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Selling Fuel Economy


When U.S. gasoline prices reached an average high of $4.11 per gallon last July, the thought for many engine oil marketers was: If there was ever a time in history to market to the awareness of greater fuel efficiency, now would be that time! Prices could not be sustained at that level though, and before anyone could act on that thought, gasoline retreated to around $1.61 a gallon by year end – less than half its peak value.

This plunge in gasoline prices has been attributed to investment speculators, who first drove prices to presumably inflated levels (never seen before in the history of this country) and then saw them punctured by a sharp slowdown in consumption. Consumers driving behaviors changed abruptly as a result of last summers higher gasoline prices.

Gasoline pricing was volatile going down – and may be just as volatile next time going back up. By mid-February, U.S. gasoline prices already were averaging $1.96 a gallon, according to AAA – 20 percent higher than their December low – and seemed poised to edge back above $2.

Nevertheless, some news commentaries and advertisements suggest, SUVs are affordable again because gasoline prices are now below or around $2 per gallon. They imply that prices will stay at this level forever. This is thinking in the present. As aftermarket product and service marketers, the motor oil industry must think in the future – and that means planning now in case prices go back up to higher levels. (Experts at the automotive research firm R.L. Polk, for example, estimate that gasoline prices will most likely settle somewhere around $3 per gallon.)

That thought – sell motor oil by focusing on fuel economy – is worth exploring. Consumer grew sensitive to fuel efficiency as a result of last summers gasoline prices, and this awareness has not completely gone away because there are future-thinking consumers out there. (Otherwise, consumer demand would not be down.) The desire for greater fuel efficiency will be back at the forefront of consumer thinking when gasoline prices climb again.

Heres the Pitch

This suggests that now may be the time to market to the awareness of greater fuel efficiency from a demand standpoint. All automotive aftermarket participants need to be very careful, however, when marketing products and services that tout greater fuel efficiency.

In the past, most aftermarket lubricant products and services that positioned themselves as providing greater gas mileage to car or light truck owners were not successful. Why? Because consumers do not necessarily notice getting greater fuel efficiency from changing the brand of motor oil they use or from purchasing an aftermarket additive.

Especially, the greater fuel efficiency that a motor oil might provide will most likely go unnoticed in the face of bad driving habits, or a seasonal change in fuel blends. Moreover, there is great variability among vehicles in the aftermarket; some could obtain greater fuel efficiency from a new motor oil, while others may see no measurable benefit.

If a consumer or end-user cannot discern greater fuel efficiency from changing motor oil brands or using an oil additive that promised such a difference, they most likely will not purchase the brand again. In marketing terms, this is called proof of performance.

Automotive lubricant marketers traditionally have shied away from positioning their brands as delivering greater fuel efficiency, because they could not adequately demonstrate measurable fuel efficiencies across all driving behaviors and all types of vehicles. Instead, this potentially powerful position has been relegated to being an attribute – a trait that marketers throw into the mix of all other virtues touted for their product or service. Such attributes usually are shown on the front label or back label, or on signage if a service.

Motivator or Mere Attribute?

Ranking such attributes is another critical marketing decision. In the past, fuel economy improvement was a mid-tier attribute, as shown in an online quantitative study conducted by Strategic Resources in mid-2006.

The survey asked 600 motor oil do-it-yourselfers to pick one statement that would most motivate them to buy a motor oil product the next time they purchase motor oil. Extending engine life, protects engine from wear, and keeps engine running at peak performance were strong end-benefits, respondents said, and out-ranked attributes like providing greater fuel efficiency as important motivators to purchase motor oil. Fuel economy, engine cleanliness, cost and reducing friction all were seen as less-compelling for these consumers. (See graph, below.)

Over the past 40 years, U.S. Corporate Average Fuel Economy (CAFE) and Clean Air Act regulations brought about significant fuel economy and emission improvements via mechanical and chemical advances. While these regulations were successful, more progress is now being demanded. The number of vehicles on the road continues to increase, resulting in negative environmental impacts. And the cost of fuel continues to amplify public demand for improved fuel economy. These factors accelerated the cycle of regulation and the performance upgrades of engine oils.

The GF-5 Factor

Soon, all new passenger vehicles manufactured in the United States will be required to meet new government regulations designed to further improve fuel economy and reduce tailpipe emissions. Federal CAFE requirements have set an average target of 35 miles per gallon for passenger cars sold by 2020. The auto industry is under tremendous pressure, and will be looking to engine oils to help achieve this goal.

Engine oil formulators already are doing their part by developing the ILSAC GF-5 specification. These oils, expected to come to market in 2010, will provide numerous improvements over the current GF-4 specification, including greater sludge protection, engine durability, rust protection, turbocharger performance – and some amount of fuel economy.

The important statistic: Automakers want GF-5 to boost fuel economy by 0.5 percent above that established for the current GF-4 oils viscosity grades.

A 0.5 percent improvement in fuel efficiency may help automobile manufacturers reach their overall CAFE requirement. But will a consumer notice that he or she is getting this improvement from engine oil? On a 15-gallon tank of gasoline, a 0.5 percent gain means a savings of less than 10 fluid ounces.

For a motor oil marketer to position its brand for greater fuel efficiency while delivering a mere 0.5 percent improvement will not be appreciated by consumers or end-users. If motor oil marketers intend to stake a position for their GF-5 formulations based on greater fuel efficiency, they need to ensure consumers will recognize they are saving fuel by using this improved product.

Burden of Proof

There are examples of consumers actually noticing a motor oil fulfilling its stated promise. Castrol GTX found a sweet spot in the mid-1980s as the oil for smaller engines that run hotter. Valvoline introduced MaxLife for Higher Mileage Vehicles in January 2000, positioned as specially formulated to help condition seals and prevent leaks. In fact, the company received one testimonial after another that the product actually did help or improve engine oil burn-off. Such positions worked because Castrols small-engine customers and MaxLifes older-vehicle owners perceived the benefit they expected.

So despite the fact that consumers will be looking for greater fuel efficiency wherever they can find it (once gasoline prices go back up to higher levels), motor oil marketers should tread carefully if they are considering a specific position for their brand based on greater fuel efficiency.

To date, greater fuel efficiency has held a place as one among many other attributes that a motor oil provides. The introduction of the GF-5 motor oil upgrade is unlikely to improve this attributes lot in life to become a full-fledged brand position. But it can remain in its traditional role – that of being one among all the other benefits GF-5 engine oil has to offer. Here, it is likely that the burden of noticeable proof-of-performance will be eased, because fuel economy will be one of many reasons to purchase – not a top motivation.

That said, it is true that if there was any time in history to market to the awareness of greater fuel efficiency, now would be that time. If greater fuel efficiency could be noticed by consumers or end-users, it would be a marketing bonanza. However, it is foolishness to stake the entire reputation of an engine oil brand on a position that cannot show noticeable improvement to consumers or end-users.

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