Cheap Gas and Music Fuel Sales

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Cheap Gas and Music Fuel Sales

CEDAR FALLS, Iowa -- Cars lined up for nearly a block down the street recently as bargain-hungry motorists waited to fill up their gas tanks at the Music Station convenience store in Cedar Falls, Iowa. The price: $1.09 a gallon

Owned by Ken Miller of Janesville, Iowa, the Music Station in Cedar Falls and another in Independence, Iowa, blend sales of traditional c-store merchandise with a few not-so-traditional touches, according to a report in The Des Moines Register.

The Cedar Falls store sells music CDs by artists such as Mary J. Blige, Beyonce and Ludacris, off an 18-foot aisle. Low gasoline prices and temporary super price cuts that last two or three hours, often putting Music Station prices 40 or 50 cents a gallon below competitors' prices, are an integral part of the Music Station's marketing strategy.

A recent evening saw gasoline at $1.09. "I think the last time gas was this cheap, I wasn't old enough to drive," customer Cory Haeffner, 23, told the newspaper.

Miller's gas marketing strategy draws block-long lines of motorists -- and it irks some competitors.

"This is his game," said Leonard Hunter, co-owner of the Hometown Cafe and Convenience Store. "It's just real disgusting."

At times, Hometown has been forced to sell gasoline 5 to 10 cents below cost to match the Music Station's everyday prices, Hunter said. Most competitors do not try to match the temporary prices, which occur at least a couple times a month.

Miller told The Des Moines Register his business model works. The strategy is for Music Stations to be profitable without any profit coming from gasoline.

In Cedar Falls, many stores in the Music Station's neighborhood were selling ethanol-blended gasoline for about $1.45 a gallon a few weeks ago, while at the Music Station it was $1.33. At the nearby Thunder Ridge Ampride convenience store, however, the price was $1.36.

"We meet them head-on," said Darin Beck, a co-owner of the Ampride store. He and two partners bought the business in August. "When we went in there, we knew we were going to have to play that game with him. He's a formidable competitor."

Miller, 40, also uses the mix of CDs and gas price cuts at a Pronto store he oversees in Manchester, Iowa. Miller, a native of Denver, Colo., runs a convenience store consulting business called Make It So out of his home in Janesville.

While some price cuts are planned, most are spur-of-the-moment decisions because he is in a good mood, Miller said. When that happens, he simply calls a store and tells the manager to drop the price.