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Battle of the Brands

Branded fuel differentiation in the petroleum industry seems once again to be taking the forefront. Advertising and marketing campaigns among some of the major oil companies have turned back to the fuel itself, with companies launching new alternative fuels and branding their gasoline as the "cleanest" and "best" fuel out there. With gas prices continuously on the rise, companies need more than the lowest price to keep customers coming back, and the quality of the fuel itself is again coming into the picture.

There has certainly been some erosion in consumer perception of the brand value of proprietary gasoline over the past decade, coupled with growth and consumer acceptance of non-major oil company brands. "In terms of branding in this industry, there has been a gradual shift in consumer perception," said Tom Osborne, director of communications for the Reston, Va.-based Society of Independent Gasoline Marketers of America (SIGMA) "It used to be that there was branded and unbranded, but today Costco is a brand, QuikTrip is a brand, Sheetz is a brand in consumers' minds. It's not unbranded, it's just a non-oil-company brand."

It is conceivable then, Osborne added, that the current trend of advertising quality fuels among the major oil companies is directed at trying to recreate perceptions of superior brands among the mass-market saturation of unbranded fuels.

Others have said that the shift to promoting quality fuels is an effect of cyclical marketing. Back in the 1960s, companies made a big deal out of trying to differentiate their gasoline brands. Esso, which became Exxon, had the slogan that has gone down in advertising history: "Put a Tiger in Your Tank." Mobil also has made advertising history for the red "O" in their logo, which in television ads appeared as a washing machine with gasoline sloshing around in it, advertising their clean-burning gasoline. It was a time of no-holds-barred, heavy-duty gasoline branding.

But the oil embargo of the 1970s damaged the popular image of gasoline companies, and the Exxon Valdez oil spill didn't help consumer perception. People lost interest and trust in "safe" gasoline brands. Others just came to believe that it doesn't make any difference — gas is gas is gas. But there does seem to be a renewal of effort among the big oil companies to make their brands stand out.

Another explanation for the swing back to fuel differentiation lies in how consumers' sensitivity to gasoline prices today can affect a branded fuel. While oil companies may not be able to control the price hikes, they can convince consumers that the quality of their fuel offers value for their money.

While brands continue to beef up their marketing of the quality of their fuels, some people in the industry propose that the effort may be lost on the average U.S. consumer, who will not be able to overcome the pricing issue. "I've always been an advocate of brands, but I also understand that the gasoline burns regardless," said Vance McSpadden, executive director, Oklahoma Petroleum Marketers Association/Oklahoma Association of Convenience Stores (OPMA/ OACS), Oklahoma City. "Some people will drive across town to save four or five cents — sometimes even a penny. It's just ingrained in them that they're saving. I think price is still going to be key. That's why we all buy bigger price signs."

For the time being, however, the majors are doing whatever they can to influence consumers' buying decisions in the gasoline market. Some companies have chosen to market the benefits of their fuel in terms of its cleanliness, environmental efficiency, power performance and even lifestyle value. Prices may be rising and brands may be all over the board right now, but if a customer can be swayed into thinking one fuel is distinctively "better" than another, that's one way for major oil companies to regain an advantage. "I don't know what else you can do to create brand value other than stress the quality of the fuels," Osborne said.

Shell's V-Power

Prior to 2002, Houston-based Shell Oil Products US had shied away from advertising its fuel characteristics for about 10 years. Now, with a multimillion-dollar advertising initiative, the company is not only promoting a "quality fuels" campaign but launching a new premium-grade gasoline, due out this summer.

On an international level, the company began its choice-fuels initiative in 1997, launching a premium-fuel offering in 50 countries throughout the world before turning to the United States. Since Shell's purchase of several of the downstream assets from the ChevronTexaco merger in 2002, a deal that gave Shell exclusive rights to the brands until July 1, 2004, the company's priority in the United States has been its rebranding activity. The focus has been in converting those Texaco gasoline stations into Shell stations through a national reimaging effort.

"Even though we, and I guess others, have been trying to broaden the base of our activities, nevertheless, fuel remains the core of the core of our business," said Russell Caplan, vice president retail, Shell Oil Products US. "We felt in the United States that we had neglected, to an unacceptable degree, to talk to our customers about the core of our business. We are accustomed to being recognized by our customers as having really high-quality fuel, and we saw a tailing off in that and that concerned us."

The "quality fuels" campaign was launched in the United States in 2002 to try and restore that dialogue with Shell customers. The company recognized that Shell's reputation as a provider of quality fuels, which had been hard-won over many decades, was losing its foothold with the customer. "We clearly were focused on trying to promote our stores' business, and for a period relying on our reputation as a fuel supplier, rather than continuing to build on our reputation as a fuel supplier," Caplan said.

