22598527 Marketing Project on Shell

8/13/2019 22598527 Marketing Project on Shell

1/23

Shell History in Pakistan

History of Shell

Shell has an over 100 years presence in the Subcontinent

1

Executive SummaryShell is a superior brand name with more than 100

years history in this region, infact the company is

still in possession of a fuel storage tank from 1899.

However, the documented history of the oyal

!utch"shell group the #ndo$%ak subcontinent dates

back to 190& when a partnership was struck

between the shell transporter and trading

company and the oyal !utch petroleum company

to supply petroleum products in 'sia.

(ith their key indicators of progress alreadysoaring to new heights, Shell is committed to

dedicate all its energies, resources and the time to

bring higher value and satisfaction to their

customers, employees and shareholders.

)he graph of Shell is going up every year. )he ratio

of profit is increasing at good percentage. Shell isserving the people at high level of standard by

going according to the wishes of the customers.

'ssessment of the needs and wants of the

customers is an ongoing process at Shell, which

helps to continually develop new products and

services. )o continuously offer courteous,

professional and advanced business, the team of

shell has recently been re*uvenated by going

though training programs with a focus on

information technology.


2/23

)he Shell brand name en*oys a 100$year history in this part of theworld, dating back to 1899 when 'siatic %etroleum, the far easternmarketing arm of two companies+ Shell )ransport ompany and oyal!utch %etroleum ompany began importing kerosene oil from'-erbai*an into the subcontinent. ven today, the legacy of the past isvisible in a storage tank carrying the date $ 1898.

)he documented history of Royal Dutch Shell plcin #ndo/%akistansubcontinent dates back to 190& when partnership was struck between)he Shell )ransport )rading ompany and the oyal !utch%etroleum ompany to supply petroleum to 'sia.#n 198, to enhance their distribution capabilities, the marketinginterest of Royal Dutch Shell plcand the 2urmah 3il ompany 4imitedin #ndia were merged and 2urmah Shell 3il Storage !istributionompany of #ndia was born. 'fter the independence of %akistan in1956, the name was changed to the 2urmah Shell 3il !istributionompany of %akistan. #n 1960, when 71 of the shareholding was

transferred to %akistani investors, the name of changed to %akistan2urmah Shell %2S: 4imited. )he Shell and the 2urmah ;roups retainedthe remaining 59 in e stake in Shell%akistan 4td S%4:$ an e?pression of confidence.

Companys Slogan@You can be sure of ShellA

Company b!ective

2


3/23

Statement of "eneral #usiness Principles$Shell %akistan 4imited ;eneral 2usiness %rinciples govern how Shell%akistan 4td. conducts its affairs.

)he ob*ectives of Shell %akistan 4td. are to engage efficiently,responsibly and profitably in oil, gas, chemicals and other selected

businesses and to participate in the search for and development ofother sources of energy to meet evolving customer needs and theworldBs growing demand for energy.

(e believe that oil and gas will be integral to the global energy needsfor economic development for many decades to come. 3ur role is toensure that we e?tract and deliver them profitably and inenvironmentally and socially responsible ways.(e seek a high standard of performance, maintaining a strong long$term and growing position in the competitive environments in whichwe choose to operate.

(e aim to work closely with our customers, partners and policy$

makers to advance more efficient and sustainable use of energy andnatural resources.

"oal of Shell)he goal of the company is to position itself as the preferred oilcompany in %akistan, leading the field in its commitment to safety,customer service,


4/23

Pro%uct &ix@%roduct mi? is the set of all the products offered for sale by acompany.A

)he structure of product mi? has both breadth and depth. #ts breadth ismeasured by the number of product line carried and its depth by thevariety of si-es, colors and models offered within each product line.)hus the two main products which Shell %ak. offers are fuel andlubricants. )hese have further classifications in various constituentswhich form the product line.

Pro%uct line$Shell has two product lines namely, fuel and lubricants.

'uel$Shell offers a wide range of fuel. )hese are+

Hi$3ctane

Super Cnleaded

Super

Hi$speed !iesel

D;

(ubricants$)he various lubricants offered by Shell areE

imula

imula !

imula F

Heli? %lus

Heli? Super

Heli? Standard

Shell Heli?D;:

Pro%uct (ife CyclePro%uct (ife Cycle Stages$%roduct 4ife ycle means the changes in the sales volume of theproduct over the life the product. #n market there is always ups anddowns are present because this is a dynamic world. very thing willhave to finish after certain time period, by finishing their life, so the lifecycle of Shell is.

