FINAL PROJECT OF STRATEGIC MARKETING

Submitted To:

Mr. Kamran Saeed

Batch:

MBA-E9 (5th

Semester)

Submission Date:

26th January 2015

Submitted By:
Wajid Ali
3335
Haifa Saleem3336
Nabita Ishtiaq
3353
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Shakeel Aslam
3338
Hassan Naseer
3328
Rana Tassadaq
3316

ACKNOWLEDGMENTS
My first and foremost humble gratitude to ALLAH the Almighty for giving me
the valor to remain dedicated to make this final project report.
Apart from this we are taking the opportunity to acknowledge the real efforts of:
First, we would like to thank SIR KAMRAN SAEED, for his valuable support
and encouragement which he has offered. His words of wisdom will always be
remembered, and we are convinced that the knowledge of marketing that he has
imparted would go a long way and helping us all through our professional career.
Secondly, we feel much obliged to our beloved family members for their
moral support and encouragement. Particularly, we have always been
feeling our parents right behind us praying, patronizing and enabling us to
work out the era of life both spiritually and physically and whose prayers
was incessant enabling us to acquire this stay.

We are also very grateful to all our well-wishers for their support, love and
sincerity. May Allah give them reward and bless their lives with love.

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Table of Contents
PART-01................................................................................................................. 5
Executive Summary.................................................................................................... 6
The Industrial Analysis............................................................................................... 7
Standardization in O&G industry.............................................................................8
Reserves/ Numeric status........................................................................................ 8
Competitor Analysis.................................................................................................. 10
Pakistan State Oil:................................................................................................. 10
Chennai Petroleum Corporation Limited:................................................................11
Exxon Mobil Corporation:...................................................................................... 11
INTRODUCTION........................................................................................................ 13
MISSION STATEMENT.............................................................................................. 15
VISION STATEMENT................................................................................................. 16
Core Values............................................................................................................... 16

PART-02............................................................................................................... 17
Business Units Details.............................................................................................. 18
Exploration and Production:..................................................................................19
Gas and Power:...................................................................................................... 19
Refining and Marketing:......................................................................................... 19
Chemicals:............................................................................................................. 20
Trading and shipping:............................................................................................ 20
Product Mix.............................................................................................................. 20
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Product Life Cycle...................................................................................................... 21

Competitive Advantage.............................................................................................. 23
Porters 5 Forces Model............................................................................................. 25
Shell Petrol:............................................................................................................... 26
Shell Gas (LPG):........................................................................................................ 26
Potential Entrants:................................................................................................. 27
Bargaining power of customers:..............................................................................28
Bargaining power of Suppliers:............................................................................... 29
Threats of Substitutes:........................................................................................... 29

PART-03............................................................................................................... 31
Functional Departments Details................................................................................ 32
Shell I.T Department:............................................................................................. 32
Marketing and Sales Department:..........................................................................32
Service Department:.............................................................................................. 33
Procurement Department:...................................................................................... 33
R&D Department:.................................................................................................. 33
Marketing Strategies.................................................................................................. 34
Current Marketing Strategy of Shell Pakistan Ltd:..................................................34
Marketing.................................................................................................................. 35
Advertising................................................................................................................ 36
Target Market......................................................................................................... 37
Market Segmentation............................................................................................. 37
Ansof Model For Shell Pakistan Ltd...........................................................................39
SELLING OUT........................................................................................................ 39
CONSOLIDATION................................................................................................... 40
MARKET PENETRATION........................................................................................ 40
MARKET DEVELOPMENT...................................................................................... 40
PRODUCT DEVELOPMENT.................................................................................... 41
DIVERSIFICATION................................................................................................. 41
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a)

RELATED DIVERSIFICATION.......................................................................41

b)

Unrelated Diversification............................................................................... 41

CONCLUSION........................................................................................................... 42

PART-04............................................................................................................... 43
Recommendations..................................................................................................... 44
References................................................................................................................. 45

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PART-01

Executive Summary
Shell is a superior brand name with more than 100 years history in this
region. In fact the company is still in possession of a fuel storage tank from
1899. However, the documented history of the Royal Dutch/shell group the
Indo-Pak subcontinent dates back to 1903 when a partnership was struck
between the shell transporter and trading company and the Royal Dutch
petroleum company to supply petroleum products in Asia.

