Final Marketing Project on Pakistan State Oil

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Introduction

Pakistan State Oil Company Limited, namely PSO was found in 1976, as a result of amalgamation of the formal three oil marketing companies i-e Pakistan National Oils Limited, Premier Oil Company and Esso Undertakings in Pakistan. There is a chronology of events leading to the formation of Pakistan State Oil Co. Ltd .On January 1st, 1974, Federal Government takes over management of PNO

(Pakistan National Oil) and DPO (Dawood Petroleum Limited) and renamed it into POCL (Premier Oil Company Limited) under

marketing of Petroleum Products (Federal Control) Act, 1974.Then on June 3rd, 1974 Government incorporated Petroleum Storage

Development Corporation, PSDC. On August 23rd, 1976 name of PSDC was changed to State Oil Company Limited, SOCL. On

September 15.1976 Government purchased ESSO Undertakings, vested the same in SOCL. And finally on December 30, 1976

Government merged PNO and POCL into SOCL and named it as PSO.

As the largest oil marketing company of Pakistan, PSO is engaged in the storage, import, distribution and marketing of Petroleum products, petrochemicals, Aviation and Bunker fuels, LPG and CNG dominates the country’s fuel and energy needs. Since its inception in 1976 the company has been meeting more than 70% of the country’s fuel needs. PSO’s 3805 outlets all across the country markets more than 12 million tons of fuel products annually. This network is supported by PSO’s 28 storage facilities with a capacity of more than 800,000 tons .PSO took a major step in improving its distribution facilities by acquiring 12% equity in the 800km long Karachi-Mehmoodkot White Oil Pipeline. As part of PSO’s policy of providing better customer services, it has embarked upon its New Vision retail development program. Equipped with the most modern facilities like Electronic dispensing units, auto car wash, convenience stores, internet facilities and business centers, these sate of the art designed stations provide greater customer confidence and a friendlier environment. As a manifestation of PSO’s greater customer focus PSO 24hr customer service has been launched where customers can lodge their queries and suggestions about various PSO products and services.

Being the largest of the three marketing companies in Pakistan, PSO has consistently maintained an edge over its competitors Shell and Caltex. With an overall market participation of over 72% in 1997-98, it sold 6.244 million tones of petroleum products during the half year ended December 31st,

1999 against 5.633 million tones sold during the corresponding period last year, showing an increase of 10.8%.

Continuous growth

PSO continues to expand its physical, technical and marketing resources to meet the requirements of the country .To keep pace with

growth, PSO has maintained International Collaborations to import latest technology. These are:

1. Castrol (UK) Blending and marketing of lubricants in Pakistan

2. Air Total (France) Technical and Commercial agreements in Aviation Services

3. Exxon Chemicals (Singapore) Petrochemical Business And Technology.

Mission statement

To ensure availability and security of sustainable supply of oil and gas for economic development and strategic requirements of

pakistan and to coordinate development of natural resources of energy and minerals.

Strategy to achieve mission

To adopt an integrated approach for promoting exploration and fast track development of oil, gas and mineral resources. To

deregulate and liberalize and privatize oil, gas and mineral sector through structured reforms. To attract private investment and to

establish credible institutions for facilitating the development of petroleum and mineral sector. To develop technical professional

human resources. To optimize existing energy delivery infrastructure oil and gas pipelines. To reduce imported fuel oil consumption

with indigenous gas by optimally balancing the gas availability and supplies from local and imported resources.

Importance of company within industry

It would not be wrong to say that ‘PSO’ is having a brand and loyal image in the industry. On the basis of this brand image we can

have an idea about the ranking and positioning of “Pakistan State Oil Company” in the industrial sector. ‘PSO’ has been serving the

entire industrial sector in Pakistan since 1971. As positioning of company within market is a means to target a customer. So we can

say that ‘Pakistan State Oil’ is no doubt having the useful and simplest tool to the marketers in the industrial sector. The importance

of the ‘PSO’ in industry is due to the fact that it always launch a product according to specific requirements of a particular industry.

So in this way ‘Pakistan State

Oil ‘ is having more loyal customers that they never switch to another company. The important point is that importance of any

organization is related to its perception. The positioning basically is the perception of products and services in the minds of

consumer.

And the perception differs from person to person, what do you think about the quality and value, I may not favour that. For example

you may go in favour of usage of ‘CNG’ because your perception of that product is excellent but I may not favour that, as my

experiences of that particular product are not well and good. The importance of “Pakistan State Oil “in the industry becomes obvious

when we talk about the different industrial products which they are offering in the market. The most popular products of “Pakistan

State Oil” which are used in bulk amounts by the industrial are: kerosene oil, furnace oil, lubricants and diesel. ‘PSO’ is the largest

lubricants marketing company in Pakistan. The major consuming industries for ‘PSO’ products are: sugar mills, steel mills, edible oil

mills, independent power plants (IPP’s) and paint industry.

The importance of “Pakistan State Oil” to the sugar mills is due to the fact that they are offering furnace oil and lubricants for the

protection and safety of their machinery and Plants. “Pakistan State Oil” is now offering Doorstep ‘PSO’ lubricants delivery i.e. free

lube delivery anywhere you want. Whether you are a ‘PSO’ industrial consumer, lube shop agent, or customer. You can now have

‘PSO’ lubricants delivered at your doorstep, this service is totally free of cost anywhere. “Pakistan State Oil “ has a complete range of

automotive lubricants. Some of these are used in the steel industry. These lubricants makes it possible that the machinery and plants

can work more efficiently as they reduces

The friction prevents all the barrier to the performance .The above statement is no doubt true “Pakistan State Oil” is totally

committed to quality and excellence and its lubricants department is ISO 9002 certified for testing and processing facilities of all

automotive lubricants.

