Although this would leave a void in the mid-tier space, you can be sure the void will be filled by lubricant marketers who seek to grow their business by raising the bar rather than lowering their price. And here is why.

The mid-tier space offers some of the most fertile ground for growth in the U.S. lubricants business. This is because although PCMO is in the later stages of its product life cycle, where overall growth in demand is flat to declining, the mid-tier space is transitioning from the introductory to its growth stage. And in a zero-sum game where the volume of winnable goods is relatively fixed, growth in the mid-tier space will come at the expense of the lower tier.

To appreciate the magnitude of opportunity in the mid-tier, one only has to look at how this space is developing. For many years, it was populated primarily with synthetic blends. These were the true mid-tier trailblazers. Blends leveraged the fact that consumers already were sold on synthetics as being the best products in the category and would logically assume that synthetic blends are better than conventional motor oil. Accordingly, some would be willing to pay more for synthetic blends and it made sense for such blends to be priced roughly halfway between conventional motor oil and synthetics. Blends gave consumers a choice among good, better and best. And a significant number choose to pay more for better.

By 2000, sale of synthetic blends in the United States reached an estimated 15 million gallons valued at close to $135 million, or 2 percent of the total PCMO volume and 3.5 percent of the total dollar value. Castrol was the clear leader in sales of blends at that time with just over 35 percent market share, and Quaker State and Valvoline were nearly tied for second, with about 25 percent market share each. But the success of synthetic blends and these marketers in the mid-tier space was only the start.

In what many considered a stroke of market research and marketing genius, Valvoline entered a new horse in the mid-tier race in 2000. That horse was Maxlife and it took off running. It gave rise to a new mid-tier category – oil for high-mileage engines – that helped spur overall demand in that space from only 2 percent of PCMO volume in 2000 to closer to 20 percent by the end of 2004. The U.S. mid-tier ballooned from a $135 million category in 2000 to one valued at close to $1.3 billion in 2004, a compounded annual growth rate of 75 percent.

Several important teachings came out of Valvolines success in the mid-tier space. The first is that consumers are willing and ready to pay significantly more for PCMO if they understand the value proposition the products offer. Although industry stakeholders may be impressed with outstanding NOACK volatility, killer Sequence IIIGs, fractional gains in fuel economy, and starburst logos, the ones buying PCMO really are not. Instead, they are motivated by other issues, issues that speak in easily understood language to the specific needs, real and perceived, of the vehicles they drive. And oil for high-mileage vehicles did just that.

The second lesson driven home by Valvolines success is the importance of product positioning. Although its believed that Valvoline, based on its manufacturing costs, could easily have justified dropping Maxlife into the battleground of conventional engine oil, the marketer didnt. Instead it positioned Maxlife shoulder-to-shoulder in the mid-tier space with synthetic blends.

Today, that decision has led to total yearly U.S. sales of close to $300 million greater than if high-mileage PCMOs had been positioned in the lower tier. A significant percentage of those gains were rightfully claimed by Valvoline, but others are catching up.

The hunt is on for the demographics, hot buttons and consumer-capturing issues that will define the next blockbuster in the mid-tier space. Quaker State, for example, recently introduced motor oil engineered for Winter use. Castrol is still testing the water to see if its Start-up resonates with soccer moms and others who make frequent short trips. Mobil has its New Vehicle formula, and most majors now have products fighting for mid-tier share by targeting trucks, vans and SUVs.

But one question, one really big question remains about the search for the next PCMO blockbuster: How long will it be before a major oil company breaks from the pack and leads with a PCMO that speaks loudly to extended drain intervals? The market is there, the demographics are real. An estimated 20 percent of drivers on the road tend to neglect routine oil changes. An even greater number occasionally extend drains. And both groups feel guilty when they do. What major will speak to these consumers and their needs in language they understand?

And equally important, if and when they do, where will they position these and other potential blockbuster categories? Although there is still plenty of room for growth in the mid-tier space, there may be even more room for growth at the top.