Behind Oil Firms’ Slick Campaigns
Once each year for the rest of his life, 24-year-old Scott Kelley will reach into his mailbox and pull out a check for about $6,000.
Kelley, a college student in Atlanta, didn’t win the lottery. All he did was pull into a Chevron station and scratch the coating off a game ticket handed to him by an attendant. He drove in to fill his tank; he drove off loaded.
If luck follows Kelley when he wheels into other service stations, he could also drive off with four years of free travel and free gasoline from Exxon; a free BMW, Jaguar or Corvette from Conoco, or a Chevrolet Cavalier from Amoco.
With summer gasoline sales generally in the tank and vacation travel down, several of the big petroleum companies have turned to flashy sales promotions to drum up new business. Oil company executives say these new promotions improve their business and make the mundane process of getting gasoline more fun for consumers.
But critics say these promotions are desperate measures by oil companies to try to improve their damaged images. There is lingering consumer anger over oil spill catastrophes of recent years, and many people are still upset over how much gasoline prices shot up during the Persian Gulf War. Some consumer groups further complain that all promotions do is bump up gasoline prices.
“It’s not a free ride,” said Michael Jacobson, executive director of the Washington-based consumers group Center for the Study of Commercialism. “The cost is incorporated into the price of the gasoline, and the consumer ends up paying.”
Oil company executives deny that the promotions affect prices at all. In fact, some say, the promotions temporarily lure in enough new business to cover the costs of the promotion entirely.
One leading sales promotion executive, whose firm creates sweepstakes for top companies, says the oil giants hope promotions will improve business--and their images--at the same time.
“The oil companies took heat for some recent environmental disasters and for raising prices during the Persian Gulf War,” said Don Dixon, chief executive of New York-based Lifestyle Marketing Group. “With sales promotions, they hope consumers will be less price sensitive and have warmer spots in their hearts for them.”
Many of the new promotions are similar to state lottery “scratch-off” games that require consumers to scratch tickets and instantly find out if they have won money. Marketing experts say the gasoline companies are borrowing from the strong interest that many consumers already have in these lottery games. In the minds of many consumers, the oil company game tickets become something akin to lottery tickets that they don’t have to pay for.
“People who drive in to the stations expect to win,” said Fred Zufryden, professor of marketing at USC. “The gambling aspect really turns some people on. There is anticipation of a payoff.”
The oil companies further benefit by sponsoring contests that have a perceived value that far exceeds their actual value, said Kerry Smith, Jr., managing editor of the trade publication Promo magazine. Sure, the Chevron contest winner receives free gas and groceries for life--but that translates into about $6,000 annually.
“Chevron probably spends that much in one night taking lobbyists to dinner,” said Smith. “It’s not even a drop in the bucket for them. But for the consumer, that might motivate someone to make a left into the Chevron station instead of a right into the Amoco.”
Few service stations give away items like drinking glasses these days, basically because they don’t have any place to store them. Most service stations have cut way back on size--and service--so it’s much easier to place 1,000 promotion tickets in a drawer than 1,000 glasses in an entire room.
But service station owners say they’re willing to try just about anything to improve business. At Josh’s Exxon in Hollywood, owner Josh Rosenbaum said he is selling 20% to 30% less gasoline this summer than he did last summer. “Today we’re in bad shape,” said Rosenbaum, who has owned stations in the area for 20 years. “The good times are over.”
Yet good times are exactly what the oil companies seem to be promising with these promotions.
“People don’t like to fill up their cars with gas; it’s one of their least favorite things to do,” said Wayne Ederer, manager of motor fuel merchandising at Chevron, which sponsored the “Great Gasoline & Grocery Giveaway” this summer.
Chevron did customer attitude surveys and found out that they felt much better about filling up when they knew they might win prizes. “It also gives station owners something to talk to their customers about,” said Al Macdonald, advertising specialist at Chevron.
But Conoco officials admit that they got into the game because the competition forced their hand. “We figured if we’re going to run with the big boys, we’d better start,” said Rick Poindexter, coordinator of promotions at Conoco, which operates mostly in the Midwest.
Exxon officials say their newest promotion is an attempt to get consumers to try their new gasoline. Besides top prizes such as four years of free air travel and free gasoline, the company has cash prizes such as $1 or $5 cash. Never mind that the odds of winning the top prize are one in 65 million.
“We recognize over the next several years that there will be a decline in gasoline sales,” said Chuck Hale, ad manager at Exxon Co. USA. “We want to attract and retain new customers.”
So eager is Exxon to get new customers that it even brought its animated tiger out of hibernation. The smiling tiger, which has been used in advertising for two decades, is the focal point of the advertising for the promotion.
Two years after the Alaskan oil spill, Exxon’s petroleum division says it is not attempting to overcome the parent company’s lingering image problems with the promotion. “We recognize we still have an image problem with some of the public,” said Hale.
No matter how many promotions Exxon does, “they won’t make up for the impact of the oil spill,” said William A. Cohen, marketing professor at California State University, Los Angeles. “They have a long way to go to make up for that.”
Gasoline Giveaways With summer gasoline sales off, major oil companies are trying to attract new business with sales promotions and contests that feature big prizes. Here are some of the biggest:
Exxon: “Win With the Tiger” scratch-off promotion offers a grand prize of four years of free travel on Continental Airlines and $1,000 worth of gasoline for four years. Other prizes include $4,000 in cash and instant cash prizes of $5 and $1.
Chevron: “Great Gasoline & Grocery Giveaway” (which just ended) featured two grand prizes of a “lifetime” of gasoline and groceries ($6,000 per year). Smaller prizes included free motor oil and vouchers good for $1 worth of gasoline or food.
Conoco: “Cars We Love” promotion features puzzle pieces with which consumers can win one of six luxury cars: Cadillac, BMW, Lincoln, Mercedes, Jaguar or Corvette. Other prizes include Hawaiian vacations and smaller items such as free motor oil.
Amoco: “Big Summer Fill-Up” promotion includes 10 1992 Chevrolet Cavalier convertibles. It is also offering free $1 gasoline vouchers for every 10 fill-ups. In addition, the promotion includes free certificates for Pepsi-Cola soft drinks.