HPCL Revolution in FuellingPresented at HPCL case Study Competition Finals at IIM-A

Team Name : OwlCityMembers Vipul Vikram Singh Yash SaxenaIIFT Delhi

Value Proposition

Mileage

Driving Experience

Brand Experience

Reduced Emission

Premium Paid INR 1.75 Diesel , INR 2.00 Petrol

Commercial UsersUnexplained

Premium Paid

Personal Users

Premium Paid

Value Above Premium

Time Premium

At Earlier Lower Premium

Premium Paid

Current Scenario

What this tells us : Personal Users are the ones who are can pay a premium

Driving Convenience

Mileage Lower emission

Brand Experience

0 0.2 0.4 0.6 0.8 1

53% 16% 5% 0%

0 0.2 0.4 0.6 0.8 1 0 0.2 0.4 0.6 0.8 1 0 0.2 0.4 0.6 0.8 1

Consumer Optimism

* Figures Based on our survey with Urban Commercial transport drivers/operators

Commercial Consumer Perception: Value perceptionAdditional features of branded fuels

30% 5% ~ 0% 0%City goods carriers

Interstate Carriers

?

Where is the value in ( mileage benefit ) lost?

Fleet Owners Drivers

Decision Makers

Will tend to pay for normal fuel as:1.Absence of performance metric for branded fuel 2.Risk of false reporting about performance from Drivers

Given lack of consumer confidence about mileage; will avoid risk over new fuel.

1. Consistent Mileage Performance Metrics or

2. Performance feedback by ‘Word of Mouth’

Performance Mileage or Feedback will take time to emerge over the prevalent market sentiment

Hence for the moment it will be advisable to capitalise the convenience factor which has more user confidence

Urban commercial & individual users, Interstate carriers operating in difficult terrain are more likely to value convenience

Driving Convenience

Mileage Lower emission

Brand Experienc

e

Value Perception (for a feature) = Consumer Optimism x Max. Premium consumer is willing to pay for the feature

Never Switchers Always No LongerSees no value

Finds value delivered almost equal to premium paid. Hence finds normal & branded fuel a no loss no gain deal.

Finds value for the premium paid

No longer finds value delivered for premium paid

1. Users are unable to find actual evidence of higher mileage or see only a small benefit2. Consumer Insights: Old vs New vehicles & Kerosene to fight off winters.

User Types >

Maximum Premium consumer may pay for the above factors

City goods carrier: Rs 1Interstate carriers: Rs 0.3

City goods carrier: Rs 2.5Interstate carriers: Rs 4

Rs. ~0 Rs. ~0

City goods carriers

Rs 0.5 Rs 0.4 Rs ~0 Rs ~0 Rs 0.9

Interstate carriers

Rs 0.1 Rs 0.2 Rs ~0 Rs ~0 Rs 0.3

TurboJet – High Mileage or High Power ???

Economy

Style

Power

Mileage

? TurboJet ?

Brand tries to be two different polarities, with Mass Media Communication

Brand failed to create a connect , reason for low scores of HPCL

Keep Distance

“Jyada Mileage wala Diesel”Also an analysis of the advertisements gives the feel of “over intellectualization” for the target audience

An communication strategy recommended has to include this aspect of a uniform message, with variants at very constricted and differentiated mediums.

TurboJet –High Power so “Keep Distance”

Economy

Style

Power

Mileage

TurboJet

As per suggested strategy, only personal users to be targeted through the mass media.

Keep Distance

Thus brand to be specifically positioned to indicate “high power” & “high style”

Commercial Users are found, unaffected by the mileage positioning, due to inconsistent results. Thus the communication is ineffective.

“Keep Distance” Positioning kept intact.

What about commercial users of Turbojet ???

1. Most truck drivers and taxi operators spend time at the highway ‘Dhabas’. These places can be a very vital point to connect with the drivers.

2. Advertising at these Highway ‘Dhabas’ is low cost

Bike Drivers Entry Segment Car Drivers

Mid Segment/ Entry level Luxury

Car Drivers

Luxury- Chauffeur Driven

Short Distance Passenger Transport

Short Distance Goods Transport

Long Distance Goods/Passenger

Transport

1. Commercial Vehicles: (Mainly diesel driven)- Have shown a lower conversion rate at 13.2% & 9.2% against the petrol consumers at 20% & 23.8 %

2. Commercial user will pay no premium for branded fuel experience as against a individual consumer

Segmentation/Target strategy:

1. Driving Experience is important2. Will pay for ‘Time Premium’3. Less cost elasticity

1. Try to tap only a small cross-section that can pay premium for convenient driving.

2. Mileage performance improvement is long term view to further expand.

Adding a new value proposition: The Time Premium & Green Positioning

1. Adding/Re-allocating new dedicated fuel dispensers or one side of dispensers for branded fuel that will run during peak rush times.

2. These new stations will service with the customers at priority so as to attend the office goers, short on time urban consumers faster. This faster service will add a new value to the customer justifying some additional cost.

3. These additional dispensers can be attended by part time service men or perhaps switch between branded or normal fuel at off peak hours to save running costs.

1. The new stations will be positioned as lower emissions – Environmentally friendly fuel so as to score with consumers on greater environmental credentials.

Time Premium

Communicate the Value

How to leverage Time Premium ???

Let Consumers Publicize

Mass Communication

Outdoor Communication

Direct Marketing ( Mailers )

Word of Mouth

Vehicles as Display Units

Managing Forums

Word of Mouth to be encouraged through differentiated service – “ I don’t have to wait in lines “ feeling

Recommendations

Vehicles as display/identifiers . “ I don’t wait in lines “ stickers

Outdoor Communication @ Petrol Outlets Example “ You saved X minutes by using Power / Turbojet “

Direct Mailers to be informative like “ Average time spent by a “Power” user is 10 mins less than normal fuel user “ What would you do with that time ?

Advt. Cap does not mandate use

I don’t Wait in lines

Time PremiumHow to achieve Time Premium ???

Output Remains the same in terms of number of service points

Outlet Layout

Service Personnel

Legend

Branded Fuel Serve Point Normal Fuel Serve PointBranded Fuel Users

No differentiation for branded fuel users

The proposed layout

philosophy is to allow for segregated

paths for the branded fuels

To be implemented across all outlets Explicitly time premium made visible to all customers

Time Premium

Personal UsersBuying Decision Process

Limited Search

Choice

Limited Evaluation

Attitude of Others

Situational Factors

Peer Groups

Influencers

Influencers are the Mechanics and the automotive OEMS

These are the ones to be targeted, primed to be a HPCL product supporter

The customers look for validation to their choice with peers & mechanics No discussions on the

type of Petrol/Diesel used.This needs to be developed to promote the brand image through Peer approval

What we need to do ?

Increase peer discussion about brand , through secondary identification. “ Powered by poWer “ Emblems on vehicles

Influencers i.e. Mechanics & Automotive OEMs are the ones to be trained to promote and validate HPCL brand use.

Mechanic Training ProgramSimilar to what IOCL has achieved, a HPCL poWer – trained program should be concieved where the participants will be given engine training etc. and demonstrated the +ve effect of branded fuels.

Powered by poWer strickers etc. to mark a poWer user.

End