GENERAL MANAGER of PETCOM, Alwyn Brown, the retail subsidiary of the Petroleum Corporation of Jamaica group, attributes the growth of the liquified petroleum gasolene (LPG) market, from 25.3 million gallons in 1996 to 29.5 million gallons in 2000, mainly to economic factors.
"It costs approximately $29,000 to purchase and install a 30-inch gas stove and operating expenses are minimal, averaging about $250 a month. This compares to an initial payment of approximately $33,000 for a 30-inch electric stove and $435 monthly for related electricity costs."
PETCOM, Jamaica's first indigenous petroleum retailing company, entered the LPG sector in 1993 with a mandate to supply the product at least cost and stabilise prices in the industry, which is also served by Shell and Industrial Gases Limited (IGL).
"We found that the margin between the ex-refinery price and the final cost to the consumer was very high. With a marketing strategy focused on volume sales and reduced margins relative to the other two players in the industry, PETCOM has increased competitiveness in the marketplace and given consumers an affordable option," Mr. Brown explained.
A recent survey conducted by Market Research Services Limited among consumers of cooking gas indicated that pricing was the most important factor, accounting for 27 per cent of the respondents. The clean burning quality of the fuel was next, with 22 per cent, while availability was the third major attribute at 12 per cent. Among the users of PETCOM'S Cookie cooking gas, 39 per cent selected the product because its price was consistently the lowest in the market.
The company's general manager said it had maintained its competitive prices by "achieving efficiencies in our operation and keeping our overheads low." It has been able to achieve this by entering into franchise-type relationships with local marketing entrepreneurs to retail Petcom's product on a contractual basis under the company's distinctive "PETCOM" and "Cookie" trademarks.
In its eight years in the sector, Petcom's market share has risen considerably. Presently, there are 10 filling plant operations, which are associated with PETCOM. The company's medium-term objective is "to establish a presence in strategic locations across the island, in order to improve the ability of customers to access our product," Mr. Brown observed.
At the same time, he said PETCOM was currently undertaking a programme to significantly expand its stock of cylinders in order to meet the growing demand in the trade.
The PETCOM general manager noted that despite strong customer loyalties in the industry, the company had strengthened its competitiveness and gained market share because of its emphasis on service and affordability.
"The product sold by the three LPG marketing companies is the same; and it is the value added that we offer to the consumer that has contributed to our advantage," he stated.
For example, the choice of three different valves for its range of cylinders affords customers who are shifting their business from another company the flexibility of using the same regulator. In addition, PETCOM charges a minimal installation cost at commercial sites, thereby making start-up costs more affordable.
Mr. Brown said that, in the next few months, PETCOM would embark on an upgrading programme to enhance the quality, safety and integrity of its operations to ensure that they remain on par with the stringent standards governing the industry worldwide.