With their key indicators of progress already soaring to new heights, Shell
is committed to dedicate all its energies, resources and the time to bring
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higher value and satisfaction to their customers, employees and

shareholders.

The graph of Shell is going up every year. The ratio of profit is increasing at
good percentage. Shell is serving the people at high level of standard by
going according to the wishes of the customers.

The Industrial Analysis

This is the legendary industry and is serving the fuel cravings of the globe since a
century. This is none other than the giant Oil and Gas industry. The population of
the world continues to grow, as does the average standard of living, increasing
demand for food, water and energy and placing increasing pressure on the
environment. The population of the world more than doubled from 3.2 billion in
1962 to 7.1 billion in 2014 and is forecast to grow to 9.2 billion in 2050.
Supplies of oil, gas, coal and uranium are forecast to peak as reserves are depleted.
At the same time, fear of climate change is putting pressure on the energy sector to move
away from carbon burning to nuclear, solar and other environmentally friendly
energy sources. Oil accounts for between 34%-37% of the world's primary energy.
Components of crude oil are feedstock to the chemicals, plastics and fertilizer
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industries. The petroleum and natural gas sector which includes transportation,
refining and marketing of petroleum products and gas constitutes over 15 per cent
of the GDP.
The following exhibit1 clearly shows that the demand for the energy is expected to
grow linearly in the future and the dependence would be more and more on the oil,
thus there is a dire need to cater to the energy demand and explore and encourage the
alternative sources of energy.

World Energy Consumption, 1990-2030

Standardization in O&G industry

The oil and gas industry is working worldwide on the API (American Petroleum
institute) standards, these standardization are helpful in increasing the revenue and
efficiency. The German National Standards Body, or DIN, recently studied the
direct economic benefits of standardization, in this study, published in 2000, the
direct economic benefit of standardization was found to be 1% of Gross Domestic
Product, or GDP.
These standards have led to many benefits to the major oil companies, a few
instances are: in the North Sea, the Norwegian oil industry has developed some 80

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harmonized specifications, called NORSOK standards which led to the cost

reductions including savings from shortened project schedules and refined
engineering, along with capital and operating cost savings.
A petrochemical manufacturer reduced plant turnaround costs by $2.5 million in
one year by implementing an industry-developed risk-based inspection
methodology for process equipment based on 125API550 standard.

Reserves/ Numeric status

According to the 2014 BP Statistical Energy Survey, the world had proved oil
reserves of 1237.875 billion barrels at the end of 2013, while consuming an
average of 95219.7 thousand barrels a day of oil in 2013. OPEC members hold
around 75% of world crude oil reserves. The countries with the largest oil reserves are, in
order, Saudi Arabia, Iran, Iraq, Kuwait, United Arab Emirates (UAE), Venezuela, Russia,
Libya, Kazakhstan and Nigeria.
According to the 2014 BP Statistical Energy Survey, the world had proven natural
gas reserves of 177.35 trillion cubic meters and natural gas production of 2939.99
billion cubic meters in 2013. Although the world has 3,600 billion barrels of
unconventional oil reserves, these require significant energy and water to extract.
Wood Mackenzie estimated the worlds unconventional oil reserves as comprising
heavy oil (107 billion barrels), extra heavy oil (457) and shale oil (2,800).
The main sources are Canada, Venezuela, Madagascar and Texas. According to the
2014 BP Statistical Energy Survey, the world had a refinery capacity of 87913.34
thousand barrels a day. A study by Harrison Lovegrove has shown that that the
world consumes 29 billion barrels of oil per year.

Field

Country

Date

Carioca

Brazil
Kazakhstan
Brazil

2012
2006
2010

Kashagan
Tupi
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Reserves (billion)
33
14.6
4.0

Niban
Azadegan
Yadavaran
Shah Deniz
Dolginskoye
North Samburgsoye
Nanpu
Dalia

Saudi Arabia
Iran
China
Azerbaijan
Russia
Russia
China
Angola

2005
2004
2006
2005
2005
2004
2009
2003

4.0
3.5
3.0
2.1
1.9
1.8
1.3
0.9

Competitor Analysis
Shell Pakistan Limited Operates in the Petroleum refining sector. Major
competitors of Shell are PSO with petrol pumps and Caltex with petrol pumps.
But Shell Pakistan Limited operates in the Petroleum refining sector. This Analysis
compares shell Pakistan Limited with three other petroleum refiners in Asia.
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 Chennai Petroleum Corporation Limited

