mobil

Slide1: 

November 2, 2001 This report is solely for the use of client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from Copernicus: The Marketing Investment Strategy Group, Inc. Copyright 2001 COPERNICUS, all rights reserved Mobil Service Stations: An Example of Transformational Consumer and Business-to-Business Marketing prepared for: The Conference Board

Agenda: 

Agenda Introduction Peter Krieg The Dilemma and Mobil’s Decision Bette Hoyt The Customer-Guided Process Peter Krieg The Results Bette & Peter

Slide3: 

“The business enterprise has two—and only two—basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” Peter Drucker

Slide4: 

“Marketing is the engine that drives business.” Phil Kotler

Slide5: 

How Well Is Marketing Working? The Marketing Performance Bell Curve 14% Above average 2% Well below average 68% Average marketing program 14% Below average 2% Well above average

Slide6: 

14% Above average 2% Well below average 68% Average marketing program 14% Below average 2% Well above average The Marketing Performance Bell Curve How Well Is Marketing Working?

Marketing in the U.S. retail gasoline industry in the 1990s was no exception.… Until Mobil transformed itself : 

Marketing in the U.S. retail gasoline industry in the 1990s was no exception. … Until Mobil transformed itself

For two decades, the major gasoline brands were in a state of pax gasolina. : 

For two decades, the major gasoline brands were in a state of pax gasolina.

Slide9: 

Meet the Major Players

They went comfortably about doing their business, market shares changing only slightly from one year to the next. : 

They went comfortably about doing their business, market shares changing only slightly from one year to the next.

Sure, there were periodic price wars and promotions characterized by NFL glasses and selling discounted Coca-Cola, but nothing so substantial as to wake the industry up from a deep complacency. : 

Sure, there were periodic price wars and promotions characterized by NFL glasses and selling discounted Coca-Cola, but nothing so substantial as to wake the industry up from a deep complacency.

Slide12: 

That all began to change in the early 1990s Gulf War drives gas prices up New low-price brands began showing up everywhere.

In response, the major brands focused on differentiating themselves to earn more margin from their businesses, but a true point of differentiation that would justify a higher price proved elusive. : 

In response, the major brands focused on differentiating themselves to earn more margin from their businesses, but a true point of differentiation that would justify a higher price proved elusive.

Most stations offered similar services.Indeed, no service was the rule.: 

Most stations offered similar services. Indeed, no service was the rule.

Price seemed like the only option. : 

Price seemed like the only option.

The industry seemed dangerously close to commoditizing.: 

The industry seemed dangerously close to commoditizing.

This was where Mobil found itself in 1993. : 

This was where Mobil found itself in 1993.

Mobil took a hard look at what was going on in the market and concluded… : 

Mobil took a hard look at what was going on in the market and concluded…

The industry was totally focused on distributing gasoline to the stations—there was little emphasis on addressing consumer needs or making the dealers “happy.”: 

The industry was totally focused on distributing gasoline to the stations—there was little emphasis on addressing consumer needs or making the dealers “happy.”

No one had a clear targeting strategy—anyone and everyone was a potential customer.: 

No one had a clear targeting strategy—anyone and everyone was a potential customer.

None of the players were differentiated in the minds of consumers—no one had a unique national positioning.: 

None of the players were differentiated in the minds of consumers—no one had a unique national positioning.

And promotion-oriented pricing strategies were diminishing rather than enhancing brand equity.: 

And promotion-oriented pricing strategies were diminishing rather than enhancing brand equity.

The company considered its options.: 

The company considered its options.

It could get out of the business entirely. : 

It could get out of the business entirely.

It could continue to take the cost out of the business, ignore brand equity issues, and become the low cost producer. It could position itself as the place to buy cheap gasoline. : 

It could continue to take the cost out of the business, ignore brand equity issues, and become the low cost producer. It could position itself as the place to buy cheap gasoline.

It could offer something extraordinary, some kind of value-added product or service, supporting prices higher than competitors’, and position the brand as the premium entry in the category. : 

It could offer something extraordinary, some kind of value-added product or service, supporting prices higher than competitors’, and position the brand as the premium entry in the category.

Slide27: 

“Strategy is about making choices. The essence of strategy is choosing to perform activities differently than rivals do.” Michael Porter

Before making a final decision, Mobil asked Copernicus to study customers and evaluate potential market targets, positionings, and financial opportunities. : 

Before making a final decision, Mobil asked Copernicus to study customers and evaluate potential market targets, positionings, and financial opportunities.

