Never Lukoil

Alekperov and Putin in 2006, working closely.

Five years ago, it dawned on me how I never buy gasoline at a Lukoil station. I sampled my Ukrainian friends and members of my family — all answered the question “do you ever buy gas at Lukoil?” the same way.  “Never!”

Why is that?  Probably because they’re Ukrainian and don’t appreciate remnants of the old Soviet Union, of which Lukoil is one. Nearly all my Ukrainian friends are refugees or children of refugees, who escaped from the Bolsheviks after The War. Of course we remember the Holodomor, the Stalin-ordered genocide of 7,000,000+ in 1931-33.  Add the forced Russification of Ukraine over the centuries and you’d have to agree with those who bypass Lukoil gas stations when given the choice.

But is this reason enough to cause so many Lukoil stations to be so quiet that you’d think they’re not open for business? The only ones who seem to get any business at all are the ones co-located with Dunkin Donuts. In Edison, a Lukoil station on Route 1 was so slow I was amazed at how long they held out before surrendering.

A decommissioned Lukoil gas station on U.S. Route 1 in Edison. It was once a busy Mobil station.

Are there that many Ukrainians (and other post-Soviet ethnics) in New Jersey to make that kind of difference? I don’t think so. I think it’s just poor marketing on the part of Lukoil.

A Mobil station was distinctive and consistent with the brand.

When Exxon settled with the U.S. Federal Trade Commission in 1999 to complete their acquisition of Mobil, they agreed to sell all the Mobil stations in New Jersey. Lukoil and Valero were among those who bought or rebranded many of those stations.

Lukoil came out with advertising around the slogan “We ♥ Cars,” with help from Arnold Worldwide of Boston. The agency’s goal was to make the brand “likeable.”  That didn’t last long and I personally did not see them “moving the needle” much as far as brand awareness is concerned. In a story on Lukoil’s sports sponsorships in Philly, a Wharton professor had the best quote…

“Lukoil’s done an excellent job introducing their brand here and deserves points just for getting that done in [Philadelphia-headquartered] Sunoco’s back yard,” said Scott Rosner, a lecturer at the University of Pennsylvania’s Wharton School of Business and associate director of the school’s Sports Business Initiative. “Gasoline purchase decisions are generally based on price and convenience, but when a driver’s away from home, brand-name recognition is a big factor.”

Really? The brand was introduced? Branding is much more than a logo and a slogan. What does it stand for? Who’s behind it? What makes customers feel good by doing business with these brands? Where’s the experience? I have a hunch the good people at Arnold had a limited budget with which to work — both for creative and media.

A former Mobil station, re-skinned as a Lukoil station. Looks the same, only red.

Valero took a different approach. They overhauled their stations with distinctive architectural detail, welcoming convenience stores and good lighting. As a result, their gas stations are always busy. Customers fill up and come inside the retail shop and spend more money. The resulting point-of-sale “experience” is favorable and helps build loyalty. They may not believe in the brand, but they do appreciate the experience.

Mobil had a great brand and their marketing was top-notch. It was my favorite gasoline brand — I’d go out of my way to buy Mobil. They had a unique selling propostion (USP) with “the detergent gasoline.” With Herb Schmertz, they had an opinion, including and an ad every Thursday on the op-ed page of The New York Times. Their advertising stood out. Imagine if Lukoil took a similar approach. How would their corporate “personality” be changed if they had come out with an ad like this?

It’s a shame that Lukoil, responsible for more than 2% of global oil production, would squander a chance to make their brand a leader in the U.S., where there are more Lukoil stations than any other country outside of Russia. Good distribution is critical to making a brand a complete success. In this case, it seems good distribution can’t get enough quality brand support.