for such investigation is the concept of customer value, which exactly discusses the interface between customer preferences and a firms offering, hence it's business model. In particular customer value has been identified as an important object of a firm's approach of economic value creating (Belz & Bieger, 2006; Parasuraman, 1997; Slater, 1997; Woodruff, 1997). "Customer value is a customer's perceived preference for and evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate (or block) achieving the customer's goals and purposes in use situations" (Woodruff, 1997: 142). We conducted an online consumer survey on smart grids for four European countries (Germany, Switzerland, Austria and Lichtenstein). After recruitment of cunsumers by online and print media, by leaflets and by inserts to the electricity bill of a regional energy provider we got a sample of 837 probands. A hierarchical clustering based on Ward's method on SPSS was used to identify three clusters. The analysis is based on questions relating the advantages and reservations of using smart meters. We characterized each customer type according to socio-economic aspects. In line with previous research (Forsa 2010) we detected a high number (around 2/3) of customers who do not have any prior knowledge and have never heard about smart meters. Different results, however, were obtained from Germany where only about 1/3 of respondents stated to have never heard about smart meters. Another interesting outcome is the fact, that the expected advantages of the usage of smart meters greatly outweigh the concerns by almost all respondents. In line with this wie detected a high willingness to pay for a smart meter by one third of the consumers. With help of a cluster analysis we furthermore assigned customers to three clusters, each with customers that have different amounts of concerns and expect different amounts of advantages. Surprising differences about their willingness to pay for smart meters and their attitude to the consumption of green energy could be established. Those results have implications for further research on social acceptance of smart grids and managerial business model design for smart grid products and services.
    Type: presentation
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/93935
  • Publication
    Marketing Gag or Value Creating Strategy: How does Sustainability Impact Store Choice in Retail?
    ( 2010-06-17)
    Hampl, Nina Lucia
    ;
    Loock, Moritz
    Sustainability is getting more ground in the food retail industry. But empirical studies on sus-tainability strategies in retailing are rare, and even more when it comes to highlight the cus-tomers' perspective and their willingness to pay. This paper investigates the impact of sus-tainability initiatives on store choice and on consumers' willingness to pay by conducting a web-based conjoint experiment with customers from Austria, Germany and Switzerland. We report from 1,224 choice-decisions conducted between June and October 2009. We find that price is not of highest importance when it comes to store choice. If different sustainability aspects are fulfilled customers are prepared to pay a price premium. In particular we show that (1) if a meat-assortment of standard and organic products is complemented by products from the region, customers are ready to pay a price premium of €0.99, which constitutes a premium of 51 percent on the lowest price in our study; (2) if retailers decrease the distance to their customers from 2-5 km to below 2 km, customers are prepared to pay a premium of €0.88 (45 percent on the lowest price); (3) we find that if retailers switch their power mix from conventional power to mainly renewable power, customers are ready to pay a price pre-mium of €0.91, which equals a premium of 47 percent on the lowest price. Finally, we show that bad employee treatment can lead to a real discount of €1.67 (83 percent of the lowest price). We state important implications for retail management practice and further research.
    Type: presentation
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/96303
  • Publication
    Type: presentation
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/96806