In 2018 research showed that the South African Petroleum sector contributes an average of 6% to the GDP of the country while also supplying an average of 18% of the countries primary energy needs. Statistics for 2018 showed that South Africa’s crude oils imports sit at an average of 80%. The petrol station industry consists of 6 major players in the market that are well known. The six petrol stations are British Petroleum (BP), Caltex, Engen, Sasol, Shell and Total. In the above pie chart we see which petrol brand is the most popular in the industry.
We see that Engen is the most popular petrol station with 36.5% of the market where the 0.2 represents the smaller less popular petrol stations. Over view:In this research task primary and secondary research will be conducted to identify what factors influence consumer’s choice of petrol stations in Gauteng as well as why those particular factors are so important to consumers. Aims:Through primary research a better understanding of the consumer’s view of petrol stations should be gained as well as an understanding for their answers in the questionnaire that will be used.
Secondary research should help gain a better business and market perspective of petrol stations. The secondary research will be compared to the primary research in order to formulate a middle ground between the consumers and the business. The petroleum industry and petrol stations in South Africa:The South African Petroleum Industry Association is a trade organization representing the main petroleum and liquefied petroleum gas companies in South Africa. The South African petroleum industry divides into downstream and upstream activities. Downstream activities refers to the process of refining, transporting and marketing of the final product whereas upstream refers to the process of exploring and producing crude oil. South Africa has refineries on the coast of Kwa-Zulu Natal but does not have crude oil reserves and rely on the import of crude oil from the Middle East. Petrol stations in South Africa are the one type of business that is continuously operating, people always need fuel, people are always buying from the quick shop, people use the car wash and people are always looking for an ATM in a safe place. How each brand influences the industry? All petrol brands offer different partnership programs where their consumers make earn loyalty points with an existing account that they have, by doing this the petrol brand ensure some customer loyalty whilst drawing in new customers and ensure that old ones stay loyal to the specific petrol brand. Petrol station: Partnerships: BP Partnered with discovery’s credit card and the vitality drive. For every R15 spent at BP consumers will earn 1 discovery mile. Vitality drive: consumers will get 50% fuel rewards monthly. Partnered with pick n pay: consumers swipe their smart shopper cards and earn cash back for every liter. Caltex Partnered with Standard bank’s uCount Rewards so if Standard bank consumers use Caltex garage they will earn uCount Rewards. Engen Partnered with Edgars so for every liter that a customer swipes for they will earn 150 thank u points of their Thank U Card. Partnered with FNB eBucks where consumers can earn a minimum of 0.10c to R4 per liter. Sasol Partnered with ABSA’s of reward card where every time an ABSA consumer fills us or makes a purchase at a Sasol garage they can earn between 1 and 5%.Shell Partnered with clicks so every time Shell customers fill up the will earn point on they click club card. Partnered with Discovery’s vitality drive, the consumers will get 50% fuel rewards monthly. Total Partnered with Dis-chem do for every liter that the consumer swipes their dis-chem card for the will earn 10 benefit points. Quick easy accessibly and delicious food. Something people look for in today’s fast paced life. Although most garages have a quick shop many of them have partnered with well-known restaurant brands, they then open up a sit down restaurant or take away on the premises of the petrol station. This is convenient for customers that how long busy days at work and arrive home late or even the people traveling long distance. Petrol station: Partnerships: BP Has partnered with multiple food brands such as Chicken Licken, Fish-aways, KFC, McDonalds and wimpy. As well as a steers, Nandos and Debonair. Each garage has only one of these restaurants/take-aways on site and not every BP has one. Caltex Caltex may not be partnered with a well-known restaurant/ take-away brand but they have a express stop called Fresh Stop which supplies baked goods, sandwiches, pies, cool drink, juices and healthy meals. Engen Most Engen garages has one or two of the following: Corner Bakery, Equatorial Coffee, Wimpy, Woolworth’s food stop, Fish-aways, Barcelos, Bimbos McDonalds and Nandos. Engen’s 1-Stop’s usually have a few of the above listed food brands. Sasol Sasol has partnered with quite a few well-known brands such as: Barcelos, Big Al’s, Burger King, Chicken Licken, Debonairs, Dodo’s Chicken, Fishaways, Fitchef, Galito’s, Jimmy’s Killer Grills, KFC, Macmunch, Maxi’s, Mochachos, Nando’s, OK, Spur and SteersShell 29 of 30 of Shell, Ultra cities have a Steers Dinner restaurant. Shell has partnered with Vida e Caffe who now offers coffee at selected stations.Total Total has partnered with Steers, Mug & Bean, External factors of a petrol station: In business we use environmental scanning to identify factors that may be used to the businesses advantage or that may pose as a threat from now or any time in the future. There are two particular environmental scanning tools that we use: PESTLE and Porters six force model. A PESTLE Analysis will be used to identify the opportunities and threats in the Macro environment