corporate image

Boycotting BP gas stations would miss the mark, experts say

26-June-2010Published in: St. Louis Post Dispatch Author: Matthew Hathaway
Consumers can change the world simply by not buying — but boycotts don't always work that way.

Twenty years ago, South Africa was in the throes of cultural and economic isolation largely because consumers vowed to punish any companies doing business with the apartheid state. That international boycott is credited with helping bring down the country's racist system, and today a transformed South Africa is the focus of international sports as host of the World Cup.

If South Africa is the best example of just how mighty a consumer boycott can be, the campaign to punish BP might be its opposite - an ineffective response to the Gulf of Mexico oil spill that will most harshly affect small-business owners who had nothing to do with the disaster.

Yet this week, the Facebook page Boycott BP gained its 700,000th supporter.

And, in the real world, plenty of St. Louis consumers have stopped buying from BP stations, said Tracey Hughes, a spokeswoman for Wallis Cos. of Cuba, Mo., a distributor of gasoline to about 60 area BP stations.

"Everybody is feeling the impact, although there are pockets where the consumer backlash is stronger," said Hughes, who said some stations have reported double-digit declines in sales recently.

On Thursday, in a commentary published in USA Today, Public Citizen President Robert Weissman renewed that group's call for consumers to avoid BP stations for at least three months.

Innocents will suffer from a boycott, Weissman acknowledged, but "that can't be reason for consumers to forfeit their collective power to influence or punish bad-actor companies."

For a consumer boycott to work, business must feel its sting, either from lost sales or tarnished reputations, and they need to have a clear path to winning customers back. The apartheid-era boycott worked because it met both these criteria; the BP boycott does not, said Benjamin Ola Akande, the dean of Webster University's George Herbert Walker School of Business and Technology and an expert in energy economics.

Boycotting gas stations flagged with the BP brand is, at most, a symbolic act that will have an insignificant impact on the company's bottom line, Akande said.

That's because BP owns fewer than 200 of about 11,000 stations bearing its logo. Those stations are owned by independent operators, and the gas they sell may or may not have been drilled by BP.

The oil giant does make money from these stations, but the company won't say how much. Industry experts have said that they believe it's insignificant and that the flagged stations' real value to BP are as platforms for corporate marketing.

Under a boycott, the flagged stations could become liabilities. They are the battlegrounds where boycotters can chip away at BP's cultivated public image, or at least that's the position of Public Citizen. In the long run, BP will suffer.

In the short term, the collateral damage of a boycott is overwhelmingly borne by independent operators who had no say in BP's drilling operations or gulf cleanup effort.

"If you're boycotting, you're missing your intended target," said Ronald Leone, executive director of the Missouri Petroleum Marketers and Convenience Store Association. "You're hurting local businessmen, their employees, the people they buy products from ... even the Little League teams they sponsor."

To make any BP boycott even more difficult, the company makes plenty of money from stations not bearing the BP logo.

For instance, angry consumers could end up skipping BP-flagged stations that, in fact, are selling fuel that was drilled by other firms and taking their business to another chain — or a non-branded service station — only to fill up their tanks with petroleum that was drilled, transported and sold by BP.

Patrick Welch, an economics professor at St. Louis University, compares the BP boycott with car buyers shying away from Toyota after that company's recall of more than 8 million vehicles because of unintended acceleration problems.

Toyota must respond to consumers' concerns because it has no other choice. The automaker can't simply sell its inventory to a competitor. But because BP has that option, "it can, to a large degree if not completely, dodge the bullet of a boycott," Welch said.

Leone agrees.

"Let's assume a boycott works, it ultimately isn't going to hurt BP corporate because they'll just sell their crude on the open market," he said. "It's not like the product isn't going to be sold."

Toyota: Opportunity Born Out of Failure

Date: Thursday, February 25, 2010 3:15 PM CST Published: Ladue News

Section: Living > Wealth, Commerce Matters by Benjamin Akande

Author: Benjamin Akande

In his bestseller The Tipping Point, Malcolm Gladwell tells a remarkable tale of the relative importance of word-of-mouth and how in the age of e-mails, we may have overlooked this simple yet very valuable and powerful communication tool. The story also speaks directly to the greatest auto recall ever. Toyota is facing the potential death of an illustrious brand name despite doing so much right until just a few weeks ago, when it was revealed that 9 million vehicles manufactured by the company were putting the lives of drivers and passengers at risk due to rapid and unexpected acceleration. Toyota is not new to recalls.

In 1990, just after Toyota’s Lexus division introduced its line of luxury cars in the United States, the company realized that it had two minor problems with the LS400 line that required a recall. Lexus had decided from the beginning to build its reputation around quality workmanship and reliability.  Then, just over a year after the brand’s launch, the company was being forced to admit to problems with its flagship model. While most recalls are handled by a public announcement via TV, radio or letters to owners, Lexus decided to make a special effort in contacting its customers in the most personal and direct manner: The company called each owner individually on the telephone the day the recall was announced.  When the owners picked up their vehicle following the repair work, each car had been washed and the tank filled with gas.  If an owner lived more than 100 miles from a dealership, the dealer sent a mechanic to his or her home.  In one instance, a technician flew from Los Angeles to Anchorage, Alaska, to make the necessary repairs. Toyota emerged from what could have been a disaster with a reputation for customer service that continued until this present recall. One automotive publication later called it ‘the perfect recall.’ By going the extra mile, Lexus successfully kick-started a word-of-mouth epidemic about the quality of their customer service, a message that would have been lost in a letter, fax or media broadcast.

Perhaps Toyota can take a page from its own history to regain the trust of current and future customers by doing whatever it takes to prove the company is dedicated to safety--and providing personal service while doing it. During the repairs, for example, the company could offer free car rental, gas vouchers and even food and restaurant coupons. Toyota is renowned for its manufacturing prowess; it’s time to focus on overcoming its public relations nightmare.

How effective Toyota is in communicating to millions of customers worldwide will determine whether the world-class automaker becomes a memory in the not-too-distant future. There is a real opportunity here for Toyota to create best practices that could become the reference point and industry benchmark on recalls. Somebody once said that we learn more from our failures than we do from our successes. I hope Toyota takes heed and makes this very serious situation an opportunity born out of failure. Either way, word-of-mouth is going to count. In a few months, will people be singing Toyota’s praises or its eulogy?

Dr. Benjamin Ola.  Akande is Dean of the School of Business and Technology at Webster University.  Follow him on Twitter: @Benjamin_Akande