(e define a product as anything that is capable of satisfyingcustomer needs. )his definition includes both physical products e.g.ars, (ashing machines, !G! players as well as services e.g.

4


5/23

insurance, banking, private health care. 2usiness should manage theirproducts carefully over time to ensure that they deliver products thatcontinue to meet customer wants. )he process of managing groups ofbrands and product lines is called portfolio planning. )he stagesthrough which individual products develop over time are called %roduct

4ife ycle. )he classic product life cycle has four stages.

)ntro%uction Stage$'t the introduction stage market si-e and growth is slight. #t is possiblethat substantial research and development cost have been incurred ingetting the product to this stage. #n addition, marketing costs may behigh in order to test the market, undergo launch promotion and set updistribution channels. #t is highly unlikely that companies will makeprofits on products at the introduction stage. %roducts at this stagehave to be carefully monitored to ensure that they start to grow.3therwise the best option may be to withdraw or end the product.

"ro*th Stage$)he growth stage is characteri-ed by rapid growth in sales and profits.%rofits arise due to an increase in output economies of salesI andpossibly better prices. 't this stage, itBs cheaper for business to inset inincreasing their market share as well as en*oying the overall growth ofthe market. 'ccordingly, significant promotional resources aretraditionally invested in products that are firmly in the growth stage.Shell %akistan introduction stage is successfully done because it comesfrom the international market and enters in %akistan market. Dowcompany has about 50$57.7 of market share and still growing

&aturity Stage$)he maturity stage is perhaps the most common stageE it is in thisstage that competition is most intense as companies fight to maintaintheir market share. Here both marketing and finance becomes keyactivities. Jarketing spend has to be monitored carefully, since anysignificant moves are likely to be copied by competitors. )he maturitystage is the time when most profit is earned by the market as a whole.Shell %akistan not yet enters in maturity stage.

+ecline Stage$#n the decline stage the market is shrinking, reducing the overallamount of profit that can be shared amongst the remainingcompetitors. 't thus stage great care has to be taken to manage theproduct carefully. #t may be possible to take out some production cost,to transfer production to cheaper facility, sell the product into othercheaper market. are should be taken to control the amount of stocks

5


6/23


7/23

Dow days companies pursue survival as there ma*or ob*ective ofpricing especially when they are plagued by intense competition andchanging consumer wants. Shell %akistan ltd also tends to its lubricantsin order to survive the tough competition lubricants industry. )hepricing of fuels is not in the bands of Shell %akistan limited or any other

such company. )he price of fuels is in the hands of the government.

&aintenance of current profit$)he ne?t ob*ective of pricing is the maintenance of current profits. 'tthe moment shell %akistan ltd is the leader in fuel and lubricantsindustry and there for tends to maintain its profits through appropriatepricing.

Pro%uct ,uality (ea%ership$Shell lubricants and fuels have been especially formulated to meet thedemanding re


8/23

-arget &arket

' target market is the market segment which a particular product ismarketed to. #t is often defined by age, gender socio$economicgrouping.

)argeting strategies is the selection of the customers u wish to service.#ncludingE

How many segments to targets

(hich segment to target

How many product to offer

(hich product to offer in which segments-here are three steps to targeting$

Jarket


9/23

Jarket consist of buyers and buyers differs in one or more ways theymay differing their wants, resources, locations, buying attitude andbuying practice.

Shell %akistan ltd. !ivide his market in to following segments+

!emographic segmentation ;eographic segmentation

%sychographic segmentation

+emographic Segmentation$!emographic segmentation is dividing the market in to groups basedon demographic variables such as+

'ge

;ender ducation

#ncome

=amily si-e

3ccupation

Social classShell introduces their product for upper class, upper middle class andmiddle class. #n other words shell produces its products for everyonewho have automobile.

"eographic segmentation$;eographic segmentation is dividing the market in to differentgeographical units such as.

egion !ensity

ities

)his is all about the segmentation of shell. Shell provides facilities ofpetroleum to urban as well as rural areas. Segmentation basicallydepends upon

%opulation of that area

4iving standards of people

(evels of &arket Segmentation)here are three levels of market segmentations

Jass marketing

Segment marketing

Diche marketing

&ass &arketing$

9


10/23


11/23

@4ine e?tension means including new products in the product line.AShell has recently e?tended the product line of its lubricants byproducing D; lubricants by the name of @Shell D; ngine 3il.A

Heavy %vertising$'nother feature of a good market leader is to heavily advertise in order

to compete with the competitors and to create more awarenessamongst already e?isting and new customers.Shell also adopts the same strategy. #t advertises both on electronicand print media to keep its customers well informed. )he company hasalso started a maga-ine named @SpiritA to promote its products.

