Gas Buyers Pick Brand Over Price

Costs Continue to Soar, but Consumers Shift Their Focus to Product Benefits

By Published on .

DETROIT ( -- Even as gasoline prices creep close to $4 per gallon in some markets, consumers are increasingly choosing to buy based on brand benefits rather than price or location.
Shell viral: The oil company is attempting to reach younger drivers on the web.
Shell viral: The oil company is attempting to reach younger drivers on the web.

According to NPD Group analyst David Portalatin, consumers in the past year have more often cited product performance as a reason to buy a given brand of gasoline. That marks a turnaround after a decade of decline, indicating that big oil's branding pushes are beginning to pay off.

It's "a little surprising," said Mr. Portalatin, given the record prices. Indeed, the price of U.S. retail unleaded gasoline hit a record average of $3.32 a gallon in the first week of April, although the San Francisco Bay area was even higher at $3.71, according to the most recent information available from industry researcher Lundberg Survey.

Nationally, prices at the pump jumped nearly 53¢ per gallon compared with a year ago. But it appears consumers are deciding that if they have to pay more, they might as well go for quality.

Combined resources
Earlier, oil companies were distracted by a flurry of massive mergers, which created giants such as ExxonMobil and ConocoPhillips, Mr. Portalatin said. "Now they're advertising the quality of their differentiated products, and the ad messages are working."

That's not to say the gasoline giants don't still have a way to go.

Collectively, they commanded a 40% share in the U.S. through 2007, but discount retail outlets such as Wal-Mart and Costco and supermarket chains such as Kroger have experienced a significant jump in recent years in retail gasoline share, reaching a combined 13% at year's end, Mr. Portalatin said, and "we continue to see that share grow."

The remaining share of the fragmented industry is held by smaller regional players and independent outlets.

Karen Wildman, brand and communications manager of the Shell brand at Shell Oil Co., said the industry hasn't done a good job in the past five to 10 years of educating Americans about their fuel products. "Ten years ago, the hypermarkets and grocery stores weren't selling gasoline, and we saw their growth, but we didn't react as quickly as we should have."

Stopping 'gunky buildup'
She said the $35 million she spent last year for the gas brand's "Passionate Experts" campaign was a good investment and is spending the same amount this year to continue the effort.

Ms. Wildman said Shell's quarterly research shows that consumers' perception of the brand's gasoline has improved dramatically since the campaign began running, though she declined to provide specifics. She credits improvement partly to the simple message that Shell gasoline can "stop gunky buildup" in engines.

Shell is also trying to reach drivers, many of them younger, who might not be exposed to its national TV, banner or local radio ads with three humorous online viral videos featuring geeky, lab-coat-clad scientists who are the "passionate experts." The two videos tallied more than 1 million hits on YouTube from their arrival Feb. 25 through the end of March, Ms. Wildman said.

Shell's agency for the campaign is WPP Group's JWT, Houston.

Shell, however, still feels the need to nudge cautious consumers. This month it kicked off a second-quarter promotion, "Earn 25¢ per gallon," for customers who sign up for its branded credit card. Consumers who open a Shell gasoline card through June 30 will have 90 days to earn a $25 gift card for Shell locations by charging $100 in fuel.

Ms. Wildman said the promotion's goal is to build loyalty and add 26,000 credit-card customers to Shell's roster of more than 12 million cardholders. Shell first tried the promotion in the third quarter of 2007, and it was the branded card's most successful promo, she said.
Most Popular
In this article: