NEWARK, N.J. — The growth of E15 fuel is getting harder to deny.
In the week leading up to the “E15 Best Marketing Practices” webinar hosted last month by Convenience Store News and Growth Energy, 200 more sites began offering E15.
As of Sept. 6, there were 1,600 sites offering E15 at the pump and 2,800 sites committed. The majority of these sites, as pointed out by Growth Energy’s Vice President of Market Development Mike O’Brien, are significantly larger than the average fuels site in the United States. And they’re reaping the benefits: E15 retailers sell 2.4 million gallons per site vs. an average of 1 million gallons per traditional fuels site.
The retailers that were among the earliest to offer E15 are what O’Brien refers to as the "innovators." Referring to the Law of Diffusion of Innovation, which categorizes how a product is adopted into the mainstream over time, he suggests E15 is through the Innovators stage, which is capped per the law at 2.5 percent saturation.
Current E15 retailers are filling in the Early Adopters phase (capped at 13.5 percent), according to O'Brien, which precedes the tipping point into Early Majority (34 percent), Late Majority (34 percent) and finally, the Laggards (16 percent).
The E15 Brand
Based on two years worth of data evaluation at pumps across the country, Afshin Mohamdi, principal at Quadrant Strategies, detailed the best practices around offering E15 in the marketplace.
"The product is popular and has the benefits that consumers really want. There is a brand issue, though," acknowledged Mohamdi. "We see this most clearly when we test different ways of branding E15 at the pump."
"There is a real need to change the E15 brand and, if we do so, there’s clear consumer demand that can be built," he added.
Through the data evaluation — which included 4,000 qualitative and quantitative surveys, intercepts at the store and 300,000-plus transactions — Mohamdi came away with a few primary challenges for E15.
The first challenge is that consumers are inherently fearful of all new products; when given new choices, they tend to default to products they know. Secondly, consumers aren’t particularly eager to really think about gasoline prices. Perhaps counter-intuitively following the second challenge, the third challenge is that consumers believe that a lower price on a new grade of fuel indicates that it’s of lesser quality.
Despite these challenges, there’s ample reason for optimism, Mohamdi stated. All told, American drivers have logged more than five billion miles on E15 thus far. And while it took a long five years to get to that first billion miles, demand has since accelerated — so much so that it took just four months to reach the second billion miles.
The New Narrative
So, what do fuel retailers need to do to get more consumers to opt for E15 at the pump?
First and foremost, according to Mohamdi, they need to prioritize the narrative to consumers around E15 being similar to their usual gasoline, and it working in their specific car. Everything else is essentially moot.
In field testing, consumers were asked: What’s the one thing about E15 you most want to know before you’d try it? Fifty-four percent responded that their main concern was whether or not it would work in their engines. Coming in at a distant second as a consideration was price (12 percent), and environmental factors was even lower down the list.
“If you’re saying E15 will work in their car because it’s a high- performance/high octane fuel, people think it’s meant for a sports car or luxury car when most people are thinking about what works in my minivan, my Camry, my Ford Fusion,” said Mohamdi. “If you talk about E15 generally being a quality fuel that will help your engine perform a little better, people will come away thinking, 'OK, that’ll be good for my family car and I think I’ll actually get benefits from it.'”
Mohamdi also thinks it’s important to drive home that E15 is a cleaner-burning fuel, which conveys the important point that not only is it good for one’s engine, but also that there are societal benefits.
"The difference it makes is not just to the car or to their wallet, but to the world," he said. "They do feel a bit of guilt about the amount of fuel they use, and using gasoline as they understand it to be, and they do want a cleaner, more sustainable option."
E15 Consumer Conversion
The impact of providing consumers with this narrative about E15 is hard to ignore. At the start of a poll, consumers were asked what type of gasoline they’d use for their car the next time they visited a pump. Fifty-seven percent chose regular unleaded, with just 15 percent opting for E15. After reading a narrative about the alternative fuel, the percentages shifted dramatically, with 51 percent opting for E15 and support for regular unleaded dropping to 31 percent.
Those who are already purchasing E15 tend to be conservative men who are age 55 and older. They are also likely to be car enthusiasts in the upper middle income range, and they’re responding to messaging about the fuel being better for their cars.
Early converters are likely to fall into the following buckets: environmentally conscious and diverse millennials. The former tend to be upper income men between the ages of 35 and 54 who lean left politically and respond to messages about the fuel being clean and environmentally friendly. The latter tend to be lower middle income men aged 18-35 who also lean left politically and are environmentally conscious, who respond to messages about price, the environment and how well E15 works in their cars.
The next converts to E15 could very well be the soccer moms, according to Mohamdi. These are college educated women in the age 35-64 range, middle upper income, who clip coupons and drive minivans. For them, the enticing message is that E15 is an economical fuel that won’t harm their children.
"If you treat E15 like a niche, it will behave like a niche," said Growth Energy’s O’Brien, who advocates for offering E15 at the majority of dispensers on a site. He also suggests retailers position E15 similarly to existing gasoline products, as in Unleaded88 or Regular88. If possible, they should advertise E15 on a street price sign, as well.
All marketing impacts consumer adoption of the fuel, including whether or not it has a dedicated hose. At sites where it has a dedicated hose, it makes up 3 percent to 12 percent of fuel sales, while it makes up 22 percent to 51 percent of sales when it is at a shared hose.
According to O’Brien, this is because at the end of the day, it appeals to both a low- and high-income consumer and it features a lower price but a higher octane advantage.
What else can retailers do? They need to be sure that the blue color of E15 stands out, so as to not confuse consumers with other products or make them overlook it. Growth Energy provides E15 stickers, pole signs under the canopy and nozzle talkers to highlight the fuel. The company can also provide employee education with a host of materials about E15.
A replay of the "E15 Best Marketing Practices" webinar is available here.