FACTORS AFFECTING THE PROFITABILITY OF RETAIL FUEL OUTLETS IN URBAN AREAS: A CASE STUDY OF ACCRA

ABSTRACT Many fuel stations in Ghana have explored alternative sources of income in order to remain profitable and it is a concern that there are too many fuel stations, resulting in an overtraded market. The retail fuel outlet businesses in the country incorporated the usage of various market mix elements to improve their profitability, price positioning, and competitive advantage to survive and grow (Johne & Davies, 2002). Achieving efficient and effective product marketing strategy by an organization is difficult. This is as a result of the ambiguity and instability of economic factors. Although some research efforts have been undertaken to explain issues pertaining to the impact of business structure and strategies on the performance of fuel prospecting industries in developing economies (Chukwu, 2002). Many of these research efforts do not provide answers to the variables that influences profitability in retail fuel outlets within urban settings. The study is a single case study of Shell Oil Company in Accra. The purpose of the study is to investigate whether shell site and location variables influence profitability or the average sales volume of fuel. The quantitative research approach adopted enabled the researcher to compute profitability ratios from secondary data sources for the study. The findings show that average sales volume of fuel has a positive relationship with shell site and location. This means that when traffic flow and buying area of a fuel station are high, sales volume increase; and when accessibility and visibility to the fuel station have a high score, average sales volume of fuel is also high.