Development & Innovations in Petroleum Retailing: PetroWars and PetroDesign Simulations
INTRODUCTION:
The petrol station business is similar and yet very different to other businesses. It is similar in that customers do have a choice and the suppliers gain business by seeking to be better than other suppliers. However the petrol station business is also very different to other businesses in that it has many PECULIARITIES – for example no other business has such strong price competition, government attention, constantly changing raw material prices, etc.
This programme is delivered by Dr Marcel Cohen who has extensive experience in the UK petrol market both as a senior manager at Shell and also as a consultant to many of the international Oil companies. He has also written a book on Petrol retailing – which has sold out. He has also written many academic papers that analyse the petrol industry – including one academic paper called “The peculiarities of Petrol Retailing”.
THIS WORKSHOP COVERS:
1. Understanding Customers
- Customer psychology (Cynicism, The petrol gauge experience)
- Location of petrol caps (on the right, on the left or in the middle)
- Difficulties on the forecourt (layout, pumps, payment, etc)
2. Serving Customer needs
- Via convenient petrol station designs: We use a special construction kit (called petro-Design) to try out alternative designs and measure effectiveness by hand simulation. We then discuss results produced by computer simulations of equivalent layouts.
- Via competitive pricing: Delegates ‘play’ by setting prices on a computerised simulation of the petrol market (called PetroWars). We do this on two afternoons under various scenaria. On Wednesday morning we start with a debrief form the PetroWars game. We analyse what players did and compare to the theory of pricing. Fun and educational!
- Via attractive promotions: We learn how these marketing tools work from a theoretical viewpoint and then apply this understanding to petrol.
- Via the provision of a Network of stations: We examine the theoretical benefit of providing networks of petrol stations and draw out some key principles for petrol. We also discuss the management for such a network by the various alternatives (eg licences, agents, franchises, etc)
3. Extracting Profit
- Profit through timing
- Profit through differentiation
- Profit and government taxation
This program offers a mix of classroom based instruction and practical trading exercises, where attendees will ‘play’ by setting prices on a computerised simulations of the petrol market called PETROWARS® and PETRODESIGN® business-games.
It also addresses three fundamental questions about Petrol Station networks:
Should your petrol stations be designed by engineers or marketers?
Historically, the design of petrol stations has been largely left to engineers – after all they know about the turning circle of delivery vehicles, where to locate the fuel tanks and pile, health and safety laws, the best place to locate the payment kiosk/shop, etc.
With all this, the customer has been forgotten! The customer cares very little about what lies under the ground and the logistics of running a petrol station. However he DOES care about how easy it is to use a petrol pump, how easy it is to drive his car in (and out of) the petrol station, how long he has to wait whilst paying, what he can and cannot buy in the shop, etc.
In summary, for a petrol station to be appealing to the customer it must be designed from the “outside-in” by marketers rather than “inside-out” by engineers.
We explore what is wrong and can be right in petrol station design. We then use PetroDesign artefacts to simulate the operation of a petrol station and test out alternative designs. Good fun!
What makes a NETWORK of petrol stations beneficial and what disadvantages does it have?
We examine what makes a network provide benefits operationally and strategically. We estimate the smallest size of a network and ponder on when a network can be too big! If you think that you know the answer then think again!
What is the right petrol price and how should it differ from one station to another across your network?
We first approach this issue by playing the PetroWars game. In this game players compete with each other using their own experience. We play this game twice – once without disruptions and once with shocks that create unusual circumstances. When the game is over, we analyse the decisions that were made – some good and some bad. We then learn a little theory that can help in setting prices and compare to instinct. Very useful!
FURTHER QUESTIONS
For further information please contact education department:
International Business House
Tel:+44 (0) 207 183 4507
Fax: +44 (0) 207 504 8225
education@ibhouse.net
www.ibhouse.net
MEDIA PARTNERS:
