So what makes a gas station have the moxie to charge .$80 a gallon more for its gas than the station less than 1000 feet down the street? In this case, the more expensive (and likely more profitable) marketer has 2 distinct advantages. The first is location. You’ll find this 76 gas station as the nearest to rental car return at San Francisco International Airport.
But the second advantage is far more critical to the success of this business.
The typical gas station owner would be satisfied with the increased volume resulting solely from the better location. But in this case, the owner has the confidence to take full advantage of the opportunity by charging for the convenience. This is, in my opinion, a rare find. Yes, one can debate the ethics or efficacy of such a pricing differential. You can cry “gouging” all you want, but we all pay these types of pricing differentials for convenience. Check out the price of a bottle of dish detergent at your local convenience store vs. that of a supermarket. It’s the “law of the marketplace” at work.
I’m often amazed how many professionals I come across who fail to exploit the opportunities right in front of them. The solution is often clear but leadership lacks the initiative, knowledge or, more often than not, the courage, to take the necessary actions. As a result, the practice operates at less than optimum effectiveness. Indeed, our estimates indicate that the difference between a top performer and average performer results in over $10 million in lost revenue over the last 20 years in practice.
What advantages are you failing to exploit?