National Refinery Limited
Mangalore Ref & Petrochemicals Limited

Pakistan State Oil:

The past of PSO dates back to mid-70s when the Government of Pakistan
amalgamated three Oil Marketing Companies,
Esso Eastern
Pakistan National Oil (PNO)
Dawood Petroleum as part of its Nationalization Plan.
The company is the only public sector entity in Pakistan that has been competing
effectively with three multinationals (Shell, Caltex and Total). PSO is currently
enjoying over 73% share of Black Oil market and 59% share of White Oil market.
It is engaged in import, storage, distribution and marketing of various petroleum
products including mogas, high speed diesel (HSD), fuel oil, jet fuel, kerosene,
liquefied petroleum gas (LPG), compressed natural gas (CNG) and petrochemicals.
PSO also enjoys around 35% market participation in lubricants and is
blending/marketing Castrol brands, in addition to a wide array of its own. It is
considered as one of the most successful mergers in the history of Pakistan. The
company has retail coverage of over 3,800 outlets, representing 80% participation
in total industry network.
The company has been the winner of Karachi Stock Exchange Top Companies
Award for many years and is a member of World Economic Forum.
PSO serves a wide range of customers throughout Pakistan including retail,
industrial, aviation, marine and government/defence sectors. PSO has been
meeting the countrys fuel needs by merging sound business sense with national
obligation.

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The Government of Pakistan (GOP) holds approximately 54% stake in Pakistan

State Oil Company Limited (PSO), including both direct holdings of the Federal
Government and indirect holdings through GOP owned institutions. The GOP is in
the advanced stages of divesting 51% of the in PSO to a strategic investor.

Chennai Petroleum Corporation Limited:

Chennai petroleum corporation limited of India (2001 sales of 69.56 billion Indian
Rupees /US$1.44 billion of which 100% was Oil & gas exploration).
National Refinery Limited (34.33 billion Pakistan Rupees /US$571.61 million of
which 93% was Fuel).
Mangalore Ref & Petrochemicals Limited, that is based in India (27.85 billion
Indian Rupees /US$577.35 million of which 100% was Petroleum products).

Exxon Mobil Corporation:

Exxon Mobile Corporation is the global competitor of Shell, which is engaged in
exploration and production of crude oil and natural gas, manufacture of petroleum
products, and transportation and sale of crude oil, natural gas, and petroleum
products. The company also manufactures and markets commodity petrochemicals
and specialty products. Exxon Mobil is also engaged in electric power generation.
The company operates across the globe.

Exxon Mobil operates through three segments:

Upstream
Downstream
Chemicals

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The upstream segment explores for and produces crude oil and natural gas. The
company's upstream business has operations in 36 countries and includes five
global companies. The company's upstream operations are run in the US, Canada,
South America, Europe, the Asia-Pacific, Australia, the Middle East, Russia, the
Caspian, and Africa. The company's downstream activities include refining, supply,
and fuels marketing. The chemicals division manufactures and sells
petrochemicals.

Significant deals in recent past:

Exxon Mobil divested its 3.7% stake in China Petroleum and Chemical
Corporation in 2005.
Further in 2007, Sinopec, Exxon Mobil, and Saudi Aramco received the
government approval for the Fujian Refining and Ethylene Joint Venture
Project.
With a total investment of about $5 billion, was Exxon Mobil's first fully
integrated refining, petrochemicals, and fuels marketing project with foreign
participation in China.
Exxon Mobil announced an investment of about $100 million in offshore oil
exploration in Philippines, in June 2008.
In March 2009, announced an investment between $25 billion and $30
billion annually over the next five years to meet expected long-term growth
in world energy demand.

INTRODUCTION
Shell is a global group of energy and petrochemicals companies. According to the
manager, With around 101,000 employees in more than 140 countries and
territories, Shell helps to meet the world's growing demand for energy in
economically, environmentally and socially responsible ways.
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The Shell brand is one of the most familiar commercial symbols in the world.
Royal Dutch Shell is the world's largest private sector oil company by revenue,
Europe's largest energy group and a major player in the petrochemical industry.
One of North America's leading producers of oil, gas, and petrochemicals, Shell
Oil Company has distinguished itself through its commitment to industry
innovation. Its marketing expertise has enabled the company to compensate for its
relatively low volume of crude oil production, as compared to its strongest
competitors, by selling an equivalent amount of gasoline nationwide.

