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Factors that influence consumer's choice of petrol stations in South Africa

Introduction

Have you ever imagined your life without fuel? No electricity, no transport, no traveling etc. the world wouldn’t be the same, everything needs fuel. Petrol stations are part of our everyday lives, but even though there is such a demand for fuel the competition between the brands is extremely competitive. I will be researching what factors influence the consumer’s choice of petrol stations and which petrol station is the most popular in South Africa.

With the petrol price being controlled by the government, there is not much room for the petrol stations to gain a competitive advantage.

The petrol stations needed to be creative and work out ways in which they could gain a competitive advantage. Some offer services such as, a car wash or a mechanic; others make use of convenience stores and fast food outlets and some ensure safety and/or cleanliness. The petrol industry has many risks one of them being that there is limited stock but and incredible, constant demand that puts pressure on the limited amount of stock.

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Another risk is one that is not very well known, this risk is being a target of terrorism, if a terrorist organization is targeting a specific country (especially a country that is dependant on their oil exports); they will target the petrol stations as it creates unrest and is a necessity to every community/country.

Context Discussion

In South Africa the competition between petrol stations is very tough. There are multiple brands and they all seem to have brand-loyal customers.

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With the petrol price being controlled by the government, there is not much room for the petrol stations to gain a competitive advantage. The petrol stations needed to be creative and work out ways in which they could gain a competitive advantage. Some offer services such as, a car wash or a mechanic; others make use of convenience stores and fast food outlets and some ensure safety and/or cleanliness.

Engen Petroleum

Engen is a South African oil company that started in 1881. Engen markets around 500 petrochemical products that they manufacture at their 4 plants. Their philosophy is “What matters to you, matters to us.” and their promise to customers is “With us you are number one.” In 2000 Engen had a rebrand and changed their name from Mobil to the famous Engen, a risk that is now known as one of the most successful rebrands in South Africa. Engen garages always have a Quickshop. They are also in partnership with Woolworths, Wimpy, Steers, Corner Bakery, and Equatorial Coffee. In select garages (depending on location) they offer Debonairs, Fishaways, Barcelos, Nandos and McDonalds.

BP

BP is an international brand and in South Africa alone BP has over 500 petrol stations. BP started in 1908 and continued to grow. Unfortunately in 2010 there was an explosion on one of BPs oil rigs, Deepwater Horizon, they sold $75 billion worth in assets to cover unexpected costs after the explosion and the stock dividend of the company was dropped to zero. There was uncertainty about whether BP would survive the spill or not. BP pulled through but realizes that it will always be part of the company. BP and Shell co-own SAPREF refinery. BP offers BP Express, Wild Bean Caf? and Pick’n’Pay Express. In 2012 Pick’n’Pay signed an agreement with BP and converted 120 BP Express stores into Pick’n’Pay Express stores.

Caltex

Caltex started in 1936 and they have a star in their logo. This star represents quality, value and service. In 1973 the international brand launches CX-3 fuel brand in South Africa, a fuel that cleans your engine. This launch helped Caltex to gain brand-loyal customers. Caltex offered support in many areas such as education, in South Africa during apartheid. Caltex has more than 800 garages around South Africa and is, therefore, one of our top four petroleum brands. Caltex SA is in a partnership with Fruit and Veg City and created their convenience store called FreshStop.

Sasol

Sasol began in 1950 in South Africa and is now listed on the JSE as well as the New York Stock Exchange. Sasol garages are considered SCC’s this means that each Sasol garage has a forecourt, a convenience store, a bakery and possibly a car wash or a fast-food outlet.

Shell

Shell started in South Africa in 1902. The shell logo is one of the world’s most recognised logo. Shell co-owns SAPREF refinery with BP. Their convenience stores are called Shell Select Stores and they offer 24-hour service. Shell Select has a bakery with goods that are freshly baked everyday and standard groceries. Shell Select also has unique vending machines that contain pharmaceutical products, Pharmashop 24. Shell Ultra Cities have Steers diners available for the customers.

Total

Total started in South Africa in 1954 and now has about 520 garages nationwide.