“Pakistan State oil Company Limited” also supplies imported or local chemicals to various industries. Among these industries the

paint industries and edible oil mills are important consumers of industrial chemicals. These chemicals are tauline, benzene, hexane

and solvent oil. Edible oil mills which may be called ghee mills are using hexane. Lubricants and chemical department remains in the

activity of launching new products for the benefits of industries and to attract the new industrial consumers. “Pakistan State Oil”

makes it possible by extending lube testing and advisory services to all customers to drive maximum benefits from its products. In

other words we can say that the importance of Pakistan State Oil” in the industry is due to the fact that it is a public limited

company.

Therefore, it is offering its specially designed products to the “Independent Power plants” (IPP’s) which includes army, railways and

WAPDA. Army uses “PSO” products for the refueling of tanks. So the ranking of “Pakistan State Oil Company” according to the

Divisional Manager is defined as:

“PSO has top oil market”

(Divisional Manager: Khawar Jilani)

pattern of holdings of the shares held by the shareholders

Pattern of holdings of the Shares held by the Shareholders (%)

Categories of Shareholders 1996 1997 1998 1999 2000

Individuals 15.58 14.41 13.22 16.17 16.38

Investment Companies 0.62 0.52 0.52 0.37 0.20

Insurance 4.19 3.67 3.26 3.76 3.63

Companies

Joint Stock Companies 0.93 0.79 0.86 2.13 2.28

Financial Institutions and Banks

33.54 31.16 28.37 32.65 43.73

Modaraba Companies 0.05 0.02 0.02 0.06 0.25

Federal Government 25.51 25.51 25.51 25.51 25.51

Securities and Exchange Commission of Pakistan

0.00 0.00 0.00 0.00 0.00

Abandoned Properties Organization

0.48 0.48 0.48 0.48 0.48

Charitable Institutions 0.26 0.26 0.26 0.27 0.28

Foreign Investors 18.84 23.18 27.50 18.60 7.26

organizational structure

functional departments of pso

1. Marketing Department.

2. Finance Department

3. Supply & Distribution Department

4. Operations Department

5. Information System Department

6. Human Resources Department

7. Training & Organizational Development Department

Importance of marketing department within Organization

An advanced organization like “Pakistan State Oil “needs some sort of marketing system to satisfy the efforts of all the people

working in the organization which are required to satisfy the varied needs of all its consumers. Importance of marketing department

within the organization is due to the fact that “it is both a set of activities performed by organizations and social classes.” Marketing

is also important in an organization as it is directly related to the products and services offered by the company. Divisional Manager

of ‘PSO’ said that:” the marketing department within our organization serves as front line fighter to their competitors. Without it they

can not project and introduce new products. So it should be proactive and customer focussed. You have product and you are unable

to sell it if you do not market it. Therefore, we can say that marketing department plays a vital role in the profitability of an

organization.”

Marketing plans are vital to the success of an organization because they give direction that how the particular objectives are to be

achieved and how we intend to do that. Therefore whenever “Pakistan State Oil” is going to introduce a new product or is going to

provide a new facility to its potential customers, the marketing department of “PSO” always serves as a connection bridge by

providing necessary information to its customers either by print media, electronic media or by internet. So they claim that for

“Pakistan State Oil Company Limited”, the customer comes first, always and every time.

They are committed to providing the best products and services to all their kind patrons. The main objective and of “PSO” marketing

department is to continuously upgrade their products their presentation to keep the customers fully satisfied. In line with this policy

on Oct 1st, 2000 they introduced PSO/CASTROL industrial and automotive lubricants in 210 litre plastic drums .The new plastic drums

are specially designed to withstand tough handling conditions especially during transportation which is subjected to continuous

vibration and high axial force. Moreover, the single mould design of these drums makes virtually leak proof. All this is basically PSO’s

effort in not only providing efficient service to you but also in making the environment better and safer.

It is one of the marketing plans of the “Pakistan State Oil “ to promote and market their product according to laws and regulations of

the country. The marketing department of “PSO” also keeps in mind the current state of technology i.e. they make their strategic

plans according to the latest technology e.g. now they have launched their petrol pumps on the new vision. In this they are also

confronted with the marketing plans campaigns of the competitors. In early 1990’s “Shell Pakistan” introduced the” retail visual

impact “. It renovated the petrol pumps at the same international standards. So the “Shell” influenced the “PSO” market. This was

very tough time for “PSO” as its most of the loyal customers were switching towards “Shell Pakistan”. But now “PSO” has improved

its marketing and has introduced a new vision. So now “PSO “ has given time to its competitors because it has largest infrastructure

and is having largest Depo’s. All this is done through the efforts of its marketing department. The another reason of its success is due

to the fact that it is both profit and service oriented organization.

