People buy Apple products, because Apple has a powerful brand that connects to their ideal customer.
Consumers can see the connection to the iPhone in their hand or the MacBook Pro in their lap along with the company itself.
It doesn’t matter if the products are manufactured offshore by companies and people they don’t know exist. It doesn’t matter if the components in the phones are fabricated by other companies most of us have never heard of. It doesn’t matter if the raw materials in the device include plastics derived from oil.
It especially doesn’t matter if Apple makes enormous amounts of profit. What matters is how consumers perceive the value they receive from Apple. That is their brand. Apple fans are fanatically loyal. Brilliantly managing their brand has been the key to Apple’s success in the last decade.
Contrast that with the oil and gas industry.
I head to the pumps to buy gas, because I need it to run my car. Gasoline is pretty much gasoline. There might be a difference between Shell’s Nitrogen Enriched Cleaning System and Petro-Canada’s SuperClean Ultra 94. However, unless you are a high-end car buff or a chemist, you are more likely to choose a gas station based on the points you will collect and the lowest price.
If you are driving a pickup truck, SUV, or other gas hungry vehicle, you may be paying anywhere from $500 to $2,000 per month to feed it. The car company gets the brand recognition. The perceived value of ownership is associated with the vehicle and not the fuel.
Natural gas is even more devoid of branding. It comes into your house via a pipe. You choose the billing company based on the price they offer and whether or not they made you angry in the past. The emotional disconnect between the producers and the consumers is huge.
The Only Game in Town
For the longest time, people ignored the oil and gas industry. We need it. They provide it.
At first, the prices fluctuated mostly based on supply and demand. A few big players had a lot of influence over supply. Then, the commodity markets got more sophisticated, and now investors and speculators are making money on that part too.
The public perception is I need it, it is a commodity, the government is overtaxing it, and the big companies are gouging me in good and bad times. So, who is ultimately communicating the value and benefits to the public for the oil and gas industry?
The Brand Influencers
Building on that evil, rich company theme, it was not very hard for environmental groups to continue to paint the industry in a bad light. Spills and other environmental issues handed them the stories they needed on a silver platter.
At first, no one paid much attention to the environmental groups. Then, pollution and global warming started to gain widespread attention, and people begin to care. So, the industry fights back against the environmental groups and lobbyists. The perceived value includes the negative aspects of your product or service.
In the absence of strong brand management, it becomes much easier for an outsider, such as these environmental groups and lobbyists, to influence the perception of value with your market.
The Competition Is Growing
Alternative energy sources are becoming viable. Remember Netflix and the demise of video rental chains? That happened pretty fast.
Tesla and others are starting to sell quite a few electric cars. It doesn’t really matter if the electricity powering these cars comes from electricity utility companies. It doesn’t really matter If generating and distributing electricity is not that efficient due to losses during transmission (a bit like the fuel truck spilling 40% of its load on the way to the pumps). It certainly doesn’t matter if electricity is still mostly generated by non-renewable sources like nuclear, coal, and natural gas. The consumer is buying the car and the story.
Sure, the infrastructure and investment by consumers in existing vehicles is vast, and there are still issues with electric vehicles to be solved. The key fact is people will soon have at least the perception of viable choices. The changes will happen slowly until they happen fast.
What Are You Doing For Your Business Brand?
Those are some of the trends. That is the power of branding. I don’t have a crystal ball to say exactly what is next, and I surely can’t fix the brand perception of the entire oil and gas industry. But, I can relate the lesson back to what you can do.
If you are an entrepreneur, the owner of a business, or hired to run a business, you need to understand brand management or someone else will manage it for you.
Article originally published in the February 2016 issue of the Oilfield Pulse.