TAMPA – Rather than focus on pricing, lubricant marketers should use packaging to differentiate themselves in a market where consumer brand preference is falling by the wayside thanks to an overwhelming number of products and consolidation of retailers, an industry insider said at the Petroleum Packaging Councils annual tradeshow held here earlier this month.
Brand preference has been waning, said Andrew Bornstein, vice president of global sales and marketing at Amalie, in a March 5 presentation. 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.
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The do-it-yourselfer still has somewhat of a brand preference, but if the brand is not on the shelf, theyll simply go to that same category, he added.
This near lack of preference comes 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 bifurcation of mineral, synthetic-blend and full synthetic oils into 12 categories with overlapping viscosities.
There are more viscosity recommendations today than ever before, he noted in an interview. Today 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.
Additionally, the trend towards original equipment manufacturer licenses has given way to an increased number of products on the shelves. In 2000, for example, almost all new vehicles recommended API or ACEA products, but now many original equipment manufacturers have additional or proprietary licenses and specifications that are often mutually exclusive to API or ACEA specifications.
Although there are more products on the shelf, there are less players in the market. The number of automotive parts retailers has significantly decreased as top players like Auto Zone 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 1,911 locations – 1,513 more than the fifth-largest chain, Kwik Kar. Oil change plus locations have nearly the same ration, with the top chain, Goodyear, running 1,508 more stores than the fifth-largest, Monro.
There are fewer customers and [there has been] consolidation both in distribution, retail and the install market, [as well as] increased SKU count. Were having more and more different products out there, and [a] decline in brand preference, said Bornstein.
Price has been beaten out of the market, Bornstein claimed. Rather than focusing on price, marketers should focus on packaging opportunities including package sizes, proprietary packaging, labeling and multi-application products.
Five-quart, six-gallon or single use package sizes offer the customer a convenient option and are likely to stand out on the self. [The] ideal package size is one complete oil change, believes Bornstein. The perfect fit, however, can be a bit difficult to achieve because of the multiple possible combinations of sump capacity, viscosity recommendation and oil specifications, 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 or 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, postulated Bornstein. Consumer preference trending toward proper fitment as pricing or sourcing information continues to become more transparent, he noted.