In the US, most gasoline sales are through convenience stores. In 1971, says NACS, the Association for Convenience and Petroleum Retailing (formerly the National Association of Convenience Stores), less than seven percent of convenience stores sold gasoline; now, over 80 percent sell gasoline. While gasoline brand names may be featured on the signage, less than three percent of those stores are owned and operated by a major oil company, says NACS. The shift has clearly been away from the traditional company-owned, branded, full-service station to gas as a convenience product.

So the question becomes: Do gasoline brands matter?

Let’s start with this basic fact: There are so many gasoline brands because there is simply no business as large as oil. In 2005, for example, Exxon Mobil reported a whopping US$ 10 billion in net income… just in the third quarter! That year, ExxonMobil’s profits were up 75 percent over the previous year. They weren’t alone. BP’s profits were up 34 percent, and ConocoPhillips’ income was up 89 percent.

So is there anything that influences the consumer’s gasoline brand purchasing decision?

Maybe it’s performance. Oil companies have, over the years, attempted to convince consumers that automobile performance is linked to specific gasoline brands. Chemist Tom Johnson says: “Oil companies swap base gasoline all the time. … while the base gasoline may be the same, the additive is different, and hence the brand of gasoline you use is different because of the additive, not the base gasoline.” Chances are those additives are not compelling enough to create strong brand preference.

Maybe it’s gasoline credit cards. Take the BP Card, for example. It offers no annual fee, a 2 percent rebate on all Amoco Ultimate fuel purchases, and charge privileges at over 11,000 BP locations. Or the BP Visa card offers a 5 percent rebate at all BP locations (10 percent rebate for up to the first 60 days). But do consumers really want another credit card?

Maybe it’s the advertising. Let’s see: Chevron is telling us to “think differently about energy.” ConocoPhillips is talking about “developing alternative fuels.” Exxon Mobil says it is investing “to meet the world’s growing energy needs.” BP is asking “What size is your carbon footprint?” Honestly, would any of those messages make the consumer buy one gasoline brand over another?

Some oil companies are betting that a long term branding strategy will ultimately pay off for them at the pump. BP is a case in point. In 2000, the company embarked on a major branding initiative featuring a new green and yellow sunburst logo and the phrase “beyond petroleum.” BP’s intent was to legitimize its position as a provider of alternative energy, such as solar power, and be perceived as a protector of the environment.

Says Jackson Mahr in his brand profile: “Smart brands such as BP and Toyota recognize that to have a sustainable future, they have to find innovative and clever ways of putting themselves out of the traditional gasoline and motoring business…” (For more about BP’s new direction, see Dr. Arlo Brady’s Brandspeak article, “The Greenrush: Eco-branding.”)

But in the end, gasoline may be one product category in which the power of the brand is trounced by the reality that consumer preference is based on just two attributes: price and convenience. These factors, more than the strong pull of one brand over another, seem to be the driving force behind gasoline purchases. If market conditions remain consistent and gasoline prices continue to rise, most oil companies’ gasoline brands, regardless of what they offer, will just be running on empty.     

[1-Oct-2007]