SHELL GASSES UP VIRTUAL REALITY TOUR

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BUENOS AIRES-Heightened competition in the service station market is taking Shell Argentina virtually to new promotional heights with a traveling virtual reality road show.

With the industry deregulated and high gasoline prices across the board forcing more value-added services to distinguish the brand name at the pump, Shell is shelling out $2.5 million for four machines to take its promotion nationwide. The machines-about twice the size of a conventional cargo van-fit 14 persons per ride and simulate one of five experiences: a roller coaster, an auto race, a motorcycle race, a slalom ski run and a World War I airplane duel.

A citywide campaign from Ogilvy & Mather heralded the machines' arrival in late December. The first page of the two-page newspaper ad asked readers, "Do you know what a rally car driver feels driving on a mountain road at 200 km per hour?" Readers then turned the page to have Shell tell them, "Prepare to feel the same. Shell Adventures. An incredible experience." Similar local ads will hype the tour as it moves from city to city, augmented with outdoor ads, banners and flyers.

Shell said the coastal city of Mar del Plata-packed with summer vacationers-attracted 38,500 would-be adventurers in the first 20 days of operation starting Jan. 9.

"People were waiting in line an hour and a half just to try it," said Shell Communications Director Mario Freire.

The company also hopes to draw customers to its 1,035 service stations nationwide by offering special ticket deals. For every $10 in purchases, customers receive one ticket, with three tickets earning one ride. Customers can also purchase tickets for $5 on site or at the service stations.

The tour also aims to differentiate Shell from increasingly wide-ranging rivals. Deregulation of the petroleum industry in 1991, and more cars than ever on the road-last year domestic auto production hit a record 408,647 units-means fierce competition.

No. 2 Shell's competitors here include local giant Yacimientos Petroliferos Fiscales with 2,700 stations, Esso with 935 stations and Eg 3-the product of three local oil and industrial holdings merging their service station operations last year-with 650.

None of the four have been slow to take advantage of the booming new car market, introducing premium gasolines along with advanced lubricants. Shell rolled out its Helix line of motor oils in May 1994 with Esso and YPF launching their own versions about the same time.

Eg 3, meanwhile, inked a deal with U.S. giant Mobil Oil last November to refine and market engine lubricants under the Mobil label due to hit shelves this March.

Industry deregulation, which maintained fixed distances between service stations, is gone and companies now see the increased necessity of offering value-added services with company-owned mini-marts.

Shell currently operates Circle K mini-marts at two of its stations here under a licensing agreement signed four years ago between the two companies, Mr. Freire said.

Last May, AM-PM opened its first outlet at a YPF station in metropolitan Buenos Aires, through a licensing agreement, the first of "several hundred [mini-marts at YPF stations planned] within 10 years time," said a company official.

Eg 3 may be luring a foreign partner of its own. The company is rumored to be considering a deal with U.S. lodging operator Days Inn to operate its motels alongside Eg 3 stations here.

The companies also rely heavily on advertising.

YPF spent nearly $21 million in 1993 with Ayer/Vasquez, refining its image from that of a decrepit state entity to a modern, private competitor, according to ad data company Fuentes y Compania. The company also struck a deal with auto manufacturers Volkswagen AG and Scania, along with Chrysler importer Sidway, which placed YPF lubricants recommended in their ads.

Esso last month started up the "Esso Reporter," a six-minute newscast airing nightly at 12:00 a.m. on Argentine broadcast network Canal 9. The newscasts address the events of the day with an on-screen Esso logo present throughout and two Esso commercial spots. J. Walter Thompson, Buenos Aires, handles.

Eg 3 awarded its business to Young & Rubicam when it was formed last August.

But one area where the companies have yet to compete is gasoline prices. None has ever highlighted prices in ads, instead concentrating on image ads, and a price war has yet to break out. And Argentines, accustomed to a lack of competition, are accustomed to paying high rates for gas.

Indeed, a survey found prices at the four chains to be uniformly high, maintained through local production and transportation inefficiencies and taxes.

Eg 3 led in the regular leaded gasoline category at $2.31 per gallon, followed by Esso at $2.27, and Shell and YPF at $2.26.

Premium unleaded provided even more pain at the pump. Shell took the category charging $3.10 per gallon followed by Esso and YPF at $3.08, and Eg 3 at $3.05.

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