Marketing Departments of PSO

Being the largest oil marketing company, PSO has the following marketing departments:

1. Retail.

2. Industrial consumers.

3. Aviation.

4. Compressed Natural Gas.

5. Liquefied Petroleum Gas.

6. Chemicals.

7. Marine.

8. Lube sales and Agency trade.

Retail

The basic concern of this department is with petrol pumps. To enhance the sales of petroleum products in already existing petrol

pumps and to install new one are its major objectives .It gives certain targets to outlets dealers (owners) which they have to achieve

in a certain time period. The 3805 outlets all across the country are supported by storage depots which are being facilitated by the

product movement through tank lorries, railway tank wagons and pipelines. The major policy of this departments these days is the

new vision program of outlets .It makes the decision of new vision on the basis of some factors like location of outlets, potential of

sales area, existing sales, competitors strong hold etc. There are three ways to bring the outlets in new vision. These are:

100% contribution by company

50% contribution by company

100% contribution by dealer

Being the government organization, previously there were restrictions on new visions of outlets but as Shell International initiated

this policy, it became a necessity for PSO to take this step.

So the retail department is actively participating in distribution, storage and in new vision programs.

Industrial consumers

PSO is playing an equal important role in industrial sector. This department deals with marketing of products like furnace oil,

kerosene oil, high speed diesel, lubricants, petrol etc for Independent Power Plants (IPPs), Wapda, Army, Railways, Sugar mills etc.

From the locomotives of Pakistan Railways to the giant turbines of power projects, all are fueled by PSO. Being fully alive to the

responsibilities towards the agricultural sector PSO’s 700 strong agency network helps keep the farm machinery running. Army needs

of HSD and lubricants are also under its responsibility. Further, its kerosene sales are a major source of energy for the rural and

lacking gas facilities.

Aviation Department

PSO remains equally strong in Aviation and Bunker Sales. PSO has been constantly upgrading its facilities to serve a wide range of

commercial aircraft. Through a chain of eight Aviation Service Stations scattered all across the country PSO fuels the aircraft of many

local and international airlines. Acquisition of new Lahore Terminal Complex at the Lahore International Airport has enabled PSO to

serve the busiest corridor of East/West bound flights benefiting the airlines in shape of time saving and lesser fuel burn off. While it’s

bunkering facilities at all the major ports of country fill up the ocean liners of many nationalities facilitating the nation’s international

trade.

Compressed Natural Gas (CNG) Department

This department is concerned with promoting the use of CNG in vehicles. This use is being encouraged to reduce the pressure on

petroleum imports, to curb pollution to improve the environment. The existing price differential between CNG tariff and motor

gasoline will be maintained as an incentive for CNG use. This department is making efforts to exempt the import of CNG machinery,

equipment, conversion kits, CNG cylinders etc from duties and sales tax for a period of five years. Also efforts have been going to

eliminate double taxation in the form of excise duty on CNG.

Liquefied Petroleum Gas Department

LPG is filled in cylinders at high pressures. PSO started marketing of LPG in 1981 in South area (Karachi). Now all three refineries are

producing LPG.

The Government has taken a bold and far-reaching initiative and liberalized integrated infrastructure projects of LPG, free from

government guarantees and permission. Now all credible LPG companies are free to develop integrated projects of LPG import

terminals, storage facilities, inland transportation, storage depots and retail marketing / distribution without requiring any guarantees

or permission from government except the marketing license which would be issued without any difficulty. In Pakistan there are

different marketing companies of LPG like Pak Gas (PSO), Fon Gas (Fauji Foundation) , Sui Northern Gas , Lube Gas and Sun Gas etc .

Now this department of PSO is actively dealing with the purchase and supply of LPG cylinders for household and commercial

purposes.

Chemical Department

This department is engaged in the business of chemicals derived from petroleum called petrochemicals. Most of the chemicals are

imported in bulk and some are manufactured in refineries. these chemicals are imported from Europe , Middle East etc through

ships , Local and imported chemicals are supplied to various industries for their chemical needs. These chemicals include toluene,

methyl , benzene, polyol, hexane used in edible oil mills, solvent oil used in paint industries etc.

Marine Department

The basic purpose of this department is to fulfill the needs of shipping firms. The refueling of ships is done through this department.

Supply of lubricants to shipping corporations is also done through this department. For marine department, the government has fixed

the prices and owing to high prices of oil, share of this department is nominal. Supply is made available through pipelines, tank

lorries and barges (ships).

This department sells furnace oil , LDO and HSD to Karachi port .

Lube sales and Agency trade Department

This department is concerned for making agreements of manufacturing and marketing the lubes. PSO has maintained International

standards of its lubricants. It has a technical collaboration with Castrol, England. Lubricants are locally manufactured. PSO has 10

blending plants; 3 in Karachi, 1 in Lahore and 5 blending plants are affiliated. Marketing of lube oils is done through agencies and

petrol pumps. Major products being marketed are diesel lube, CR 40 and GTX.

Importance of Marketing research

Market research and marketing research are often confused. 'Market' research is simply research into a specific market. It is a very

narrow concept. 'Marketing' research is much broader. It not only includes 'market' research, but also areas such as research into

new products, or modes of distribution such as via the Internet. Here are a couple of definitions:

Marketing research is the function that links the consumer, customer, and public to the marketer through information - information

used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor

marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information

required to address these issues, designs the methods for collecting information, manages and implements the data collection

process, analyzes, and communicates the findings and their implications.

Obviously, this is a very long and involved definition of marketing research.

“Marketing research is about researching the whole of a company's marketing process “

This explanation is far more straightforward i.e. marketing research into the elements of the marketing mix, competitors, markets,

and everything to do with the customers.

Marketing is no doubt the most important tool for the success of an organization. It helps to recognize the problems that are

confronted to an organization. The basic purpose of this research is to identify the problems and then find out the solutions for that.

