Marketers adjust buying practices to deal with down economy

From the winter climate to the economic climate, propane marketers adapt their businesses to the current conditions.

With the winter heating season complete, marketers have a chance to catch their breath, collect their thoughts and prepare for the following cold spell. The “off-season” presents an opportunity to invest in the capital needed to make companies run in high gear when customers come calling.

But this year is different. The economy is ailing, businesses are struggling and customers are conserving. On the surface, this would seem like a bad time for propane marketers to spend money and invest in equipment, products and services.

According to a LP Gas Magazine survey, however, marketers are still spending this year despite a down economy. In many cases, they are doing so on a limited, as-needed basis.

Inside the numbers
Our online survey went to more than 2,000 marketers, and we received more than 300 responses. When we asked marketers whether they plan to buy equipment, products and services this year, 93 percent said “yes.”

Fifty-four percent of marketers said they have been affected by the economy but still plan to buy on a limited basis, while 42 percent said the economy hasn’t affected their ability to buy. That means 96 percent of marketers are still buying equipment, products and services in some capacity, with 4 percent not buying at all.

Although these numbers indicate a positive sign for the industry, one propane marketer told us that the economy is still having an impact. Michael Mutter of Pennsylvania’s Eddinger Propane Gas predicts a slow start to the summer. Homeowners and businesses will not be adding outdoor kitchens and fire pits, pool heaters, space heaters, water heaters and generators like years past, he said.

“However, there is so much that we can do this year that needs to be done to our tanks and equipment in the field as well as our customers’ equipment that gets neglected when we are all too busy as in the past,” Mutter said. “It may not make us as much income, but will require buying supplies from our vendors other than heaters, fireplaces, grills, etc., and may pay us all back in the future.”

Buying habits
According to our survey, marketers are adopting smarter and more cautious buying habits, with 54 percent using a different strategy to buy in this economy. Popular strategies include using selective buying techniques and buying “as needed,” utilizing existing equipment and keeping inventories low.

“There will be a lot more just-in-time inventory, conserving cash and depleting existing inventory as new customers will be tougher to come by,” Joe Rose of the Propane Gas Association of New England told us.

So what products do marketers plan to buy this year? Tanks topped our survey at 79 percent, while vehicles weren’t far behind at 64 percent.

While buying in this economy, 65 percent of marketers said they seek creativity and flexibility from their equipment suppliers. Some respondents justified their answer, adding they always seek and appreciate creativity and flexibility from their equipment suppliers.

Big picture
While our survey offers only a glimpse of the propane marketing landscape, the industry appears to be hanging tough in tough economic conditions. Marketers are continuing many of their buying practices, but with some changes to the process.

Maybe that’s the lesson in this. No matter the climate, marketers must persevere with smart decisions and, in some cases, a different approach.

“To adjust with these changing times is the only way to survive,” Mutter added. “As always, the strong and smart will come out on the other side of this even stronger and smarter. This is a good time to appreciate a good supplier and work with them to find ways to adapt to what is going on in the world and serve our customers’ needs and wants even better.”