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Lewes, DE -- (SBWIRE) -- 04/17/2015 -- 285 prices gathered; 3,500 cross comparisons made
A total of 285 prices were gathered from the market on the various brands, products and package sizes.
169 stores visited and interviews conducted Prices were obtained from 169 different sources, ranging from distributors, AAC, MM, Installers, Fleet owners and Industrial endusers.
General pricing practices
- Most oil companies do not have a strict methodology in setting prices and discounts. Generally, cost plus margin method is used but competitive benchmarking and customer pressure also play a role in the price setting process. A notable exception is CPC, which has list prices that are published.
- General distributor pricing practices are usually set on an ad-hoc basis and fluctuate based on their buying price and the volume of the order requested.
- Foreign AAC generally exercise their pricing strategies based on policies and directions from their central office based outside Taiwan. Therefore, local AAC will try to undercut the foreign company to win more market share.
- Most MM make purchases at a store level and set their own discounts.
- General installed prices are based on competitive benchmarking with other installers and AAC.
- Pricing trends and drivers Market-based drivers of prices include (1) change in base oil prices, (2) cost of additives, (3) exchanges rates, (4) government regulations, and (5) competitive trends. There is a trend of decreasing prices in IL due to the relocation of industrial companies to other countries, leading to a decline in demand.
- Parallel imports are usually from US, Germany, UK, Japan, France, and Australia where the price of lubricants is much lower than in Taiwan.
- The major international brands, including Mobil, Esso, Shell, Castrol, and BP, are most affected by parallel imports as they have strong brand awareness and it is easy for importers to sell.
- Parallel imports in the market cause the decline of retail prices for certain models and incorrect positioning of products.
- General consumers buy parallel imports because it is a well known brand at a discounted price.
- Some consumers purchase parallel imports because of the belief that it is of superior quality.
- Competition CPC, ExxonMobil, Castrol/BP and Shell are the four largest suppliers of lubricants in Taiwan, making up 70% of the market. The remaining 30% comprise numerous local brands.
- Although Castrol is the largest foreign player, Shell is considered the closest competitor to Mobil, based on the similar price positioning in the market, as well as similar size of resources supporting the company. However, Shell has not been seen to be as proactive as Castrol in fighting for market share in the market.
Castrol overall has the widest price disparities at the distributor level, and Mobil lacks price control within the AAC channel.
Shell, BP and Caltex are able to control distinct positions for their flagship, premium and competitive products.
The flagship products Mobil 1 and Esso Ultron are often mis-positioned as premium products in all channels, probably due to the existence of parallel imports.
Prices on 200L drums are better controlled than 1L bottles, which has huge price disparities and overlapping product positions.
Mobil Delvac 1 has the widest price disparities across all channels. However, positioned is maintained above premium and competitive Mobil CVL.
Synthetic circulating and synthetic gear oil drums are priced approximately four times higher than the non-synthetic oils and grease, however their margins are not higher than the non-synthetics.
Different products need to be offered to fulfill the full range of positions required by the different class of customers.
BP and Castrol have the widest margins among other brands in installed channel, possibly due to the largest number of branded installers over Taiwan.
Esso and Mobil margins seem comparable against other brands, at all distribution levels and channels
Esso and Mobil's margins at various levels are currently at comparable levels to competitors.
Shell poses as a potential threat to Mobil as they have the largest margins and there exists room for further price reductions.
Kluber products has the highest margins and it caters to a niche market of very high temperature equipment.
Margins for distributors need to be comparable against competitors to ensure sufficient incentive to promote Esso and Mobil IL to customers.
Summary of recommendations
Remove Mobil and Esso premium products from MM channel.
Select SHELL as key competitor for MOBIL to benchmark against Distributors should have staggered margins for different retail channels
Price disparities at the distributor level need to be controlled. This could be done through reducing the range of prices that are currently sold to different distributors.
Value proposition of Mobil 208L drum packages should be revised as there is no advantage in offering the extra 8L above 200L drum that are offered by competitors that are sold at similar or even higher prices. However, the 5L bottle package should be maintained for the Mobil Delvac 1 as it is sold at a premium to 4L competitors.
Reduce price gaps between competitors.
Replace Mobil 208L package with 200L.
Introduce a multi-product-multi-position strategy to target specific user groups.
Strengthen alliances with industry equipment manufacturers.
Spanning over 197 pages, "Pricing analysis for lubricants in Taiwan" report covers the Market environment, Competitor profiles, Passenger Vehicle Lubricant (PVL), Commercial Vehicle Lubricant (CVL), Industrial Lubricant (IL), Appendix.
For further information on this report, please visit- http://www.marketresearchreports.com/vbi-solution/pricing-analysis-lubricants-taiwan
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