In PSO they are having the research and development in the regional headquarter Karachi. But this department is not so much

efficient. They are not having the research department any other offices all over the Pakistan except Karachi. The reason for their

negligence to research department is that they believe that “ Pakistan State Oil Company Limited” is already having strong market

position. They are having the top oil market among the three most leading oil companies in Pakistan, which are PSO, Shell, Caltex.

PSO is having the largest market share among all these three. So the management of PSO is that as they are already earning up to

the mark so there is no need to bear the expenses of the research and development. As they believe that if they are going to

maintain the research and development department it would be an extra burden on their company.

In order to meet the requirements of the customers and facilitate them in a better way it is necessary for “Pakistan State Oil

Company Limited” to maintain the research department and to make more active and efficient the existing department in the

regional office. It is also needed to compete in the market. As Shell is having the research department which is more advanced and

equipped with the technological skills and due to this Shell is able maintain its market image in a better way than PSO.

segmentation

MARKET SEGMENTATION

Diesel

Basis for the market segmentation for hi-speed diesel are:

Engine Power

Motor Vehicles above 1300 cc

Geography

Market is divided into Roral & Urban areas, where placement and promotion policies differ. On roral areas selling is through oil

agencies and in Urban areas placement is through petrol pumps.

Income

The other base of market segmentation is income a:

Vehicles and machines which consumes Hi-speed diesel are usually involved in commercial activities. So, people involved in such

kind of business belong to middle-middle class and above.

Market segmentation for petrol

Market for petrol is segmented on the basis of following.

Engine Power

Vehicles or machinery having engine power below 1000 cc.

Income

On income basis, there are basically three groups:

Lower Middle

Middle Middle

Abore Middle

Lower Middle

In this social close people who are having vehicles/machinery from (49 cc to 100 cc) which includes. Vespa- motor- cycles.

Middle Middle Class

Includes those people who are having small cares like (Suzuki, Charade, Santro etc) means, they are used to travel by these vehicles

mostly within the city. Those people have income group which can be classified as middle class.

Above Middle Class

Then those people who are having vehicle that can be classified a luxury vehicle.

(Pajero, Jeeps, Limousine, Mercedes)

Toyota (Latest Models), Honda (etc).

Market segmentation for GTX Mobil oil.

The segmentation of GTX Mobil oil has been done on the basic of consumption level which is as follows:

1. Light Users

light users include those people who have vehicles/machinery that consume mobil oil from (1 liter to 4 liters) i-e Motorcycle and

Rickshaw – generators (Light).

2. Mediocre User

Includes those user who are having vehicle/machinery that consumes (4 liter to 12 liter) mobil oil i.e. small ears and light machinery.

3. Heavy User

Includes those user who are heaving vehicles and machinery, that consumes more than 12 liter, which includes heavy transport,

truck, buses loaders, road rolers, tractors and industrial units.

TARGET MARKET

PSO, as a public oil company, which has a Govt. support also. Its target market for selected three products is as follows:

HI-SPEED DIESEL

Target market for hi-speed diesel can be divided into:

1. Agriculture Sector

Agriculture sector includes. The landlords, who have their own irrigation units and they use diesel in their operations. Diesel is also

used in tractors, cultivating machines and in harvesters.

2. Govt. Sector

PSO also has a very good market in Govt. sector, which include WAPDA and

3. PAK Forces

Pakistan Army, Air Force, Navy, all these are the target market of PSO-particularly for hi-speed diesel. Moreover, transports that are

involved in loading, cargo activities i.e. public transport, private transport Co. trucking (Goods transport stations).

Hi-speed diesel is also consumed by the diesel general motors, which include vehicles that are above 1300 Coca-Cola. (1C – 2C

engines to heavy power engines).

PETROL

Target market for the petrol car below 1300 Coca-Cola. Light user like people who have motorcycles. Taxis and rickshaws and

generator.

Castrol GTX MOBIL OIL

Target market for GTX mobil oil is large vehicle, in Govt. sector, highway authority. Who used their machinery to develop the

infrastructure? FWO (Army) services stations and workshops.

PRODUCtS OF PSO

PSO Automotive Oils

PSO Industrial Oils

Castrol Automotive Oils

Castrol Industrial Oils

Industrial Chemicals

Fuel Oils

PSO AUTOMOTIVE OILS

Engine Oils

Super Engine Oil

Premier Motor Oil

PSO CNG Oil

Turbo Engine Lube X

Turbo Engine Lube (SAE 15W/40)

Turbo Engine Lube LD

Turbo Engine Lube (SAE 10W-30 & 20W-50)

Diesel UBE LD/MLD

Diesel Lube D-3

Diesel lube HD

Tractor Oil

Engine Lube

Gas Engine Oil

Two-Stroke / Flushing Oil

Gear / Transmission Fluids

Gear Oil EP (GL-5)

