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DIFM: Get Your Fair Share


Today,I called five local quick lubes in the northern Kentucky/Cincinati area – three chains and two independents – to ask about oil change prices. The average oil change price quoted, using conventional SAE 10W-30 grade oil, was $35.

I then called five local car dealers; their average price was $28. Next, five repair garages, who were close to that with an average price of $29. Finally,I called five mas merchandiser/tire/muffler stores, and got an average cost for the same service of $22 (including one tire store offering a $17 oil change and free tire rotation).

My local area is a reflection of a middle-America metropolitan city, but anyone can perform the same exercise and begin to discern a pattern. This ad hoc research demonstrates that in middle America there are now three distinct oil change segments: quick lubes which represent the high-end oil change; car dealers and repair garages, representing a mid-to-higher-end oil change; and mas merchandiser/tire/muffler stores, the value oil changes.

Seven out of 10 quarts of motor oil for private-sector passenger cars are sold now through Do-It-For-Me out-let such as these. If youre an engine oil seller, a deeper insight into these outlets can make or break how you approach the DIFM market. Start by peeling the DIFM onion back and asking some key questions:

Which outlets do DIFM consumers go to most often?

Are all outlets the same? (i.e., can I get the same oil change in any DIFM outlet?) Within existing outlet types, are they all the same? For example, are all repair garages the same? Are all car dealers the same?

How much influence does the professional installer have on the brand used?

How do I get my fair share of a growing market?

Answers to these questions apply to motor oil products as well as other soft-part categories, like automotive chemicals and appearance chemical product categories. And the answers also suggest how to steer ones product or service through this sharp-elbowed marketplace.

Which Outlets Do Consumers Use Most?

In 1988,I wrote the first in a series of motor oil consumption papers for the National Petrochemical& Refiners Association. A that time, quick lubes were just becoming very popular as a new convenient way to have ones oil changed a very reasonable price. That 1988 paper estimated that quick lubes would become the leading DIFM outlet with over 50 percent of the market by 1992.

I did not anticipate that car dealers would fight back! Between 1988 and 1992, car dealers fought back more strongly than anticipated to reach a 24 percent share. They leveraged new-car warranties to bring customers back for oil change services, introduced their on-site quick-lube services, and promoted their segment heavily to hold onto share.

The highest share that quick lubes achieved was in the mid-30 percent range in the 1990s, prior to settling in a the mid-20 percent range over the past several years. Car dealers have matched that share (in the mid-20 percent range), to represent the two leading outlets in the DIFM Market. Since 200, repair garages also have become contenders for oil changes, growing from a single-digit share to a share in the mid-teens, according to NPD Automotive data.

Segmentation by Clasfication

Are all outlets the same? That is, can one get the same oil changein any DIFM oulet?

In addition to asking prices in my informal survey, I asked, Which brand of motor oil would I get when I changed oil? The brands offered were Castrol, Kendall, Penzoil, Quaker State and Valvoline. Two independent quick lube said that they used Service Pro motor oil – and both were quick to point out that this product meets all industry specifications. One went so far as to say that Service Pro was made by Penzoil and Quaker State, to assure me that it was god as a name-brand product in quality.

This indicates that, so as far as oil brands go, drivers can receive the same name-brand, API certified motor oil protection – no matter if they purchase a high-end, mid-to-high-end or a value oil change.

The differences between outlets, then, must be in the type of service a customer would experience.

When customers go into a quick lube, they can sit in their car and the service is performed around them. (Or if the driver is like me – the Alpha-male – he can get out of the car and watch every move the technicians make when changing the oil, just to make sure it is done right.) Quick lube technicians will also look over the car while checking all fluids. If something is wrong, they will let the customer know. Their honesty is conveyed (sometimes) by not offering that service and suggesting the customer take the vehicle to a repair facility to have it fixed.

By contrast, when a consumer takes a vehicle to a car dealer, the experience is all about dropping the car off and picking it up later. Additionally, one has the confidence that the dealership is looking over the car to make sure all is working well. If something beyond an oil change is needed, then the dealership will call the customer to ask if it should be repaired while the car is in the shop.

When a customer takes his vehicle to a repair garage or mass merchandiser/tire store, the vehicle also generally is dropped off, and the driver waits in the lobby or perhaps shops nearby. (Wal-Mart, Sears, Firestone and Pep Boys are good examples of this business model.) If something more needs to be repaired, the customer will be called or asked if it should be done.

The difference between these outlets and car dealerships is cost and confidence. Consumers may perceive that they will pay more for oil changes and repairs at a car dealership, but the trade-off is a feeling of confidence that the job will be done right. (In reality, that depends on the job and the trust one has in the mechanic or dealership.)

Are They All Alike?

Within existing outlet types, are they all the same? For example, are all repair garages the same? All car dealers the same?