of the petroleum industry. PESTLE Analysis:External factors: Influence on the industry:Political: Local political situation. Political situation of other countries. World politics. Political moves within the country may affect the fuel price depending on whether that political move is good or bad for the economy. Trade agreements with other countries may be affected by certain relationships with other countries Economical: Economic growth and development rates Inflation rates, interest rates, exchange rates and high unemployment rates Taxes Exchange rates may make it more difficult for certain countries to buy fuel because their currency is weaker than the currency that the oil is charge in. (South Africa) The unemployment rate in the economy will affect the economic stability of the country, if the unemployment rate is high the economic stability will be weak and vice versa. Ethical: Principles and/or values that determine if the decision and actions are acceptable. CSR: the business should give back to the economy not only to gain a better name for the business but to show that you care for the people in the economy of your business. Social: How the economy is impacted by the social trends. The fact that the business must adapt to the social trends. Level of education: is the garage decides to employ unskilled, uneducated worker to do simple job it will uplift the community and the economy (paying the worker so he/she is able to support their family) Social media: with the right to freedom of speech in South Africa this plays a very important role in any business. If consumers are treated with bad service they may post a negative review online about the garage that many people will see which will most likely lead to a loss in consumers. Technological: Refers to the advances in equipment that the business may use (card machine) or supply their product for (cars) The world’s new and developing need to go green has the development of battery and solar operated car posing as a threat to petrol stations. The cost of keeping up with the technological advancements may be very expensive but will be worth wile because it is most likely to make it easier for consumers to fill up at the station. Legal: Laws that impact the business and its operations. Environmental laws are starting to be extremely pressurizing on petrol station to go green and to somehow ensure that all emissions released during the refining of crude oil is controlled and cleanEnvironmental: Refers mainly to the physical environment. Important due to the growing awareness of protecting the environment. Business Tech (2019) says that from the 1st of June 2019 a fee of R120 will be charged per ton of carbon dioxide emission. Recycling: it is import for the petroleum industry to look into ways of recycling the waste oil produced during the refining process. Porters six force model is a very helpful environmental scanning tool for many businesses but when it come to the petroleum industry is it much for difficult to conduct the analysis. Porter’s six force model looks at the following aspects: 1) level of rivalry; 2) threat of new entrants; 3) availability of substitute products; 4) power of the buyer; 5) power of the supplier and 6) complimentary products. For this research task we will only looking into three of the six factors.PORTER’S six force model:Level of rivalry: This refers to the number of current competitors in the same market as Engen. There are very high levels of competitiveness between the existing gas stations in terms of how they market their brand as well as how loyal the customers are to the brand. By developing and offering new products Engen not only attract new customers but give loyal customers more confidence to support the brand.Power of the buyer: This refers to how Engen’s demands as a customer can affect the price and quality of the products they purchase. If petrol stations uses a well-known supplier their power as the buyer will be minimized because suppliers with a large customer base tend to regulate their prices The power as the buyer demands good quality products and better delivery time on products.Power of the supplier: This refers to the reliability of the supplier and how much control they have over the cost of Engen’s product (oil). Having multiple supplier’s works in Engen’s favor as this allows them to continually benchmark to ensure best value and price from suppliers. The above pie chart show us how the actual price of fuel is composed. The basic fuel price (40.8%) is the standard price that is set out by government. Fuel levy (23.7%) is the tax that petrol stations must pay over to government. RAF which stands for Road Accident Fund (13.6%) is a compulsory insurance that is paid to the government, the government then uses this to pay for any accidents that take place on the street of South Africa. Lastly, other cost (21.9%) is charged so the petrol station can pay their employees, their light, water and electricity as well as the other taxes that the petrol stations is charged as a business. Context discussion summary: Through the secondary research that was conducted the following information was found and presented: The majority of oil is imported and there are very few refineries in South Africa. Different petrol brands have partnered with different well-known brands (clothing brands, health brands, insurance brands and food brands). We also see that a few petrol brands have partnered with discovery which also promotes a healthier lifestyle for the consumers. A PESTLE and Porter analysis was conducted showing possible opportunities and threats within the petroleum industry. A graph was included showing how the total fuel price is composed. Methodology: Data collection method: