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PetroRetailingExpectations and Opportunities...

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Title: PetroRetailingExpectations and Opportunities...

1
Petro-Retailing-Expectations and Opportunities...

2
Current Market Dynamics- Petro-Sector

Deregulation Dismantling of Administered Price
Mechanism(APM).
Competition Entry of new players.
Entry of new/private sector players , Reliance ,
Essar , ONGC, Numaligarh Refinery
Changing customers needs and attitudes.
More informed and Traveled

3
Current Market Dynamics Petro-Sector

With growing competition and deregulation, the
rules of the game in the petrol retailing
industry will undergo some major changes.
The revolution in the Indian Telecom industry is
a good example of the impact of the free market
dynamics on the structure and strategies of the
players in the industry.
Ultimately It is the customer who will emerge
as the winner. The company who identifies his
customers and his needs will emerge as the
Leader.

4
What does research tell us.. At home

90 customer cite assurance of quantity and
quality of petrol to be the key drivers of
choice.
70 of the respondents say that having air
filling facilities is important in their decision
making process
85 of the consumers also attach significant
importance to experience in terms of quick
service, attendant disposition and station
ambience.
Consumer brand loyalty is very low over 50 are
indifferent to the brand of petro-retailer.

Qualitative Research findings for Delhi by
A.T.Kearney
5
What does research tell us.. At home

80 of the consumer would prefer their station to
stock fuel based products and offer air refill
facilities, small repairs
Only 45 of the car and 35 of two wheelers have
ever purchased at a convenience store. Snacks and
beverages being the most common items
More than 90 of the consumers do not usually
fill their tanks.
40 of the car owners seek food service
facilities at the petrol pumps.
Trust in Fuel Quality and Quantity and Locational
convenience are the primary reason for choice of
petrol pumps in New Delhi.

Qualitative Research findings for Delhi by
A.T.Kearney
6
Key research findings abroad were..

COMPARING the drivers of the petrol station
choice with more developed markets there are some
stark differences. For example US
While location ( 71) is the primary factor
Prices(56) is also a very important factor
Product performance or quality (24) is the third
most important factor.
Consumers interpretation of quality
In India Quality is interpreted as, no
adulteration (Pure for Sure), but in US it
means impact on fuel efficiency and engine
performance.
Quantity is not a parameter for consideration in
a market such as United States whereas in India
it is interpreted in India as getting the right
amount of fuel,i.e Integrity.

A.T.Kearney research
7
Key Strategic Options

Strategic Options
Adopting a customer focussed approach
To develop differentiated value propositions that
will boost revenues and improve competitiveness
and profitability in the new market economy.
Building a strong brand equity.
Empirical evidence shows that strong brands add
perceived value which can command a price and /or
volume premium by differentiating from commodity
products.
In times of increased competition we have the
options of
Either increasing cost competitiveness
Or at growing revenues

8
Growing the Revenue

To drive revenue growth
Petroleum retailers will have to attract new
consumers or increase their share of the wallet
of the existing customers.
By creating a strong brand equity which will
drive the revenue growth.
Leveraging its existing retailing strengths in
the business.

9
Building Strong Brand Equity

Brand Recognition and Differentiation of existing
is currently low.
This is changing and will evolve in times to come
Club HP Accha Lagta Hai
Pure for sure
Still there is lot of opportunity to new players
as well as existing companies to build a strong
petroleum retail brand.

10
Building Strong Brand Equity

Develop Customer Insights
To develop a strong brand and product
proposition, a key imperative is to understand
your target consumers psyche, behavior and needs.
Psychographic segmentation is more often used
today than traditional demographics measures, as
it captures better the key behaviour and needs
Develop the Offer
The Choice of the target consumer segment drives
the development of the brand offer and impacts
many aspects of the organizational strategy such
as location, pricing and human resources.
Differentiation
Based on Fuels
Selling Multiple Grades of fuel based on their
octane ratings, additives added and/or process
differences.
Price
It is a very powerful platform for differentiation

11
Differentiation-Contd.

Consumer Experience
Petroleum marketing has a strong service element
which can be used as a powerful lever for
differentiation
by ensuring warm and caring attitude
Continuously improvement of the retail ambience
through systematic renovation

12
Value added service and products

Other than a basis for differentiation, Non fuel
products and services can contribute
significantly to revenue and profitability.
Non Fuel revenues of petroleum retailers
contribute as much as 38.6 in the US 28 in
France, and their higher profitability makes them
particularly attractive
Average Profit contribution of non fuel products
and services is 65.8 in US 40 in
France.

13
Value Added Service Through Strategic Alliances

Strategic Alliances is the ideal way for
introducing the Value added services at the
petrol pumps
FedEx and HPCL tie-up is one of the example.
FedEx opening FedEx Authorized ShipCenters
across Club HP locations
100 Club HP Pumps
Cities covered Delhi, Mumbai, Chennai,
Bangalore, Kolkatta, Hyderabad

14
Win- Win

Both the Companies can leverage their strength
which results in value addition to the customer.
HPCL
Leading Petroleum company of India
Extensive retail network
Strong marketing Orientation
FedEx Worlds Largest Express Transportation
Company.
Strong Brand Name
Strong Customer Focus