On The Spot

FROM THE FEBRUARY ISSUE: Most consumers make their fuel purchase decisions at the pump. Consistent branding based on market research can help boost ethanol’s appeal.
By Lisa Gibson | January 23, 2018

The average consumer spends no more than 15 seconds deciding which fuel to buy after pulling up to a pump, says Randy Gard, chief operations officer for Bosselman Enterprises. In that moment, the consumer is looking for a low price and a simple message, he adds.

“At the pump. That’s when the decisions are made,” says Charlie Bosselman, owner of Bosselman Enterprises. Thus, promotion and marketing there are crucial.

Bosselman Enterprises, which owns 44 Pump & Pantry stations in Nebraska, markets E15 as Clean 88, with the trademarked slogan “Better fuel, costs less.” The message is short and simple, helping boost sales, while attracting and retaining customers, Gard says. “It’s very easy to understand and consumers seem to grab it pretty quickly.”

Mike O’Brien, vice president of market development for Growth Energy, says consumers are apt to simply purchase the fuel they’re accustomed to, often regular 87. “It’s a habit. They don’t want to think about it.”

To help make ethanol blends more attractive at the pump, Growth Energy is working with 12 retailers across the country—including Minnoco, Kum & Go, Thorntons and others—to establish best practices in marketing, O’Brien says. “We’re working on making E15 stand out, but in a relevant way that will break consumers’ preoccupation so they’ll look. And once they look, what’s the No. 1 message that’s going to draw them to E15 and pick that handle?”

The Message
Growth Energy recently conducted 2,000 interviews with consumers to determine what’s important to them when buying fuel. Results indicated they had three main requests: confirmation that ethanol is OK for their vehicles; confirmation that it’s cleaner and better for the environment than regular gasoline; and a cheaper price. “In that order,” O’Brien says. “Plain and simple: ‘Just tell me it’s OK for my car.’ Then, they’re willing to listen and believe the fact that it is a little bit better for the environment, it burns a little bit cleaner and has fewer tailpipe emissions, and those things mattered once the consumer understood that everything is going to be fine for their car.”

With all that in mind, “What’s the best way to present it to the consumer at the location?” O’Brien says.

Trey Binford, North America dispensers product manager for fuel pump manufacturer Wayne Fueling Systems, says consistency in labeling and graphics at the pump would be a huge benefit. “You’ve seen a lot of different market names for E15. I think people would like to see that consistency. I think it would help drive recognition.”

O’Brien agrees. Consistency in branding is crucial, he says, and is part of Growth Energy’s push. That branding effort includes a name, colors, graphics, and the amount of information to communicate to consumers at the pump. “We don’t have much time,” he says.

Binford points out that consistency in offerings makes a big difference, too. It’s ideal for all the pumps at a given station to offer the same options, so consumers aren’t forced to a certain pump to purchase an ethanol blend. If one offers five grades and blends, they all should, giving the consumer a “consistent experience,” Binford says. “E15, or E85, or E30 or E25—if these fuels are part of your strategy, presenting it consistently at every fueling point is to your advantage.”

Pumps: Design and Blending 
In 2016, Wayne Fueling Systems increased its standard UL listing to E25. The new pump design allows easy upgrade to higher blends in the future, and has been a big success, Binford says. “When you’re offering a better standard to the market, you’re future-proofing dispensers.”

Binford says pump design and presentation are crucial to attract customers. “We allow retailers to decide, based on their fuel strategy, what dispenser they want to use.” He says he sees two distinct trends in fuel sale strategies: blender dispensers, and multi-hose dispensers.

At the multi-hose dispensers, a retailer would have separate hoses for E85, E15, regular, mid-grade and premium. “Those retailers’ strategy is to present as many fuels as possible to a customer.”

Blender dispensers allow the retailer to sell different blends of ethanol without changing the pump or infrastructure. “They’ve had a lot of success with that and they’ve done really well,” Binford says.

“Maybe they want to do E15 today, maybe they want to do E25 later, maybe they want to do E30 later. On these blender dispensers that we build, it’s just a graphic change and a blend ratio setting. It doesn’t require ripping things out and tearing things out of the ground.”

Bosselman Enterprises took advantage of federal and state government grants, as well as some trade group funding opportunities, to install blender pumps at 15 of its locations. “That’s what got us into this,” Bosselman says of selling high volumes of E15. He adds that he would replace all his pumps at all locations with blender pumps, if it were feasible.

In the past year, E15 and E85 sales at Bosselman Enterprises locations have grown by an astonishing 300 percent, Gard says. He and Bosselman attribute that growth to blender pumps, as well as the relationship the company has with the ethanol producers it buys from. That relationship, they say, isn’t common enough. “I think a lot of ethanol’s been stifled through the current relationship structure with a wholesaler in the middle,” Bosselman says. “I think it might be better for producers to go to the retailer directly.”

Producer-Retailer Relationship
Bosselman Enterprises does use a wholesaler in its ethanol purchase transactions, but reaches out directly to the producer to negotiate price and determine how the RINs will be monetized. “We reach out to the producer, but we don’t see producers reaching back to us,” Bosselman says.

Gard adds, “We just simply think there’s a better way.” Negotiating prices directly with the retailer can lead to savings. “We can pass that on to the consumer, which will drive demand.” And to attract consumers to ethanol blends, the prices of those blends must be lower than the other options, Gard says. “It can’t be priced the same; it has to be cheaper,” Bosselman adds. “We have grabbed the bull by the horns to do that.”

Ethanol producers pay trade groups and other organizations to help educate the public on ethanol’s benefits, but some of that money might be better spent on supporting retailers, who will then get the message out to consumers right at the pump, Bosselman says. Producers could help retailers install blender pumps, or educate them about RINs and how they function. “There are still a lot of multi-unit operations that still don’t understand what a RIN is and how it works. They could use some help.”

Wholesalers do serve a purpose, Gard and Bosselman agree, but the lack of relationship between producers and retailers negatively impacts ethanol sales. “It just seems to me that there has been little relationship building and communication between producers and retailers,” Bosselman says. “And it’s caused stagnation.”

Gard points to the company’s 300 percent sales increase as proof. “You can’t argue with the numbers.”

Pointing the Ship
Growth Energy’s Prime the Pump initiative offers incentives for retailers to sell and market E15. The money has been used to help install on-site blending infrastructure, along with other projects.
Growth Energy also is monitoring sales at about 25 co-promotion retail sites offering E15 next to regular 87 and premium 93, and the results show E15 constitutes easily more than 50 percent of sales at those locations, O’Brien says. “Our intent is to duplicate that success as much as we can, everywhere we can with the retailers we’re working with.”

Growth Energy’s retail promotion partners represent about 15 percent of the total gas supply in the U.S., and about 9,300 stations. The intention is to build a strong network of retailers that would move the market, O’Brien says. “It’s in our best interest and their best interest to figure out the best way to market and sell E15, so they get the maximum competitive advantage and we, of course, get all the benefits of the higher volume.”

Retailers know that selling fuel for 3 to 5 cents less per gallon is a huge competitive advantage, he says, and E15 typically retails between 3 and 10 cents per gallon less than 87 regular. “These retailers realize that they have a pretty compelling, competitive advantage with E15, so the question now is, ‘How do we jointly take advantage of it and build our businesses together?’”

That’s the point Bosselman makes. “I think the market’s wide open,” he says. “There’s so much upside. We need to get together and point the ship in the right direction. We could expand it dramatically.”


Author: Lisa Gibson
Managing Editor, Ethanol Producer Magazine
701.738.4920
lgibson@bbiinternational.com