BP/ampm gas stations, your gas stations

ESL Consulting Wei Ling CHAO Stefano DI GENUA Jinsong DING Joseph Chung-I LIN Jingxiao LIU

Recommendations

Short-term

Screen display advertisement

New products and improved facilities

Long term

RFID

Company Who we are

Our Brand Elements:

Green : demonstrating our environmental leadership

Innovative : provide breakthrough products and service

Leader : be the top on the market

Channels Products offered Profit contribution to a gas-convenience store by product:

Competitors General view

Highly fragmented

Demand depends on car traffic

Profit linked to location and product mix

Competitors Who are they?

Competitors How good they are comparing with BP/ampm

Facts:

am/pm re-aligned to BP core-values

am/pm needs better structure and consistency in products campaign

Customers Facts

Customers switching gas station during the past year

Alejandro Melgar P. Bryant College, Louisville, Kentucky, 2001

Customers Facts

Reasons for NOT changing Gas Station

Customers Facts

Age of our Customers

Best Customers, New Strategist Publications 1999; U.S. Bureau of Labor Statistics, 1998).

Customers Facts

70% are 23-54 years old

Spends four minutes at the pump per visit

Visits the gas station six times per month

VRIO framework Key capabilities of BP V: V alue R: R arity I: I mitability O: O rganization For a strategic resource/capability to be a source of competitive advantage, it must characterized by: Capabilities VRIO framework for bp/ampm

VRIO framework Key capabilities of BP High level service Strong customers base Commitment to train the franchises

International company with good reputation

Serve more than 14 million people everyday

More than 1 million memberships

Green, clean and smart

Superior brand name Corporate culture

Safety, people and performance

Commitment to serve society

Real estate assets

More than 14,000 gas stations over the US

Grow with the franchises

Capabilities Bp’s key capabilities Key Capabilities

VRIO framework Key capabilities of BP New service Advertisement New products BP community Extend business line Organize the capabilities

High quality services

Safety, performance and people

RFID technology

Strong customer base

Broad network with franchises

User friendly display

People traffic

Organic products

Clean facilities

Superior brand name

Commitment to community

Build BP life-style around the customers

Capabilities Bp’s key capabilities

Findings Goals:

BP wants to be at the top of its market again

Means:

Increase market share

Increase customer contact time

Findings

Expand the total demand:

1. finding new users

2. promoting new uses

3. encourage more usage

Protect its market share:

1. fulfill its value promises

2. continually innovate

What is RFID?

Number of RFID in use:

2007: 200 million 2016: 550 billion (*)

Why? To object tagging including cars

Results:

1. The technology is getting cheaper 2. The standards are unified

(*) T.Tambosso – RFID, current situation and future prospective, Jan 2007, IEEE

The Idea RFID in BP/ampm gas stations

Apply the same concept of ETC through RFID

Identify automatically the customer (ACI)

Use the screen already present in the BP pumps as a main interaction point

Security and speed in the transaction

Change our Memberships Cards to Tags

New Customer Experience

New use of gas pump screen: Outdoor Advertising Industry The World Market for outdoor advertising is projected to reach US$30.4 billion by the year 2010. 5.50% $8,558.90 $9,033.30 TOTAL -5.90% $745.20 $701.00 WALT DISNEY CO 25.50% $560.90 $704.10 ALTRIA GROUP INC -12.30% $848.60 $743.90 DAIMLERCHRYSLER AG 7.30% $704.40 $755.60 VERIZON COMMUNICATIONS INC 22.10% $642.60 $784.90 JOHNSON & JOHNSON -7.30% $856.40 $793.60 SBC COMMUNICATIONS INC 13.70% $714.00 $812.10 FORD MOTOR CO 6.90% $896.50 $958.10 TIME WARNER INC -4.70% $1,327.20 $1,265.30 PROCTER & GAMBLE CO 19.90% $1,263.10 $1,514.70 GENERAL MOTORS CORP % Change Jan - June 2004 (Millions) Jan - June 2005 (Millions) Company Top Ten Advertisers: First Half 2005 vs. First Half 2004

New use of the gas pump screen: Quality Time for Advertisements

Outdoor advertisement is a new attractive market channel because:

it uses idle daytime;

it gives a stronger impression to viewers;

Micromarketing Good for our customers, good for us

Why is it good for our customers?

No cash or credit cards (automatic transaction)

Promotions

Why is it good for us?

Visibility of ampm products in POP

Tailored promotions and advertisements

Track customer behaviors

Understanding customers needs

Short run… New Products and Improved Facilities

Provide organic products to leverage our current brand image

Focus on travel/small size portions

Improve image of toilet facilities

Long run… The Introduction of our Idea

Conversion is free;

Instant Cash Rebate program;

Coupons;

Referral program;

The screen Contents Fill your car Other services Tailored promotions

Engine Oil change

Maintenance Check

Tires

Car Wash

Brake Pads

Transmission Fluid

Windshield Wiper

The screen Your car

Sort by distance: OR Choose one of the below:

Provide customers coupons for the nearest Car Oil Change Garages

7.6 mi Uncle Ben 1.8 mi Add oil 0.5 mi John Smith Distance Name

Feasibility Assumptions

Main costs will come from:

Improve current database

Design and implement new software

RFID Readers and Tags

Touch screens

Maintenance

Advertising

Main revenues will come from:

Advertising

Sales in c-stores

Other assumptions:

Increase members by 4% annually

Initial investment (15% of gas stations with ampm)

Feasibility Conclusions The project will generate the following cash-flows: NPV = $ 927,346,442 IRR = 58% 770,519,342.57 229,788,000.00 1,000,307,342.57 Year 4 446,826,714.01 235,784,000.00 682,610,714.01 Year 3 245,047,994.24 243,428,000.00 488,475,994.24 Year 2 57,311,456.00 245,052,000.00 302,363,456.00 Year 1 (373,098,000.00) 373,098,000.00 - Year 0 Profits Costs Revenues

Conclusions

Short-term

Screen display advertisement

New products and improved facilities

Long term

RFID

Q&A

Conclusions

At the beginning we said we would have focused on:

Security

People

Performance

The security of the RFID technology applied to BP gas stations:

can help ampm in attracting a bigger customer base.

understand our members needs;

improve our performance ;

What is RFID?

RFID stands for Radio Frequency Identification;

It is mainly used in logistics for product tracking (Wal Mart) and inventory systems, passports, transport payments (ETC);

Number of RFID in use:

2007: 200 million 2016: 550 billion (*)

Why? To object tagging including cars

Results:

1. The technology is getting cheaper; 2. The standards are unified.

(*) T.Tambosso – RFID, current situation and future prospective, Jan 2007, IEEE

RFID in Transport Payments

RFID are used in ETC (Electronic Toll Collection) in order to eliminate the delay in toll roads:

1. It determines whether the cars are enrolled in the program; 2. It debits electronically the accounts of registered cars;

RFID @ Microwaves frequencies (2.56, 5.8 GHz);

The cheapest system in use;

Tags have a smaller antenna;

Passive tags (do no contain their own power source);

Needs a clear view;

Used for dynamic readings (up to 400 km/h)

Automated Vehicle Identification (AVI) is the process of determining the identity of a vehicle subject to tolls.

TV Advertising Benchmark New attractive market Channel: Advertising during idle daytime Stronger impression to viewers 1.00 2.00 customer income index 1.50 3.00 No. of minutes during stay 120.00 2.00 No.times of visiting 10,000,000.00 24,000,000.00 No. memebers 68,290,000.00 10,926,400.00 advertisement Focus-Media BP/ampm