GSB-35: Branded Or Unbranded? The Good, the Bad & the Ugly of Both Sides You Should Know About

Gas Station Business 101 Podcast - How to Start, Run and Grow a Successful Gas Station Business

What is a Branded Gas Station?

Branded stations are what we see around us the chevrons, the shells, the marathons, the Bps the Mobil stations, all these are examples of branded stations.

On the other hand, the unbranded stations are the one that you also see around you like the quick stop, the express mart, where you will see names like that but no sign of a branded logo anywhere.

The primary difference between a branded and unbranded is the fuel additive most every brand use. Most brands use millions of dollars in advertising their brand and about their fuel quality due to the additive they sue.

I am sure you have seen words like Chevron with Techron, or similar type of advertisements

These additives are mostly designed to improve fuel economy and clean your fuel system and reduce carbon emission. Naturally you should ask what about the people that buy unbranded fuel? What happens to them? Do they all suffer from lower fuel economy and dirty fuel system?

Well no, they are not, The government has a lot to say about the quality of fuel, such as the octane, sulfur content, vapor pressure, quality, lead content, ethanol content, etc.

There is a very specific standard that ALL fuel must meet before it may be legally distributed and sold in most countries.

So in reality, the ONLY difference in quality between branded and unbranded fuel is the additive that branded suppliers add. They also add a massive amount of marketing for that additive, trying to convince the consumer that the additive is worth the extra 5 to 25 cents per gallon. Chevron with Techron, Shell Nitrogen Enriched gasoline, Conoco and Phillips 66 add twice the amount of detergent, as just a few examples.

You may also ask then why buy branded when we can save money by buying unbranded. Well again you can do that, but most people with expensive new cars tend to stay with branded fuel as they want that extra additive, it gives them a mental peace, not to mention typically the branded stations are cleaner, brighter, and they all have to maintain a certain standard to remain branded.

Just remember the chemical standards set by the federal government for gasoline are more than sufficient for your car. In fact, car engines are designed to operate on gasoline refined to meet those basic standards. To be honest, purchasing the more expensive, branded gasoline is an unnecessary expense that is marketed as a “must have” for higher end vehicles.

However, many consumers see branded fuels to be more trustworthy and are often willing to pay a little more for that peace of mind. From a retail perspective, it’s important to consider your customer's comfort level in this regard.

Let's identify few of the top brands for the US market.

Shell

Also known as Royal Dutch Petroleum Corp. Shell is based out of the Netherlands. It is the 7th largest company in the world and the 2nd largest oil company in the world. They have a very strong presence in the US also not to mention a very strong credit card base.

Chevron Texaco

Chevron is an American company; it has active businesses in more than 180 countries in the world. It too has a very strong presence throughout the US.

Exxon Mobil

Exxon Mobil is by far the largest oil company in the world. Especially after the merger of Exxon and Mobil in late 90's they truly became the largest of all oil companies. Naturally they are the strongest brand as well with a very strong credit card base

Conoco Phillips

Conoco merged with Phillips in early 2000. Lately they are establishing a brand call Phillips 66, but when it comes to strong brand recognition and a strong credit card base they fall short when you compare them to the other brands like Exxon or Chevron

Valero

Valero is also a fortune 500 company like all other names I mentioned beforehand. Valero has one of the largest retail operation in the US with almost 7000 retail and wholesale outlets.

Marathon

Marathon also owns Speedway and thus they are the nation's second-largest chain of company-owned and operated gas stations.

BP

Also known as British Petroleum headquartered in London, England. It is also the 6th largest oil company in the world. BP has a very large presence in the gas station and retail sector. They have over 7,000 gas stations in the US and little over 17,000 worldwide. So they too have a very strong credit card base in the US.

Advantages of having a branded business:

The image

The support

The credit card base

The Marketing

Disadvantages of Having a Branded business:

The Price Difference

The cost of Image

The upgrade cost

The quarterly inspection

Advantages and disadvantages of having a nonbrand business:

Lower price vs. higher price

Freedom to do whatever vs. following branded company guidelines.

Bottom line:

If you are in the market for a gas station, don't try to find a specific brand, instead, try to find a good and profitable business first. Your focus should be on the profitability of the business and not on what brand the business is carrying.

But if your heart is set on brands, then look and see what are the two strongest brands in your city or locality, then figure out which one of those is not nearby where you are looking to start your business.

If you are building a gas station from scratch, then things become little different. As most jobbers that represent these branded oil companies offer some incentives to brand with their company.

For example, if you are building a new station, and the projection says your business will pump around 70,000 gallons a month then some of the local jobbers may offer you a good amount of money up front to brand with them.

Don't forget they are offering you the money to offset the branding cost you would have to pay to erect their price sign, to wrapping the canopy and the building according to their image guidelines.

Typically you would have to sign a 10 year fuel supply contract to get that money also. It is a good idea to ask and get offers from 2-3 brands and see who is offering you the best deal.

Hope I was able to clarify the questions some of you have asked before. If you have any other question, please feel free to send me an email at [e-mail]. You can also join my new Facebook group by going to http://ShabbirHossain.net

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