Although the company conducts business primarily in the United States, Shell also
explores for and produces crude oil and natural gas outside the country, both
independently and through joint ventures with other subsidiaries of its parent
organization, Royal Dutch/Shell Group. Shell Petroleum Inc. is a holding company
that is 60 percent owned by Royal Dutch Petroleum Company and 40 percent
owned by The Shell Transport and Trading Company.

Shell has five core businesses: exploration and production, gas and power, refining
and marketing, chemicals, and trading and shipping. Shell's primary business is the
management of a vertically integrated oil company. The development of technical
and commercial expertise in all the stages of this vertical integration from the
initial search for oil (exploration) through its harvesting (production),
transportation, refining and finally trading and marketing established the core
competencies on which the company was founded. Similar competencies were
required for natural gas, which has become one of the most important businesses in
which Shell is involved, and which contributes a significant proportion of the
company's profits.

Over the years Shell has occasionally sought to diversify away from its core oil,
gas and chemicals businesses. These diversifications have included nuclear power
(a short-lived and costly joint venture with Gulf Oil in the USA); coal (Shell Coal
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was for a time a significant player in mining and marketing); metals (Shell
acquired the Dutch metals-mining company Billiton in 1970) and electricity
generation (a joint venture with Bechl called Intergen). None of these ventures
were seen as successful and all have now been divested.

If we talk about a single franchise, it provides:

Oil change service

Convenience store
Gas
Petrol

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MISSION STATEMENT
Manager of Shell in Islamabad defined the mission statement of Shell
Petroleum Pakistan as:

Our aim is to meet the energy needs of society, in ways that are
economically, socially and environmentally viable, now and in
the future.

Shell is basically an oil company. Its products include oils, fuels, and card
services as well as exploration, production, and refining of petroleum
products. The mission of this organization is to manufacture and supply oil
products and services that satisfy the needs of their customers. Constantly
achieving operational excellence, conducting their business in a safe,
environmentally sustainable and economically optimum manner,
employing a diverse, innovative and results oriented team motivated to
deliver excellence. Obviously, an organizations main purpose is meeting its
profit requirement, so Shell wants to meet the energy needs of the society
with high financial performance.

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VISION STATEMENT
To be the market leader and deliver the best value to their stake holders.
Our vision is to reinforce our position as a leader in the oil and
gas industry in order to provide a competitive shareholder
return while helping to meet global energy demand in
a responsible way.
In Upstream they focus on exploring for new oil and gas reserves and
developing major projects where their technology and know-how adds
value to the resource holders.
In Downstream their emphasis remains on sustained cash generation from
their existing assets and selective investments in growth markets.
So, overall the vision of organization is to lead the oil and gas industry and
to develop itself according to the change in demand of their customers in a
profitable way but at the same time, this way should be environmental
friendly and should not cause any harm to the social values. Shell is also
working for many social causes by operating different NGOs for
deforestation, betterment of education.

Core Values
Shell Pakistan Ltd. employees share a set of core values like honesty, integrity and
respect for people.
They also firmly believe in the fundamental importance of trust, openness,
teamwork and professionalism, and pride in what we do.
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PART-02

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Business Units Details

Product:
Anything that can be offered to market for attention, acquisition, use or
consumption that might satisfy a want or need. The oil products of shell are given
below.

Services:
Services are the form of product that consist of activities, benefits, or satisfaction
offered for sale that is essentially intangible and do not result in the ownership of
anything. The services that provide shell Pakistan limited are given below.

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 There is credit card that given to the customer, in presence of these credit
card shell provide all types of services without getting charges.
When customer of shell going for pouring oil then also clean the
transportation that is coming for being filled the oil.

Business Units
If we talk about a single Shell outlet, it has following units as told by the
manager:

Petroleum:
Filling the petroleum in vehicles

Gas:
Filling gas in the vehicles according to their need

Oil Change:
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Changing oil in vehicles

Convenience Store:
Providing snacks and other things of basic necessity to customers

Now, if we take the whole organization in view, then it has following

business units:

Exploration and Production:

To extract the petroleum and produce the fuel needed.

Gas and Power:

The extraction of gas and power and its provision to service outlets

Refining and Marketing:

To refine the extracted material and make it fit for use and then its
promotion etc.