Gear Oil EP

ATF

Brake Fluids

Hydraulic Break Fluid HD

Automotive Greases

MP Grease

PSO Industrial OILS

Circulating Oils

Texol/Texol-K

Spindle Oils

Spin cot

Hydraulic Oils

Hydro

Hygrolaw

Turbine Oils

Turbine Oil

Gear Oils

Gear Oil MEP

Gearled EP

Refrigeration Oils

Low Pour Oil

Cylinder Oils

Cylinder Oil M

Asphaltic Oils

Sugar Mill Oil

Bearing Compound

Gear & Wire Rope Compound

Heat Transfer Oils

Heat Transfer Oil

Metal Working Fluids

Solcut Oil

Super Solcut Oil

Neat Metal Cutting Oil

Quenching Oil No:10

Slide Way Oils

Slide Way Oil

Process Oils

Process Oil-R

Jbo/Rpo/Wbo

Transformer Oils

Transformer Oil

Industrial Greases

Alpha & Alpha EP Greases

Moly Grease EP

Castrol Automotive OILS

Engine Oils

GTX Magnatec

GTX

GTX-XL

RX Super Max

Turbo Max

CR40

CR40 Plus

RX Super

CRD

DD 40

CRI

CR

Agri Castrol MP

TLX

MXD 400

MXD

Marine MLC

Gear/Transmition Fluids

Hypoy B

Hypoy EP

Dexron III Mercon

TFP

TQ

Brake Fluids

Brake Fluid HD

Automotive Greases

LM Grease

Castrol Industrial Oils

Circulating Oils

Magna

Hydraulic Oils

Hyspin

Hyspin AWS

Hyspin AWH-M

Turbine Oils

Turpak

Perfecto_T

Gears Oils

Alpha ZN

Alpha SP

Refrigeration Oils

Ice Matic

Compressor Oils

Aircol PD & SN

Cylinder Oils

Cresta V

Asphaltic Oils

Grippa

Heat Transfer Oils

Perfecto HT

Metal Working Fluids

Cool Edge BI

Ilocut

Iloquenc 9

Slide Way Oils

Magna GC/BD/CF

Industrial Greases

Spheerol AP & EPL Greases

Industrial Chemicals

Industrial Chemicals

Solvent Oil

Mineral Turpentine (MTT)

Hexane

Toluene (Nitration Grade)

Mixed Xylene (Nitration Grade)

Isopropyl Alcohol

Methyl Ethyl Ketone (MEK)

Vinyl Acetate Monomer (VAM)

Normal Butyl Acetate

Fuel Oils

High Octane Blending Component

Premium Plus (SGP)

High Speed Diesel

Kerosene

Light Diesel Diesel Oil

Furnace Oil

Since there is a variety of products offered by PSO and all are in great demand. But even then we have selected three products which

PSO is believed to have the highest market.

Single Grade Petrol (SGP)

High Speed Diesel (HSD)

Castrol GTX

marketing mix

The 'marketing mix' is probably the most famous phrase in marketing. The elements are the marketing 'tactics', also known as the

'four Ps'. The marketing mix elements are product, price, placement and promotion.

Some commentators will increase the mix to the 'five Ps', to include people. Others will increase the mix to 'Seven Ps', to include

physical evidence (such as uniforms, facilities, or livery) and process (i.e. the whole customer experience e.g. a visit the Disney

World). Neil H. Borden coined the term in his article 'The Concept of the Marketing Mix' in 1965. The concept is simple. Think about

another common mix - a cake mix. All cakes contain eggs, milk, flour, and sugar. However, you can alter the final cake by altering

the amounts of mix elements contained in it. So for a sweet cake add more sugar! It is the same with the marketing mix. Varying the

mix elements can alter the offer you make to your customer. So for a high profile brand increase the focus on promotion and

desensitize the weight given to price.

Products

Single Grade Petrol (Premier Plus)

High Speed Diesel (HSD)

Castrol GTX

Single Grade petrol:

Compatible with mineral and synthetic oils and most hydraulic oils. Blends with most greases, pastes, 2-stroke fuel oil, cutting oil,

chain oil, compressor oil, axle oil, drilling lubrication, tapping fluids, hydraulic oil, mining fluids, petrol, diesel, marine fuel oil, scour

able oils, coolants, anti freeze, soluble cutting fluids, penetrating oils, flushing oils, general purpose lube oils.

SGP does not:

Flake, Melt, Crack, Expand, Creep, Scuff, Drag out, Contract, Migrate, Wash off

SGP helps to prevent:

Seizure, Galling, Vibration, Noise, Frictional heat, Weight Loss.

SGP improves:

Loading on bearings, cutting tool versatility, product finishing

PRODUCTION

Productivity and production may now improve using existing staff and equipment. Wastage is reducing on finished goods.

Single Grade Petrol products benefits.. Saves petrol/diesel fuel up to 20%

Improves engine power (BHP) 8%

Reduces exhaust emissions 46%

Reduces all round friction 90%

Reduces oil consumption 20%

Improves compression 16%

Reduces vibration 50%

Reduces operating temperature 20%

Improve torque values 12%

Improves frictional flow rates 15%

Extends the life of filters 20%

Improves production output 20%

Saves electrical power 14%

Improves Nm rating on gears 12%

Improves cutting life 200%

Reduces operating noise 10%

Improves the life of oils 100%

Extends the battery life on tools 12%

Increases operating speeds 10%

Reduces weight loss on bearings 50%

Extends machine life 30%

So they say that SGP, which is commonly known as petrol, is their fast moving product. They also claimed that it is profitable product

as its consumption is very high.

2. Castrol GTX…

Multigrade super high performance oil for use viscosity range of SAE 20W-50, gives the rapid circulation and adds protection during

start up from cold, where 80% engine wear may occur, with extra protection for engines operating in hot and dusty climates.

Benefits

Longer engine life and power retention.

Improves oil pressure and consumption.

Protects against soot, varnish, black sludge formation, acid and corrosion

Performance

SAE 20W-50

MIL-L-46152D

API SG/CD

MIL-L-2104E

Because of all these description it is also considered as one of the fast moving product. Independent power plants, Wapda and etc

mostly demand it. It is used as lubricant in the petrol consumption cars.

