Synthetics Near Tipping Point

by Ed Newman
AMSOIL Marketing and Advertising Manager
Appeared in Oct. 2000 Issue of National Oil & Lube News

Why did crime in New York drop so suddenly in the mid-nineties? How does an unknown novelist become a bestselling author? Why did Paul Revere succeed with his famous warning? Why did the other rider who left at the same time and went the other direction -- the fellow no one remembers -- why did this other guy fail?

Malcolm Gladwell has analyzed these and other questions in his excellent book The Tipping Point.  Subtitled “How Little Things Can Make a Big Difference”, the book focuses on that critical moment in the life of a trend where it “tips”, causing a dramatic shift in behavior or outcomes.

We’ve all seen and experienced this tipping point in one way or another.  Take VCRs, for example.  I don’t have the stats and dates, but I do know that very few people had them, and then suddenly every home had one, or two or even three.  Overnight we not only found video rental outlets springing up everywhere, we also found racks of videos appearing in our gas station convenience stores.

Television sets, microwave ovens, an automobile for every household…. There was a time when each of these products existed, but only in a limited way.  Then suddenly, things changed, with wide reaching ramifications.  Some say that the civil rights movement of the sixties was a direct outbirth of the widespread incorporation of television sets into our way of life.

If you review articles Mr. Gladwell has written for the New Yorker magazine, you’ll see that he has been a long time fascinated with analyzing “what makes things happen.”  He focuses on the little things behind the trend, scrutinizing the handful of connections made between people and events.  Major shifts in thinking can be surprisingly forceful, yet caused by a relatively small number of people.  In the right context, the right ideas or messages can spread like a wildfire.

One of the key factors that causes something to tip, notes Mr. Gladwell, is the “stickiness factor.”  Some ideas are more “sticky” than others.  In an age of information overload, we become skilled at tuning out.  Some ideas, however, have an ability to get through, to “stick”.  It doesn’t even have to be a big idea.  Pet Rocks were an amusing concept that caught peoples’ fancy, got talked about from coast to coast and made a pile of money for someone.  Most of us “got it” when we first heard of the notion of a low maintenance pet.

Focus: Motor Oils

I believe that if Mr. Gladwell brought his magnifying lens into the consumer lubricants market he would make some fascinating observations, particularly with regards to the subject of synthetics.

Synthetic motor oils have been around for decades, beginning with AMSOIL in 1972 and later Mobil 1 in the mid-seventies.   But as anyone who was there will tell you, it was a challenge explaining to people what the new lubricants were about.  Only a handful of companies manufactured synthetic oil, and most of the major oil companies did not have a synthetic in their product line.  Consumers were relatively uninformed and although the idea of synthetic motor oils made sense to some when explained, most consumers really knew little about them, if they knew anything at all.

Over time this began to change.  In the eighties, Amoco introduced its “Ultimate” line and GM Goodwrench produced a synthetic oil, giving a tacit endorsement to the new oils by at least one of the big three auto makers.

Then, the nineties came along and one by one nearly every oil company added a synthetic motor oil line to its product offerings.  Clearly something had changed.  So, too, consumers were becoming more acquainted with the word “synthetic” and the impression was favorable.

Obviously, the IDEA of synthetics as superior to conventional petroleum has already tipped.  When you talk to people, it is almost universally understood that synthetic motor oil is better than conventional petroleum based lubricants.  This is really quite remarkable considering that perhaps ten or twelve years ago the average motorist had almost no idea what synthetic motor oils were.

Professional Prognosticators

An article on base oils in Hart Lubricant’s World (August 2000) makes projections about the continued growth of the synthetic market.  Writes editor Kaerin Bui, “Demand is expected to grow 5.7% per year, to 115 million gallons in 2003, because of increased desire for high-performance products, longer drain intervals, and lower emission formulations.”

Such projections are generally made by observing current trends, current patterns of consumer behavior.  But what would happen if synthetic oil sales were suddenly to tip? The idea of synthetics being better has already captured consumers.  It is only a matter of time before their behavior follows.

One reason to expect continued growth in synthetics use is the convergence of several trends.  The trend toward quality, the trend toward performance, the concern regarding our environment and the wealth created by baby boomers who are now reaping the benefits of their peak earning years.

Boomers are particularly attracted to quality.  You can see it in the fancy packaging on expensive fruit drinks at the service station.  You can see it in the wide range of “toys” they buy, in season and out of season, from catalog stores like the Sharper Image. Will the “Boomer Mindset” brush aside the “price objection” that has been a barrier to faster growth of synthetic motor oil sales? As Bui writes, “the word ‘synthetic’ retains the image of higher performance and product development.”

Car Manufacturers Contribute

Automakers have not extensively promoted the use of synthetics, though several individual models (such as the Corvette) are now factory fill synthetic motor oil.

One reason auto manufacturers have held back from recommending synthetics is a concern about there being an adequate supply of PAO basestock to meet the country’s needs.  (The Greatest Oil That Isn’t Yet, Lubes N Greases, Jan. 1996, p.19)

This may change, however, as the definition of synthetic is now undergoing a transformation.  Perhaps the looser definitions of what is a synthetic motor oil will finally make it possible for supply to meet what I anticipate to be a surge in demand.

Closing Thoughts

Forward thinking quick lube operators will come up with ways to profit from this trend.  Review your pricing.  Consider premium pricing for extended drains. Think about ways to position yourself as a quality leader.

Gladwell’s basic premise is this: ideas, products, messages and behaviors spread just like viruses do.  They are not always predictable, but they do follow certain rules.  Occasionally, like this summer’s Montana wildfires, they race out of control.

The experts all agree that synthetic sales will continue to grow.  Will you be ready when they tip?