Chemicals:
Different chemicals produced

Trading and shipping:

Trading it to different parts of world where Shell is working.

These were the major departments. Other than that, there are separate
organizations settled for handling management activities such as human
resource, controlling and assurance etc.

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Product Mix
Product mix is the set of all the products offered for sale by a company.
The structure of product mix has both breadth and depth. Its breadth is measured
by the number of product line carried and its depth by the variety of sizes, colors
and models offered within each product line. Thus the two main products which
Shell Pak. offers are fuel and lubricants. These have further classifications in
various constituents which form the product line.

Product line:
Shell has two product lines namely, fuel and lubricants.

Fuel:
Shell offers a wide range of fuel. These are:
Hi-Octane
Super Unleaded
Super
Hi-speed Diesel
CNG

Lubricants:
The various lubricants offered by Shell are;
Rimula C
Rimula D
Rimula X
Helix Plus
Helix Super
Helix Standard
Shell Helix(CNG)

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Product Life Cycle

Product Life Cycle Stages:
Product Life Cycle means the changes in the sales volume of the product over the
life the product. In market there is always ups and downs are present because this
is a dynamic world. Everything will have to finish after certain time period, by
finishing their life, so the life cycle of Shell is.
The stages through which individual products develop over time are called Product
Life Cycle. The classic product life cycle has four stages.

Introduction Stage:
At the introduction stage market size and growth is slight. It is possible that
substantial research and development cost have been incurred in getting the
product to this stage. In addition, marketing costs may be high in order to test the
market, undergo launch promotion and set up distribution channels.

Growth Stage:
The growth stage is characterized by rapid growth in sales and profits. Profits arise
due to an increase in output [economies of sales] and possibly better prices. At this
stage, its cheaper for business to inset in increasing their market share as well as
enjoying the overall growth of the market. Shell Pakistan introduction stage is
successfully done because it comes from the international market and enters in

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Pakistan market. Now company has about 40-45.5% of market share and still
growing.

Maturity Stage:
The maturity stage is perhaps the most common stage; it is in this stage that
competition is most intense as companies fight to maintain their market share. Here
both marketing and finance becomes key activities. Marketing spend has to be
monitored carefully, since any significant moves are likely to be copied by
competitors. Shell Pakistan not yet enters in maturity stage.

Decline Stage:
In the decline stage the market is shrinking, reducing the overall amount of profit
that can be shared amongst the remaining competitors. At this stage great care has
to be taken to manage the product carefully. Shell Pakistan is a brand name and
company is not in decline stage because their sale increases day by day.

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Competitive Advantage
Shell operating capacity is decreasing consistently over the past three years and the
utilization rate came to 80% which was 90% in 2010, where the capacity
utilization of Exxon Mobil is 85% i.e. the Shell has managed to work at higher
capacity utilization rates and is planning to achieve a utilization rate of 110% by
2015. Exxon has maximum production capacity of 190,000 barrels of oil a day
which is only from the 9 major operated countries by Mobil Nigeria, which is more
than Shells 115000 barrels per day.
Shell has some 300 distribution facilities and more than 3,000 storage tanks in
around 70countries. They move products through Europe and the USA through
9,000 km of pipeline. Their global fleet of around 7,000 Shell-owned or contracted
trucks travels over 1.7 million km every day and makes a delivery somewhere in the world
every seven seconds.
For the last three years shell has spent $3.5 billion to reduce the energy
requirements, environmental impacts and running costs of current operations. It
also develops technologies that help us capitalize on business-growth
opportunities, both in Upstream and in Downstream. And it can create entirely new
technologies, such as those needed for alternative fuels or carbon capture and
sequestration, which may become part of the worlds energy system in the longer
term.
They employ around 30,000 technical staff in centers across the world. From
scientists to business experts, their employees and contractors work to deliver their
research and development program, finding innovative solutions to the worlds
energy challenge.
Smart technology thinking is helping meet that demand by finding ways to get
more from what theyve got, to developing new and alternative energy sources to
power our future. The Shell is providing the down-hole monitoring, enhanced oil
recovery facilities to develop the high yielding smart fields. It also has huge shale
shakers which purifies the contaminated sand and mud.

