CSNews Exclusive: CITGO Celebrates 100 Years


JERSEY CITY, N.J. -- Much has changed in the 100 years since CITGO Petroleum Corp. was founded. Yet what hasn't changed is the petroleum marketing and refining company's central focus on what is real and truly relevant to consumers -- in its words: "Good gas without the frills."

"We offer a quality, reliable product, pure and simple, without a lot of hoopla," CITGO leaders told CSNews Online in an exclusive interview. "While there has been a world of change in many respects, we maintain the core values of our original company, in that our primary focus is on our people and the people we serve."

For the last century, the Houston-based oil company has aspired to create phenomenal business success, while making life better for ordinary people. This vision was set forth by pioneer oilman Henry L. Doherty, who in 1910 founded CITGO predecessor Cities Service Co., one of first corporations to supply gas and electricity to small public utilities.

The CITGO brand wasn't created until 1965, when it was determined that Cities Service needed to fine-tune its marketing strategy. The new moniker retained the first syllable of the company's existing name, but ended with "GO" to imply power, energy and progressiveness. CITGO's iconic "trimark" logo also was born at this time.

Today, CITGO is owned by PDV America Inc., an indirect, wholly owned subsidiary of Petróleos de Venezuela S.A. (PDVSA), the national oil company of the Bolivarian Republic of Venezuela. PDVSA acquired half of CITGO in September 1986, and took over the remaining half in January 1990. The acquisition has greatly benefited CITGO, as PDVSA possesses the largest hydrocarbon reserves in the Western Hemisphere, and is ranked fifth in the world in proven crude oil reserves. Adding the Orinoco Oil Belt reserves, which are currently being certified by an independent third party, Venezuela possesses the largest accumulation of liquid fuel on the planet, the company noted.

Over the last century, the petroleum marketing landscape has continued to evolve -- and so has the CITGO brand. Since the early 1980s, the company has opted to dedicate itself entirely to the independent marketer class of trade. Currently, CITGO serves roughly 6,500 locally owned and operated gas stations, and approximately 200 quick lubes.

While CITGO may not have invented the idea of selling its products exclusively through relationships with independent entrepreneurs, company leaders underscore that the company was certainly the first major player in the U.S. petroleum industry to stake its future on such a "revolutionary concept" -- one that others have since adopted.

"It was a concept that turned out to be bold in its sheer simplicity," they said. "That focus is paying off today as CITGO has evolved into one of the most recognized retail brands in the United States. Each of our approximately 6,500 independently owned stations is its own unique success story of local entrepreneurship and giving back to the community."

CITGO noted its relationship with its marketers is unique in that it is more of a collaboration, rather than a standard supplier/customer relationship. And not owning a single station frees the company to focus entirely on serving its customers' needs.

"[We never have to think about] the conflict of interest that occurs when a company has its own retail locations, which could potentially present a competitive threat to the independent locations. Also, because we do not have to support the administrative infrastructure of running our own locations, we are leaner and more nimble than our competitors," company leaders explained.

Of course, there is a flip side. The challenge of having a locally owned network is that CITGO's primary connection is with its direct customer -- the marketer. However, 80 percent of its branded retailers are independent dealers who own their stores outright. "Since the marketer doesn't own these locations either, that means that our ability to reach these retailers and connect with them can be challenging," the company noted.

CITGO overcomes this challenge in several ways:
• Conducting focus groups and telephone interviews to discern the retailers' perceptions and degree of engagement with the brand's offering.
• Maintaining a comprehensive communications effort that reaches out to retailers every week with updates on company programs, guidance on best retailing practices and information on training.
• Providing retailers with a buying consortium -- CITGO Buying Group -- that offers access to bulk purchasing discounts on merchandise and various types of equipment, as well as training programs on everything from customer service and merchandising, to back-office administration and technology.
• Having a mystery shop program.
• Holding a number of meetings each year that bring its retailers together for a trade show and presentation, along with food, drinks and fun.

In taking these steps, CITGO strives to foster an open exchange of ideas.

Most recently, this collaborative spirit led to the creation of a bold new street image for the brand. The Centennial Image Design, which features a predominately red triform design on the retail canopy, pumps and quick lube building, aims to grab the attention of consumers, thus attracting more of them to CITGO locations.

"The rationale is to mark our second 100 years as a major player in the energy arena with a fresh, modern new look to assist our customers in putting their best face forward well into the 21st century," explained Gustavo Velásquez, vice president of supply and marketing for CITGO. "This new image complements our existing marketing programs and taken together, will help our local marketers and retailers enhance their locations in their respective markets. We are excited about our new look, and hope consumers will find it as refreshing as we do."

The new design, which was formally unveiled Aug. 31 at CITGO's Centennial Summit in Orlando, Fla., was developed in conjunction with marketers across the company's network. It was tested at CITGO sites in Katy, Texas; Miami; Greensboro, N.C.; Bristol, Conn.; Park City, Ill.; and Fuquay Varina, N.C., to ensure it will stand up to various weather conditions and can be easily installed, according to the company.

All new CITGO-branded locations will sport the new street image, and rebranding is expected to begin Jan. 1. CITGO hopes to have all of its locally owned branded gas stations and CITGO Fast Lube stations rebranded within the next few years.

Navigating an Uncertain Future For 2011 and beyond, company leaders told CSNews CITGO plans to introduce a "ramped-up" Retailer Engagement Initiative, which will work to further solidify CITGO's relationship with and support of its network of 6,500 retail locations, helping operators continue to thrive and prosper in the future -- whatever it may hold.

"Navigating through uncertain times is the biggest challenge all of us face," they said, pointing to how dramatically the petroleum marketing landscape has changed over the last century. Companies have moved from curbside dispensing pumps and full-service corner gas stations, to now the self-service mega convenience stores offering everything from bakeries to tanning salons.

The emergence of powerful competitive forces from big-box entrants and regional private brands also has created monumental change for all convenience and gasoline retailers. And most recently, the withdrawal of the major brands from retail operations is once again redefining the competitive landscape.

What's more, the broadening span of diversity among today's driving public is creating new opportunities to segment consumer offerings in myriad ways, according to CITGO. Research indicates that Millennials (also referred to as Generation Y) drive significantly less than their parents or grandparents, and they commune via social media networks such as Twitter, Facebook, Foursquare and all other emerging digital media. CITGO and its marketers are working to reach and appeal to these younger consumers through these avenues, in addition to traditional media.

"The recent recession has caused us, along with the rest of oil industry, to refocus on basics and to find ways to help our marketers and retailers not only survive, but move aggressively into the future," CITGO leaders added.

To keep the company thriving for another century, CITGO said it will continue to focus on its greatest strength: extraordinary service and support.

"We know the value of open dialog, strong relationships, and the drive to do what it takes to solve the problem and get the job done," company execs said. "The future success of CITGO is inherently and fundamentally tied to the success of its vast independent business network. We are poised to fuel the next century only by assuring the success of those who market the CITGO brand, and those who keep the nation's fuel supply moving."

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