Rebranding: how does it impact fuel pricing?
With many significant mergers and acquisitions in recent months, we can expect to see more fuel sites rebranded in the year ahead. But how does the fuel brand impact fuel prices?
The value of branding
To address the question, we first must assess the value branding brings to a fuel retail network. The short answer is ‘it depends’. A stronger or weaker brand can impact factors across market perception, customer loyalty, volume, and profit. And these nuances are driven by local market conditions, customer behavior, and the unique characteristics of the brand in each market.
Bigger, international brands often have established roots and loyalty in the market, which is important for some retailers and consumers. Smaller, regional brands can be less established and can sometimes take on the brand of the convenience chain, which has its own value. Some fuel brands resonate more with ‘petrolheads’, because of a perception of a superior product.
As we know, capturing the value of a fuel retail brand is not a matter of a one-time review. Indeed, reviewing a brand is a task retailers must take on consistently, and take frequent action that will improve your brand overall.
Does a rebrand drive market change?
Rebranding doesn’t just impact the fuel retailer that’s presenting a new logo and name. A rebrand can create a ripple effect through any given market.
For example, if a more premium brand can command a few cents per liter more than the previous one, where does this market share come from?
Not to mention, a rebrand can strongly impact customer behavior; if they feel more loyal to one brand or alienated by another, it will impact the volumes achieved. Puma Energy sold the majority of its Australian business to Chevron. Many of these sites are in the process of rebranding. How will this combination of changes in the market impact the brand’s value?
What can a competitor rebrand mean for your business?
A short answer applies; it depends.
The strength of the new brand will determine how big an impact your business will face. One thing is for certain, however, inaction and “hoping for the best” could seriously damage your profits and brand value.
The best thing a fuel retailer can do, in the time preceding a major rebrand in their market (whether their own or a competitor’s), is to assess the scene, run analytical simulations, and devise a robust strategy.
By running a number of “what if” scenarios on your sites, like those we provide to our clients at Kalibrate, you can understand your competitors, see your potential market share, and plan a new pricing strategy. It delivers the power of knowledge, so you understand the implications of a rebrand on your business, and the rest of the market.
Such analyses should not be considered predictions but potential scenarios. While the outcomes are hypothetical, it’s a key starting point for conversations within the company. You can discuss which position you are aiming for, ask yourselves where you will sit, where you may gain or lose volume, and what you will do if you see volume loss.
At Kalibrate, we have the market data, the technology and the expertise to support these simulations. Our Brand Value Analysis reports are used worldwide to support the very analysis that these types of scenarios require. A rebrand won’t have the same impact across all markets, as there are varying demographics and local flavors in every market, but our detailed assessments can help you unpack these scenarios on a market-by-market basis to be informed and prepared when the changes come about.
The impact of rebranding can be positive or negative or have an overall neutral effect. It’s also likely that some local markets will react differently to the same rebrand than others. As always, data-driven approaches place you in the strongest position to navigate market change and make the appropriate decision for your sites and your portfolio as a whole.
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