Market Topics



Malcolm Gladwells 2000 best-seller, The Tipping Point: How Little Things Can Make a Big Difference, is about how changes in behavior or perception can reach a critical mass and then suddenly create a whole new reality.

Why, Gladwell asked, did crime in New York drop so suddenly in the mid-90s? How does an unknown novelist end up a best-selling author? Why is teenage smoking out of control, when everyone knows smoking kills? What makes TV shows like Sesame Street so good at teaching kids how to read?

Ideas, behavior, messages and products often spread like outbreaks of infectious disease, he responded. Just as a single sick person can start an epidemic of the flu, so too can a few fare-beaters and graffiti artists fuel a subway crime wave, or a satisfied customer fill the empty tables of a new restaurant. These are social epidemics, and the moment when they take off, when they reach their critical mass, is the Tipping Point.

The question for the lubricants industry is whether ExxonMobils new line of high-endurance engine oils and the revolutionary ideas leading up to them might, together, contain the seeds of a tipping point event.

Will one of ExxonMobils core ideas – straight talk to consumers instead of what it called the clutter, confusion and different messages of the motor oil market and mixed messages from OEMs and installers – reach critical mass and draw the rest of lubricant manufacturers, marketers and public into a new reality?

Could passenger car engine oil be arriving at, in Gladwells words, a place where the unexpected becomes expected?

Idea 1: Guaranteed Protection

Ideas have power. U.S. Secretary of State Condoleeza Rice pointed this out to European leaders in early February. We can all cite a case or two of transformations (both good and bad) that came about from a big idea: manifest destiny, Marxism, democracy, freedom. Recent history has given us more examples of phenomenal and profoundly hopeful tipping points.

In business, the power of ideas surrounds us. Henry Ford early in the last century instituted the idea of interchangeable parts to the fledgling automobile industry and widespread, inexpensive personal mobility changed the world. Bill Gatess idea in the early 1970s that computers would need software and an operating system made him the worlds richest person. A bit later, Michael Dells idea of selling direct to customers instead of through distributors and retailers has made Dell computers the worlds leading supplier of personal computers.

On Jan. 25, ExxonMobil embraced the idea of guaranteed engine protection for a specific number of miles (see March, page 26). This straightforward idea has been around for some 30 years as the core business practice of independent lube blender Amsoil Inc. But from the beginning, Amsoil has been struggling against a tsunami of contrary messages from major oil companies, automakers, and installers, especially quick lubes.

ExxonMobils lineup differs from Amsoils in an important way. Of its three new Mobil Extended Performance engine oils, one is a mineral oil, one a semi-synthetic, and the third a full synthetic, with increasing price points and recommended mileage capabilities for each; all of Amsoils products use a synthetic base stock.

Amsoil is no ExxonMobil, not even close. Its a mid-size, upper Midwest firm whose products are sold by individual distributors, mostly outside of regular aftermarket channels (see page 24). Its media advertising buy is miniscule.

ExxonMobil, on the other hand, is a heavyweight, the worlds largest oil company, with revenues last year of $291 billion and income of $25.3 billion. Its at the very center of the petroleum industry, and what it does and says makes news. When it declares that it will guarantee engine protection for 5,000, 7,500 or 15,000 miles for vehicles used under typical driving conditions – well, thats hard to ignore. Especially when its backed with a $40 million to $50 million media campaign.

Idea 2: Typical Driving

ExxonMobils other idea, typical driving conditions, is defined clearly on the back label of its product trio, with just four exclusions: racing and commercial use; frequent towing or hauling; extremely dusty or dirty conditions; excessive idling. All other driving, including stop-and-go commuting, is considered typical and covered for a specific number of miles, depending on the Mobil Extended Performance product used. Here, ExxonMobil has substituted authentic consumer information in place of the industrys same-old mixed and different messages (the ultimate examples being normal and severe service).

Typical driving conditions. That simple and entirely unambiguous concept, with its revolutionary overtones, is now abroad and linked with guaranteed engine protection in a big way for the first time.

Tired Idea: 3,000 Miles

Many engine oil marketers – including Shell and Valvoline, the nations largest quick-lube operators with their combined 4,400 outlets – continue to aggressively promote a 3,000-mile drain interval, but that concept is a resource-consuming relic. Its time is over. ExxonMobil has put one big nail in its coffin.

Earlier still, General Motors Corp. – the worlds largest auto manufacturer – had put in another spike. In the late 1980s, Dr. Shirley Schwartz and her GM colleagues initiated work on an on-board oil life monitor. Their breakthrough device, the Oil Life System, is now standard equipment on 95 percent of GMs new vehicles.

For the past 15 years, the company has monitored oil performance in vehicles equipped with the system. I have analyzed numerous samples from vehicles with the OLS, GM Senior Project Engineer Robert Stockwell told LubesnGreases last year. Many of these samples were from vehicles with [oil drain intervals] greater than 10,000 miles, a few with more than 14,000 miles, and at least one with greater than 16,000 miles. These intervals were recorded in vehicles using regular mineral oil. Synthetic oil gets even longer change intervals.

Sit back and let GMs numbers sink in: 10,000, 14,000, 16,000 miles – with run-of-the-mill, mineral oil based ILSAC GF-3 engine oils.

