Badger Meter Badger Meter, headquartered in Milwaukee, Wisconsin, is a flow meas
ID: 2812684 • Letter: B
Question
Badger Meter Badger Meter, headquartered in Milwaukee, Wisconsin, is a flow measurement company that generates 75 percent of its annual revenue from water applications for both residential and commercial use. "Badger Meter's water applications help utilities charge the right amount to each customer, alert the utility companies to system malfunctions, and manage water conservation programs. Badger Meter has been in business for more than 1o0 years and holds a 30 percent market share that is roughly in line with its top competitor, Neptune. Likewise, the company continually invests 2.5-3.0 percent of annual revenue on R&D to improve measurement accuracy and remote monitoring technology The domestic water metering industry, however, presents a challenge-utility customers have been slow to adopt smart, connected product technology. To illustrate, while radio meter monitoring technology (which allows utility companies to read meters remotely) has been available for 20 years, only one-third of installed water meters in the United States employ radio monitoring solutions. (Recently, Badger Meter also introduced a cloud-based solution.) Utility customers follow the procedure of replacing manual-read meters with the new technology when the useful life of the old meter is over. The U.S. Environmental Protection Agency forecasts that the cost of replacing the aging water infrastructure may well exceed s300 billion. So there is a long growth runway for Badger Meter. Todd Wenning, "Seeking Small-Cap Moats: Badger Meter," Morningstar, Inc., January 22, 2014, p. 1, accessed at http://www.morningstar.com on February 25,2015 What strategies could Badger Meter follow to speed the rate of adoption of smart, connected product solutions by utility customers?Explanation / Answer
To speed the rate of adoption of smart and connected product solutions Badger Meter should, going forward, undertake a promotional campaign that is meant for the utility companies and customers as the target audience. In this campaign the company should focus on the benefits that the utility companies will derive from replacing their existing manual meters.
Badger Meters should provide a cost benefit analysis of changing the meters now and explain to the utility customers how the adoption of new and technologically advanced meters now will lead to substantial costs savings for them and how they are losing out by not changing their meters now.
When the utility customers are properly educated and informed about the benefits that will accrue to them by changing their meters now (versus waiting for the useful life of the manual meters to get over) they will be much more willing to change their meters now and will not wait for their old meters to get obsolete.
The above strategy will enable Badger Meter to speed the rate of adoption of smart and connected product solutions by the utility customers.
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