Methodology

To gather my data I will be using a questionnaire, which is quantitative data, that I put together online. I will be sending my survey to as many people as possible to receive more accurate results. While I was aiming my survey at people with a car, people without cars also use petrol stations and have opinions about which petrol station is their favourite. I asked consumers from all over South Africa to complete the survey.

My Survey

What is your gender?

  • Male
  • Female
  • Prefer not to say

What is your age?

  • Under 18
  • 18 –
  • 30
  • 31 –
  • 40
  • 41 –
  • 50
  • 51 –
  • 60
  • 60+

Do you own a car?

  • Yes
  • No

How many petrol stations are in your area of residence?

  • 1 –
  • 2
  • 3 –
  • 5
  • 6 –
  • 10
  • 10+
  • Unknown

Which petrol station is your favourite?

  • Engen
  • BP
  • Sasol
  • Caltex
  • Shell
  • Total
  • Other

Why do you like this petrol station?

  • Clean
  • Price
  • Location
  • Service
  • Rewards
  • Convenience store
  • Trading hours
  • Friendly staff
  • Safety
  • Additional services (eg. Car wash)

How often do you put petrol in your car?

  • Once a week
  • 2-3 times a week
  • Once every two weeks
  • Everyday
  • When I need it

What puts you off a petrol station?

  • Rude Staff
  • Unsafe
  • Dirty
  • Bad service
  • Price
  • No/bad convenience store
  • Word of mouth
  • What fuel do you use?
  • Diesel
  • Petrol

How often do you use the car wash?

  • Once a week
  • Once a month
  • Rarely
  • Never

How often do you use the convenience store?

  • Every time I am at the petrol station
  • Rarely
  • Never

Analysis and Discussion

What is your gender?

There was three times the amount of females than males that completed the survey. Females are very busy in their vehicles, as they tend to transport children and are always on the go whereas males tend to drive to their work and back home.

What is your age?

While there are more under 18s that answered the survey, some under 18s already have their own cars or they simply are at the petrol stations quite often with their parents.

Do you own a car?

Fewer people who completed this survey have a car than those who do not. This may be due to the fact that some people over 18 do not have a car.

How many petrol stations are in your area of residence?

From the survey it is clear that there is mainly between 3 and 5 petrol stations per area. If there are many more in an area the competition will be to high and the area will be too concentrated. In bigger areas having more petrol stations will be okay because they will not be as concentrated but it will still be a lot. If there are only 1-2 petrol stations in your area than that will be a factor as to which brand you use because you don’t have many options to choose from.

What petrol station is your favourite?

Engen is liked the most by the people that completed my survey. Engen and Caltex are the two biggest competitors and have most votes; the other brands only have a couple of votes. Engen has been in South Africa for the longest out of its competitors, it also has the most partnerships with other businesses, which means that it has more to offer. Caltex has the most service stations around South Africa and has many brand-loyal customers.

Why do you like this petrol station?

As we can see from the data the two most important factors are the convenience store and the location of the petrol station. This information goes hand in hand with the context discussion, as after researching about Caltex, we know that they are in partnership with lots of other businesses; they have many fast food outlets as well as Woolworths, Quickshop and Corner Bakery. A factor as to why they are the favourite petrol station to many is the convenience store(s) and how many other partners they have. Location is in tied first place as the most important factor when it comes to deciding on petrol stations, when researching Caltex we see that they have more than 800 service stations around South Africa, they are focusing on being available and in as many locations as possible which is a huge factor as to why people would choose Caltex.

How often do you put petrol in your car?

Most people put petrol in their cars when they need it, this could be due to the fact that petrol is so expensive but filling up when you need it just seems to make sense, as it doesn’t last any longer if you fill up before you need to.

What puts you off a petrol station?

Petrol stations are a huge target as there are large sums of cash and it can get very dangerous. Safety is a huge problem and is a very important factor.

What fuel do you use?

Other the year with new technology and formulas diesel cars have become very efficient and because the government does not regulate diesel it can be cheaper than petrol. The price that diesel is sold for can be used to create a competitive advantage for the company.

How often do you use the car wash?

A car wash is an additional service offered to obtain a competitive advantage. Due to the drought car washes had to think practically and either use waterless soaps or source their water from other places. Car washes are very convenient but some people simply prefer not having the risk of scratches. Almost all garages have car washes nowadays.