Effective Placement of Pro%ucts$Shell has established a special council called @%roduct %lacementouncil.A #ts sole function is to keep an eye on proper placement of thevarious products offered by the company. )he council makes contractswith dealers and retailers regarding the placement of the products and

also keeps checks in order to see that there is no violation of thecontracts.

Price %iscounts an% llo*ances$Shell %akistan 4td. offers different kinds of discounts to its customers.

Cash +iscount$@' cash discount is a price reduction offered to buyers to pay their billspromptly.AShell offers such discounts to its distributors. )he distributors take theproducts from the depots and have to pay in a certain time period.

Sche%ule of Cash +iscounts ffere% by Shell

11


12/23

.uantity +iscounts$' "17 net 70 !istributor can get > discount, ifhe makes the payment within 17days which is due in 70 days.

8"0 net >0 !istributor can get 8 discount, ifhe makes the payment within 0days which is due in >0 days.

10"7 net 60 !istributor can get 10 discount,if he makes the payment within 7

days which is due in 60 days.

12


13/23

)he types of advertisements which Shell %akistan 4td. Has adopted areas follows+

)nformative %vertisement$@)he type of advertising which is done during the introduction stage of

a product is known as informative advertising.AShell adopted this strategy when it launched its Shell Heli? D; 3il. #tadopted all kinds of media to inform the public about the new product.Shell advertised through )elevision, Dews %apers, billboards, etc.tobuild a good product image in the minds of the customers.

Persuasive %vertising$@)he advertising done to compete with the competitors and to createmore demand of the product in comparison to the competitorBsproducts, is known as persuasive advertisement.AShell %ak 4td. also adopts such strategy to compete with its

competitors. Lou must have seen various adds of Shell featuringcelebrities like Jichael Schumacher in order to make them attractiveand also adds in which comparison is made among Shell andcompetitorBs products. omparison features include purity, viscosity,efficiency and performance.

/in%s of &e%ia to be 2se% for %vertising

@Jedia is basically a carrier which carries a message or any kind ofinformation from the sender to the receiver.A)he different kinds of media used by Shell %ak .4td. are+

)elevision adiospecially =J stations:

#nternet

)elephone Service )his function is performed by @Shell dgeAcustomer services centers. )heir toll free number is 0800-22737:

Dewspapers

Jaga-ines Shell has its own maga-ine Spirit3:

2illboards

-he #C" &atrix)he business portfolio is the collection of business and products thatmake up a company. )he best portfolio is the one that fits thecompanyBs strengths and helps to e?ploit the most attractiveopportunities.)he company must+

13


14/23

'naly-e its current business portfolios and decide which shouldneed more or less investment.

!evelop growth strategies for adding new products and businessesto the portfolio while, at the same time, deciding which productsand businesses should no longer be retained.

'n S2C is a unit of the company that has a separate missionstatement and ob*ectives and that can be planned independentlyfrom the other businesses. 'n S2C can be a company division, aproduct line or individual brands.

Stars$Stars are high growth businesses competing in the market. 3ften theyneed heavy investment to sustain their growth.

Cash Co*s$ash cows are low growth businesses with relatively high marketshare. )hese are mature successful businesses with relatively littleneed for investment.

.uestion &arks$)hese are the S2Cs with low market share but which operate in highergrowth market.

+ogs$!ogs refer to businesses that have relatively low share in unattractivelow growth markets. 3rgani-ations prefer to divest from dogs.

Shell in #C" &atrix(e put Shell in Stars in the 2; Jatri? because shell has a goodmarket share and it has the opportunities to grow more.

-he S4- nalysisS(3) stands for Strengths, (eaknesses, 3pportunities )hreats. #nwhich, Strengths and weaknesses are related with internalenvironment of the organi-ation and opportunities and threats are

related with e?ternal environment of the organi-ation.

Strengths$Shell strengths mean what are the positive points of the organi-ation.)he strengths of shell %akistan 4td are+

)he managers regard their sub ordinates.

Jain focus of the organi-ation to increase their customers.

14


15/23


16/23

%olitical forces

conomic forces

Socio cultural forces

)echnological forces

Political forces$#n %akistan there are rapid changes of ;overnment since poison. achgovernment that came in power condemned the planning work doneby the precious government. )he slow development due to politicalinstability but now the preset government is very stable to growbecause govt. is providing incentives to different industries.

Economic forces$#n %akistan ;D% is 7.51 and inflation rate is very high which is 1.6.

)he balance of payment position in %akistan is $&.7. )he employmentrate is &5.95 million.

