Murph may get better, fancier Unocal stations.

Murph may get better, fancier Unocal stations

It is a only a prototype, cautioned company executives. And it does not represent the "super stations" the company is banking on to anchor its west coast retail business through the 1990s. But a bedazzling change could be in the works at the service stations best recognized for big, bright orange orbs, as Unocal Corp. unveiled this week a prototype service station at the corner of Melrose and Highland Avenues.

"Graphics, signage, lighting," described Unocal Vice President of West Coast Marketing, Clay Warnock, of the prototype nestled in the trendy Melrose district. "It is in the testing stage. If you drive by it, understand that it has not been approved for wide distribution yet. But it will give you good insight into what we could do to the other stations in our system to upgrade and update our image."

The Melrose and Highland station is one of "six prototype stations" being built throughout the western states.

The prototype station features a revamped corporate logo, streamlined and designed, at least in part, to keep Unocal's niche market - customers who take their trade specifically to service stations that truly serve - coming back.

With 11,000 stations nationwide, and 2,800 in the west, Unocal could be spending a good part of the decade updating its image, if the prototype station becomes the corporate norm.

But, according to Warnock, the Los Angeles-based oil company will not take a different tack in its approach to service during what may become its designing decade, maintaining instead its competitive but slightly higher pump prices and emphasizing service.

"Unocal's basic thrust and image has been to be a full-service marketeer," said Warnock. "We feel that there's a segment of the population out there that is not being satisfied by the competition. If we can continue to satisfy that need, we feel that we'll maintain a valuable niche in the marketplace.

"Most of our competitors have drifted over to the convenience (end of the market)," he said. "We've stayed with the service. . .Our primary business is service - automotive (repairs) and service at the pump aisle."

But is all this emphasis on service working?

Some analysts contacted were not convinced.

"There's no question that Unocal has a niche in the market," said one analyst. "Its competitors - Shell, Chevron, Mobil, Exxon, Arco - have all abandoned the high-service market. But it is not clear that Unocal has been able to capitalize on that niche."

Unocal has been cultivating its consumer base since 1978, when it launched its ProTech program. The program, emphasizing the training of Unocal service-station mechanics "at a level way above the national average," marked a strong commitment toward a strategy best defined by one fictional character - "Murph." He tends to be big on cleaning windows, checking engine fluids and pumping gas. A corporate symbol, Murph, the television commercial pitchman, has endured.

But the strength and size of Unocal's most loyal clientele has not.

Those consumers who demand full service, purchase gas, tires, batteries and accessories from their gasoline dealers and always shirk the self-service pump has diminished from 24 percent total market share in 1979 to about 17 percent in 1988, according to a corporate sponsored report.

According to one analyst, Unocal has "missed the business boat" in the west coast, barely holding its market share of about 12 percent from 1981 to 1988. In that span, London-based Shell Transport & Trading Co. and San Francisco-based Chevron Corp. dropped slightly from about 12.5 to about 12 and from about 16 to about 15 respectively. Los Angeles-based Atlantic Richfield Co., rising from fourth in the market to first, went from about 10 percent in 1981 to about 17 percent in 1988.

While its competitors have snuffed out and snuffled up the independent gasoline station operators, all sharing somewhat in the market share spoils, Unocal has maintained the status quo, said an analyst.

"The independents have virtually disappeared in Los Angeles," said one analyst, "and Unocal has not cashed in."

With 840 stations in Ventura, Los Angeles, Orange and Santa Barbara counties, and 695 of them offering full service at the pump islands, Unocal is bullish on service, said Warnock.

A full 75 percent of Unocal's business is in California and 45 percent of that business is in Southern California. Sales are strong here, he said, strong and consistent.

"Like any business we go through cycles," said Warnock. "The strategy of high service has proved to be profitable thoughout and overall. . .I am certain that we will continue to emphasize service and the needs of the consumer."

The challenge of meeting the high expectations of the customers, said one analyst, is a weakness in Unocal's high-service strategy.

A 1988 study conducted for Unocal by Chicago-based researchers Sorkin-Enenstein Research Service Inc. showed that its customers had the highest expectations for its service stations. The Sorkin study, an ongoing survey of about 1,200 consumers on a regular basis, also showed that the desires of Unocal's customers were consistently being met - a finding that several analysts doubted.

"Unocal leases out a majority of its stations and it is dependent on its operators to make an investment and create a high-quality station," said an analyst. "Because of that Unocal can not always achieve a consistent, high-quality product. You never know. Every station does not have a mechanic. Every station does not always look good. That's damaging when you're going for the high end of the market. At discounters, there are no expectations except low prices."

Warnock emphasized the Unocal "superstation facility" as the company's retail direction in the 1990s. With four to six service bays, the stations are placed on one acre, about a third larger than the normal size of a site for a normal service station. A 50-foot car wash and large gasoline dispensing facilities augment some of the Unocal super stations. Building 10 to 15 a year, and adding to the 70 already in place, Unocal has sketched a plan for 120 to 145 super stations into its corporate picture by the mid-1990s.

"We have some excellent operators and there will be some excellent opportunities for them with the super facilities," said Warnock. "Motivating our dealers is our greatest challenge. The bigger our businesses, the bigger our facilities, the greater qualifications of the dealers and the bigger the income opportunities."

He said that the high-service service station strategy will pay off for Unocal in the 1990s.

"We're on a very sound base," said Warnock, "rather than being in the convenience store business, the fast-food business, which can become saturated. I believe we're on a stable business base for the long term, measurably better than those that have diversified into the convenience business. . .measurably better."

While one analyst maintained that highly leveraged Unocal could become the target of Chicago-based Amoco Corp, stating that "there's a very good chance that Amoco will take them under their wing," another analyst was cool to the much-publicized rumor.

"I believe that it is unlikely that Unocal is a merger candidate," said Mike Kerr, an analyst with Capital/Guardian Trust Co. "The company is doing well. Richard Stegemeier is doing a good job satisfying the stockholders with good returns. The best way to avoid a merger is to keep the stockholders happy. He's doing that."

PHOTO : Unocal: Retailer goes for new image