Said Brooks Herring, Shell brand and strategy manager, "We are about providing quality fuels. We're trying to deliver the message that all gasoline is not the same."

Based on the foundation of the "quality fuels" campaign, Shell then moved in 2003 to the "Get Better Mileage" campaign, which emphasized the value-for-money proposition of Shell's base fuel offering. The combination of those two campaigns was intended to build a solid foundation for the company's third initiative — the nationwide launch of V-Power, a new premium-grade gasoline that will be available at all 13,000 Shell stations in the United States in time for the summer driving season, accompanied by a national advertising and marketing campaign including television, radio, Internet, print, point-of-purchase and technical magazines.

Caplan noted that Shell's extensive research finds that customers are increasingly more knowledgeable about fuel and are interested in attributes that they find important, from responsiveness and value for money to power and engine cleanliness. "Our campaign, which underpins V-Power, will be about the benefits of engine cleanliness. The name of the product is suggestive of a performance benefit, and our experience around the world with this product is that that approach has resonated extremely well with our customers," Caplan said. "We're building on that experience as we launch in the United States."

Nor is the company being put off by the current high gasoline prices. "I guess you can either retreat from the market, or you can aggressively go out and pursue it and try to get a higher percentage of the premium fuel — and that appears to be what they're doing here," said Tom West, president of the National Association of Shell Marketers (NASM) in Springfield, Va., on the V-Power superpremium launch.

"We are, as a global company, extremely pleased with our differentiated fuels initiative around the world, and that's why we're optimistic about our launch in the United States — even at a time when prices are high," Caplan said. "Compared to an unbranded product, the Shell brand gives you the guarantee that you're getting what you're paying for."

BP: Beyond Petroleum

BP has had a plethora of marketing challenges in the last few years in terms of re-educating consumers. First was the challenge of combining the BP and Amoco brands into one unified entity and being able to transition customers to BP with Amoco fuels.

Next came the full-throttle introduction of a differentiated convenience offer, which came in the form of BP Connect with the Wild Bean Café east of the Rockies, and ARCO am/pm west of the Rockies. It seemed at that time that all marketing efforts were going toward promoting the new enhanced retail offer to customers.

"Now that we've been able to successfully complete the reimaging campaign," said Polly Flinn, president of U.S. retail operations for BP, "we're talking about one of the very specific distinctive product offerings at BP called Amoco Ultimate — America's number-one premium fuel brand."

In all of its markets, BP offers Amoco Ultimate, which has twice the detergent-additive level required by law, as its premium fuel offer. In 2003, BP launched new Amoco Ultimate with enhanced cleaning power (at four times the legal requirement of detergent additives) in Cleveland, Indianapolis and Memphis.

BP has been beefing up its marketing push for the premium Ultimate brand, as it says, in response to customer demand for a clean, efficient premium fuel. "Based on the research that we've done, we think brand identity for premium fuel and fuel in general is very important," Flinn said. "There is a certain segment of customers out there that continues to buy premium fuels because they want to enhance their car's performance, or because environmentally friendly fuels are important to what they're doing and how they contribute to their community."

Working hand-in-hand with the BP Ultimate campaign is the BP "on the street" campaign. The advertisements depict real comments with photos of everyday people, including statements such as: "Electric cars won't happen overnight. There's got to be a way of making fuels cleaner" and "I'd rather have a cleaner environment, but I can't imagine me without my car."

This approach ties in perfectly with the Amoco Ultimate campaign — consumers pose the problem, company provides solution through cleaner premium fuel. "The current premise of the advertising campaign joins together both performance and clean fuels, and the fact that cleaner, better performance is the cornerstone of our distinctive fuel strategy right now," Flinn said.

One would wonder, however, how the promotion of a premium — and, therefore, higher-priced — fuel is affected by today's rising gas prices. Are consumers willing to dish out the extra cash for a cleaner fuel? "I think there is always a certain segment of customers that is sensitive to price, and certainly we see that when there are upticks in price," Flinn said, adding that many premium customers downgrade to silver and typically return back to premium after the increase in retail prices has subsided. "Even still, premium fuel plays a very important part of our overall portfolio, and there is a certain segment of customers less price sensitive to fuels than others. Brand identity we think is quite key, no matter what the price is, and it's a distinctive part of our strategy."

Flinn said the company is having significant success with the distinctive premium strategy in the United States, and is benefiting from the continued success of launching programs with premium introductions in Greece, Portugal and the United Kingdom. "We launched those in 2003, and have had a lot of success," she said.