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The Shell has implemented the methodology to use the enzymes eating straw, oil
squeezed from algae, and wood chips turned to liquid. Shell is pursuing all of these
in the development of better biofuels that could see CO2 reductions and a
sustainable alternative fuel source that does not compete with food crops.
They are committed to preventing spills from happening and to containing and
properly cleaning up any spills that do occur. They have been working hard to
reduce the emissions of local pollutants - like NOx, SO2 and VOCs - from their
operations.

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Porters 5 Forces Model

The idea of this analysis is to identify what makes one firm stand out from the
others. How is the organization different?
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Shell has managed to differentiate itself through the following methods:

The company has a large number of specialists and specialized employees in the
areas of scientist for their research and development divisions. They have devised a
unique program called Enhanced Experimentation (EE) accelerates research and
development by allowing higher performance testing efficiency of new products,
which translate into shorter development phases and ultimately quicker routes to
market.
Shells response and adaption to new technology advances and special ordering
techniques has made it possible for them to meet its customers' requirements
for speed, responsiveness and quality assurance in an increasingly competitive
market. Speed of delivery is essential in a consumable market, if petrol
pumps run dry customers will drive to the next available petrol station.

Shell Petrol:
At Shell they are constantly striving to create the best fuels for their customers.
They have invested heavily in leading edge research and development. They're
working hard to give you better fuels which will take you further. They've
conducted a range of laboratory tests, which have shown that Their Better Mileage
formula can help moving parts within your engine run more easily which
effectively burns less energy - and a more efficient engine, means improved fuel
economy.

Shell Gas (LPG):

Shell Gas LPG (Pakistan) Limited is a public limited LPG Company, listed on
Karachi and Lahore stock exchange. The Company was incorporated in Pakistan in
October 1966, initially as unlisted company, under the name of Burshane Pakistan
Limited.

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The Companys principal business activity is storing, filling and marketing of

Liquefied Petroleum Gas (LPG) throughout Pakistan. Due to its pioneering efforts
in the LPG market in Pakistan, Shell is now a household name in Pakistan and is
considered synonymous with Quality, Reliability and Safety with regards to
marketing bottled LPG in Pakistan. In 2001 the Company participated in the
privatization of LPG business of Sui Southern Gas Pipelines Limited (SNGPL) and
managed to secure the business. This has increased SGPs indigenous allocations
and gives it a market share of approximately 8%.
Shell produces 3.1 million barrels of gas and oil every day compared to its rivals.
This gives Shell another advantage over its competitor as it can reduce its prices
when supplying more markets and add to its reserves. Economic theory states that
when supply is more than price is reduced.
Shell currently has a vast number of service stations in Pakistan as compared to
competitor service stations in Pakistan. Therefore the reach and spread of Shells
customers are much larger this gives off the image to customers that Shell is more
accessible and at the same time presenting and maintaining its brand image.

Potential Entrants:
Although Shell is one of the largest companies in terms of revenue they still fear
competition with threats of new entrants mainly in the form of local suppliers:
Shells barriers to entry include:
Economies of scale where they benefit from reductions in output costs due
to their large scale of production.
Capital investment is high so new entrants will have difficulty raising the
capital needed to start such a large corporation in order to meet the existing
competition of such big oil company. The need for specialized equipment,
employees, land etc.

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 Business relations and partnerships are already established and the market is
already mature, Shell already occupies many areas for the extraction of raw
materials this makes it difficult for new entrants to compete.
Infrastructure, such as logistics and transportation that Shell already acquires
is vast spread and took years to build. New distribution channels are difficult
to establish.
Experience is one of Shells advantages; the expertise that they acquire is not
so easily available.
For the case of PSO their barriers to entry are equal to that of Shell. Except Shell
possess more of each of the above statements.

Bargaining power of customers:

As mentioned before the oil industry is an unusual market as demand for fuel
remains high, it is more of a necessity rather than a luxury. Economies/Countries
rely on the supply of energy. However switching costs, price-awareness and
product quality are issues to be considered for organizations in the oil industry.
Barriers that Shell are capable of are as follows:
Customers choosing to fill-up at Shell or PSO stations will make little or no
difference to the consumer. However using pricing strategies has proven to
be a major success. The consumer buying pattern of fuel has shown that
people will drive for miles and miles in order to receive cheaper petrol down
to the pence. Price wars over petrol pump prices have hit the headlines
between competitors.
For Shell accomplishing brand awareness relating to quality and fuel
efficiency in their advertising slogan You Can Tell When its Shell. The
Shell logo of yellow and red is easy to identify and locate. They maintain
standardization globally (like McDonalds).

