How to Think About the Future

1
What do you hate about gas stations?
2
How does a company compete in a market where the
product itself is mostly undifferentiated (as
perceived by the consumer)?

• To help frame this
• What drives choice of what air filter to use?

3

• Shell Oil A Case Study
• A process of differentiation and marketing
  strategy through customer behavior analysis

4
The highly competitive gas industry
Similarity to structure of air filtration market?
5
The Majors Across all Markets
So is all lost?
6
So what should Shell do???
7
Answer Derive Customer Segments

• How ?
• Which ones should Shell go after?
• How should they market themselves to these
  segments?

8
Information Sources

• Focus Groups
• In-depth interviews
• Standard Survey
• You must understand your customer
• Buying Groups (Premiere)
• E-commerce Buying Groups (SiteStuff.com)
• National Distributors (Grainger)
• OEMs (Trane, Carrier, Fedders)
• Store Chains (Target, K-Mart)
• Big clients (Hotels and Hospitals)
• Property Management Co. (Weeks, Meridian)

9
Shells Customer Segmentation Study Methodology

• Surveyed 5000 respondents in 6 markets
• Questions included
• Behavior Patterns
• Desired Features
• Frustrations
• Brand Ratings
• Psychographics
• Demographics

• Statistically identified 10
• distinct clusters
• of customers
• with different
• needs/attitudes

• Studied survey
• results from each cluster
• Developed name personality
• for each cluster

10
So which segment(s) should Shell go after??
This could be a key to success for Camfil Farr
11
Brand Identities Considered
Quick Easy (Premium Speedsters, Simplicity
Seekers, Safety Firsters)
One Stop Convenience (Value Minded Planners,
Struggling Survivors)
Friendliest Service (Relationship Shoppers,
Comfort Zoners)
Best Gasoline Performance (Hands on
Individualists,
Premium Speedsters)
Community Support (Comfort Zoners)
Lowest Price (Low Octane Commuters,
Sentimentalists)
12
How do you decide on an identity??
13
Key to Shells Plan

• Focused selling to segments
• own a set of customers (80/20 Rule of Sales)
• Chose segments based on margins, volume, and
  Shells capabilities to meet those segments
• ex Leave Low Price to Independents (e.g. not
  Camfil Farrs niche)
• Choose an identity in which segments have natural
  overlap and synergies (You cant be everything to
  everybody)

14
Shell Customer Segments Target Segments and
Characteristics

• Premium Speedsters
• Personality
• Internally driven, Style Detail Oriented,
  Competitive, Mentally Active. Car Enthusiasts
• Gas Purchasing
• Fast Pumps, Quick Access, Quick Pay
• In a Word... Driven Goal Oriented

• Simplicity Seekers
• Personality
• Overburdened, Frustrated. Loyal to Others,
  Caring, Sensitive. Hard to Motivate.
• Gas Purchasing
• Reactive. Want things that make buying gas easy.
  Major Brand Product Reassurance.
• In a Word... Overwhelmed

• Safety Firsters
• Personality
• Confident, Self-Assured, Responsible
• Control Oriented, Well Prepared
• Gas Purchasing
• Want Cleanliness, Comfort, Efficiency, Safety
• In a Word... Safety Minded

15
Plan Implementation (How do you align
distributors, OEMs, etc?)

• Allow local retailers flexibility to choose their
  own implementation
• Feedback system so that local retailers can say
  what worked
• Surveys throughout the year
• Reward retailers based on volume and profit
  numbers
• Develop a coordinated Media campaign
  (commercials!!)

Who is Camfil Farr?
16
So what would you offer the Quick and Easy
Segment?
You cant just talk the talk, you must walk the
walk
17
Options Considered

• Soft drinks and coffee at pumps
• Unmanned stations
• Cash accepted at pump
• Bar code payment
• Frequent filler plans
• Drive through mini-marts
• Co-branding with McDonalds
• Robotic Arm gas pump (CNN video)

18
(No Transcript)
19
(No Transcript)
20
(No Transcript)
21
(No Transcript)
22
(No Transcript)
23
Issues due to Large Change

• risky due to high failure rate and large initial
  costs
• can change the face of the market
• may require a new way of thinking
• Are your customers ready?

24
How do you evaluate an options potential
value?? How much would someone pay for an
improved air Filter/filtration system? How much
would someone pay for improved filter holding
hardware?
25
Standard Approaches SurveyAsk People What They
Would do

• They dont know
• Cant tell us with any precision
• They dont want to say
• Dont have explicitly formed preferences

26
Standard Methods (Contd)

• Laboratory Simulation
• external validity
• Test-market/beta testing
• requires full product development
• tips competition
• external validity

27
Choice-Based Conjoint Analysis

• Give customers sets of profiles and make them
  choose one option or the other
• From these profiles you can infer the relative
  utility associated with a particular feature

28
So What Happened to Shell??

• Mobil beat them to the market with Speed-Pass
• Still Beta Testing the Robot Arm
• Shell acquired Texaco and now is resegmenting its
  dual markets
• Has mostly abandoned the Quick and Easy strategy.

29
What Happened to Quick n Easy?Imitate Mobil
Shell easyPay
30
Shell Strategy, 2001
31
New Product Development Process

• Concept Development and Testing
• Focus Groups
• Pre-Test questionnaire
• Analysis and Modification of Survey
• Full Scale Survey
• Competitive Assessment
• Field Testing
• Product Roll-Out

32
Summary

• Defining benefit segments, and approaches to
  those segments is a key tool utilized in
  marketing.
• Need to consider margins, size, and ability to
  reach those markets.
• Your success depends upon your ability to have a
  comparative advantage towards the segments you
  approach.