But deciding whether to be branded vs. unbranded is [image-nocss] far from easy. On one side, there is the image behind a brand. Kyle McKeen, president and CEO of Alon Brands Inc., told CSP Daily News, "I think our strategy is to have FINA-branded gasoline because it provides consistency and gives the customer some security."
Michael Haynes, vice president of operations for PCF Saleco, a ConocoPhillips retailer based in Littleton, Colo., with about 100 locations, concurred. "There's definitely a value to the brand," he said. "Obviously, there are customers who aren't as concerned, but when you have a fine oil company that stands behind its products[one that has] the additives that clean engines[it makes a difference]. I can't imagine going to someone that doesn't have the same offering that major brands can offer."
On the flip side, Aaron Walsh, director of sales and marketing for St. Louis-based FireStream WorldWide Inc., said that kind of thinking has changed for consumers. "Historically, 20, 25 or 50 years ago, brand loyalty was extremely high and very important to consumers with regards to gasoline," he said. "I think when the hypermarketsthe Walmarts and the Costcosmade gasoline available, it has really desensitized people's brand loyalty around specific brands."
He added, "While certainly there are ongoing efforts to increase brand loyalty, I think we've seen a steady decline and will continue to see a steady decline in major oil companies' push to use a branded channel to move their productand will continue to move things through their unbranded supply chain."
Location can make a difference, too, according to Lewis Adam, president of ADMO Energy, a fuel-buying consultancy based in Kansas City, Mo.
"Brand image is helpful if you have an interstate location," he said. "[But in a] smaller town or big city away from interstate where they're not trying to get business or vacation [crowds], brand is almost unnecessary. [You're] better off without, as brand is charging quite a price."
EAI recommends looking at several factors, in the branded/unbranded portfolio decision:
Strength of brand in specific market, including price lift and traffic generation. Cost of employing a major brand. Longer-term relationship consistency between major brands and retailers. Unique brand offerings, such as imaging support, fuel differentiation, loyalty programs, pricing incentives, etc. Branded supply presence and availability in the long term. Cost of developing and expanding a private label. Availability of unbranded supply and price competitiveness/volatility. Stability of supply sources, including potential for refinery closure. Negotiating deals, and learning how to not leave money on the table. Supply-chain management expertise and volume leverage (internal or pooled). For more information on gasoline and refineries, see the "Crude Awakenings" cover story in the April issue of CSP magazine.
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