Branding for Good News Issue 22 - Editor's Column

22 Dec 2009|Added Value

By Leslie Pascaud, Added Value France

Future Fuels: confronting consumer perceptions with market reality

Consumers spontaneously put all oil companies in the same basket. No one brand stands out as having either the credibility or the leadership to drive alternative fuel innovation.

Shell has made significant investment in bio-fuels and in hydrogen. Yet profit tensions pull the priorities of this publically-traded company toward opportunities for short term gains.  It was therefore incumbent upon the hydrogen team to look for ways to illustrate the added value that this fuel could offer to the Shell portfolio in the short/medium term to help offset the long term investment necessary for mass –market launch of this new technology.

Shell had a solid base of knowledge on how to extract and transform certain new forms of energy. What they knew less about was how to promote these new energies to their end target. Hydrogen research in particular had been entirely technology focussed. The role of consumer awareness and perceptions in speeding or slowing the adoption curve had not been considered. Hence, the Shell Future Fuel division asked for our help.

The research programme, involving American and German consumers, took 18 months, and involved stakeholder interviews, focus groups, a quantitative online barometer and segmentation study, a quantitative face-to-face tracking study and ethnographic research, with an economic crisis smack bang in the middle! Starting when the economy was still strong and oil prices high, the project evolved in real time; giving us valuable insight into the role that price plays in influencing acceptance to these new technologies.

The findings underlined the fact that Consumers in both countries now recognise that the end of fossil fuels may be in their lifetimes. This is driving a desire to change and a real interest in alternative fuel technologies. But environmental considerations are only part of a portfolio of motivators. We have seen this in categories near to and far from that of energy:  environmental benefits are important secondary benefits that can help to clinch a sale. But for most consumers, they are not stand-alone triggers.  Whether it is food, fashion or even home decoration, consumers give preference to products and services that meet their very immediate needs for pleasure at good value. They are also increasingly sensitised to environmental issues when they believe they will have a direct impact on their health. Additional incentives can be related to social pressure or status. The key is to see how the environmental message needs to wrapped in with the rest.

So how did we add value for Shell?

The study identified the segments within each population (US and Germany) who are most receptive to alternative fuels and the underlying drivers that draw them to each technology. This provides a roadmap for a future fuels adoption curve, underlining the doubts and barriers that will need to be overcome to convert drivers.

In the case of hydrogen, where the technology is still several years in the making, with a need for heavy investments for at least a decade before any real revenue generation opportunities will exist, the findings provide an additional incentive for Shell to take the lead in putting infrastructure into place. The study also  confirmed the positive impact that visible investment (hydrogen pumps situated  in public stations) can have on brand image: those respondents who notice the hydrogen pumps have an significantly improved Image of the quality of Shell’s products and services and of the brand’s technological leadership. This image improves even further amongst audiences familiar with hydrogen technology.

Of course, there is a risk in overexposing and communicating about a technology that is still years off. If Shell does not manage expectations, they will be accused of greenwashing, particularly given that the vast majority of their investments will remain in fossils fuels for decades. But underinvestment is equally problematic. Consumers and citizens expect companies to inform and educate around their innovations. While governments are still seen as key drivers of change via incentives and penalties, people know that initiatives cannot succeed without the support of business. The onus is thus on companies like Shell to find the right balance between classic company conservatism and proactive advocacy.

Leslie Pascaud is Director of Responsible Marketing, Added Value France

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