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Moscow-based Lukoil uses sports to build its brand in the U.S., connect with consumers

Moscow-based Lukoil uses sports to build its brand in the U.S., connect with consumers

By Terry Lefton, Staff Writer

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Lukoil is the retail gasoline chain that’s part of the second-largest oil producer in the world. Until recently, the Russian government owned a piece of the company, which runs more than 5,000 gas stations in 15 countries. The Moscow-based conglomerate is the largest oil producer, refiner and distributor in Russia and second in global oil and natural gas reserves, behind ExxonMobil.

Lukoil has sponsorships with several minor league
teams, including the Trenton (N.J.) Thunder.
None of those are attributes that would endear a brand to American consumers. So in an attempt to be as local as possible, Lukoil has turned to sports marketing as it rebrands 2,200 stations from Maine to Virginia, mostly Getty and Mobil sites.

Over the past year, Lukoil has converted close to 250 stations in the Philadelphia/South Jersey market. It’s done nearly every local sports sponsorship there with a keen eye on camera-visible signage, such as a prominent outfield wall sign with the Phillies, on-ice signage with the Flyers, and rotational courtside ads with the 76ers.

“We’re part of the second-largest oil company in the world, but we don’t want to market ourselves as the behemoth, so we’re positioned as local, and nothing’s more important in this market than sports,” said George Wilkins, a former Mobil marketer who’s now brand manager for Lukoil.

Regionally, the brand has deals with every major Philadelphia pro team, several local colleges and minor league teams such as the Camden Riversharks, Trenton Thunder, Newark Bears, Somerset Patriots and Lakewood BlueClaws.

Lukoil
Headquarters: Moscow
2004 Sales: $33.8 billion
Sports deals: Foreign sports deals: Russian Olympic Committee; Russian female national ski team; Spartak football (soccer) club, Moscow; Lukoil-Dinamo, handball, Astrakhan; Lukoil-Spartak, water polo, Volgograd; Lukoil-Bashkiria, speedway, Oktyabrsky; Lukoil Racing Team, Moscow; children’s football leagues; Lukoil Children International League of Champions.
“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.”

Without revealing specifics, Wilkins said the brand has exceeded every measure established a year ago as far as increased brand awareness.

Since American consumers didn’t know much about Lukoil, both its sports marketing and its positioning, crafted by former agency Arnold Worldwide, tugs on the heartstrings, rather than the “quality gas = better engine performance” approach used by nearly every gas marketer in the very mature retail gas category. Arnold’s tag for Lukoil: “We love cars.”

“There’s enough gas stations competing on price and performance, so the emotional play through sports and ‘We love cars’ is a good way for Lukoil to stand out in a real crowded market for gas,” said Rob Babik, principal at Design One Associates, the Medford, N.J., design firm responsible for Lukoil’s venue signage.

"We love cars" is the tag Lukoil developed to draw
consumers to its gas stations.
“We want to be as local as possible,” said Wilkins, who noted that while Lukoil’s rebranding is unusual among gasoline stations, it’s routine in retail banking after furious consolidation in that category. “We’ve taken some of our cues from banks like Mellon, which changed to Citizens Bank [which holds naming rights to the Phillies’ home park]. You’ve got to be even more local, so along with sports, we’ve given our dealers enough funding to do Little Leagues and cultural festivals, and find whatever community niches they can.”

This year, Lukoil’s Philadelphia area sports marketing is less about branding and more about activation with promotions such as a buy one/get one Phillies ticket offer to drive retail traffic.

As the brand moves up and down the Eastern seaboard, it hopes to employ the same sports marketing strategy. However, New York is unique in cost and fan affinity. The fan base of the Mets and Islanders is too Long Island-based to fit Lukoil’s geographic. The Yankees are all but locked up with competitor Hess. Wilkins said NFL sponsorships are too expensive and the seasons are too short, which leaves the Nets and Devils to fit the North Jersey market profile.

“It’ll be a lot harder to cut through in that market, but we’ve found very little that does that as well as sports,” Wilkins said. “Gas is sold to almost pretty much every demographic, but our best customers are road warriors and it ties in pretty well there, too. So as we expand, I’d look for us to continue to lean on sports.”

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