In this article, we are going to take a look at the difference between branded and unbranded fuel from the perspective of both the consumer and the retail station owner. The following information will help to understand the differences between the two categories of fuel:
What is branded fuel as compared to unbranded?
Branded gasoline is sold by companies that invests large amounts of money into a fuel quality image and its marketing for broad recognition. Most branded fuels have an additive of some type. Some of the most recognized brands in the United States are:
- Phillips 66
Stations that “Fly The Branded Retractable Banner” (sell under the identity of a specific brand) are required to purchase that brand of fuel. The relationship between supplier and retailer is exclusive, with the station presumably enjoying the value of increased traffic attracted by the recognizable brand name, in return for purchasing its fuel from the brand owner at prices set by the supplier. Typically, the retailer is required to buy the branded fuel regardless of cost.
What’s the difference between the two?
Think of the difference between brand Kleenex and unbranded tissus, or Q-tips and unbranded cotton swabs. Unbranded fuel is the exact same product as branded fuel, without the additive, at a less expensive price, generally averaging anywhere from 5-15 cents lower than branded fuel (Except on very rare occasions where there is a price inversion).
If the price of branded is more, is the quality better?
The government has a lot to say about the quality of fuel, such as the octane, sulfur content, vapor pressure, quality, lead content, ethanol content, etc. There is a very specific standard that ALL fuel must meet in before it may be legally distributed. So in reality, the ONLY difference in quality between branded and unbranded fuel is the additive that branded suppliers add. They also add a massive amount of marketing for that additive, trying to convince the consumer that the additive is worth the extra 5 to 25 cents per gallon. Chevron with Techron, Shell Nitrogen Enriched gasolines, Conoco and Phillips 66 add twice the amount of detergent, as just a few examples.
The branded companies spend millions annually advertising the allegedly superior gasoline, when technically, it the the same gas, plus a proprietary additive. At the end of the day, however, the chemical standards that are set for gasoline are more than sufficient for your car. In fact, car engines are designed to operate on gasoline refined to meet those basic standards. Truth be told, purchasing the more expensive, branded gasoline is an unnecessary expense that is marketed as a “must have” for higher end vehicles. So, if it makes you feel good, fill er up, but all you’re really paying for is the “feel good.”
THE PROS AND CONS OF EACH
|Better fuel Price 97% of the time!||Potentially unrecognizable image or brand||Recognizable image and brand||Expensive Price for fuel|
|No required maintenance or branding image requirements||Station usually less attractive||Fuel additives||Required to meet strict brand maintenance requirements|
|No contract||Rare price inversion||Trusted more by consumers||Tied to a contract with no way out|
|No additional credit card fees||Expensive Price for fuel|
|Choose your fuel supplier||No fuel price negotiation|
|Negotiate best fuel price||High credit card fees|
If as a consumer, you are more concerned about price, or a station owner and more focused on volume of sales, then unbranded is the route to go. But, if you desire a better image with a fuel perceived as more “trusted,” then branded fuel is better for you. For the retailer, It really comes down to what the customers want, because at the end of the day, as a business owner, you want to maximize opportunities to make more money, and satisfying your customers is the way to their heart.
So what does the consumer want? Read this feature to find out what the consumer looks for when buying fuel. Hopefully, it will help you decide which is best for you and your business.