May: U.S. market trends

This month: The DIY market

July: The Do-It-For-Me segment

It was the summer of 1989 – the good ol days for do-it-yourself motor oil – and I was presenting the latest motor oil marketing information to senior management at Valvoline.

Up until this time, those at Quaker State considered themselves king of all motor oil brands, because they were the market leader for so long. Pennzoil did not yet own the Quaker State brand; it was building off of its vast distributor network to gain predominance within the DIY market.

The Valvoline brand was struggling to overcome being overly promoted – with discounts, rebates and sales – to hold onto its market share; management was afraid to stop promoting in the fear they would lose brand share and stature within the marketplace (as well as bonuses – which at that time were based on gains in market share).

And most vehicle owners changed their own motor oil.

In preparing for that long-ago presentation, I noticed something different about results from this particular quarter – a change that had been coming on for a period of time. In second-quarter 1989, things changed. Quaker State lost its Number 1 market position to Pennzoil. And the DIY market started to decline from its high of nearly three-quarters of all private-sector passenger car/light truck market oil changes. Do-It-For-Me (DIFM) outlets were beginning to make their presence felt.

Since the summer of 89, Quaker States and the DIY market have continued to shrink. Gradually, this once-dominant historic brand lost its top-dog status and eventually became a Pennzoil brand, in late 1998. (For long-time Quaker State loyalists, payback came four years later when Shell swallowed up the Pennzoil and Quaker State brands.)

And the DIY market continued gradually to decline.

Today, Castrol – itself part of BP since 2000 – is the leading brand in auto parts stores, followed by private-label house brands. The Pennzoil and Valvoline brands are battling for ownership of the next tier. Mobil has become a major player after repositioning its lineup to offer protection beyond 5,000 miles to 15,000 miles between oil changes. Quaker State has launched its Q-Brand line to differentiate itself as a quality brand.

And, the DIY market continues its gradual decline. This leads to the question: Whos left buying in the DIY market after the shift to DIFM?

Consumption Trends

Overall, U.S. private-sector passenger car/light truck motor oil consumption is flat, because while there are more vehicles in the driving car pool, each is being driven less and users are extending drain intervals. As shown in Part 1 of this series (see May, page 18, Timing Your Move?), consumption actually is declining on a per-vehicle basis, but private-sector vehicle population continues to grow. According to R.L. Polk & Co., private-sector vehicle registrations will reach 212 million in 2011. So the effect of these added vehicles in the car pool is to flatten motor oil consumption – it would be declining otherwise.

In a 2005 presentation to the NPRA Lubricants & Wax meeting, I described how the data firm NPD Automotive tracks Auto Parts Store Retail volume (that is, shelf movement with commercial volume excluded) via checkout scanner data from stores. The NPD Car Care Trac Panel also captures the proportion that auto parts stores represent of the entire DIY market, as well as the proportion that is represented by Do-It-For-Me.

By agreement with NPD Automotive, much of this data cannot be disclosed; however I can provide the calculated proportion that DIY consumption represents of overall motor oil consumption. The DIY market in 2006 hit an estimated 199 million gallons, or 29 percent of the U.S. total for private-sector vehicles.

This share has been declining since the heady pre-1989 days, and will continue its steady fall to reach just 25 percent of the market by 2009. (See graph, below.)

In fact, this estimate of DIY consumption is somewhat conservative, because it does not count any commercial auto parts store volume creeping back into the DIY market. If that volume were counted into this estimate, it would raise the DIY share only 3 or 4 percentage points (to 32 percent to 33 percent), based on a overall private-sector market of 687 million gallons.

No significant changes have occurred in the marketplace to alter my 2005 forecast. Others may say the DYI market is declining faster. If so, the trend is the same – well just get there a bit faster.

One has to believe that a continued gradual decline in the DIY market will not last forever. There has to be a bottoming-out at some point in time. No one knows exactly when the DIY market will bottom out. However, when the DIY proportion gets below 30 percent, one has to think that the time is sooner rather than later.

