Shell Vs Petronas (retail fuel) Market in Malaysia

What happens, when you as a market leader, loses its cutting edge, its key competency, its lynch pin, its differentiator, its x-factor

What happens if the competitor catches up with a me too product, or worst, me too and even better. .

What can marketing, product planning, technology, or finance do about this? We’ve seen several examples of this, in recent times, Nokia, completely failing to catch the smart phone wave and therefore unable to stamp their mark on the smart phone scene. What about, Sony, in accordance with the decline in Japan’s economy, gradually losing its technology appeal, its “sexiness” and coolness of a Sony product? (although it did took the lead as the leader of gaming consoles when their "Walkman" started to lose its shine, for more than a decade,  that is until Nintendo and Microsoft with different tactics ate into Sony’s pie.)

How about Google, whom I think in recent times, has failed to put a foothold into the social networking scene? (Talk to teens nowadays and they will tell you Google was so yesterday, and rightfully so, technology changes faster than your wife’s ability to apply her lip gloss.)

I think we’re up for something big in the retail petrol sector here in Malaysia. So apparently Petronas has something up their sleeve and will reveal it in due time. This came as a real surprised, as a normal man on the street, will think that Shell being the big giant International Oil Company,(who works with Ferrari to blend fuels and lubricants) and therefore they have access to technology that are 2 decades ahead of its competitor, and will forever remain in the lead with technologically advance fuels such V-power. (I do believe Shell themselves think that too)  

Initial response has been positive. The Star’s motoring journalist wrote,

“Although I seldom drive the Wire fast as it was never a performance car, I gave in to the urge to be heavy footed because of the new found oomph.  “. http://paultan.org/2011/03/23/petronas-to-introduce-new-f1-technology-inspired-fuel-in-april/

http://star-motoring.com/News/2011/New-Petronas-fuel-with-oomph-next-month.aspx

*everything has to have a facebook page nowadays http://www.facebook.com/petronasbrands

Those are big words to claim.

 Do forgive me PETRONAS, I thought that you’re happy to sit behind and beat Shell by capitalizing the fact that you’re a NOC and have the support of the a big portion of citizens plus in the process of creating a larger network of retail stations. Who would have known that you had it in you, especially any leftover money left to invest in R&D when the Government has sucked you dry.

Perhaps it’s Shell own doing and complacency. I certainly haven’t seen much exciting new products out of the big old Pecten. That whole Fuel Save campaign was not worth my 2 seconds of attention. (I’ve concluded to main contributing factor is,

1) the product was nothing to shout about,  like come on, I didn’t felt like it saved me any a lot of money, maybe enough to buy me a decent roti canai (bugger, roti canai in Kayu's cost more than RM 1 nowadays ok) (many would argue that interms of fuel consumption, Petronas's fares better, dont believe? google it and you'll read the endless debates on different brands of petrol) 

2) There was just not enough buzz to it. (Something must be wrong if, 3 dudes competing to outdo each other on who can drive the most economically, actually found it thrilling? Ok, so I don’t have the data on how many people actually joined the competition, but the key indicator should be, how many new customer’s *from competitor’s customer* have they gained via the competition.)

This new fuel is called Xperience with a capital X and rumor has it on Ron 95. (For you non Malaysian), Malaysia now has 2 grades of Fuel, Ron 95 and 97. Ron 97 is the unregulated (unsubsidized) and deemed premium fuel, especially by Shell who has slapped on the V-power branding on it and added some additives that made stand out (I’ve tried it myself, and IMHO, there is a noticeable different in engine responsiveness and acceleration,)

Being a staunch user of Shell, this post will be from Shell’s viewpoint. How can Shell, remain the overcome this threat?

1)    Who was that guy who was the Shell Ambassador, something Fahrin Ahmad (forgettable fler) Why not be radical on the ideas, you know, get someone prominent in Malaysia to be ambassador for Shell Fuel Save, how about Siti Nurhaliza? Isn’t she the darling of every Malaysians’ (Indian, Chinese, Malay, you name it) hearts) what is a few million ringgit to an industry that’s worst 100 times as much. I willing to bet you, her endorsement would be worth much more than Michael Schumacher’s as the face of PETRONAS.

2)    Shell needs to revamp the marketing activities on its current Ron 95 grade of fuel, the “fuel save”. From what I’ve seen so far, it doesn’t really excite anyone, even currently; its offering of apparently Die-cast Ferrari model key chains is a big yawn “I can’t remember anyone being excited over another *yawn* key chain. This is nothing compared to its success of its first range of Ferrari toy car collectibles back in 2006-2007. How about, creating a buzz in cyber space, perhaps, in response to the Japan’s current crisis, Shell Fuel Save program can create a sub program, create a CSR initiative, “ Make your ringgit stretch further, while you save on every liter of petrol per kilometer, your ringgit will also save those who are displaced in Japan” For every full tank pump in any Shell retail station, Shell will pledge RM 1 into a direct funding of UN emergency response team that is currently working tirelessly in Japan now.”  (although after thinking about it for awhile, I doubt this would change anything it would have a long term effect on the fuel of choice)

3)    Shell Globally, needs to make Shell Fuel Save more real, as mentioned, there isn’t a heavy notice on the Fuel saving fuel ( as read from forums, different people have different opinions on which fuel is more suitable for their vehicles.) Or if there is a real difference, it needs to be pointed out clearly *arguable apparently*

4)   Or perhaps, Shell is barking off the wrong tree. Instead it should leverage on its heavy partnership with Ferrari and make good powerful yet economic fuel (it’s a just a marketing spin perhaps). Ideally, Ferrari and the word “saving fuel” are not coherent, and will never be.  Therefore, perhaps Shell needs to do a bit of “soul searching” and really focus on its key competencies as the technological advance leader in fuel and lubricants.

I would hate to see Shell lose its market share in Malaysia, even more so, perhaps, I think its whether PETRONAS can step up to the plate and deliver and overcome Shell as the market leader, as PETRONAS seems to have its cards right,

·         National oil company *check*

·         Preferred choice of among largest ethnic group in Malaysia *check*

·         World class partnership with leading F1 team *check* (although the relationship has only been a year old)

·         Ambitious retail station network growth. *check* (its not uncommon for you to see a Shell station being build and a Petronas station will happily pop up beside it less than a year later)

Petronas has come a long way compared to where they were 20 years ago. Brand perception has increased significantly.(and rightly so, with the amount of money being thrown at advertising and strategic F1 partnership) Malaysia, being the home market of Petronas, has obviously been tasked to overthrow Shell as the leader in retail fuels. Perhaps it is just a matter of time.