In the midst of the rising gas prices, what prevents gas station owners from doing promotions on gasoline? I remember a few years ago, local radio stations had advertising promotions that advertised, say, 92.5 cent/gallon gasoline (or whatever station sponsored the event) from 6am til 9am on a few random Fridays throughout the summer.
Why haven’t similar things happened this year? I can see that many stations would suffer losses given that the possibility of breaking even in volume is very low, but wouldn’t the proposition of attracting more commuters make the sales of other things – food, misc. items, etc – more likely to make up some of the loss?
IANA marketing expert, but I can see two potential problems:
Firstly, a huge influx of customers on a random evening could run the tanks dry. The negative PR from not being able to fulfil a promised promotion would be dreadful.
Secondly, loss-leaders do one of two thigns - encourage customer loyalty, or draw customers towards profitable merchandise. This suggestion does neither - it doesn’t give a reason for the customer to return when the fuel is back to its normal price, nor will the owner gain anything worthwhile from auxillary sales.
In the case of an independant petrol station, then fine, they’ve no problem. However, with greater overheads than the chains, it makes the whole thing more expensive. The garage over the road from me (a true fix-your-motor place) has 4p/litre more than any chain within several miles (by chain I mean BIG companies - BP, Esso etc)
4p a litre in a 40 litre tank is big money. Do that every 30 seconds for three hours, across six pumps, and it’s costing the radio station a LOT of money.
Not to say they don’t have the money. Nor to say they’ve already thought of this and discounted it. But I suspect there’s cheaper ways for them to promote themselves.
In the US, some states have minimum gas prices - for example, in Wisconsin, gas stations have to mark up their gas by a minimum of 8 cents per gallon from what they paid for it, IIRC.
A blocks-long line of cars queing up for cheap gas can definitely be a traffic nuisance. I’d be surprised if there aren’t some regulations against this type of promotion.
Every once in awhile we’ll have a radio station promotion around here (GAS AT Y2K PRICES!!!) which results mainly in a huge traffic jam until the tanks run empty.
The advent of pay at the pumps mean fewer and fewer people even bother going inside. From a loss-leader standpoint, you’d want to have something on sale customers would have to get out of their car to buy.
And, as noted earlier, if you’re an independent retailer, fine. If you’re owned by a chain, you’d have to get permission to cut your price below the chain’s guidelines. Why would a chain undercut itself?
There’s a station here in the Metro Detroit area that does a cheap gas promotion every year. It’s for taxes, we hear on the radio, but really it’s probably just about publicity. Don’t know any more details, hopefully I’m ringing a bell for a fellow SE Michigander who does know. I don’t know, because I don’t go, because when you think about it, is $35 worth of gas for $5 worth two hours of your time? (yeah, I’m lucky, I suppose – for a lot of people it is worth their time and trouble).