3. High Speed Diesel

High speed diesel is one of the fastest moving product among other products of PSO. It is most commonly used by heavy engine

vehicles and automobiles. It is used in these areas:

Agriculture

Industry

General Public

It is used in large, slow speed marine engines and automotive engines as well.

Pricing Strategy of Petrol & Diesel

Both petrol and diesel are placed under the head of fuel oil, so that the pricing strategy of both of these products is same. And well

discuss it in the context of pricing strategy of full oil.

Fuel oil prices are set by a committee for all oil marketing companies. And to this fact all oil-marketing companies are having same.

Petrol and diesel prices. There is almost no difference between the fuel oil prices of PSO and Shell, or any other competitor.

Fuel oil pricing strategy its standard. Set by OCAC (Oil Companies advisory committee). Up to every fortnight the fuel oil prices are

revised.

Pricing strategy of Castrol GTX

There is no hard and fast rule for the pricing strategy of castor GTX. But still there is a defined strategy of prices. In case of Castrol

GTX, that is a lubricant, all oil companies set their own prices which means prices of lubes vary from PSO, Shell and Caltex. These

prices are based upon.

Cost

Handling charges

Storage charges

Because some companies have to bear less cost handling charges as well as storage charges that’s why; this product of PSO has

greater demand in the market. Being a government company PSO has to bear less cost and handling and storage charges. Lubricant

prices are revised after ever 4-6 months. They have defined their pricing strategy as competitive prices. They have said that we have

competitive prices. Two factors are considered while setting the prices

i Profit

ii Services

In case of lubricants, they set their prices lower than their competitors.

Current prices of these products

Single grade petrol Rs. 32.26

High speed diesel Rs. 15.70

Castrol GTX Rs. 590.00 (1 Tin/ 4 litres pack)

Placement, distribution, channel, or intermediary

 A channel of distribution comprises a set of institutions, which perform all of the activities utilized to move a product and its title

from production to consumption.

Place is also a channel of distribution or intermediary. It is the mechanism through which goods and/or services are moved from the

manufacturer/ service provider to the user or consumer. There are many types of intermediaries such as wholesalers, agents,

retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others.

For Single Grade Petrol (SGP) and High Speed Diesel (HSD), the most viable placement channel is the products movement from

wholesalers to retailer’s .For general retail outlets; this facility is available in the form of tank lorries. For industrial needs, railway

tank wagons are the most appropriate source. Previously Government of Pakistan had been paying the freight charges of their

placement but now for the product movement, retailers have to pay themselves the freight charges. As far as the placement of

Castrol GTX is concerned, different lube vans are available which take the lubes from manufacturers to dealers of petrol pumps to be

available on lube shops. Also there are different agencies for lubricants, which take them from dealers on their own expenses and

sell to general public.

These days the enhancement of existing facilities and development of new infrastructure - especially pipelines, which are the safest,

efficient & most environment friendly mode of transportation, is being looked up carefully. Pakistan Railway is also gearing for

moving more product upcountry. This is very important to reduce the pressure on road movement

For product movement network, PSO all over the Pakistan has,

Tank Lorries 13400

Railway Tank wagons 1120

Pipelines  13

PSO has storage depots all over Pakistan. These include,

South Zone Depots

Hyderabad, Daulatpur, Sukkhur, Sanghi, Quetta ‘C,’ Khuzdar and Pasni.

NORTH ZONE DEPOTS

Chakpiran, Faqirabad, Taru Jabba, Serai Naurang, Kundian, Juglot, Chitral and Kohat.

CENTRAL ZONE DEPOTS

Vehari, Shershah -2 (B&C), Lalpir, Sahiwal, Habibabad, Faisalabad ‘A’, Faisalabad 'B',

Badami Bagh, Kala Shah Kaku, Gujranwala, Sargodha and Kotla Jam.

Swot Analysis

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus

on key issues.

Once key issues have been identified, they feed into marketing objectives. It can be used in conjunction with other tools for audit and

analysis, such as PEST analysis and Porter's Five-Forces analysis. It is a very popular tool with marketing students because it is quick

and easy to learn.

SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. For example,

strength could be your specialist marketing expertise. A weakness could be the lack of a new product. Opportunities and threats are

external factors. For example, an opportunity could be a developing market such as the Internet. A threat could be a new competitor

in your home market.

STRENGTHS

PSO is having good competitive skills.

It has adequate financial resources as it is a public sector organization and is having support of the government.

It is a well-recognized market leader as it has top oil market in Pakistan.

PSO petrol pumps are computerized

PSO is having product innovation as it frequently introduces new products according to the requirements of its

consumer.

It has well conceived functional area strategies.

WEAKNESSES

The organization is falling behind in research and development.

Sometimes the organization is unable to implement strategies in front of its competitors.

Although the services of PSO are quite well but it has weak market image as compared to Shell.

OPPORTUNITIES

Diversity into the related products i.e. creating some unique features in the products to attract their consumer.

Add some complementary products in the future.

It is likely in the future that the organization is going to expand the business and enter into the new market.

Ability to move with the better strategies i.e. applying some new ways to cover the losses, increase the financial

resources or increase the market share.

Introducing the new product having the features that are very first in the market i.e. not in any other product

offered by any competitor.

THREATS

Likely entry of the new competitors that are having new technology and are going to provide better services.

Rising sales of the substitute products offered by the competitors.

