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that unfortunately has taken a back seat
in the delivery of an important message to
our customers. As changes occur up and
down the supply chain, creating excite-
ment in some marketing footprints, many
companies are missing the opportunity to
eliminate
price
as a buying metric by
replacing it with a value proposition that
resonates with many heating oil customers
today. Are we buying and selling effectively?
What does buying and selling effectively
actually mean?
I have posed the question countless
times over the past few months to indi-
viduals that manufacture, store, blend or
distribute. It was through these interactions
that I learned that few disagreed that fuel
quality was challenged up and down the
supply chain. My follow-up question was,
why then not share these challenges with
those to whom you sell your products? The
response was often, “It takes too long, and
only price matters.”
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Before delving into the core of fuel
quality issues and how they negatively
impact operational performance of vehicles,
stationary engines and home heating
oil systems, it’s important to discuss the
psychological reasoning behind why those
in the petroleum industry focus so intensely
on making certain they offer the lowest
price each and every night.
The sales strategy of most fuel distribu-
tors revolves around price because, as the
saying goes, “Price is king.” Deployment
of this strategy comes with another adage:
“Live by the sword, die by the sword.”
Essentially, if you wish to lead with price you
may succeed in the short term or run the risk
that you will not earn customers’ business
because your rates were not low enough to
crown you today’s “low-price king.” You are
now perceived as a player in the price game.
You’ll now be treated that way.
I searched Wikipedia to determine what
it had to say about price-based selling.
Interestingly (and disappointingly), it stated
that, “Price-based selling is a specific selling
technique in which a business exclusively
reduces their price in attempt to close the
sales cycle. Price-based selling clearly exists
in businesses such as: commodity sales,
auto sales, hospitality, and even some retail
stores. However, it is only recommended
that commodity items like petroleum be
sold exclusively by price.”
Are you kidding
me?!
In this “price is king” sales model, the
short sales cycle doesn’t work for us.
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Wikipedia goes on to declare that most
businesses sell their items based upon price,
not because it is the most profitable, but
because they believe it is the easiest way to
attract customers. Price creates a certain
expectation. With a higher price there comes
perceivedhigher value, andwhat’swrongwith
that if you have a value proposition? There is
irony in conversations that go something like
this at a trade show or networking event:
“What do you do?”
“I’m an oil marketer.”
“Oil marketer? How do you market
your oil?”
“I have consistently low pricing and the
best service.”
“What are the top three benefits of the
oil that you sell?”
“Price, credit and availability.”
“What kind of oil do you sell?”
“The same as everyone else!”
It is this thought process that takes our
quality story out of the equation. Even as the
energy market introduces new higher quality
blend options like biodiesel and renewable
diesel, many marketers fail horribly in posi-
tioning these enhancements. Instead, they
position low price to win the business. These
new, improved products never had a chance
to be marketed as something unique that
would help enhance operational performance
of diesel powered vehicles and home heating
systems, simply because, “price is king.”
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Why is it important today to shift your
thinking and strategies downstream? Because
there is an opportunity to increase market
share and improve earnings if you invest time
to understand the product you are “selling,”
not marketing. Step out from behind selling
petroleum on the “price is king” strategy for a
moment and visualize yourself as a company
that is more concerned with
helping
the cus-
tomer than
selling
the customer, and all will
be good in your world. Taking this thought
back to selling petroleum, you could say that
it’s easier to sell low than it is to invest the
same amount of time helping your customer
understand your product’s value proposition.
You help a customer by conveying product
benefits in their home or fleet.
Consider opportunities available to
you if you elect to discuss fuel quality and
market challenges with your customer.
Companies’ upstream activities such as
sourcing, production and logistics have been
clearly commoditized or outsourced, while
downstream activities aimed at shaping a
customer’s perception and reducing their
costs and risks are emerging as the main
sources of competitive advantage for the
progressive energy distributor.
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To compete effectively, a sustainable
companies recognize they will not win
long-term by leading with price. They
educate and influence their customers
and prospects and declare advantages by
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Shifting the focus to the
value you deliver is better
for the bottom line
By Paul Nazzaro, National Biodiesel Board
Fuel Quality
