SAN ANTONIO -- The conversion of Oklahoma's 208 Diamond Shamrock gas stations continues as San Antonio-based Valero Energy Corp. works to expand its brand image across the state, reported The Oklahoman.
About 40 former Diamond Shamrock stations now sport the teal and yellow Valero brand trademark, and another 35 are expected to receive a makeover by the end of 2006. The state's smallest Diamond Shamrock stations will be converted to the green and white Shamrock brand.
We prioritized several markets, including Oklahoma, to try [image-nocss] to get as many converted before the wintertime set in, Ken Applegate, Valero's vice president of wholesale marketing, told the newspaper. We have a lot of coverage in Oklahoma, with more than 200 sites underneath our flags. We had the Ardmore refinery in the state, so certainly we see Oklahoma as an important state in the program. It's an important part of our network.
Even though the country's largest crude oil refiner has done business in the state for more than five years, Applegate said relatively few Oklahomans were familiar with the company. Our company has grown so much over the last two or three years, he said. But a lot of people, even in our hometown of San Antonio, didn't connect Diamond Shamrock with Valero. I think the strength of the company is notoriety across the United States. That certainly weighed into the decision to convert.
Even though all but two of the Valero and Shamrock branded stations in Oklahoma are owned by independent operators who contract to deliver Valero fuel, the company said it will cover the conversion cost, which averages about $35,000 per location.
Applegate said the conversion is designed to give the crude oil refiner a unified national retail trademark. We were utilizing the Valero brand on the West Coast and had been growing it along the East Coast with great success, he told the paper. We came to the conclusion that it makes more sense for us and for the efficiency of running the program and advertising to rally around one brand.
Besides the benefits to the company, the rebranding effort also may help consumers know from whom they are buying their fuel, Vance McSpadden, executive director of the Oklahoma Petroleum Marketers Association, told The Oklahoman. I'm sure it brings it all together, he said. Before, people probably thought Valero was a refinery and Diamond Shamrock was another company. It was confusing at best. The new branding may make it more understandable for customers.
Such extensive rebranding efforts carry with them the potential for both significant risks and sizable rewards, said Charlie Wood, assistant professor of marketing at the University of Tulsa's College of Business Administration. There's an advantage and disadvantage with any kind of move like that, he told the paper. Most of the time, a company is interested in building an image with a brand, not just a name. Branding is the whole composite of what you know about a company.
Any time a company rebrands, it takes the chance of turning off existing customers, Wood added. They have to communicate the change effectively. They need to take time and carefully move people over. They have to let them know it's the same good old product they have always liked and then build on that.
On the other hand, rebranding also is a good way to try to bring in new customers, Wood said. People are curious about new things, but there needs to be more than curiosity, he said. They need to have a great product. When people walk in, they need to feel comfortable. The location needs to be easy to find, and the service must be good. Generally, there also needs to be some other type of promotion, something price-oriented to get people to start with them.
Valero hopes to complete the conversion of the nearly 1,900 sites in the middle of the country by fourth-quarter 2006, according to the report. When the effort is finished, the company will have about 2,900 Valero-branded stations nationwide.
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