As a business owner, you have the option of providing branded or unbranded fuel to your customers. Branded fuel comes with a number of benefits:
- Recognizable signage and store branding to attract customers.
- Marketing promotions and campaigns designed by corporate.
- Exclusive products and proprietary fuel additives.
- Nationwide advertising.
- Prioritized delivery in the event of fuel shortages.
Those benefits, however, come with a cost. On average, branded fuel costs between 5 to 15 cents more per gallon. Fuel station owners who choose branded gasoline often do so because they believe those benefits grow customer loyalty resulting in repeat business. Is that the case?
What are customers choosing?
According to a survey conducted by GasBuddy in Q1 2020, 45.1% of respondents said they visit the same, single brand to fill up their vehicles. 29.2% limited their choices to two brands. Those numbers seem to show that yes, brands do create customer loyalty.
News stories illustrating the higher quality of branded fuel certainly help. In 2016, the American Automobile Association (AAA) contracted with an independent engine-testing lab specializing in fuel analysis to determine whether or not “Top Tier” gasoline with proprietary fuel additives is worth the additional price at the pump. To find out, the lab ran engines for 100 continuous hours to mimic 4,000 miles of use in a vehicle. Afterward, they examined the engines and measured results such as carbon deposits. They found Top Tier gasoline has 19 times fewer carbon deposits on injectors, intake valves, and in the combustion chamber than unbranded options. The team concluded that vehicle owners do receive added value commensurate with the additional price for branded fuel.
It’s likely that studies like this have motivated vehicle owners to be more selective in determining how to refuel their cars and trucks, but they may not be aware of how much brand impacts their decisions. In 2019, NACS produced a report on “Consumer Behavior at the Pump.” When consumers were asked why they choose a particular gas station, 59% prioritized price, 22% indicated location was most important, and only 8% said it was because of the brand.
What do you do with this information?
If you’re struggling to decide between branded or unbranded fuel, it’s important to understand there is no right or wrong decision. Yes, consumers are creatures of habit and nearly 2/3 of them will choose one to two fuel brands to fill up their vehicles. Others will focus primarily on price and convenience and may be attracted to your fuel station based on your customized marketing and local branding.
At GP Energy, we have experts on staff that can help you weigh the pro’s and con’s of branded and unbranded fuel for your business. Contact us today and we’ll help you get started on the right path for your business.