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Lucky Sevens


It may be a latecomer to the party, but since its launch in 2003, ExxonMobils store-branding program for Mobil 1 has accelerated into seventh place among quick-lube chains in the United States. While Mobil 1 has long been stocked as an upsell product at many installer locations, it now has a sizable footprint of its own on the ground.

According to a survey by the quick-lube industry publication National Oil & Lube News, Mobil 1 Lube Express has been the fastest-growing quick-lube chain for four years straight. This spring it had a total of 314 outlets. Thats about one-seventh the size of the network built by Shells Jiffy Lube segment, which is still the 800-pound gorilla in the quick-lube arena with nearly 2,000 franchised outlets and about 250 more company-owned stores. Its smaller also than the 887-strong Pennzoil 10 Minute Oil Change (also owned by Shell) and third-ranked Valvoline Instant Oil Change (800-plus) networks.

However, Mobil 1 Lube Express is seeing much higher growth than its rivals, having signed up 30 new shops in 2007 and 47 shops the year before, even as the others struggled to open new outlets in the intensely competitive business.

Most intriguing is the subtle appeal ExxonMobil is making to consumers and to quick-lube operators: Many drivers are going longer between oil changes. Thats simply part of the industry now, so we can provide you with products that meet these customers needs. To installers who are struggling to build car counts, that might sound self-defeating – but the pitch seems to be working for the oil giant, as measured by program growth.

The do it for me engine oil market is substantial – over 480 million gallons in 2007, according to consultancy Strategic Resources Inc. – with about 70 percent of U.S. passenger cars and light trucks now in the DIFM category. For many oil marketers, this means engine oil sales volumes depend on marshalling as many outlets as possible.

To build traffic in their service bays, most installers exhort customers to return promptly in just a few thousand miles for their next change. However, some drivers will not be swayed by such tactics, so ExxonMobil says it aims to help installers give these consumers peace of mind while earning a higher margin that helps to offset the reduced number of visits.

Going Long

We saw the trend a number of years ago, ExxonMobils Tom Segletes told LubesnGreases recently. We saw that the customers are extending drain intervals, and we asked, should we try to change this behavior, or should we channel our resources to meet this trend? What if we could maximize the value for the installed customers, as well as for the distributor and for ourselves?

If consumers are electing to go beyond the traditional drain intervals, we can provide them with a product that helps them do it, said the Detroit-based Segletes, the companys Americas automotive installed adviser.

One reason for strength in the growth of the program is that Mobil 1s program and brand is so strong, he continued. Most quick-lube operators understand that synthetic oils are growing every year, and more vehicles are requiring their use. Mobil 1 is now in over 40 vehicle platforms. And surveys find that 56 percent of quick lubes cite Mobil 1 as their best-selling synthetic. Ten percent of these facilities are fully dedicated to a Mobil brand slate, including the full range of Mobil oils.

Segletes is building on that with Mobil 1 Lube Express, which is a branding program, not a franchising scheme or company-owned chain. All stores are independently owned and operated, served mostly through Mobil lube distributors.

Of course, Mobil 1 has significant brand visibility, Segletes pointed out, which is carried over on its storefronts: white building, blue base and brand logo over the bays. Our operators appreciate that we spend time interacting with them, understanding their needs, and developing sound programs and business logic, he said.

We offer a significant amount of training, through our staff and sales representatives, so quick-lube operators can advise consumers of the products available. We make an effort to educate the technicians about the products, so they understand Mobil 1 benefits such as cold starts, or if a customer has a GM Oil Life System that lights up at 6,800 miles, how we can help them.

More Sevens

The company also runs periodic promotions for Mobil 1 Lube Express, often involving the NASCAR driver Sam Hornish. (Actually, hes only one of the cars we lubricate. More than 50 percent of NASCAR teams use Mobil 1 in their vehicles, Segletes interjected.) The current 7+7 promo is tied in to Hornishs Mobil 1-dressed #77 Dodge Charger: From March 1 to June 30, customers who buy an oil change at participating facilities receive a mail-in coupon. By sending it in, they get two $7 discounts on an oil change, one for themselves and one for a friend.

Although the marquee brand is Mobil 1, once inside the store customers can select that or another Mobil product, such as Mobil Clean 5000 and Mobil Clean 7500, which are guaranteed for 5,000 and 7,500 miles, respectively, and Mobil Clean High Mileage motor oil for older vehicles.

And do the stores stick to the mileage recommended on the various products? We dont have any corporate-owned stores, so each outlet owner decides how to manage return trips and interval recommendations, Segletes replied. Static clings may be used, but ExxonMobil cant dictate what they recommend.

We dont try to sell our oil – we try to provide options, he went on. We dont advocate upselling, just offer a good-better-best menu. It also means we can offer products at various price points. Especially, he said, quick lubes need to sell oils that offer higher margins, to offset the current decline in car counts nationwide.

Feedback from store operators indicates strong brand loyalty among Mobil 1 Lube Express customers, says Segletes. He also has heard some operators claim their car counts are rising because they are capturing customers from competitors.

The Right Partners

Segletes declined to say how much it costs to build a Mobil 1 Lube Express store, or what sales volumes are needed to stay in the network, saying that buy-in costs for the branding program are negotiated between the individual quick-lube owner and its distributor, as are contract volumes. Besides buying the oil, upfront costs to the operator for a conversion, including the cost of signage, can range from $6,000 to upwards of $20,000.

Were very focused on tightening our standards for accepting new partners, he added. The main thing is they commit to Mobils branding guidelines, and to buy the products in accordance with their supply contract.

Mobil is trying to target healthy facilities, those that see about 30 cars per day or higher, and that are very brand-cognizant. Geographically, were located in 44 or 45 states now, Segletes said. Best are large-population geographies such as the Northeast U.S., Chicagoland, and anywhere theres already a strong Mobil gas station presence. Our strong distribution network in these areas is also a reason its strong.

Through its Canadian affiliate Imperial Oil Ltd. (70% owned), ExxonMobil has taken the program north of the U.S. border as well. Canadas first Mobil 1 Lube Express held its grand opening last August in Sarnia; two others opened soon thereafter in Toronto and Saint John, New Brunswick.

Were an oil company and we like to sell oil, Segletes stated. However, customers extending their oil interval is just an industry phenomenon. Trying to change that behavior is a daunting task, but installers can respond to the trend to stay profitable. Fortunately, if the customer is willing to pay a premium for the benefit of extending drains, then the operator can see better economics through our product offering.

If the operator can educate the customer about these unique products with extra protection, and lets the consumer make the choice, that creates a bond, and can lead to greater customer retention.

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