Gas price pain used for gain by sellers

Ad campaigns use rebates, giveaways

May 28, 2006|By LAURA SMITHERMAN | LAURA SMITHERMAN,SUN REPORTER

When gasoline prices rise, drivers grumble and politicians talk energy crisis.

Marketers see opportunity.

Koons car dealerships in Maryland and Virginia are running television commercials offering some buyers up to five years' worth of gasoline. ConsumerClub.com is offering shoppers $10 off their gas purchases when they buy $100 of merchandise via the Web site. Even the American Red Cross recognized the allure of such campaigns and is giving blood donors a chance to win $100 gas cards.

The summer vacation season typically spawns gasoline-related promotions, and marketing experts say this year promises to be a bonanza.

A gallon of regular gas costs almost $3 in Maryland, close to the record, compared with about $2.10 a year ago. As analysts predict higher gas prices will last for months, perhaps years, the old saying that "sex sells" might become a new adage with another three-letter word: g-a-s.

"When Americans are spending more than $50 to fill their tanks, all of a sudden that reaches a threshold of pain they don't like to experience," said Britt Beemer, founder of America's Research Group, a consumer marketing company. "The longer gas prices stay up, the more it becomes a great marketing strategy."

Pain at the pump, it seems, can be used as a marketing tool in any number of ways. Not only are retailers advertising prepaid gas cards and rebates, but credit card companies that offer cash back on purchases are boosting those rebates when a card is used to pay for gas.

Hotels are rewarding bookings for more than one night's stay, with discounts to help cover the cost of the gas it takes to get there. Amusement parks are reducing admission for guests who show a gas receipt.

More than other commodities -- ones that don't have their prices posted in big numbers on street corners -- gasoline can provoke a visceral reaction from consumers.

Consumer anger over a rise in gas prices was one factor in prompting investigations into potential price-gouging. A Federal Trade Commission investigation ended recently with a finding of no unlawful price manipulation by the industry, although the issue is expected to carry over into gubernatorial and congressional elections.

"Gas is such a necessity for most Americans, and people don't want to feel like they're getting ripped off because the industry knows that gas is something we can't live without," said Ragina Averella, public and government affairs manager for AAA Mid-Atlantic. "You can live without a $4 cappuccino, but you have to be able to drive."

Americans haven't seen gas prices this high in a generation.

Prices topped $3 a gallon last fall after Hurricane Katrina devastated the Gulf Coast, and again this spring as the global price of crude oil soared. Before that, the national average had not exceeded $3, even when adjusted for inflation, since the early 1980s.

Doug MacIntyre, a senior oil market analyst with the federal Energy Information Administration in Washington, said further price increases this summer will depend on demand for gasoline and on oil prices.

Marketers are hoping that by picking up the tab for a tank or two, they can ingratiate themselves with consumers or call attention to a product or cause.

For ConsumerClub.com, a rebate and comparison-shopping site that links to more than 700 retailers, including Macy's, Wal-Mart and Office Depot, the gas rebate was a first. President Bob Diener said the promotion is intended to drive home that it's cheaper to shop online. Shoppers must mail in gasoline and online-purchase receipts by the end of this month to get the cash back.

Another Web site, BedandBreak fast.com, is promoting its "Tanks a Lot" program, in which hotels offer free gas and discounts to guests. The offers are traditionally made in June, but this year inns that advertise on the site started introducing them in April in response to rising gas prices.

The fine print

It is important to read the fine print, however. At Sugar Hill Harlem Inn in Manhattan, for example, guests must use the password "peak oil" when making a reservation for three or more nights to get the $25 discount. At Historic Inns in Rockland, Maine, the midweek discount for guests depends on their car: It's equal to 10 times the number of cylinders in the engine.

Six Flags Inc. of New York, whose theme parks include Six Flags America in Largo, has been advertising a $15 discount on up to six full-price entry tickets for park-goers with a gas receipt.

Credit card companies also hope to capitalize. Shell Oil Co., which has a proprietary card, is offering new cardholders through mid-June a $25 gift card that can be used at Shell stations or at selected retailers. Discover Financial Services is offering customers a couple of ways to get 5 percent cash back on gas purchases made with its cards.

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