The North America Industry Classification System (formerly SIC codes), calculates that the United States has 347,150 installer locations, broken into the following classifications:

New Car Dealers

Used Car Dealers

Tire Stores

Auto Mechanical/Electric Repair

General Auto Repair

Exhaust System Repair

Oil Change/Lubrication Shops

These are traditional classifications for DIFM Installer outlets. Generally, new car dealers have eight to 10 service bays, buy products from distributors, and have fewer suppliers. On the other hand, general auto repair outlets typically have two to three bays, and tap more suppliers; they buy from distributors and auto parts stores, according to Strategic Resources research.

Now, are all the locations that fall under the umbrella of each traditional classification the same? if you have seen one repair garage, one car dealership, one quick lube, etc., have you seen them all? Probably not.

Although channel classifications are unique, installer behaviors and attitudes toward their business generally defy traditional classifications – for example, the behavior of a specific car dealership may be the same as that of a specific repair garage. Strategic Resources research indicates that installer behavior generally falls into two broad camps: those who focus on Repair & Services and those who focus on Driving Traffic. These two groups demonstrate macro-behavior differences, and show that there are installer behaviors that cut across traditional channel classifications. (Here is a true test: Think of several repair garages or several car dealerships that you know professionally or as a typical customer; I am sure that you should be able to visualize some falling into the group that focuses on Repair & Service, while others tend more to focus on Driving Traffic into their stores.)

Of course, these two broad behavior groups need to be segmented further into other groups, to identify more specific behavior patterns. That can be done by conducting more detailed segmentation research.

Ask a Pro

When it comes to oil changes and other repairs, the professional installer generally chooses the brands to service vehicles, and their customers for the most part dont care. An analogy is the consumer who builds a new home (which I just did). I do not care what brand of dry wall or PVC pipe was used to build the house; I just wanted a good quality house built.

From all the studies(quantitative and qualitative) I have conducted, DIFM customers generally care more about the service they are receiving than they do about the brand of motor oil, automatic transmission fluid, brake part cleaner,etc., being used. They trust their mechanics or car dealerships to choose the right products and parts to service their vehicles.

Recently, I was conducting focus group interviews among motor oil Do-It-Yourselfers who occasionally take their vehicles into DIFM outlets for an oil change. Among other questions, I asked what brand of oil they used when changing oil themselves. Castrol,one participant replied. And what brand of oil did the installer use the last time this consumer took his car in for a professional oil change? QuakerState, he reported. I asked this DIYer why he let the installer use QuakerState, and he said tha the trusted his mechanic to use a good oil and that was okay with him. So what brand did he plan to use the next time he himself did the oil change? Castrol,he replied.

This underscores the fact that motor oil brand loyalty comes in second place to trusting onesmechanics judgment. How much does a professional installer influence brands used among DIFMers? One would have to say, a lot!

Getting Your Share

To summarize the answers to the questions that opened this article:

Car dealers and quick lubes represent the two largest categories of DIFM outlets, with nearly half of all the installer outlets. However, the largest provider of DIFM motor oil changes is a mass merchandiser: Wal-Mart, which services autos at more than 2,200 stores.

DIFM oil changes have segmented themselves into high-end, mid-to-higher-end, and value price points.

The same branded, industry specification quality oil can be purchased at any of the stated tier price points.

Oil change services do differ by traditional outlet.

Behaviors differ within traditional installer outlet categories, and these behaviors cut across traditional channel classifications.

Professional installers have a strong influence on the brands used to service customer vehicles, and for the most part, their DIFM customers like it that way!

So, how does one get their fair share of a growing DIFM market? The best way in my opinion is to market to your installer customers behaviors, i.e., know their approach to their business, then develop programs that speak to that approach.

Often, marketing programs are developed that are customized to specific traditional channels. This may mean creating a specific program that is only offered to quick lubes, one that is only offered to car dealerships, one for mass merchandisers, and so on. Companies that develop these types of channel-specific programs are missing opportunity, because theyve neglected the Repair & Service and Driving Traffic motivations that may differentiate the individual outlets.

Of course, outlets do not wear T-shirts that say, I focus on Repair & Service! or I focus on Driving Traffic into my stores! It is not easy to identify their behaviors. Sales representatives have to know their customers, know what is important to them and what is important to their business.

One way to better understand installer customers is to interview them (or a random sample of them). By conducting in-depth interviews with installer customers, better understanding of what is important to their business can be determined. When these results are combined with sales representatives knowledge about their customers, solid program strategies can be developed.

An oil marketing company will know when it has developed installer customer programs that truly touch these behaviors when the customers says, This program truly reflects my business strategy; you must have been thinking of me when you developed it!

When they say that, you will get your fair share of the growing DIFM market.

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