Consumer Preference and Performance in Today’s Market
Consumers don’t make their gas-buying decisions by price alone. NPD’s research 
shows performance, value, the retail experience and environmental concerns matter, especially when gas prices spike.
Differentiated fuel products, improved consumer experience and focus on the environment will impact buying behavior.
Brand matters in today’s gas marketplace, according to industry analyst David Portalatin, who presented research on consumer gas preferences and buying patterns. Portalatin, Director of Industry Analysis for The NPD Group, recently completed a study for
BP on consumer preferences and trends in gasoline purchases and presented many of the findings.
Clearly price matters, but consumers do not base their decisions on price alone. Performance and the quality of the retail experience also are key motivations for BP’s target consumer. In short, it’s about brand. And BP’s brand, increasingly, is about top performance, retail experience and value.
In 2002, the Wall Street Journal was asking, “Is this the year US consumers are going to reduce miles driven because gas prices were too high?” “No,” explained Portalatin,“at that point we knew American’s loved their cars and loved to drive.”
All other things being equal, the industry could count on more gasoline volume year after year, until 2005. But in 2005 that changed. “We started seeing a decrease in annual miles driven per car for the first time since the 1970s,” said Portalatin.
Price per gallon has nearly tripled since December 2001, when gas prices were as low as $1.09 per gallon. Today, with prices surging upwards of $3 per gallon, buying habits have changed. Consumers are buying gas less frequently. They are buying less gas each time at the pump. In short, they are driving less because of high gas prices. And they are buying less premium-grade gasoline. Buying patterns have changed significantly, and the change has become the new “normal” for consumers.
People are starting to make permanent changes in gas consumption including:
- Driving less
- Moving closer to work
- Cancelling vacations
- Car pooling
Portalatin pointed out that in order make these changes, consumers have made shifts in their lives and those shifts tend to have a level of permanence with regard to gas-buying behavior.
“Interestingly,” Portalatin explained, “our research shows a drop in price causes more consumer price sensitivity. When prices go up more consumers look for value and base decisions on more than price alone.” They frequently take into account preferences for a specific brand, performance and credit card programs. “It is actually when prices fall that consumers become more price sensitive.”
Where are performance-conscious shoppers buying gas?
Ultimately, the question here is how to get consumers consistently to choose BP above other brands. The answer lies in continuing to building more value in the already-strong BP brand.
Building brand equity to attract performance-driven customers
“We’ve learned that your target consumer cares about performance,” said Portalatin. “Moreover, our research has shown that these performance-driven consumers are more brand loyal.” Nearly half of all performance-driven consumers, 49.1 percent, use only one brand of gasoline. This compares with 29.3 percent of typical industry consumers who use one brand of gasoline exclusively.
Brand Loyalty Comparison
Most of these consumers, nearly 70 percent, buy gas at high-value stations, such as BP, and major competitors. They tend to care more about and are willing to spend more on their cars, performance and the environment. Moreover, while the typical consumers will not choose premium gas when prices are high, the performance-motivated consumer often will.
Beyond differentiating the fuel offering, a better, fresher experience at the station is vital to consumers. Finally, BP’s target consumer wants a brand that is better for the air and the environment.
Focus on brand value
“There’s no denying that price is important, but this research shows you can’t always win based on price. Simply put, you can’t succeed in this business if you are always the least expensive option. That is why it is important to focus on value,” explained Portalatin. Consumers care deeply about value – what they feel they’re getting for the price they’re paying. Value to BP consumers incorporates multiple facets, including cost, performance, retail experience and environmental impact.