Macro market trends or responses to fuel price change?
Fuel retailing is a complex and dynamic business that is influenced by a range of internal and external factors. As much as pricing teams would love to be able to say that they can control performance via control of the price levels, sometimes even an apparently sound strategy can fail to generate the expected results.
In today’s climate, it is important to have complete transparency aligned with the results you are seeing. Because petrol stations don’t reside in their own vacuums, things like market trends and/or changes to your own or competitors’ strategy can result in differing performance at all locations in a market.
If you see a beneficial effect following a strategy change, it may not be all that beneficial in comparison to your competitors. Without insights into the competition, you may consider an improvement as a result of your strategy, while your competitors relative improvements are seeing higher growth. When you look at the market, and it has grown to a larger extent, you haven’t performed well relative to the market – your strategy changes have hurt your growth slightly.
Gaining ground on your competitors isn’t always simple in an ever-changing environment
To gain a more accurate understanding of performance, fuel retailers must rely on different sources of competitor price information. However, this is only part of the equation. Ground-level information can be very precious when assessing performance and identifying outliers but is not always easy to come by. Unexpected changes like a road closure, which could make it impossible for people to visit your or your competitors, are hard to spot.
You can’t expect your area managers to be aware of every special event or even new openings in their territory, and it is even more difficult to predict how these changes will impact where prices change, which makes a platform that can do those things that much more important.
Getting to know your customers is essential
In addition to collecting ground-level information, a more precise understanding of your typical customers can also help you fine-tune your strategies and tactics for greater success. Knowing who your customers are, where they are coming from, and where else they are fuelling up can help you get a better understanding of current macro trends in your pricing.
Moreover, different customers have different preferences and behaviors, and segmenting them into distinct categories like “bargain hunters,” “petrolheads,” and “indifferents” can help retailers tailor their strategies to attract new customers and build better relationships with existing ones. When developing customer profiles, many teams have a gut feeling for what their ideal customer profile is, but data can corroborate or contradict these gut feelings and help fine-tune processes.
What to do with all your data?
Now, having access to all this data is great and a big step in the right direction, but data is meaningless if you’re not able to pull valuable insights and strategic direction from them. Fuel retailers with a strong data environment, in collaboration with software and expert consultants, are best positioned to spot market trends and adjust their strategy accordingly.
They say “data is king” but not all data is created equal, and more data is only beneficial if you also have the tools to make sense of it. It’s about making sure your data is up-to-date, accurate, and being able to draw valuable conclusions.
Pricing is an essential part of fuel retailing, but it is only one piece of the puzzle. Fuel retailers must have as full a picture possible to analyse the results they are seeing and use reliable competitor price information and ground-level information to gain a more accurate understanding of performance.
Additionally, they must understand their typical customers and tailor their strategies to attract new customers and build better relationships with existing ones.
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