So why do the major brands exist, let alone remain dominant in the market? Its because all is not equal, and the buying decision is not just about price. Instead, its about price plus myriad distinctions – real and perceived – that collectively give an edge to the national brands.

One of the more important points of differentiation is the ability to offer distinct performance advantages. According to Mark Ferner, team leader of research at Shell Lubricants, There are real and meaningful differences in performance, even among engine oils that meet the same American Petroleum Institute specifications. In part, this is because there is a lot of room above where API sets the bar for performance.

To explain, Ferner pointed to two products, both able to meet todays ILSAC GF-4 engine oil category. The API and other applicable industry organizations have identified certain tests, which are part of the requirements for GF-4, to help assure minimum product performance, he said. These tests include ASTM engine sequence tests, which have precision statements for repeatability and reproducibility. Comparing the ASTM precision statements to the API passing requirements, Ferner continued, it is clear that in some cases two API GF-4 oils could both pass a sequence test, yet the precision statements could differentiate a low pass versus a strong pass.

Because of this, Ferner said, it is possible for one GF-4 oil to be statistically different than another, in meaningful and measurable performance as defined by API and ASTM. In some cases, these differences are a function of proprietary additive packages used by the majors. They may allow oil marketers to offer improved performance, or use other language to differentiate among GF-4 oils.

Although these performance differences may be impressive to someone wearing a lab coat, and to automobile buffs and bloggers, Petroleum Trends finds it unusual to hear any in the business say this alone justifies the price gap between major brands and private label. More often, the issue of quality is cited to justify the gap.

Whereas private-label manufacturers can purchase and blend the same base stocks and some of the same additives (not the proprietary ones) used by the majors and theoretically produce equivalent products, theory and practice dont always match. Ferner supports this view by pointing to data Shell has on 15 samples it recently tested of off-brand SAE 5W-30 passenger car and 15W-40 heavy duty engine oils. Although these engine oils were labeled as API licensed products, Ferner says eight were off spec in such areas as low-temperature viscosity, volatility, phosphorus level and sulfur content. Specifically, he cites two examples where we found a 15W-40 heavy-duty oil with a sulfur level of 4,858 ppm, and a 5W-30 with a phosphorus level of 1,013 ppm. Both levels are well above the limit.

Such quality concerns can be due to a number of intentional and unintentional missteps – such as down-treating of additives, incomplete blending, base oil substitution, poor housekeeping, quality assurance errors, and other incidents and accidents that go unnoticed, or ignored. And its important to note that majors are not exempt from these errors. They too have issues from time to time.

In addition to these real differences, there are perceived differences that give lift to the major brands to help support the price gap. A recent NPD Group study found 56 percent of consumers believe brand-name engine oils are of better quality than store brands. This may help explain why many, although not all, DIFM outlets say the equity of major brands can help drive traffic into their bays.

These points are meaningful, but what else justifies the large gap in pricing between the major brands and private label? Other considerations include advertising (e.g., NASCAR, Superbowl) and the value-added support the majors offer their distributors and end-use customers. This support includes business development funds, promotions, rebates, secret-shopper programs, signage, equipment loans, customer loyalty programs, co-op marketing, warranties, service certificates and training, and more.

In the words of several Valvoline and Castrol distributors, these programs offer a great deal – if you know how to use them to promote and manage your business. They provide tangible value above and beyond whats typical when buying low-cost, private label lubricants. And this value benefits the distributors and their customers.

When you add it all up, there is a reason the major brands continue to dominate the market. Although their prices are significantly higher than private label, its not just about price – its about value. For most, the major brands continue to offer the best overall value in terms of real and perceived benefits.

But make no mistake about it: Private-label lubricants offer a compelling value proposition to a growing number of buyers, and represent one of the leading threats to the major brands. Although the major brands rule the roost today, and likely will tomorrow, the competition for market share never slackens. There will be increasing pressure on private label and majors to move performance and quality up, and to drive the price gap between them down – all good news for the consumer.