Capability of producers to manufacture biodiesel and buyerreadiness for biodiesel use

Abstract

The purpose of this research project is twofold. Firstly to establish whether South African biodiesel producers can profitably manufacture biodiesel on a commercial scale. Secondly to understand the readiness of owners of passenger vehicles to use biodiesel. Buyers pass through six stages before purchasing a new product, namely awareness, knowledge, liking, preference, conviction, and finally purchase. Based on the literature review, five research questions were developed to understand the capability of producers to commercially manufacture biodiesel. In this qualitative research section a series of face-to-face, semi-structured interviews were conducted with the current major players in the biodiesel industry. The data from each of these interviews was analysed to assess the producers’ capability to commercially manufacture biodiesel. Six research hypotheses were developed to understand the readiness of buyers to use biodiesel. In this quantitative research section a Likert scale questionnaire was presented in person to respondents at petroleum fuel stations. The data from each questionnaire was analysed to assess the buyer-readiness of passenger vehicle owners. An investigation revealed that there is currently only one producer commercially manufacturing biodiesel. South African producers have the capability to manufacture biodiesel on a commercial scale however sustainable feedstock supply is concerning. The producers claim that they can manufacture biodiesel to quality standards. No facility in South Africa can however test the full spectrum of the SANS 1935 quality standard. The industry requires additional encouragement and support from the South African government. Vehicle owners are at a Conviction buyer-readiness stage. Only 2.8% of the consumers have used biodiesel before. This is probably due to the commercial unavailability of biodiesel fuels. It is further identified that different age groups are at the same buyer-readiness stage. Marketers and sellers should however know that vehicle owners agree that biodiesel is better for their vehicle engines than petroleum diesel. Sellers should be sensitive to the fact that consumers are not prepared to pay a higher price for biodiesel than for petroleum diesel.