Enthusiasts, Economists

So whos left in the DIY market after the shift to DIFM? When the dust settles, those left changing their own motor oil should be segmented into the following two behavior groups:

1) Enthusiasts. These are individuals that change their own motor oil because they enjoy taking care of cars or trucks, or they feel no one can do it better than themselves. This definition is broad in its scope.

2) Economists. These DIYers are those who cannot afford to have a professional change their oil. These individuals generally look for the greatest value when it comes to purchasing any product, i.e., name brand products on sale/promotion or private-label brands.

Considering that one can purchase a value professional motor oil change for not much more than it would cost to purchase four to five quarts of motor oil and an oil filter from an auto parts store (i.e., approximately $20 to $25 for an economy professional oil change versus approximately $15 to $20 for five quarts of oil and an oil filter), the percentage of those changing their own oil for economic reasons should be smaller than Enthusiasts.

There are some aspects of each segment that can help one target either of these two groups.

Under the broad umbrella of DIY Enthusiasts are various segments with different demographics and behaviors. Here are some segments to consider when marketing to these purchasers:

Younger Vehicle Maintainers. These are generally those DIYers ages 16 to 24. The benefit to marketing to this age segment is that they have not locked-in their DIY behaviors, product purchases and brand loyalties. Moreover, they will remain DIYers for a long time period. Older DIYers have a greater likelihood to jump over to DIFM side when they reach their 40s and 50s. If a lube marketer starts a DIYer on its product when younger, he will be using the product longer than starting older DIYers, who will be leaving the category sooner.

Key Younger Vehicle Maintainer groups include primarily Tuners, and within this group are Go-Guys and Show-Guys. For Go-Guys, its all about power and speed. For Show-Guys, power and speed are important, but their cars have to look good – and that is most important to Show-Guys.

(Note: Youll see the term Guys used throughout these definitions; this is a male-dominated category, but guys can refer to both males and females.)

Car and Truck Guys. These individuals are older counterparts to the Younger Vehicle Maintainers. They are into their cars and attend car shows. They tend to influence others because of their car or truck expertise.

Longer Vehicle Life-ers. These individuals want their vehicles to last as long as possible, and work to keep them running and provide the longest possible life. Longer Vehicle Life-ers are driven partly by economics and partly by passion. Their economic side is driven by knowing if they take care of their car, they can avoid the cost of replacing it with another more expensive one. Their passion side is driven by knowing their car is well maintained and that no one can work on their car better than they can.

Power Seekers. These individuals work on their cars to obtain maximum power and efficiency from their vehicles. Driving is a thrill to these guys, and they live for that thrill.

Sanctuary Seekers. These individuals consider their garage their sanctuary, and working on their car is their therapy. Beyond the fact that no can work on their car or truck better than they can, they enjoy the peace of being in their garage.

That leaves the second category: Economists. An economist wants the best for his or her car or truck and may have some Enthusiast behaviors. But what makes this buyer an Economist is that one overriding behavior or concern: Wanting the best product for the best price or best value from a DIY category product purchase.

Picking A Strategy

As a company or a brand develops a strategy to target the DIY market under these conditions, it seems to have two choices:

First, it can develop a value strategy which would appeal to the Economist segment. By definition, these individuals would be looking for the best product at the best price or best value.

Or, oil marketers can target individuals falling in the Enthusiast segment. These individuals by definition should be more inclined to purchase more benefit-driven products. Benefit-driven products go above-and-beyond providing minimum results; generally speaking theyre simply the best at what they do. Cost (or value) is a secondary consideration to providing a quality product.

A first step in successfully marketing to automotive DIYers over the next five years is to determine which enthusiast or economist behavior and demographic segment(s) hold the greatest opportunity for ones brand sold through DIY outlets. Then, develop strategies for products marketed in DIY outlets to reach those targeted segments.

Meanwhile, DIFM is soon going to cover 75 percent of the U.S. private-sector aftermarkets needs. Which installer outlets get the best traffic? How much influence does the professional have on the brand used? Which behavior segments can you target? Next months article looks at the DIFM outlook.