Will NYC Homeowners Embrace Bioheat as the Evolution of Oilheat?

Focus group illuminates what petroleum marketers are missing
By Paul J. Nazzaro | October 25, 2011

A public opinion research company recently pulled together 12 New York oilheat customers to hear what they thought of oilheat, biodiesel and Bioheat. Those of us watching from behind the glass witnessed a transformation unfold as the focus group members made one thing very clear: Virtually every consumer objection to oilheat can be overcome with Bioheat. In fact, by the end of the night, some of the biggest oilheat detractors in the room said they would call their fuel dealers and ask for Bioheat. In an industry that watches its market share slip away to natural gas little by little each year, the results of this public opinion research should be a wakeup call to any oilheat dealers not making Bioheat a part of their business. This research should also reinforce to biodiesel producers that this potential 800 MMgy market could be a powerful stabilizing influence on the biodiesel industry. This is a market that wants and needs our product.  

Frank M. wears a suit, sitting at the front of the U-shaped table, joining the focus group after a day at the office in the financial district. He has a wife and a two-year-old son at home in Fresh Meadows, N.Y. When the facilitator asks him how he likes oilheat, he says he looked at switching to natural gas, but found it cost-prohibitive. So he stays with oilheat, saying it is easy and by and large, he trusts his supplier. It becomes clear Frank doesn’t feel very warmly towards oilheat. Rather, he tolerates it. He rattles off his concerns, which are nothing new.  

Philip R., a homeowner in Queens, grew up with natural gas, and made no bones about how he felt about oilheat. “It’s dirty, noisy, smelly,” he said. 

By the end of the focus group, after hearing about biodiesel and the benefits of Bioheat, both Frank and Philip had done a turnaround. They said Bioheat would make them feel better about their home heating, and they would be willing to pay more for it. This dramatic transformation should catch the attention of any petroleum marketer. (Although the focus group was a small sample, statistically there will be many other customers out there who feel the same way). 

Bioheat fuel is made from a combination of biodiesel and heating oil, making it a superior product for the environment, as well as for the overall operational enhancement of the heating system. The most common blends of Bioheat today are B2 and B5. The ultimate goal, however, is to gradually move consumers to higher blends. In fact, the National Oilheat Research Alliance has voted to move the oilheat industry in the direction of 100 percent biodiesel by 2050. 

Overcoming Objections

Let’s take a look at common homeowner objections to oilheat one by one, and how switching to Bioheat offers a clean sweep of solutions.

Oilheat objection: “It’s dirty.” Bioheat solution: Biodiesel is clean-burning. It reduces all emissions in an oilheat system, including NOx. Biodiesel reduces greenhouse gases by more than 80 percent compared to petroleum products, making it the nation’s only advanced biofuel that is commercially available. It is less toxic than table salt and biodegrades as fast as sugar in water.

Oilheat objection:  “It’s noisy.” Bioheat solution: Biodiesel has higher cetane than oilheat, helping to improve combustion efficiency. It also has the highest Btu content of any alternative fuel.

Oilheat objection: “It’s smelly.” Bioheat solution: Biodiesel has a pleasant odor. 

Oilheat objection: “It’s made from foreign oil.” Bioheat solution: Biodiesel is domestically produced from renewable, sustainable resources. Every gallon of biodiesel we use displaces the equivalent of foreign oil. The biodiesel industry is expected to support 31,000 U.S. jobs in 2011 and contribute $1.7 billion of income to be circulated throughout the economy. 

Naturally in this economy, price was a hot topic among the 12 New Yorkers participating in the focus group. Some of them knew to the penny how much they were paying for their oilheat. Biodiesel economics make Bioheat competitively priced right now, due to the federal and state policies in place. 
This means that even if an oilheat state doesn’t have a Bioheat mandate, dealers should not sit idly waiting for one, because RFS2 is a powerful market driver. Our message to oilheat dealers is simple: “If you haven’t made Bioheat a part of your business, you are losing a valuable market opportunity to create long-term satisfaction of your customers.”

After watching a short video on Bioheat and discussing its benefits, 11 out of the 12 consumers in the focus group said they would use Bioheat if it didn’t cost them more than oilheat alone. Others, including Frank and Philip, said they would even pay more. Here’s what else the group had to say about switching to Bioheat: “The video we watched said it has cleaner emissions in the house and helps with things like asthma. We have asthma in our family. So if it’s healthier, I would try it.The sludge in the oilheat tank is not healthy for us.” (Anna A., Queens, N.Y.); “All things being equal, I would choose Bioheat.”  (Wanda H., Bronx, N.Y.); “I’m the cheapest guy in town. But if it’s better in every way, that’s value. Isn’t it worth a couple of cents more with all the benefits?” (Phil R., Flushing, N.Y.).

The Evolution of Oilheat

What New Yorkers think of Bioheat is important to understand because starting next October, all heating oil sold within New York City will contain at least 2 percent biodiesel. New York City consumes 1 billion gallons of heating oil annually, more than any other city in the United States. The legislation will replace 20 million gallons of petroleum with an equal volume of renewable, sustainable, domestically produced biodiesel. Shoring up support for Bioheat will help ensure this landmark legislation is successfully implemented and viable for the long run. 

To that end, the focus group participants also got a sneak peek at the new Bioheat advertising campaign that the National Biodiesel Board, with additional funding from the Nebraska Soybean Board, is rolling out in New York City. This will include Bioheat billboards on city buses, posters on the subways and Bioheat radio commercials.

The theme of this campaign is “Bioheat: The evolution of oilheat.” This message resonated with the entire focus group, from the plumber’s daughter to the law firm headhunter to the homemaker. They said it made them think of: “The next step.  Progression. Enhancement.” Additionally, through NBB funding, a robust line of marketing materials is available to oilheat dealers at no cost while supplies last. These free marketing pieces include brochures, door hangers, postcards, Q-and-A and more. Dealers can contact their local oilheat association group, or Advanced Fuel Solutions, and ask for the literature menu to review the materials and place an order.

The focus group participants were very clear that Bioheat interested them. After learning about the product, 11 out of 12 said they wanted more information from their dealer. That’s a powerful statement about Bioheat’s market potential. 

Now I can ask dealers: When was the last time you were invited by more than 90 percent of your customers to provide them with information on anything new? Bioheat represents a golden opportunity to change the way customers feel about oilheat. In turn, it could provide a sure market for biodiesel producers, helping to fill in demand gaps in winter, and serving as an insurance policy against the whims of legislators.

Author: Paul J. Nazzaro   
Fuel Specialist, Advanced Fuel Solutions; Petroleum Liaison, NBB

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