Chevron Puts Brands to Pasture


Starting July 14, Chevron will transition from its current dual-branded – Chevron and Texaco – commercial and industrial product lines to a single line under the Chevron name in the United States and Canada. The change will not affect Chevron Delo, Texaco Havoline and Texaco Xpress Lube. It also will not impact consumer products or the Texaco retail business.

The outcome will be a single comprehensive, commercial and industrial lubricant portfolio which gives Chevron good coverage within the market, combining the best technologies from the two stables of products, said Vince Kyle, Chevrons general manager for North American finished lubricants.

It also has some benefits in reducing some complexities – for example, inventory management within our own organization, but equally out with our customers and marketers. Theyre not having to run two sets of inventories anymore, Kyle told Lube Report. Theyll be selling one product line now, as opposed to two as some do. Therefore, there will be a keener focus and easier marketing support on through to the final customer base.

Kyle said Chevron sees the change as a benefit to its distributors. It opens up for them the ability to sell the strongest and best products in our portfolio, he said.

Across the line, there are situations where there are similar Chevron and Texaco products, he said. When that happens, theyre looking at the one with the greatest market value, and that will be the brand name that remains under the Chevron master brand. Its possible the product taken out of the loop now could someday come back, but it wont be produced under that name for the foreseeable future.

Kyle expects there will be a rolling change to the new product line and a gradual phasing out of any discontinued products. The older products, previous sub-brands and Texaco branded products, theyll work their way out naturally through the system, he said. So its not as if those products are not being marketed on that date. There will be a transition date as inventories build with new products to replace them.

For example, Chevron Rykon hydraulic oil will be replaced by Texaco Rando hydraulic oil. The Rando product will maintain its current formulation, and will later be rebranded Chevron Rando.

The great advantage there is that the Rykon customer is still seeing their hydraulic oil linked with Chevron, Kyle explained. The Rando name, which has good market equity value, is still there for the Texaco customer as well, so it is a win-win in our mind in terms of the final end customer and marketer having that clarity of sight to it.

Chevron RPM LE 15W-40 diesel engine oil will be replaced by Texaco Ursa Super Plus EC 15W-40, because Chevron believes the Ursa Super Plus EC brand has greater market equity. The Ursa product will maintain its current formulation, and will be rebranded Chevron Ursa Super Plus EC 15W-40.

It bridges both sets of customers, who wouldve been either on the Chevron RPM or Texaco Ursa – so the Chevron Ursa bridges that gap perfectly, Kyle said.

The transition will also offer benefits at plants as well. If you go anywhere near a blend plant, obviously now were not going to have two drums of basically the same product aimed at the same application, he explained. Now well have one. There will be some benefits there from our standpoint in terms of production and storing of products.

Darrell Hovander, brand transition project leader, mentioned grease as another example of the brand transition. Texaco Multifak is the same grease as our Chevron Dura-Lith, Hovander told Lube Report. As part of this overall project of complexity reduction, we looked at those two brand names, and at end of the day we decided to move Multifak under the Chevron brand. The grease will be called Chevron Multifak.

In determining the market equity of the various brands, Chevron had dialogues with a number of its marketers. They are very comfortable with the move across where Chevrons the master brand, but the sub-brands name – the legacy Texaco brand – is still retained, he said. That really assisted us in addressing concerns about how this would be deployed through the marketing channel.

One distributor of both Chevron and Texaco industrial and commercial lubricants anticipated benefits from the transition.

Im sure theres some heartache here and there, but consolidating the two brands to one is something I anticipated would happen, and Im not really expecting it to be that overwhelming, the distributor told Lube Report. From an administrative perspective, Im sure there could be some real challenges processing all these changes internally within Chevron. But at least from our vantage point it probably is going to simplify our lives a little, because you dont have multiple brands being sold to different places with various things going on. It eliminates complications and streamlines the process. Theres not as much duplication.

Another Chevron and Texaco lubricants distributor expressed misgivings, saying a similar phase-out of Gulf brands proved difficult. The only thing I can say is a number of years ago they did that with the Gulf brand, and all they did was make mass confusion, this distributor told Lube Report.

A Chevron lubricants distributor said the transition was probably overdue.

Really what were seeing is the end of something that began several years ago and probably shouldve happened sooner, the distributor said. I mean, its sad in a way to see something thats an old, well-respected, well-regarded brand kind of go away. But in many senses, it kind of began happening with the formation of Equilon-Motiva. I think its probably the natural outcome of that type of thing.

This source said that as a Chevron branded distributor, it never had access to Texaco products other than buying through Texaco-contracted distributors. Essentially how the process will affect us will be just trying to move out our old inventory of old product names, and making sure our computer system is updated to handle the new product name, the source said.

This distributor believes customer attachment to brand names is less of an issue on the commercial and industrial side of the market.

I think it will probably be less painful than a lot of people might expect because this has been a long, drawn-out process, he said. There might be some people that are more upset not seeing the Texaco star on the drum, if theyve been getting that. I dont see it as an issue for us since we were Chevron branded.

Chevrons action was not unexpected, said Geeta Agashe, vice president, petroleum and energy, for Kline and Co. in Little Falls, N.J.

We think this is an excellent move by Chevron that will help their bottom line, Agashe told Lube Report. C&I lubricant marketers that do not have such a brand strategy are potentially leaving money on the table by not maximizing the investments that they have made in developing superior products. There is no advantage to maintaining and supporting different brands that perhaps do not have a strong position in their product and/or end-use segments.

She said Chevrons brand transition strategy will lower costs and improve consistency. Having one master brand will allow them to cut costs out of marketing, R&D, tech support, inventory management, advertising and promotion, SKUs, pack sizes, etc. as well as present a consistent image globally, Agashe continued.

A brand represents an established set of values, she commented. A sound brand strategy will clearly lead to a rethinking of the number of brands the company has in the market and in the pipeline, the introduction of new brands to fill positioning gaps, and the discontinuation of old, nonperforming brands, Agashe said. Formulating a sound, logical brand strategy is likely to eventually cost less than having no brand strategy.

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