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 Other marketing strategies that offer the customer pay at the pump, 24 hour
stations, convenience shops at their stations, fuel cards for businesses,
loyalty rewards, money vouchers, air-miles etc.

Bargaining power of Suppliers:

Although Shell is a supplier of energy they also need supplies to conduct their
business. Suppliers can control/increase prices. The following points are issues that
would concern Shell:
If suppliers have other customers outside the industry and do not rely on
Shell as their prime customer. For example specialized machinery such as oil
tankers, refinery and drilling equipment.
If their suppliers are few (monopolistic, oligopolistic) and can charge high
prices. For Shell, their I.T software solutions are supplied by Microsoft. The
bargaining power of Microsoft is high; they operate in a global monopolistic
environment and most if not all businesses rely on Microsoft for their
software.
If switching costs are high between suppliers.
Suppliers of raw materials

Threats of Substitutes:
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Although world is thinking about the substitute products of petroleum for

protecting the worlds atmosphere and for minimizing the chances of disease which
are being caused by the pollution created by the extensive use of petroleum
products. The substitute which are research are Bio-Fuel, Water and Uranium but
these substitutes are far away from being used in day to day life because yet
scientists are working on generating fuel from Bio materials and waters which will
be used on large scale and the Uranium which can be a substitute product but its
dangerous effects on environment and its limited availability is the hurdle in this
way.
But with the advent of alternative energy sources, the threat of substitute products
has risen, such as from bio fuels. Many companies are now investing in bio fuel
technologies to respond to social, environmental and political pressures.
If talk about Shells LPG in Pakistan then the biggest threat for it is the use of CNG
because in recent years govt. of Pakistan has given a number of licenses to open
the CNG stations, which shifted the focus of many LPG users to CNG because of
low prices but currently Pakistan is facing energy crises and natural gass shortage
thats why the use of this threat has declined drastically.

The benefits of Porters five forces help the organization to analyze whether the
business is in a strong or weak position overall in its external competitive
environment (the first layer of the diagram above Aspects of the external
environment). All the above analysis so far has been concentrated on the external
analysis with reference to the primary objectives and the identification of
stakeholders.

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PART-03

Functional Departments Details

There are many major departments in Shell. It includes IT department,
marketing department, sales department and other than that, there are
separate organizations settled for handling management activities such as
human resource, controlling and assurance etc.
Following are the details of few functional departments of Shell.

Shell I.T Department:

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 The IT department is very functional because it carries the collection of the

electronic requisitions from its clients.
The department then forwards the requests to the department that is
concerned with the requested product.
The department also maintains the networking software which is a platform
for all the employees and clients of SPL.
The intranet of shell at all the petrol pumps can communicate with each
other and with the shell administration.
Shell has a global HR system and video conferencing and other modern day
means of communication are used frequently to transmit commands
globally.

Marketing and Sales Department:

Shell markets itself as the largest fuel provider, where its service centers are
located in 90 countries worldwide. It adds the image of an innovation and qualityfocused company which does not compromise on performance. Although, Shell
has previously received an excellent amount of sales revenue, recently, there has
been a decline, due to rise in oil prices, rising social exposure of the workforce
exploitation and environmental degradation by the company.

Service Department:
Shell service department is very functional because it uses its helpline service to
address customer complaints and queries. Other than that, there is no extensive or
special form of service that Shell offers to customers with regard to complaints and
queries. Shell service stations have the direct interaction with the customers and
the company makes sure that the employees address to customers appropriately
and offer services in the standard way.

Procurement Department:

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Shell is now engaged in e-procurement, using the help of SAPs support systems to
enhance its supply chain activities. SAPs support offers an ERP system that allows
procurement to be done online and this department is functional since 2010.

R&D Department:
The functionality of R&D department is very apparent because over $1.2 billion
have recently been spent by Shell in research and development of new
technologies to gauge the most benefit out of the reserves of oil and gas and find
new opportunities for investments (Shell, 2010 [online]). Technological innovation
development in extracting energy is a key strength of the company and it is
continually engaged in investing in new technologies that would give it an edge
over its competitors.

