State owned monopolies are generally run as heavily bureaucratic organizations. Going private and establishing a profitable business means that the service will have to compete in a market based economy. The benefit to the public? Generally greater efficiency and better customer experience.
Sounds great but privatizing is not without its challenges, particularly in the energy sector where traditionally efforts are placed on exploration, extraction and refining while the less tangible aspects of shareholder experience and customer retailing receive less attention.
In Portugal, the public sector looms large; state ownership in commodity industries like transportation and finance is still substantial. However the country began privatizing the oil sector in 1992. Group Galp Energia (formerly GALP – Petróleos e Gás de Portugal) was formed in 1999, comprising Petrogal and GDP – Gás de Portugal, the state owned holding company for the natural gas sector.
Now Portugal’s primary oil and gas group, Galp Energia (literally Portugal Energy) is not entirely private. The Portuguese government owns 35 percent, and Italian energy conglomerate Eni claims an additional 33 percent stake. Operations center primarily in Portugal, with more than 40 percent market share, and Spain with exploration and production in Angola and Brazil.
As the country seeks to hand over other state owned enterprises to the private sector, attention will focus on how earlier companies like Galp have managed the transfer.
Privatizing the oil sector meant that the former monopoly was no longer the “only” choice. The brand owners at Galp recognized that the public would now be able to make decisions based on the best choice. The goal was to become one of the leaders in the energy sector of the Iberian market where competitors like Spanish brand Repsol YPF, the Anglo-Dutch conglomerate Royal Dutch/Shell and the British brand BP already had a head start in terms of brand differentiation.
After nearly a decade of weak undifferentiated positioning, an inconsistent identity across the different entities, and overall brand erosion, Galp Energia knew it had to shake off the public’s perception of it as a bureaucracy.
The company set out to rebrand in January 2002 with a mandate that came with full initiative and enthusiasm from the top. Vice Chairman and CEO António Mexia is largely credited for masterminding the brand’s resurgence with his ambitious strategy to align the brand internally and externally. Known within the company for being a true gatekeeper of the brand, it is not uncommon to hear stories about Mexia visiting Galp stations to ensure that all is up to the brand promise.
Mexia and his team recognized a need to unite all of Galp’s offerings while also attracting shareholders and retail customers. A set of values was drawn up to help internal staff live the intent of the brand, and establish a code by which Galp could focus its goal to increase presence on the Iberian Peninsula.
Galp chose five areas on which to concentrate its values: profitability, innovation, leadership, social/environmental responsibility and customer focus. The five elements help balance the focus to achieve a comprehensive effort toward improving all aspects of the brand and achieving a sum that is greater than the value of the parts.
An identity was created around the energy group’s mission, products and heritage. The G of Galp was turned on its side and encased in a beveled tablet. The lowercase typeface is FF Dax, an easily applicable font that is clean and utilitarian, and reflects the gas and oil staple in a friendly light.
Describing the brandmark as “more GlaxoSmithKline than ExxonMobil,” designer Jackson Wang at BrandWizard Technologies, says the overall effect is an offbeat look for a fuel company.
“In addition to warm colors that are reminiscent of Spain and Portugal,” he says, “the mark hints at both a flame and an oil drop, and maybe even a flower -- all of which work for Galp in conveying its products as well as its attention to environmental responsibility.”
As for the identity’s ability to grow with the company, Wang thinks it has the potential to be a lifestyle brand, which can only help as Galp looks to expand in its non-fuel offerings.
The overall effect is a bright and accessible look to match the energetic goals of the brand. But a fresh, inviting identity needs to be reinforced with an equally fresh, inviting customer experience. The team set about to match the brand’s actions with its identity by improving its service offering.
Presently Galp has over 1,100 retail properties in Portugal and Spain of which nearly 200 are company-owned and the rest are franchise spaces. The challenge in these situations is always to ensure that the customer experience is consistent and standardized across sites. Additionally, in the fuel sector, brands need differentiating factors to advance the customer choice beyond just price or location.
Galp set out to offer friendly efficient service and a more complete set of integrated products and services. To encourage loyalty, the company offers a fidelity card that rewards repeat business. And in keeping with an industry-wide trend to extend the fuel brand, Galp is capitalizing on the market for related services and products. “We intend to consolidate the brand with a non-fuel offer and distinctive service,” says Miguel Setas, strategic marketing director and brand guardian at Galp Energia.
Recognizing that today’s customers are better informed and more demanding, Setas concentrates on five areas of marketing: “Good ideas, authenticity, superior execution, timing and focus.” “These five issues,” he says “are fundamental because you cannot innovate without creativity. Nowadays it is not enough to [just] do well. It is needed to achieve an excellent level -- to be the best. Because a good idea out of time isn’t worth much, but also because a more focused marketing effort is a more productive and efficient use of resources.”
Recent innovations reflect the company’s effort to become a thought leader in the Iberian energy market. For instance, Galp was the first oil company to test the use of biometric recognition (fingerprint) in customer interface.
The brand’s aim to become a relevant player, reflected in its dynamism, innovative spirit and distinctive customer service, is ambitious but already efforts are beginning to show promise. Although the Portuguese government has not yet announced the final calendar for Galp’s IPO, the company has already prepared its brand to go public.
Annual turnover for Group Galp Energia in 2002 was €6.9 billion with 2003 estimated around €7.1 billion. Net profit of €115 million in 2002 is projected to more than double in 2003. Staff is estimated to be around 5,000 fulltime employees. Comparatively competitor Repsol has an estimated 30,000 employees and reported 2002 year-end sales at €38 billion making it roughly five to six times bigger than Galp.
Galp’s efforts to engage the public can only improve with the Euro UEFA for 2004: national footballer Luís Figo has recently been enlisted to put his favored face on the energy company in its advertising campaigns, which has the potential to fuel a frenzy among football fans across Portugal and Spain.