Adverse government policies i.e. government may increase the taxation rate on the products offered to the

customers.

Growing competitor pressures can be proved as threat to the survival of the organization.

Buyer’s needs and tendencies may change and they are not fully satisfied by the existing products and may

switch to the other products offered by the competitors.

Adverse demographic changes.

SUGGESTIONS

This is needed for the organization to improve the services.

PSO is lagging behind in the field of marketing research. So they should pay attention to make the research and

development department efficient and active.

Management should work in depth to know that which petrol pumps are more profitable and which are

generating low sales so they can adopt new policies in order to increase sales.

Conclusion

Term report on marketing enabled me to have practical experience. Since it was my first experience to make a report on marketing.

This provided me the opportunity to have close might into the business activities. The main source of data collection was

interviewing the employees of “Pakistan State Oil Company Limited”. So it becomes a source of sharpening my communicator and

interpersonal skills. By face to face interviews with Divisional Manager (Industrial consumer) and Divisional Manager (Retail) I come

to know that how to communicate with personnel’s. It gave me confidence to move in professional field.

SWOT Analysis:

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus

on key issues.

Once key issues have been identified, they feed into marketing objectives. It can be used in conjunction with other tools for audit and

analysis, such as PEST analysis and Porter's Five-Forces analysis. It is a very popular tool with marketing students because it is quick

and easy to learn.

SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. For example,

strength could be your specialist marketing expertise. A weakness could be the lack of a new product. Opportunities and threats are

external factors. For example, an opportunity could be a developing market such as the Internet. A threat could be a new competitor

in your home market.

When we went to PSO regional office situated at the mall road of Multan Cantt, we noticed some similar strength there and some of

our observations were not analogous with each other. This difference might be because of our observation criteria or because of our

personality differences.

So that according to me the SWOT analysis is like that:

STRENGTHS

A distinctive competitive advantage.

Adequate financial resources.

An acknowledged market leader as it is having largest market shares of 72%

Competitive advantage as it is considered as governmental Company.

The whole company is fully computerized.

Being a government company it has big contracts with other governmental organizations like Pakistan Railways,

PIA etc.

Pakistan State Oil is the only Oil Marketing Company of Pakistan that has received top 25 Companies Award.

WEAKNESSES

Falling behind in Research and Development.

Below average marketing skills

Less developed website.

Opportunities

There is lot diversity in their products.

They are having faster market growth.

Complacency among rival firms.

They are having opportunity to create better strategic group.

Threats

They have a threat to face adverse governmental policies.

They have a threat of growing competitive pressure.

The biggest competitive threat which they are facing now is “Shell”

Findings:

According to our study

The system of the whole company is computerized

In the whole organization is using modern technology process and techniques.

All of its officers are very co-operative.

They are sincere enough to their company.

All of them were having the strong attachment with PSO.

The employees are committed with their duties.

It is one of the biggest oil marketing company in Asia

It has the biggest market share in Karachi Stock Exchange.

PSO has less developed Research and Development department.

PSO is having the support of government.

Suggestions:

Nothing is perfect in this life so that PSO should also have to improve itself.

Its should improve its research and development.

They should improve their services at their retail outlets.

They should focus more on their marketing activities.

They should promote themselves during national events like cricket tournaments.

Conclusion

In this way, it was a good chance to get practical experience and close look of official working. During our project we got a

prestigious exposure of business field. We got a chance to sharp our interpersonal skills and communication skills. We came to know

how to communicate in the business world and attitudes of personnel. We got confidence to move in the practical field.

Swot analysis

SWOT ANALYSIS

THREATS

Competitive threats

Loss due to similar products

More inclination towards CNG

OPPORTUNITIES

Can enter new markets

Diversity into related products expansion of shop stops

More contracts with PARCO

STRENGTHS

Acknowledged market leader

Corporate responsibility to community and environment

Distinctive core competencies

Well conceived functional area

Awarded company

WEAKNESSES

Weak R&D abilities

Plagued with internal problems

Interference by govt.

Weak conceived image

Vulnerable to competitive pressures

SWOT Analysis, which is key step in planning, helps marketers to focus on key issues. Once these key issues have been identified

they feed into marketing objectives.

Pakistan State Oil Company Ltd. Have also some strength, weaknesses, opportunities and threats as being in the oil marketing

company.

Strengths

The most dominant strength of PSO is that it is the largest Oil Marketing Company (OMC) in Pakistan with a

market share of 72%.

PSO utilizes sophisticated equipment and sound industry standards to prevent any form of pollution and

preserve natural habitat.

PSO was the first oil marketing company (OMC) to introduce Premier Plus in Pakistan. It is a low lead gasoline

with a special additive to reduce Carbon Monoxide levels in vehicle emissions. CNG, a much cleaner fuel in place

of gasoline, is also being introduced in Pakistan by PSO.

PSO has a distinctive core competence of strong supply chain as well as strong value chain. Starting from their

supplier to their end consumers, they are well thought off.

Being a government organization, PSO is the leader in distribution of petroleum products to all business buyers.

PSO has been ranked as No.1 performing company in Pakistan by Karachi Stock Exchange and received award

for the 16th consecutive year in 1999-2000.

PSO is the only company in Pakistan which is listed in top 1000 companies of Asia and has received TOP 25

Companies Award every year, for the last 13 consecutive years.

Weaknesses

At present, the greatest weakness of PSO is its poop research and development capabilities as compared to its

biggest competitor, Shell. The R and D department of PSO which is centered only in Karachi is quite inactive in

research field.

