Marketing
Issue No. 13 - October/November 2003
Serving Who Better?
Supermarket Petrol – Marketing Lessons and Questions
by Dr David Corkindale and John Hendrikson
The Advanced Marketing Forum is a group of experienced marketing executives convened and facilitated by Professor David Corkindale and John Hendrickson, from the University of South Australia. At their August meeting the Forum discussed this topic with the GM of Drake Supermarkets.
It all started with Fly – Buys
When Shell Australia created the Fly – Buys concept in 1994, it had the effect of removing the incentive for Coles to enter the petrol market in Australia. In the early 90’s, Coles was keen to follow the European and American trend and put petrol pumps adjacent to their supermarkets, so that they could conduct their own cross merchandising promotions between two types of high volume commodity, petrol and groceries. Fly – Buys was designed to create a broader impact, more quickly and at less capital cost to Coles.
With Fly – Buys in place, Shell and the other oil companies could relax. They had reduced the risk of a powerful commodity marketer entering and upsetting the balance of power in the Australian petrol market.
Unfortunately, with Fly – Buys there was a delay in the purchaser experiencing a benefit. Australian motorists, more than any other consumers, were hooked on instant gratification and would go out of their way to get it. This was hardly a surprise because the oil companies trained motorists to search for instant rewards by watching price boards. How many other products are there where the price was headlines in the news, it changed several times a day and was advertised on permanent road side signs 2.5 metres high by 1.5 metres wide and illuminated at night?
Woolworths sets new standards
Woolworths recognised this weakness as their opportunity and started opening their own sites in 1996. They have built up their own national network of 287 service stations, and have achieved very high outlet volumes over the last seven years . Their petrol outlets are now estimated to ha...