Stockwell added, In all cases where the OLS signaled for an oil change it was before the oil was worn out, and he emphasized, An analysis of all samples indicated that the oil still had the expected oil-life safety factor.

Elsewhere in this issue, Quaker States Mark Ferner reports on research into the condition of nearly 500 real world used oil samples, all SAE 10W-30 oils collected in the Houston area several years ago (see page 14). His company says these results show how risky it is to extend drain intervals. However, Ferners pool of samples were largely GF-2 oils, which were phased out of the market over three years ago. The samples described above by GMs Stockwell, on the other hand, were all GF-3 oils – a big step up.

ILSAC GF-4, an even better oil over GF-3, now has been in the market for a year and became mandatory for API licensing of the starburst logo on May 1. It raises the possibility of providing even longer drain intervals, in many cases approaching the European top tier limit of 20,000 miles. Thats a long way from 3,000 miles.

Additionally, the American Petroleum Institutes Aftermarket Audit Program (despite its shortcomings in accountability) suggests that most licensed marketplace oils are of correct quality. Together, ExxonMobils and GMs actual marketplace data (and throwing in for good measure APIs audit data and Amsoils 30-year track record) should nail shut the 3,000-mile drain interval coffin – and finally muzzle the industrys 3,000-mile Rottweiler, the quick-lube segment.

An Infectious Idea: Straight Talk

ExxonMobils promise of guaranteed engine protection puts the worlds largest oil company squarely behind the one single concept that differentiates quality for the consumer – the miles between oil drain intervals. This is the only measure that allows consumers to use engine oil wisely.

For decades the oil industry (with the exception of Amsoil) has buried this measure under a mountain of disinformation. A quick scan of labels for most major brands, as well as the house brands, at Pep Boys and Wal-Mart in late June found that only the new Mobil labels offer guidance on drain intervals (with one exception: Valvolines SAE 20W-50, at $2.30 a quart, brazenly urges, Change Your Oil Every 3 Months Or 3,000 Miles for Maximum Protection.)

Instead, the consumer is fed baloney such as tough anti-wear protection, fights volatility burn-off, protection against corrosion and high temperature and similar technobabble. (Duh. Isnt that the bare minimum one should expect today from an engine oil? Isnt that what the API starburst logo means?)

By comparison, the language on the new Mobil products is striking in its clarity. ExxonMobil is now treating its engine oil customers as adults, not dimwits, nincompoops or children. It has changed the content of its engine oil message to customers – one of the preconditions leading to a tipping point.

Almost Tipped, Not Quite

In 2001 Valvoline, followed closely by Pennzoil, came out with a high-mileage engine oil, for cars with more than 75,000 miles on the odometer. Many others followed with me-too products and the initiative overall was seen as a marketing success.

Since then, high-mileage oil has created an informal, engine oil tier system in the United States, based on a vehicles age. The initiative segmented the market but did not result in a bright point where the unexpected became the expected. Moreover, the labels of high-mileage oil do not break from the tradition of unhelpful, mixed messages, clutter and confusion. Nor do the labels contain any hint of how the new oil might impact drain intervals.

In short, high-mileage oils created a tier – and a stir – but nothing really tipped nor was a new reality born. A brief shuffling of the market occurred, then business as usual.

Are We There Yet?

So is ExxonMobils high-endurance oil a tipping point? It has a lot going for it – a top-of-the-line, technically sophisticated firm which invested two full years to formulate and test the new products.

That in itself wont guarantee that high-endurance oils will fare better than high-mileage oils. Malcolm Gladwells dissection of the Hush Puppies phenomenon hints at what more is required to spread a social epidemic. In the mid-1990s – as the footwear manufacturer was considering discontinuing the brand because of low sales – a handful of hip kids in lower Manhattan latched on to Hush Puppies shoes. All of a sudden, Hush Puppies became cool, sales took off, a tipping point followed. The once-foundering company now makes more than 600 styles of shoes.

Is there an equivalent to lower-Manhattans hippest teenagers in the stolid world of engine oil? Without them, can ExxonMobils oil thats changing oil surmount the odds?

Do-It-Yourselfers are certainly not cool in the same way as urban teens, but they are the most knowledgeable group of engine oil consumers. ExxonMobils Don Turk notes that it is targeting consumers who are involved with their cars and make decisions about them. Many of these consumers have historically been Do-It-Yourselfers.

If this knowledgeable community, even a small segment of it, begins to feel that a 15,000-mile oil change interval is credible, we might see a kind of engine oil marketing infection … a new reality … a tipping point. And with it the permanent deep-sixing of the 3,000-mile fixation.

Its not a slam-dunk by any means. Engine oil consumers, even DIYers, may be so anesthetized by the relentless technobabble, the 3,000-mile drumbeat, and the clutter and confusion, that they discount ExxonMobils straight talk. The stakes are considerable for all: the bottom lines of individual companies, resource conservation, environmental benefit, and not least the industrys ethical health, its right to hold its head up to its customers.

The Hush Puppies marketing explosion was a windfall for that company. A DIY engine oil tipping point might turn into the same for ExxonMobil, Amsoil and other forward-looking oil marketers, as well as an environmental windfall for the nation.

Related Topics

Market Topics