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Where do you fill gas? - Views on News from Equitymaster
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  • Jun 9, 2000

    Where do you fill gas?

    The last couple of years have seen banking move from a commoditised product to a branded product with the entry of private domestic and foreign players. Today we bank with Citi or HSBC or our very own SBI (though has been slow of the blocks). The earlier differentiator was service, which the PSU banks are only now waking up to while competition has moved to a higher plain, which is products (internet banking, credit cards, advance against shares etc). Subsequent to this onslaught the Kumbhkaran’s have woken up only due to erosion of their cream customers (Business and high networth clients).

    Do we see a similarity between the banking and oil & gas industry, fortunately or unfortunately there is in the value chain (commoditised to branded products). Fortunately because the captains of this industry can reasonably predict the future industry scenario having witnessed, evolution of the banking sector. Unfortunately; as they like the PSU banks maybe to slow to respond to private competition once the industry is deregulated (April 2002).

    However, all is not lost, few companies like Bharat Petroleum (BPCL) and Indian Oil (IOC) have taken some initiative. Like in banking, oil & gas products are positioned as commodities; IOC and BPCL have indicated plans of branding their products. The early differentiator in the initial level of competition will be service, which will attract customers, in the next level they will need to differentiate their products. In this regard BPCL has launched the petro card while IOC has tied up with CitiBank to launch a co-branded credit card. Purchases on the card will entitle the holders to redeem their points earned on free petro products or any other gifts on offer. They are also in the process of setting up consumer stores (C.S) at their retail outlets, C.S sales form a significant portion of the turnover of global majors and we should see a similar shift in the Indian majors.

    Thus one can see a focus on the final consumer with the intention to retain and for that you have to delight! It is only then that he will say; “I fill at XYZ”.



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