Knowing the Customers Needs

Before putting pen to paper and drafting a new marketing plan, its important for companies to understand current consumer trends so they know how to focus their strategy.

Online sales, or e-commerce, has made a significant impact on the petroleum industry, according to Elliott. Take the opportunity to design labels built for online consumption, Elliott advised in an interview. Avoiding a digital marketing strategy could leave a company in the dust, he warned, as this trend is significantly changing how consumers purchase goods.

Some of the shifts consumer product companies are making due to online purchasing erosion of price and experience is to create what we call digital shelf, he continued. In a physical store, consumers can peruse products, pick them up and look at them from all angles, and read important information included on the label. Digital shelf looks to bring back the consumers ability to explore the product online, Elliott explained. This includes images of the package from multiple angles or a 3D rotational view, images of the product out of its package, in-use shots and information highlights, as well as experiences that are not possible in a store such as mini ads and video.

Consumer product companies providing this rich online experience can expect significant additional sales above their competition, as well as deliver on the brand experience consumers are saying they want, said Elliott. So branding is still very relevant and effective when delivered in a current medium.

Environmentally friendly features could be added into the marketing mix to stay relevant to todays consumers, even though Amphora has seen this trend play only a minor role in sales of most packaged goods. Consumers claim they want environmentally friendly products and packaging, but green oil hasnt gained any significant market share, added Andrew Bornstein, vice president of global sales and marketing at Amalie Oil.

Consumer trust of private labels has increased over the past several years, creating more competition for branded products. According to Bornstein, a mere 35 percent of traditional oil jobbers offered private label products in 2005. By 2015, this number grew to 80 percent, and private label products now outsell their branded counterparts in some categories. This means branded products must focus even more attention on differentiating their brand, Bornstein said.

If product qualities are similar, the brands have one other asset the private label providers do not: a higher level of emotional connection to the consumers. When brands leverage their longevity in the market and the emotional connections they have created through time with their consumer base, this will tip the price scale to Ill pay more to be associated with this brand, Elliott said. Consumers have an overload of choices in todays marketplace. Branding plays a critical role in delivering what a company stands for, as [do its] products features.

Brand preference has been waning, Bornstein told attendees at the meeting in Tampa, Florida. According to the Automotive Oil Change Association, less than 1 percent of people that come into a quick lube are actually asking for a specific brand of motor oil.

The do-it-yourselfer still has somewhat of a brand preference, but if the brand is not on the shelf, theyll simply go to [another product in] that same category, he added.

However, it is unlikely that brand preference will ever go to zero.At the very least, branding will slow the preference erosion and help maintain margins. When done correctly, branding can increase sales and margins even in a declining market, Bornstein stated.

SKUed Market

Brand preference seems to be falling away at a time when the number of products on the self is increasing, which Bornstein refers to as SKU proliferation. The number of SKUs, or stock keeping units, has increased due to a split of conventional, synthetic blend and full synthetic oils into 12 different categories with overlapping viscosities.

One of the major manufacturers has no less than seven synthetic motor oils, he told LubesnGreases. There are more viscosity recommendations today than ever before.

There are so many niche products that it is difficult to even fully define them. For example, one oil marketer has the same viscosity grade in a dozen offerings.

The trend toward original equipment manufacturer specifications has also given way to an increased number of products on the shelves, Bornstein reported. In 2000, for example, almost all new vehicles recommended oils meeting standards of the American Petroleum Institute or European Automobile Manufacturers Association (ACEA), but now many original equipment manufacturers have their own specifications, which may have requirements that are mutually exclusive.

Although there are more products on the shelf, there are fewer players in the market, he continued. In 2005, there were roughly 12,000 traditional oil jobbers in the market; by 2015, only about 2,400 remained. The number of automotive parts retailers has also significantly decreased as top players like AutoZone and Advance Auto Parts continually acquire other outlets. The top five chains have a combined 18,420 stores, while the next five have merely 1,228 stores.

Similarly, the largest quick lube chain, Jiffy Lube, has 1,922 locations-1,522 more than the fifth-largest chain, Quaker State Oil Change. So-called oil change plus locations have nearly the same ratio, with the biggest chain, Goodyear, running 1,394 more stores than the fifth-largest, Mopar Express Lane, according to National Oil & Lube News.There are fewer customers and [there has been] consolidation both in distribution, retail and the install market, and increased SKU count. Were having more and more different products out there, and decline in brand preference, said Bornstein.

Packaging Could Be Key

Price no longer has the leverage it used to, even in a market where consumer brand preference is falling by the wayside thanks to an overwhelming number of products and consolidation of retailers, said Bornstein.

Price has been beaten out of the market, he claimed. Rather than focusing on price, marketers should turn their attention to packaging opportunities including package sizes, proprietary packaging, labeling and multi-application products.

In fact, Elliott reported that Amphora has conducted case studies where merely changing the package design-and only the package design-drove a 300 percent increase in sales.

Five-quart, six-gallon or single-use package sizes offer the customer a convenient option and are likely to stand out on the shelf. Ideal package size is one complete oil change, believes Bornstein. The perfect fit, however, can be a bit difficult to achieve because sump capacities vary, he noted.

Proprietary packaging and labeling are two other ways companies can battle the lack of brand preference to differentiate themselves, he continued. Designs unique to a specific brand often stand out on the shelf and stick in the customers mind. Using technology like QR codes on labels also helps the products become more attractive to customers by offering more technical information about the product in multiple languages. This can also be achieved through multi-part labeling.

Finally, companies can package products that work across multiple categories, engine types or uses, or that hold a variety of licenses from industry organizations like API or OEMs.

Continued splintering of products, pack sizes and unique or differentiated packing is likely to continue, predicted Bornstein. Consumer preference is trending toward proper fitment as pricing or sourcing information continues to become more transparent, he noted.

Heading in the Right Direction

Companies can leverage the packaging update to develop a unique, relevant and defensible brand by following what Amphoras Elliott calls a brand process. Market research can make or break the success of a brand, he claimed.

Knowing the business objectives, the problem the branding is trying to solve and any other goals will be critical to being on target with the effort, he stated. Once that is understood, companies should gather market insights and trends through stakeholder interviews, focus groups and audits.

Branding experts often advise marketers to develop a brand blueprint, one statement that sets the companys brand apart from others, including sales channels and places where consumers interact with the product. This is where your brand blueprint comes in handy, positioning you to win. Included in a brand blueprint is the unique selling position. This is the one statement that sets your brand or product apart from all others, Elliott said.

Now that a foundation has been built to support a brand, you are ready to develop the brand vision. This typically includes the naming, messaging, promise and visual assets to be used in marketing, Elliott continued. The brand vision allows for flexibility through all marketing channels without compromising the consistency of the brand. Over time this builds equity and value, according to Elliott.

Finally, companies should develop case studies that demonstrate the positive outcomes of using their products, in order to give customers evidence to back up marketing claims. Typically this is done in a challenge-solution-outcome format.

Build a positioning statement and brand promise around the needs that align with the core competencies of the business, back them up with reasons the customer should believe you, and youre on the way to business marketing success, Elliott said.