Bayside Fuel Competition
Now Viewing Bayside Fuel's competition in: Fuel Oil and LP Gas Dealers
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Who is the company's typical customer? - While the majority of customers are homeowners, fuel dealers also sell to agricultural, commercial, institutional, and industrial accounts.
How does the company retain customers? - Because fuel oil and LP gas are mature markets, most companies focus on customer retention. In certain states, customers must fill rented LP gas tanks using the dealer owning the tank, which helps minimize customer turnover.
What programs does the company have to encourage customer loyalty? - To develop loyalty, dealers may offer automated tank monitoring and refilling or fixed-term contracts.
What types of marketing and promotions are most effective for the company? - Word-of-mouth is extremely important. Other marketing and promotions include direct mail and local newspaper, radio, TV, and print advertising.
What role does the Internet play in the company's marketing efforts? - Few small dealers have websites because most operate within a limited geographic market. The Propane Education and Research Council helps promote the use of propane gas and posts dealers on its website. Some large dealers offer online billing.
How does the company set retail prices? - Companies typically determine prices based on a margin over wholesale cost. When possible, companies pass wholesale price increases to customers.
How do farm co-ops affect fuel pricing in the company's market(s)? - Price pressure from farm co-ops can depress LP gas prices regionwide. Farm co-ops have different financial objectives and generally accept lower margins than LP gas dealers.
Competitive Landscape
Residential, commercial, industrial, and agricultural heating needs drive demand. The profitability of individual companies depends on efficient operations, low-cost purchasing, and competitive pricing. Large companies have advantages in purchasing, finance, and distribution. Small companies can compete effectively by serving a local market, offering unique products, or providing special services.
Business Challenges
CRITICAL ISSUES
Volatile Supply Costs - The cost of fuel oil and LP gas depends highly on the constantly fluctuating price of crude oil. Commodity prices for propane and fuel oil can change up to 80 percent in a single year; most suppliers increase wholesale prices accordingly. While dealers typically pass wholesale price increases to customers, most hesitate to raise prices enough to fully recover extreme rises in fuel costs. Customer price protection programs, which help retain customers, can hurt dealer profits when wholesale prices jump.
Increasing Competition from Natural Gas - Growing availability of natural gas in the residential market has resulted in steady customer attrition for fuel dealers and flat market growth for LP gas dealers. In general, LP gas and fuel oil are more expensive than natural gas. As a result of declining demand, most fuel dealers must rely on acquisitions to grow sales.
Industries Where Bayside Fuel Competes
- Energy & Utilities
- Oil & Gas Refining, Marketing & Distribution
- Fuel Oil Dealers(primary)
- Oil & Gas Refining, Marketing & Distribution
