RECYCLING: County Drives Market For Re-refined Oil

Dan Klusman

Like most markets for recyclable materials, the consumer market for re-refined oil is a slippery one to hold onto.

Although re-refined oil has be-come the standard for many environmentally conscious government and private sector fleets, manufacturers and retailers have yet to ful-ly tap the large, ever-elusive consumer market. Joint market devel- opment programs between local government agencies and the private sector may be the key to promoting this value-added recycled product to the general public.

Re-refined oil is made from used oil collected from lube shops, service stations and auto supply stores. The re-manufacturing process "cleans" the used oil by removing contaminants and extracting the base stock from the additives that give the oil its weight, viscosity and anti-oxidant properties. The base stock is then blended with a new additive package to create the different grades of oil, such as 10W-30 or 15W-40. The finished product reportedly meets stringent industry specifications and engine manufacturers' warranties.

New re-refined oil suppliers, in-cluding Arco, Chevron and Unocal, have entered the market, offering their re-refined products in bulk or in quart bottles for the general consumer.

The King County, Wash., Com-mission for Marketing Recyclable Materials promoted re-refined oil as part of its "Get in the Loop" campaign. The 1993 retail-level recycled product promotion was based on research which found that the public is willing to buy recycled products, but believe they aren't available. The campaign provided door signs, store posters and shelf tags to point out recycled products.

A partnership between the Mar-keting Commission and the Pacific Northwest auto parts supply chain increased sales of the regional, lesser-known brand of re-refined oil by 96 percent during the four-week campaign period (see chart). Through the partnership, the Mar-keting Commission provided store materials and advertisements while the retailer agreed to use the campaign's logo in all of its circulars.

This is a significant increase since the do-it-yourself oil changer is often brand loyal. Major oil companies spend tremendous amounts of money to achieve this loyalty and to build a presence within a store. Also, an established consumer base already exists that buys re-refined for its environmental benefits and, often, is willing to pay a higher price. In contrast, the 1993 campaign attracted new customers whose brand loyalty or perceptions about re-refined oil were changed.

The Marketing Commission also targeted the quick lube market to increase re-refined oil sales. These customers are not as brand loyal as the do-it-yourselfer; are often well educated; can be motivated by price discounts; and are interested in fast, quality service.

The program provided select quick lube shops with target advertising material and funded a direct mail coupon for a re-refined oil change. As an added incentive, participating lube shops were signed up for the 1994 "Get in the Loop" Campaign. This package, in addition to being a member of a large, high-profile campaign, dramatically increased sales.

For example, a Seattle lube shop increased re-refined oil sales from just a few oil changes per month to more than 130 during the four-week campaign.

The Marketing Commission will implement a public education campaign in 1995 to target existing re-refined oil distributors and retailers and solicit new retail locations. The program will educate consumers on the quality and availability of re-refined oil.

Although re-refined oil market development is growing, it is still in its infancy. As King County discovered, the secret to success rests in a public-private partnership.