PetroRetailingExpectations and Opportunities...

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Petro-Retailing-Expectations and Opportunities...

• Hemanth D.P
• Country Manager, Sales
• FedEx Express, India.

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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

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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.

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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
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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
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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
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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

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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.

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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.
  

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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

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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

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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.

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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

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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

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FedEx Family Worldwide
Annul Turnover US22 Billion.
Global presence in 211 countries 215,000 empl
oyees
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FedEx Family Worldwide

• 653 of aircraft fleet
• 366 airports served
• 34,000 Drop Boxes
• 95,000 ground vehicle fleet
• 4.8 Mill packages daily Avg.
• 65 million electronic transactions daily

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Win- Win

• Advantage HPCL
• Association with one of Americas Top 10
  recognized brands.
  
• New revenue stream for HPCL and its dealers at no
  additional cost.
  
• Their dealers are imparted world class training.
• Joint promotions to FedEx customer base.
• World Class Value Added Service and convenience
  for their Customers.
  
• Advantage FedEx
• Access to HPCL extensive retail network
• Association with a leading brands in the
  country.
  
• Helps FedEx get closer to its customers
• Excellent Brand Coverage.
• Scope for Joint Promotions.

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Thank you