Socio5cultural forces$#n %akistan population is increasing and social values are also changingso the demand of fuel consumption is also increasing. %eople arecoming from rural areas to cities and their motor cycle for traveling.%akistanBs attempt to raise the living standards of its citi-ens hasmeant that economic development has largely taken precedence overenvironmental issues.

-echnological forces$%akistan environment regarding the technology is not very advancedue to the lack of resources. Datural gas, because of its environmental


17/23

3ur suppliers are %akistan refinery, Dational refinery and 'ttockrefinery and !hodak refinery.

(abor component$4abor is fre


18/23

prosper: branded oil change facility. #t provides suggestive literaturesto its customers while launching a new product such as Heli? super andHeli? 4ubricant etc.#t was also the first company to introduce the concept of Jobile)raining Cnit J)C: for the purpose of training the workers and workers

and introducing


19/23

'inancial Performance$

Sales nalysis$

Shell %akistan 4imited reported sales of >&.>& billion %akistan rupeesfor the fiscal year ending Mune of 001. )his represents an increase of6>., versus 000.(hen the companyBs sales were &>.1 billion%akistan rupees.

!uring 001, the companyBs sales increased at a faster rate than allthree comparable companies. (hile shell %akistan limited en*oyed asales increase of 6>. the other companies saw smaller increasesEhennai %etroleum orporation 4imited sales were up 9.1, Dationalefinery 4imited increased 17.9, and Jangalore efinery %etrochemical 4imited e?perienced a sales decline of >.&. Shell

%akistan 4imited currently has >08 employees with sales of >&.>&billion %akistan upees.

Stock Performance$#n recent years, this stock has performed terribly. #n fiscal year 000the stock traded as high as &>6.70 %akistan rupees. !uring the past 1&weeks the stock has fallen 80&.!uring the 1 months ending &0"0>"01, earnings per share totaled&0.1 %akistan rupees per share. )hus, the price"arning ratio is 7.58.arning per share fell 18.6 in 001 from 000.)he ompanyBs priceto book ratio is higher than that of all three comparable companies,

which are trading between 0.7 and 0.96 times book value.

Profitability nalysis$3n the >&.>& billion %akistan rupees in sales reported by the companyin 001, the cost of goods sold totaled 55.67 billion %akistan rupees, or60.& of sales. )his gross profit margin is significantly better then thecompany achieved in 007, when cost of goods sold totaled 91.1 ofsales.Shell %akistan 4tdBs 001 gross profit margin of 9.6 was better thanall three companies.

Competitor nalysis

19


20/23

Shell %akistan 4imited 3perates in the %etroleum refining sector. )his'nalysis compares shell %akistan 4imited with three other petroleumrefiners in 'sia.

Pakistan State il$)he past of %S3 dates back to mid$60s when the ;overnment of%akistanamalgamated three @3il Jarketing ompaniesA+ sso astern,%akistan Dational 3il %D3: and !awood %etroleum as part of its@Dationali-ation %lanA.)he company is the only public sector entity in %akistan that has beencompeting effectively with three multinationals Shell, alte? and)otal:. %S3 is currently en*oying over 6& share of 2lack 3ilmarketand 79 share of (hite 3ilmarket.

#t is engaged in import, storage, distribution and marketingof variouspetroleum products including mogas, high speed dieselHS!:, fuel oil,*et fuel, kerosene, li


21/23

2rand #mage

Nuality and . 'ttendant asks to the customer that he would like to purchase an

international high


22/23

.uality an% .uantity$)he third strategy of the company is to set standards for reliability andhonest dealing because it is fundamental to the companyBs reputation.=or the improvement of


23/23

)here should be proper shades and proper sitting arrangementsat the filling stations.

4ubricants should be disposed in a proper way to protect theenvironment from being polluted.

Shell should provide small incentive to its customers.

Schemes like @buy 70 liters of super and get a cola drink freeA,should be kept introducing time to time.

Shell should make company operation site in every city tocapture the new market.

)here is only one thing that is constant that is changeE shellshould invest on research development to cope with dynamicenvironment.

ompany should establish new regional office to control theactivities of company operations.

)he company should provide the facility of free oil change on all

its outlets. Shell should develop modern retail outlets. )hese outlets shouldhave all possible facilities for customers because one of thereasons behind decrease market share is moderni-ation ofcompetitors.

Shell should develop effective marketing programs that help thecompany to increase sales that will lead to increase the marketshare. #n these market programs emphasis should be given toadvertising, which is the most effective and efficient tools ofpromotion for such type of business.

Documents

22598527 Marketing Project on Shell