Thursday, June 21, 2007

Branded Petrol and Disel, from Commodity to Brand


The other day while traveling in Bhuwaneswar, I saw the auto-rikswas purchasing the branded diesel, which is priced at a premium versus the normal diesel. And these auto guys run on ‘share-basis’ wherein they keep collecting customers on the way and dropping them to their destinations. They run on even thinner margins compared to the usual meter auto guys. I spoke to a few them to find out if they were actually getting mileage and performance out of the Branded diesel, for which the answer was in positive. I felt that was a vindication of the performance of the branded Diesel and felt this should be highlighted in the communication adopted by the petrol companies.

It was in the last few years that we have seen the launch of branded Petrol and Diesel by the major oil PSUs in the country along with the attempt to improve the petrol pumps itself. The Trigger was the imminent entry of private players into petrol and diesel retailing in the country. The secondary reason was an attempt to convert a commodity into a brand. A commodity is a product which cannot be differentiated and price becomes the only differentiating point and in a controlled economy situation where price would be same across different petrol pumps, the petroleum majors never had any incentive to either improve customer service or try to brand their products. But entry of competition has changed all that. The positive results of the introduction and adoption by vehicle drivers was mentioned in the newspapers a few months back and the example in the beginning reinforces the fact that the segment of branded petrol and Diesel would only grow in the near future.

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