In the year 2000, Malcolm Gladwell’s bestseller, “The Tipping Point” created a buzz. The book is about how little things can make a big difference and how at a certain point in time, trends can suddenly deviate in an unexpected way to the upside.
We’ve all seen and experienced this tipping point in one way or another. For example, VCRs. I don’t have the stats and dates, but I do know at one point very few people had them. Suddenly, every home had one. Overnight we not only found video rental outlets springing up everywhere, we also found racks of videos appearing in our gas station convenience stores. And just as abruptly as these were released, they were replaced with DVD players. Television sets, microwave ovens, an automobile for every household — there was a time when each of these products existed but only in a limited fashion. Suddenly, things changed.
Focus: Motor Oils
In 2000, I wrote that if Gladwell brought his magnifying lens into the consumer lubricants market, he would make some fascinating observations, particularly with regards to the subject of synthetics. For years, the size of the synthetic motor oil market had been growing at a slow but steady rate. My aim was to raise the question with regard to when and how much consumer acceptance might suddenly leap upward or tip, as Gladwell put it. Today, this seemed to be a topic worth re-visiting.
Synthetic motor oils (for automotive applications) have been around for decades, beginning with Amsoil in 1972 and, later, Mobil 1 in the mid-70s. But as anyone who was there will tell you, it was a challenge explaining to people what the new lubricants were about. Only a handful of companies manufactured synthetic oil, and most of the major oil companies did not have a synthetic in their product line. Consumers were relatively uninformed. Although the idea of synthetic motor oils made sense to some when explained, most consumers really knew little about them — if they knew anything at all.
Over time, this began to change. In the ’80s, Amoco introduced its “Ultimate” line and GM Goodwrench produced a synthetic oil, giving a tacit endorsement to the new oils by at least one of the big three automakers.
Then, the ’90s came along and, one-by-one, nearly every oil company added a synthetic motor oil line to its product offerings. In other words, things had tipped with regard to the adoption of synthetics, at least with regard to the formulators of motor oil. Clearly, something had changed. More consumers were becoming acquainted with the word synthetic, and the impression was favorable.
Professional Prognosticators
An article on base oils in Hart’s Lubricants World (August 2000) made projections about the continued growth of the synthetic market. Editor Karen Bui wrote, “Demand is expected to grow 5.7 percent per year, to 115 million gallons in 2003, because of increased desire for high-performance products, longer drain intervals and lower emission formulations.”
Such projections are generally made by observing current trends, current patterns of consumer behavior. But what would happen if synthetic oil sales were suddenly to tip?
In 2000 I wrote, “The idea of synthetics being better has already captured consumers. It is only a matter of time before their behavior follows.”
According to numbers from a recent Freedonia report, the market has moved quickly in that direction. In 2003, fully synthetic motor oils comprised only 3.6 percent of the market. In 2013, this had already grown to 14 percent with a projection of 27.4 percent in 2023. Factor in the semi-synthetic oils now being purchased and we’re already up to 25 percent in 2015, according to OEMs/NOLN, June 1, 2015.
Car Manufacturers Contribute
As of 2000, automakers had not extensively promoted the use of synthetics, though several individual models (such as the Corvette) were then factory-filled with synthetic motor oil. This too has significantly tipped as more than 60 makes and models now roll off the assembly line with synthetic fluids in the oil pan.
One reason auto manufacturers held back from recommending synthetics was the concern about there being an adequate supply of PAO base stock to meet the country’s needs. (The Greatest Oil That Isn’t Yet, Lubes N Greases, Jan. 1996)
This has changed, however, in part because the definition of synthetic has undergone a transformation. Perhaps the looser definition of what is synthetic motor oil has made it possible for supply to meet the surge in demand.
Forward-thinking quick lube operators will come up with ways to profit from this trend. Review your pricing. Consider premium pricing for extended drains. Think about ways to position yourself as a quality leader.
Gladwell’s basic premise is this: ideas, products, messages and behaviors spread just like viruses do. They are not always predictable, but they do follow certain rules. Occasionally, like California wildfires, they rage out of control.
The experts all agree that synthetic sales will continue to grow. Will you be ready when they tip?
ED NEWMAN is the advertising manager for AMSOIL INC., an independent manufacturer of synthetic lubricants. He can be contacted at [email protected]. For more information, visit: www.amsoil.com