For this part of the research task primary research will be conducted in the form of a questionnaire that will be issued to people who drive any type of vehicle in the Gauteng region. The reason for this questionnaire is to identify the most popular petrol brand as well as to identify which factors influence consumer’s choice of petrol station in the Gauteng region. This questionnaire will also help in the process of gaining a better understanding of consumer’s views of petrol stations. Data analysis: The most popular petrol station seems to be Engen garage with 8 people. Most people seem to fill 95 in their car. Twice a month is the amount of time majority of people fill their cars up. Almost all people use a specific garage. Most people have had bad service at a petrol station. People aren’t willing to pay an extra price to fix the issues at a garage because they say fuel is already too expensive. An equal amount of people stop at a petrol station for things other than petrol and an equal amount say they do not stop for anything but petrol. Surprisingly majority of people will not carpool never mind the increasing fuel prices.Graphs based on the questionnaire answers: This pie chart shows us that the most popular petrol station is Caltex and the least popular petrol station is BP. From the above single-bar graph we see that the majority of people living in the Gauteng are fill their cars up with 95 ppm. This double bar graph show us the answers of yes or no that the targeted audience answered to certain questions. Many of the people tend to use one specific petrol station yet an average just above half of the targeted audience had answered yes to have had bad service at a petrol station. The vast majority has answered no to paying an additional fee to fix the service at petrol stations and the main reason was the petrol is already as expensive as it is. Surprisingly many people said that although there is an increase in fuel with future increases to follow they would not carpool due to the type of work that they do as well as the need for privacy and independence. Strategies: To keep customers returning: Stay in touch: this doesn’t necessarily mean that as a petrol station you should message each and every consumer that visit you garage. This simply means that you should continually reach out to the consumers by means on advertising on TV and on social media. Collaborate: ensure that the business CSR strategies involve the consumer as well as the surrounding community. Allow consumers to part-take in CSR initiatives, this will help create a relationship between the petrol station and its consumers. Have the right people on the front line: this is a vital strategy in a petrol station. If the business ensures that the people filling up the consumers taking or the cashier at the till that the person always try their hardest to greet the consumers with a positive attitude and a kind manner. Look after your loyal consumers: this simply means creating a loyalty program or as the petrol stations have started, collaborate with a well know brand with who the customer may swipe their loyalty card and earn cash back bonuses or loyalty points on their cards. To combat external factors: The garage should ensure that all its employees are healthy and go the extra mile by ensuring that the employee’s family is also healthy. This could be done if the business pays a contribution to the employee’s medical aid fund or by organizing semi-annual health checkups. Petrol stations can avoid the threat of technology by staying up to date with the advancement or even by investing in their own research and developments in terms of how to adapt to the upcoming advancements in technology. The stability of the economy: the petrol station does have an impact on the economy but on a very small scale. Nobody can truly control the way the economy strengthens and/or weakens but the petroleum industry should always have reserves in terms of capital especially.Conclusion and reflection:Summary:Through the process of conduction primary as well as secondary research I have managed to develop a much better and clear understanding of petrol stations as well as the petroleum industry. From primary research in particular I have discovered that many people are actually quiet unhappy with the service they receive yet through secondary research I had found interesting facts such as the fact the petroleum industry actually has a significant impact on the GDP of the country. The context discussion part of this research task has helped me identify many fact of a petrol station the usually I would not think about whilst also introducing me to many opinion that’s the media portrays of petrol stations. The methodology part of this research task has opened up my eyes to the real mean of inflation. For example many people answered that they are not willing to pay an extra fee for improved service at a petrol station because fuel is already quite expensive. Primary research also showed me that not many people use diesel like I had originally though and that people don’t usually fill fuel as often as I had thought. The petrol stations are usually busy doe to people stopping to use the ATM or to get something from the express shop or even just to use the carwash. When the petrol station is full it doesn’t necessarily mean that all those consumers are filling fuel in their cars. Reflection:Once again the primary and secondary research has broadened my mind and has pushed me to think outside the box in terms of questions for my questionnaire and then strategies for the petrol stations to use. Improvements: Be more persistent about the due date for the questionnaires Hand the questionnaires out earlier Utilize google more efficiently.