FINDLAY, Ohio -- As major oil retracts from the retail business, mid-tier brands are finding opportunities to expand. For Marathon Petroleum Co. LP, this has translated into a 22% leap in branded locations in the past five years to reach 5,100 sites in 18 Midwest and Southeast states. Of those, 20 each year were new to the industry, with the balance being conversions.
The Southeast has provided one of the largest stages for Marathon's branded growth, as the refiner-marketer adds several key jobbers whose footprint encompasses a regional to multistate presence. And its brand sell sheet focuses on four key areas: long-term value creation, product quality, supply reliability and customer support and service.
"We have to earn the business of those locations where the supplier has withdrawn from the market," Tom Kelley, senior vice president of marketing with Marathon, told CSP Daily News. Key withdrawals have included ConocoPhillips' market withdrawal and Chevron's exit from the Southeast. "Over the last five years, approximately 60% of our site growth in the network has been the result of opportunities presented by competitors' market withdrawal. We maintain a discipline of focusing on markets where we can be a reliable and flexible supplier and are committed to growing our brand in those markets."
See the cover story, "Mining for Opportunities," of the May issue of CSP magazine, or click here, for more on the race by regional brands to grow their national footprint.
A key reason for Marathon's success, Kelley said, are the relationships it already has in place with many jobbers on the unbranded side. For example, when Chevron pulled out of 14 Southeast and Midwest states in 2010, Marathon was able to pick up more than one-half of the available sites. "We already knew these jobbers and were ready for the opportunity," said Kelley. "These folks trusted us and our commitment to these markets. They liked our overall brand offering, and clearly they liked our known reputation as a flexible and reliable supplier."
While "the competition was very stiff for these locations," Kelley noted that Marathon's established representation in the region and brand offering won the day.
This brand offering also includes product availability. In 2000, when Marathon decided to expand beyond its Midwest footprint into the Southeast, it was able to take advantage of its network of 18 terminals in the region to offer jobbers new products before the competition. For example, in the mid-2000s, the economics of ethanol blending started to become attractive. "We were among one of the first companies to invest in ethanol blending at our southeast terminals, which allowed us to give our jobbers a gasohol offering in advance of competitors," said Kelley. "That was a dynamic change."
Kelley also pointed to the $3.9 billion expansion of the company's Garyville, La., refinery as another strong statement that Marathon is invested in the Southeast as a growth market. The company sells light products through 62 company-owned and approximately 52 third-party terminals in 18 states.
In addition to the supply flexibility, Marathon has built a portfolio of benefits for its branded jobbers and dealers, including:
- The Marathon Spirit Fund, which provides for co-investment opportunities in the image or technology of a Marathon-branded location. The program was developed in collaboration with jobbers to ensure that the investments were in the most impactful areas. While it was just rolled out this past summer, "Early participation exceeds expectations and has led us to believe we've really hit the mark, and the program's been positively received by our customers," said Kelley. "It really allows us to focus on blocking and tackling, making sure each retail location is making investments it needs to be an attractive location to the consumer."
- A new Marathon Visa co-branded card that provides consumers up to a 25-cent discount per gallon. "There are many ways to create loyalty, but a co-brand card rewards the customer because it gives them an incentive to earn per-gallon discounts when they buy at a Marathon location," said Kelley. "It also gives dealers a great platform to provide value to their customers and grow their sales."
- A new loyalty program, rolled out at the beginning of the year, includes a menu of five offerings that are simple to understand, flexible and customizable to a jobbers specific needs. This gives Marathon-branded retailers the opportunity to pick and choose what makes sense to their business.
Marathon's agreement with The Pantry, Sanford, N.C., was extraordinary in the depth of the partnership, including an ad campaign to jointly promote Marathon and Kangaroo Express brands together. While Kelley declined to discuss the particulars of the partnership, he said, "The agreement with The Pantry indicates the kind of engaged business partner we can be." (Watch the embedded CSPTV video for details.)
"Our primary objective is to attract those locations in our marketing area that meet our standards and provide coverage to the consumers that they would expect of a brand network," he said. "To that end, we don't operate by rigid criteria for with whom we do business. We have no rule on the minimum size of jobber, or how many jobbers in the market. We really value all of our customers, regardless of size, and strive every day to be their most valued branded business partner. That's our approach to how we go about growing a branded network."
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.