AMSOIL INC.
Reduces Product Pricing,

AMSOIL Dealers reap huge rewards
as company rolls out several changes. Feb 2009
 

... and trends within the Dealer network revealed the opportunity to improve the AMSOIL business opportunity by refocusing our marketing programs.” Price increases at AMSOIL are implemented only to recover costs. In many cases, corporate profits per unit have decreased, but increased sales have helped offset those losses. In fact, AMSOIL was able to avoid any price increases between 1994 and 2003. Since 2003, the profits earned by AMSOIL Dealers have increased significantly across all programs, but not at an equal pace. Since prices must be adjusted for not only increased raw material and operating costs, but also increased commission levels, these increased commission levels directly affect each price adjustment. The high cash commission and commission credit payout of the Retail-on-the-Shelf Program was driving the retail price of AMSOIL products upward more sharply than other AMSOIL programs. In order to ensure wholesale and retail prices remained competitive, AMSOIL froze cash commissions for sales to retail accounts in 2007. “The commission rate on the Retail-on-the-Shelf Program was driving AMSOIL prices out of the competitive range,” said Alexander. “Additionally, the higher commission rate of the Retail-on-the-Shelf Program provided an incentive for Dealers to focus on that program more than the Commercial Program.” AMSOIL has always promoted running a balanced Dealership that establishes a customer base in a variety of AMSOIL programs. Much in the same manner that adopting a diversified investment portfolio can help maintain investment earnings through unstable market conditions, running a balanced AMSOIL Dealership can help the business weather times of economic uncertainty. This has been made more apparent in the recent economic downturn as retail-on-the-shelf sales have been more greatly affected than sales in any other AMSOIL program.

Commissions Increase
In addition to reducing product pricing, AMSOIL is adjusting Dealer commissions in the Commercial and Retail-on-the-Shelf Programs to provide greater overall profi ts for Dealers. These changes are the result of ongoing analysis of the AMSOIL business model and the lubricants industry and will provide Dealers with a more sustainable, more profi table, more balanced, long-term business opportunity. “We have been working on this process for several years now,” said Alexander. “In-depth analysis of market trends

In one of the most progressive moves in company history, AMSOIL INC. is simultaneously reducing prices and making several program adjustments that will increase overall Dealer commissions and improve the AMSOIL business opportunity. The price decrease, effective March 1, will mainly affect lubricants. The price of some will go down between 15 cents and 30 cents per quart, representing a 60 cents to $1.20 decrease per gallon, while others will be impacted less. Some adjustments will also be made in the price differential between different package sizes in order to implement more consistency. This unique situation offers many benefits for AMSOIL Dealers.8 AMSOIL ACTION NEWS / FEBRUARY 2009
 

Reduced Pricing
The dramatic rise in the price of lubricants over the past two years has been all-encompassing and well-documented. All oil companies – conventional, synthetic, large and small – have endured a seemingly endless barrage of price increases, most stemming from the skyrocketing price of crude oil. Now that the barrel has plummeted from the highs of last summer, oil consumers, distributors and manufacturers alike are expecting the price of motor oil to follow suit. AMSOIL is no exception; the company has been pressuring its suppliers to reduce prices for several months. After a great deal of negotiating, AMSOIL is finally able to reduce prices for all customers.  “Pricing adjustments are a delicate matter and are taken very seriously,” said AMSOIL Executive Vice President Dean Alexander. “Thousands of Dealers make their living on the ability of AMSOIL to market cost-effective and competitive lubricants – they depend on it, every day. That’s always in the back of our minds as we make these decisions, and that’s why rolling back prices is so satisfying.  ”In 37 years of business, this is the first time the company has been in position to provide an all-lubricant price reduction.  “We’ve been able to reduce pricing of particular products in the past due to our costs being reduced on particular raw materials, but AMSOIL has never been able to reduce pricing on all lubricants at once,” said Executive Vice President Alan Amatuzio. “It is great that we can do this for our Dealers and Preferred Customers, and with the current state of the economy, the timing couldn’t be better.”
 

Decline in Do-it-Yourself Market

Market analysis shows that the retail do-it-yourself (DIY) market is shrinking, while the do-it-for-me (DIFM) and commercial markets are growing. Essentially, fewer consumers are willing to change their own oil; they prefer to have the work done by a quick lube or other local repair shop. The commercial market remains the only market segment showing growth in DIY activity.  Additionally, in a retail scenario, there is no one present to properly explain the cost-effectiveness of AMSOIL products. “That is why [AMSOIL President] Al [Amatuzio] adopted the MLM model in the first place,” said Amatuzio. “Customers shopping in a retail store often shop on initial price alone; they don’t realize that AMSOIL products are actually more cost-effective to use and offer many other benefits that just can’t be conveyed as effectively in a conventional retail setting as it can be through an AMSOIL Dealer.”

As quoted from Feb 09 Amsoil Action News -