The Research Covered:: 

A large scale study among a national sample of more than 1400 vehicle owners. Measurement of the needs, problems, motivations and perceptions of each group. Identification of the most profitable segments and positioning; and the financially optimal service strategy. The Research Covered:

Segmentation and Targeting: 

Segmentation and Targeting Create Hundreds+ Different Ways To Segment The Market Attitudes Behaviors Demographics Media Habits Test Against Rigorous Criteria Identify Key “Predictors”/ “Market Drivers” Evaluate Different Cluster Solutions Pick Best Approach Put Into Cluster Analysis

Segmentation and Targeting: 

Segmentation and Targeting Road Warriors 16% True Blues 16% Generation F3 Fast, Food, Fuel 27% Price Driven 20% Home-bodies 21%

Slide32: 

Road Warriors True Blues Generation F3 Price Driven Homebodies Key Targets represent 59% of the population, but account for 86% of potential profitability % of Households Share of Fuel and C-Store Spending Share of Mobil’s Potential Profitability ROI Index 143 125 115 60 57

Slide33: 

“These targets want classier snacks from the convenience store; human contact; quality products; top notch, quick service; privileges for loyal users; attendants who recognize them; and a nationally available brand. They also want a reasonably competitive price, but that’s not the most important consideration.” The Wall Street Journal on Mobil

Slide34: 

“Brand Strategy Matrix” Among Key Targets

This was the area of opportunity that all the major players in the industry had been searching for—and Mobil had found it first! : 

This was the area of opportunity that all the major players in the industry had been searching for—and Mobil had found it first!

The company combined what the Key Targets indicated they wanted, but weren’t getting with, very importantly, what many dealers thought they could deliver—friendliness, cleanliness, safety and speed—and a pricing strategy which is neither low nor premium….: 

The company combined what the Key Targets indicated they wanted, but weren’t getting with, very importantly, what many dealers thought they could deliver—friendliness, cleanliness, safety and speed—and a pricing strategy which is neither low nor premium….

…And “Friendly Serve” was born.: 

…And “Friendly Serve” was born.

The Process Continued: 

The Process Continued Strategy Development Segmentation/Targeting Positioning Communications Development and Testing Station Managers Survey Internal Marketing Station Typology Database Geodemographic Modeling Microvision Database Street Corner Markets Station “Product” Re-Engineering Trade-Off Experiment Financially Optimal Service Test Market L A U N C H

“Friendly Serve” is sparkling clean restrooms, great coffee in the convenience store, a happy young person to assist customers, and, more recently, Speedpass.: 

“Friendly Serve” is sparkling clean restrooms, great coffee in the convenience store, a happy young person to assist customers, and, more recently, Speedpass.

Slide42: 

Television, spot radio during drive time, and newspaper advertising Point-of-purchase Billboards Public Relations Integrated Marketing Communications

The results were stunning. : 

The results were stunning.

Consumer perceptions of Mobil as the friendly, fast, clean service station rose markedly over a two-year period along with sales until Mobil passed Shell as the number-one gas station in consumer preference. : 

Consumer perceptions of Mobil as the friendly, fast, clean service station rose markedly over a two-year period along with sales until Mobil passed Shell as the number-one gas station in consumer preference.

Annual revenues have risen by $1 billion+, yielding double digit increases in profitability each year for 4 years and counting.: 

Annual revenues have risen by $1 billion+, yielding double digit increases in profitability each year for 4 years and counting.

The company received letters from customers expressing appreciation for friendly service, clean bathrooms and Speedpass.: 

The company received letters from customers expressing appreciation for friendly service, clean bathrooms and Speedpass.

Mobil received the prestigious Effie Award from the American Marketing Association for demonstrated marketing effectiveness.: 

Mobil received the prestigious Effie Award from the American Marketing Association for demonstrated marketing effectiveness.

More than a dozen HBS cases, reports, and articles have been published about the campaign.: 

More than a dozen HBS cases, reports, and articles have been published about the campaign.

Slide51: 

“Mobil North America Marketing and Refining is our best example of putting the five principles of a strategy-focused organization into practice.” Robert Kaplan and David Norton (Inventors of the Balanced Scorecard) Financial Management, December 2000

Slide52: 

“Destiny is not a matter of chance, it is a matter of choice; it is not a thing to be waited for, but a thing to be achieved.”

Mobil chose its destiny, and the company was transformed. You can make the same choice, too.: 

Mobil chose its destiny, and the company was transformed. You can make the same choice, too.

Slide54: 

Thank You!