How often do you use the convenience store?

14 people in my survey use the convenience store every time they go to the petrol station this shows the importance of the convenience stores and how much they contribute to the service station and brand. Once again Engen is the overall favourite of my survey and from this study we can see that that one of the factors that contributes to Engen’s success is the convenience store.

Strategies

Differentiation

The aim of the business is to provide a unique product and service. Having a unique service will mean that customers cannot get that service or product anywhere else, if they like it they’ll come especially to you to get this product or service.

Pros:

  • Customers become brand loyal
  • Spreading the news – customers will tell their friends or share how they feel on social media which will encourage people to come to your service station

Cons:

  • Making the product or service too different – creating a product that is so bold it is unbelievable and consumers feel it is not real or that the product is pointless.
  • Becoming to specific – leaving out some customers because your product or service is too specific and doesn’t have a wide target market.

Corporate Combination

A joint venture is when two businesses work together to ultimately benefit both the businesses. When the businesses work together they share each others brand-loyal customers, for example Engen is in a joint venture with Woolworths when they signed the deal, Woolworths’s customers will now see their favourite food store at Engen and stop there rather than at Pick ‘n Pay express at BP.

Pros:

  • Financial benefits – both parties can contribute to costs if need be.
  • Additional resources
  • Opportunity for growth

Cons:

  • Different working culture and structure.
  • One party making a decision can effect both parties
  • Lack of commitment

Growth Strategy

Product development is when an existing market is offered an improved product or a new product. Caltex introduced the CX-3 fuel which was the first fuel proven to clean you engine; this is an example of the growth strategy, Caltex took normal fuel and improved the product to make it better and give them a competitive advantage and it helped them gain brand-loyal customers.

Pros:

  • Encourages innovation
  • Consumers have a need to try out new products even though they are nervous about it they will be there to try it because they are curious.

Cons:

  • Set high expectations
  • Unexpected product failures

Conclusion and Reflection

From this research and survey I have found that currently the dominating petrol station brand is Engen and following that is Caltex. I found that location and convenience stores are the key factors as to why customers prefer their favourite petrol stations. Engen is thriving in the convenience store department as they have they a lot of partnerships with other businesses that their customers use. Caltex has focused on location, they have over 800 service stations around South Africa; this means that Caltex petrol stations are easy to find and always right where you need them to be, they are close and accessible to their customers and this is what is important to them.

During this task I have learnt a lot about petrol stations and their history. I find it interesting how the different petrol stations focus on different features and how those features are what attract their consumers. I learnt that the fuel industry is tough and there is not a huge amount of measures that can be taken to gain a competitive advantage.

I think I did my research well as I gave lots of information and my survey asked the right questions to find out which factors influence the consumers choice of the petrol stations. I put so much effort into this project, I do not feel that there is something I could have done better except for start a little earlier. I enjoyed this task as the data I used was real and you can see the results, you can see how Engen has lots of partnerships and how Caltex has many service stations.

I found the analysis of every question a little frustrating, as some of the information is not information that needs to be analysed, there is no explanation as to why the result is the way it is.

Reference list

    BP Southern Africa website, 28 April 2019.
    Engen website, 24 April 2019.
    Force information (2016) Study reveals the UK’s favourite petrol station, 25 April 2019.
    Mufson (2018) After the Deepwater Horizon disaster, a new BP emerges, The Washington Post, 28 April 2019.
    Writer (2015) Best and worst petrol stations in South Africa, BusinessTech, 25 April 2019.
    Writer (2017) The most popular petrol stations in South Africa, BusinessTech, 25 April 2019.
    Leonard (2019) Pros and Cons of Differentiation Strategy, Chron, 29 April 2019.
    Moroney (2018) The Pros and Cons of Joint Venture and Partnership Agreements, Legalvision, 29 April 2019.
    Gaille (2016) 8 Pros and Cons of Product Development, BrandonGaille, 29 April 2019.

Cite this page

Factors that influence consumer's choice of petrol stations in South Africa. (2019, Dec 03). Retrieved from http://studymoose.com/business-studies-reserch-task-example-essay

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