Price, Price, Price

Seventy percent of consumers say price is the biggest determinant on where they purchase gasoline.

That figure has held steady for the past several years, according to Jeff Lenard, vice president of strategic industry initiatives for NACS, the Association for Convenience & Fuel Retailing. Lenard presented at the fuel educational session entitled, “Gas Prices: Consumer Perspectives.”

One interesting insight related to that question, though, is that women are more attracted to a gas station by the price sign than men are.

Looking at what might change consumer behavior at the pump, Lenard pointed out that NACS’ research shows 78 percent of consumers would pay with cash instead of plastic to get a 5-cent-per-gallon discount, indicating the potential effectiveness of two-tiered pricing.

“Saving 5 cents is a really big deal,” he said, noting that 28 percent of consumers said they would drive five minutes out of their way to save 5 cents per gallon, and 12 percent would drive 10 minutes out of their way for similar savings – both losing propositions for the consumers.

To sell fuel more profitably, retailers should think about taking the focus off price. Lenard offered the example of one Berkeley, Calif., dealer who focuses on sustainability and environmental education, fair-trade coffee and organics. “She can sell diesel at a higher price than any of her competitors because consumers don’t look at price when they go there,” he explained.

Another effective tactic is to “tell your story.” Messages like “We are locally owned and operated” and “Here’s what we’re giving back to the community” can make a difference, he said.

As for the future, consumers’ thoughts about transportation are evolving. About 90 percent of those surveyed by NACS say they would consider purchasing a hybrid vehicle and another 55 percent cited flex-fuel vehicles. Almost 50 percent said they would buy electric, but Lenard pointed out that few dealers currently offer recharging stations and those that do largely do so to push an image.

E-15 fuel still has negative consumer perceptions, Lenard said, with 45 percent of consumers citing concerns about decreased efficiency. Compressed natural gas (CNG) has a high level of acceptance with 73 percent saying they are “somewhat or very” likely to try CNG. However, CNG still requires a lot of work, such as converting a car to accept the fuel. Lenard noted that some retailers, such as Kwik Trip in the Midwest, are expanding CNG stations because they have a base of business with CNG-powered fleets.

Another NACS executive, Hart Schwartz, fuel and research analyst, spoke about the more esoteric concept of reflexivity and how the interaction among all levels of the supply chain can disrupt the business.

“Imagine in the future that self-generating vehicles that run on solar or wind power might pull up to your station and connect to the grid, supplying power to the grid,” said Schwartz.

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