Being a government sector, PSO is confronted with many internal problems due to excessive staff and

unnecessary political interference.

The managing Director (MD) of company is changed every time when the government is changed which creates

in stability in the company.

As PSO is a public sector, so people poorly conceive it and there is a conception of lack of managerial skills and

talents about it.

As Shell is the biggest competitor of PSO with a market share of 20% and innovator in new vision program, it has

created competitive pressure for PSO.

Opportunities

PSO can enter new markets by clarifying their image through efficient and effective marketing skills

It can create diversity in its products by complementary products introduction.

It can expand the shop stops into proper restaurants to provide better service to travelers and to create a more

attractive vision of retail outlets.

It can sign more reliable and strengthening term product off-take agreement with Pak Arab Refining Company

(PARCO).

Threats

The biggest threat for PSO is the emerging company of France, the Total. It has started its services in Pakistan

and is gaining wide popularity.

PSO can lose its potential customers due to similarity of products offered by Oil Marketing Companies in Pakistan

Due to more inclination towards CNG, the demand for petrol and HSD is in danger .As is the law of Canadian

government for built in CNG kits in cars, it will be a threat for fuel oils if imposed in Pakistan

Findings and Recommendations

Pakistan State Oil Company Ltd is the finest Oil Marketing Company in Pakistan. Although it faces constant competitive threats from

its competitor Shell, yet it is moving fastly to gain even larger proportion of market share. The Company is maintaining the tempo of

achievements through wholehearted commitment & hard work of its Human Resources and full support of its dealers / agents and

customers. It has remained in the forefront to protect the health and safety of its employee, customers and the environment in which

it conducts its daily operations and shares with the community. The introduction of Internet facility at 150 outlets indicates PSO

concern for providing modern means of communication to PSO dealers and also opens a world of information to communities across

the country. PSO is now in position to serve the requirements of a broader base of customers. Expanding the range of services at its

outlets, PSO has set up easy payment centers, in collaboration with Citibank, at selective retail outlets of Karachi, where customers

can pay their utility bills at any time of the day, avoiding the hassles of long Queues.

PSO has also to make its position stronger in this growing environment. It should appoint checking staff apart from sales men on

retail outlets who can check the quality and quantity of oil products and can listen to the claims of people. Similarly, the R and D

department should conduct research for promotion of its products and for exploring new ways of fascinating customers towards PSO

products .For distributing its products in Northern Areas; PSO has to incur some losses due to higher transportation charges. So

arrangements should be made to make PSO sell on at least breakeven.

Privatization of PSO is underway whereby JP Morgan’s financial advisory consortium is assisting the Government of Pakistan in the

privatization process. The basic purpose of privatization is to more effectively develop the hydrocarbon resource potential of Pakistan

and reducing the growing dependence on imported petroleum.

All these attributes endorse one thing, grow with grace and sound earnings, along with all those associated with PSO, i.e. its

customers, business partners, manpower and share holders. This has been the greatest asset of the Company's Management, able

guidance from its Board of Management (Oil) and Ministry of Petroleum & Natural Resources.

Conclusion

Making a term report of marketing on Pakistan State Oil Company Ltd. was a first experience of my academic career. I visited the

regional office two times along with my colleagues for gathering information. Generally there is a strong believe in public that officers

in there regional offices give a cold response when asked anything. But it is a false notion. As for as our experience is concerned we

were informed of everything we required. What I believe is that this type of practical study enhances interpersonal and

communication skills. So there should be assigned more assignments and projects to enhance our capabilities.

TABLE OF CONTENTS

Introduction 1

Mission Statement 2

Importance Of Company Within Industry 3

Pattern Of Holdings Of The Shares Held By The Shareholders 5

Organizational Structure 6

Functional Departments Of PSO 7

Importance Of Marketing Department Within Organization 8

Marketing Departments Of PSO 10

Retail 10

Industrial Consumers 11

Aviation Department 11

Compressed Natural Gas (CNG) Department 11

Liquefied Petroleum Gas Department 12

Chemical Department 12

Marine Department 12

Lube Sales And Agency Trade Department 13

Importance Of Marketing Research 14

Segmentation 16

Market Segmentation 16

Target Market 18

Hi-Speed Diesel 18

Petrol 18

Castrol GTX Mobil Oil 18

Products Of PSO 19

PSO Automotive Oils 19

Gear / Transmission Fluids 19

PSO Industrial OILS 20

Castrol Automotive OILS 21

Castrol Industrial Oils 22

Industrial Chemicals 23

Fuel Oils 23

Marketing Mix 25

Products 25

PRODUCTION 26

Castrol GTX… 27

High Speed Diesel 28

Pricing Strategy Of Petrol & Diesel 29

Pricing Strategy Of Castrol GTX 29

Current Prices Of These Products 30

Placement, Distribution, Channel, Or Intermediary 31

South Zone Depots 32

North Zone Depots 32

Central Zone Depots 32

Swot Analysis (Maria Rehman) 33

Strengths 33

Weaknesses 34

Opportunities 34

Threats 34

Suggestions 35

Conclusion 35

SWOT Analysis (Maria Mushtaq) 36

Strengths 37

Weaknesses 37

Opportunities 37

Threats 38

Findings: 39

Suggestions: 39

Conclusion 39

Swot Analysis (Misbah Shafi) 40

Strengths 40

Weaknesses 41

Opportunities 42

Threats 42

Findings And Recommendations 42

Conclusion 43