Another aspect of BP's brand-differentiation strategy has been its promotion of alternative energy sources through the "It's a start" campaign. "Thinking about new energy sources is the way we do business," Flinn said. "Each and every day, even though we're in the convenience and fuels business, we are certainly thinking about ways those new energy sources could be a source of business going forward. We've been actively engaged in the solar business for some years, but we have certain projects going on with hydrogen and wind around the world. The view is that we want to understand how these can be part of our business going forward."

ConocoPhillips Gets PROclean

Formed by the merger of Conoco and Phillips Petroleum, Houston-based ConocoPhillips is no stranger to fuel differentiation. As part of its new direction for the future, the company recently announced a new gasoline brand advertising campaign, "Life Happens Between Empty and Full," which puts a new spin on the brand and its quality fuels.

The "Life Happens Between Empty and Full" campaign unites the company's three major U.S. gasoline brands — Conoco, Phillips 66 and 76 — and coincides with the recent launch of Quality PROclean gasolines to every station in the country. At the beginning of the year, the company made a significant corporate decision for all three brands to up their additive to the top treat rate in all three gasoline grades, from regular unleaded to premium.

"We raised the quality of our gasoline by increasing our detergent additive program to levels that go far beyond the national standard, and exceed levels of many competitors," said Mark Harper, president, U.S. marketing for ConocoPhillips. The new fuel offer markets to the consumer looking for a cleaner fuel alternative that will maximize a car's performance. Some of the touted results include giving drivers smoother acceleration, helping to restore engine performance, reducing hesitation and making a driver's car more responsive — all through fuel quality.

"From our consumer research we know the best way to become the brand you trust is to offer one of the highest-quality products on the market," Harper said.

The "Life Happens Between Empty and Full" campaign launched in major markets on April 1, and will include a full spectrum of television, radio and print ads to pass the message. Images detail how gasoline products fit in with day-to-day life, and how you rely on your car to live and move about with your daily activities.

The company is really pushing the "clean" factor of the new fuel, even down to renaming the offering Quality PROclean. Some of the fun and witty slogans used in outdoor advertising include: "It's like flossing for your engine," "Because the squeegee can't reach the tank," and "Wash behind your fuel injectors."

As the advertising campaign swings into full force, the company has done its best to promote the effort directly to its loyal customers as well. A brochure highlighting at a cursory level the technical information on the new gasoline is being produced and will be available at ConocoPhillips sites for consumers. Point-of purchase materials for the campaign are also expected to be delivered to the sites in the third quarter.

ExxonMobil: We're Drivers Too

Unlike its aforementioned brethren, Irving, Texas-based Exxon Mobil Corp. has not gone back to emphasizing the quality of its fuel offering in recent advertising campaigns. ExxonMobil believes its consumers already have confidence in the quality of the fuel, so the company is working on other elements of the retail and gasoline offer to keep the customers coming back.

"We feel, and our research indicates, that consumers feel that our fuel is of good quality and always has been," said Stew McHie, global branding manager for ExxonMobil. "We track satisfaction levels, we track customer complaints, and frankly our fuel performs very well in the marketplace, so in terms of changing fuel and advertising fuel, that's really not a priority for us right now."

McHie emphasized that research has satisfied that customers are past the "detergency and cleanliness phase." He said that "need for clean" phase occurred in the 1980s, when fuel-injector ports were having clogging issues blamed on unclean gasoline. "The industry and the government addressed that, and for many years we did advertise the cleanliness and the detergency aspects of this problem," McHie said. "By and large, we solved it and consumers have come to recognize that gasoline today — most certainly major-brand gasoline — is going to contain the right kind of additives and detergencies to keep their car performing well."

McHie also pointed out that on a basic level, the grand majority of consumers can't tell the difference between fuels once they are in the tank. "I defy a consumer to be able to discern the difference in the performance of the fuels," he said. "Now having said that, we feel very good about our fuels because of the additive treatments that we use. The evidence is we just don't get complaints from consumers that their cars don't perform. We provide good value, and certainly today in a high-priced environment, people are looking for value."

Instead of touting the quality of its fuels offering, ExxonMobil is positioning its brand as enhancing life on the move for its consumers, which the company expresses in advertising with the slogan "We're drivers too." Said McHie, "We understand what life is like out there; we know the joys and frustrations of life on the road. That's why we're uniquely positioned to provide you with a better experience, because it's the same experience we would want as consumers."

The company is working to differentiate its brand through its extended offer of the convenience experience to make the consumer's life somehow better. Priorities have been centered around promoting and growing the On the Run c-store format, SpeedPass payment systems and enhanced car-wash offerings.

"In large cities today where we market, life is really very mobile and we want to be positioned to enhance that life. This is what we're trying to get our people within the company to promote, to behave that way, design our stores that way and design our products and services that way
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