1. Strategic Management Class
Presentation Outline
October 11, 2000
Market Background
DIFM Strategies

2. By Selected Time Periods
DIY vs. DIFM
Quarts Based
Total United States
By Selected Time Periods
% D-I-Y
% Installed
12 Months Ending June,
On a volume basis, the Installed segment increased to 43.4% of the market in 1996.

3. Market Continues to Shift From DIY to DIFM
Factors Causing Shift From DIY To DIFM
Age - The aging population is more inclined to be DIFM’s
Convenience - Higher demand as less leisure time is available
Increased Installed Outlets - Emergence of new outlets and competitive pricing
Environmental Concerns - Public awareness on hazards of improper used oil disposal
Female Influence - Increased number of female drivers, decision-makers
Strong Economy - Increased disposable income decreases DIY activity
Conclusions
More Profitable Packaged Volume Declining While Less Profitable Bulk Volume Increasing
Less Brand Recognition / Influence in DIFM

4. MOTOR OIL BRAND SHARE TRENDS
Installed Quarts
Total United States
12 Months Ending June,
(0.5)*
(0.7)
(0.6)
(0.4)
(0.4)
(0.3)
* Share point change required for statistically significant difference between years, at the 90% confidence level.

5. PURCHASES BY KEY CHANNELS - INDUSTRY
Installed Quarts
Total United States
12 Months Ending June,
Quick Lubes remained the leading channel in the Installed segment, accounting for 33.7% of Installed volume; however, their share within the Installed segment has been flat since 1992.
After several years of growth, New Car Dealer's share of the Installed segment was flat in 1996.

6. Brand Share within Top 3 Installed Channels
Installed Quarts
Total United States
12 Months Ending June, 2000
Quick Car Repair
Lubes Dealers Garages
Valvoline
Pennzoil
Quaker State
Castrol
Havoline
Mobil é ê ê é ê é é ê ê é é

7. Top 10 Quick Lubes by Centers
(Fast Lubes Only)
Source: National Oil & Lube News, March 2000

8. Top 10 Oil Change + Businesses
GM Goodwrench Quick Lube Plus 4500
Midas Auto Systems Experts
Firestone Tire & Service Center 1363
Wal-Mart Lube Express
Motorcraft Fast Lube
DaimlerChrysler Mopar Express Lube 970
Shell Auto Care 900
Gemini Auto Service Center (Goodyear) 806
Penske Auto Center (Kmart)
Meineke Discount Muffler 622
SOURCE: National Oil & Lube News / as of March 2000

9. Service Center Growth
630
584
574
519
474
455
422
407
360

10. Strategic Management Class
Presentation Outline
October 11, 2000
Market Background
DIFM Strategies

11. Motor Oil Company Challenge Response
Slow Market Growth Grow market share in installed segment
and Shift to DIFM Improve bulk oil margins
Alliances with distributors / grow together
Outlets less Brand Loyal / “Controlled” Outlets
Switching Costs Low - Company-owned oil changes
- Franchised oil changes
- Mid-tier Program: Express Care
- Tougher Supply Contracts
Differentiate Understand the oil change business
- Offer solutions
“Family of Brands”

12. Valvoline Express Care
DCF-ROR
We Feature: 39%
Express Care: 23%
VIOCF (New Royalties): 44%
VIOCF 29%

13. Reasons for Express Care Program
Accelerate Growth for Valvoline’s DIFM Business
Provides Offerings for Three Distinct Installer Groups: VIOC, Valvoline Express Care and the “We Feature” Program
Provides a “Branded” Program to a Customer Valvoline is not Currently Positioned to Sell
Competitive Program to Sell Against Texaco Xpress Lube, Pennzoil 10 Minute Oil Change and other Branded Independent Programs
Increased “Family of Brands” Purchases, Longer Term (10 Year) Contract, Consistent Marketing and Image Management of Independent Operators
Pulls Several Fragments into One Program
Most of the Pieces Were There, We Needed to Pull Everything Together, Add a Few Pieces and Put It Under a Strong Image.

14. Quick Lube - General Challenges Response
Location, location, location Site Selection Models
Labor expense and turnover “People. Cars. Greatness.”
(Become a ‘Most Admired’ Company)
Benefits
New Hiring Methods
Offering new products and Convenience
services Ability to sell / focus
Trust
Trade-offs between price Constantly shop motor oil company deals
and brand Understand impact on customer base l l l l l l l l l l l l l

15. VIOC - Specifically Challenges Response
Controlling Expenses Real-time Management Systems
Labor Scheduling
Internal Benchmarking
Investment Base Greater Percentage of Franchisees
Geographic Expansion Protect Existing Markets - 3 Tiers
Stay within Areas of Valvoline Brand Strength
Concentrate to Leverage Advertising
Differentiate MVP Program
Service / Trust l l l l l l l l l l l l l

16. Competitive Interaction
Protect Your Markets
Concentrate / contiguous
Fill out existing markets
Stay in Areas of Strength
Good distribution (cost advantage)
High DIY market share
Areas Where You Compete Head-to-Head
Service (Employee Friendliness / Recognition)
Trust
Best Location / Convenience
Promotions
Service (Product and Service Offering)