From an undifferentiated commodity
to Harvard Business School celebrity

Background

• Declining profits and constant price wars.
  
  
• Filthy service stations offered little service.
  
  
• Customer attraction and retention strategies consisted of giving away NFL glasses and selling discounted Coca-Cola.
  
  
• Perceptions of Mobil were declining in terms of service and declining in overall brand equity.
  
  
• Service station dealersoperating independently of the parent company and each other—everyone was doing their own thing

Diagnosis

• Total focus on distributing gasoline to the stations—little emphasis on making the dealers happy or addressing consumer needs.
  
  
• Marketplace players were not differentiated in the minds of consumers and dealers—no unique national positioning.
  
  
• Promotion-oriented pricing strategy diminished rather than enhanced brand equity.

Strategic Research

• Two large scale studies were undertaken among a national sample of more than 2000 car owners and 600 Mobil dealers.
  
  
• The needs, problems and motivations of each group were measured.
  
  
• The most profitable market targets, a powerful, positioning and an impactful media strategy were identified.
  
  
• In addition, a “service engineering” study was undertaken to identify and describe the financially optimal service configuration.
  
  
• This was followed by research to select the best advertising executions.
  
  
• And even more research to test the Speedpass concept.
  
  
• Finally, marketing simulations were run to determine a financially optimal“marketing spend” and media schedule.

Strategic Options

• Continue to take the cost out of the business, ignore brand equity issues, and position itself as the place to get low cost gasoline.
  
  
• Offer extraordinary services at the pump, thus supporting price increases, and position the brand as the premium entry in the category.
  
  
• Emphasize cleanliness and speed; positioning the brand as the “Friendly” service station which doesn’t need to discount prices.

Strategic Choice

The company selected the third option and “Friendly Serve” was born. Led by Nancy Carlson, V.P. of Marketing at Mobil, the strategy addressed what customers indicated they wanted, but weren’t getting, and what many dealers thought they could deliver:

• Friendliness, cleanliness, safety and speed, with a pricing strategy which was neither low nor premium
  
  
• With new technology—Speedpass
  
  
• Marketing plans were created using modeling technology which linked investments with revenue and profit outcomes.
  
  
• A 3 Sigma (above average) television, print, radio and direct marketing program was launched.

Performance Results

• Boosted annual revenues by $1 billion+ which yielded double digit increases in profitability each year.
  
  
• Mobil “owns” the service positioning, eclipsing Shell.
  
  
• Mobil received thousands of phone calls and e-mails from customers expressing appreciation for friendly service, clean restrooms and Speedpass.
  
  
• More than a dozen Harvard Business School cases, notes and articles have been written about “Friendly Serve.”
  
  
• For the past four years, ExxonMobil has been the world’s most profitable company with annual earnings exceeding $30 billion.
  
  
• Unfortunately, for Copernicus, corporate profits are so high but margins so low in the service station industry, that ExxonMobil has decided to exit service station business in the United States.