Marketing Strategies

Current Marketing Strategy of Shell Pakistan Ltd:

The current strategy of shell is concentrate on its business and selected market
areas. By using this strategy company expands its business by upgrading petrol
pumps in the country.

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Especially they are concentrating in the following three areas:

Customer Services
Brand Image
Quality and quantity

1- Customer:
Our customer is high class, low class and also middle class, because every class is
used petrol for consumption.

Customer Services:
Shell Pakistan Ltd is working for customer satisfaction because customers play a
very vital role in the prosperity or failure of a particular company. That is the
reason that shell is operating with the basic aim to satisfy its customers and provide
better and better service to its customer. In brief it can be said that shell gives a
strong emphasis on customer services.

Customer Knowledge:
Shell Pakistan is fully committed to achieve excellence in customer services and
product quality. This can only be done by having complete knowledge of the needs
and wants of their customers. It is due to this reason that Shell Pakistan has
established a special customer service center by the name of Shell Edge.

2- Brand Image:
The Second strategy of shell is creating a strong Brand image of the company in
the customer mind. In Visual terms, the installation of Shells Retail Visual Identity
(RVI) makes a striking and immediate difference between shells gasoline stations
and those of its competitors, Pakistan state Oil (PSO) and Caltex. The RVI
programmed is massive, for the 1200 or so sites which shell inherited through the
takeover, around two thirds are scheduled to be developed as RVI sites, many of
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them being completely redesigned from the underground storage tanks up. In
addition, new sites are being acquired in strategic locations.

Marketing
At the moment Shell Pak. has a market share of about 40% to 45% in Pakistan. It is
trying hard to become the market leader in Pakistan. Shell has strong distribution
channels. Their market size is very large. Therefore, marketing staff is very
efficient and their main objective is satisfying the customer and people have the
brand loyalty.

Market leadership due to innovation:

Shell is considered to be the market leader in innovation. It was the first company
to get legal approval to operate mini-market. It was the first among its competitors
to introduce (rainbow) jet wash and (prosper) branded oil change facility. It
provides suggestive literatures to its customers while launching a new product such
as Helix super and Helix Lubricant etc.
It was also the first company to introduce the concept of Mobile Training Unit
(MTU) for the purpose of training the workers and workers and introducing quality
and quantity control units, which check the quality and quantity of major gasoline
at various filing stations.

Product knowledge:
As there are so many products offered by the shell, it is very important that the
customers have full knowledge about the product. Shell Pakistan informs
customers by their marketing and positions itself in their mind.

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Subliminal Marketing:
According to the shell manager they do subliminal marketing by keeping their
prices high. High prices mean superiority. This will automatically appeal to the
customers as this is human psychology high prices means high quality. So shell
will be considered as the best quality provider.

Advertising: Promotion
Objective of Advertising:
Shell advertises both on electronic and print media to keep its customers well
informed. The company has also started a magazine named Spirit to promote its
products.

The types of advertisements which Shell Pakistan Ltd. Has adopted are as follows:

Informative Advertisement:
Shell adopted this strategy when it launched its Shell Helix CNG Oil. It adopted all
kinds of media to inform the public about the new product. Shell advertised
through Television, News Papers, billboards, etc. to build a good product image in
the minds of the customers.

Persuasive Advertising:
Shell Pak Ltd. also adopts such strategy to compete with its competitors. You must
have seen various adds of Shell featuring celebrities like Michael Schumacher in
order to make them attractive and also adds in which comparison is made among
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Shell and competitors products. Comparison features include purity, viscosity,

efficiency and performance.

Target Market
A target market is the market segment which a particular product is marketed to. It
is often defined by age, gender socio-economic grouping. It is the process of
evaluating each market segments attractiveness and selecting one or more
segments to enter. Market targeting depends upon the financial positioning of
company. If company is strong financially then he must go for market targeting.
Shell in Pakistan produces verities of products. All these products are available
urban as well as rural area.

Market Segmentation
Shell Pakistan ltd. Divide his market in to following segments:
Demographic segmentation
Geographic segmentation
Psychographic segmentation

Demographic Segmentation:
Shell introduces their product for upper class, upper middle class and middle class.
In other words shell produces its products for everyone who have automobile.

Geographic segmentation:
This is all about the segmentation of shell. Shell provides facilities of petroleum to
urban as well as rural areas.
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Levels of Market Segmentation:

There are three levels of market segmentations
Mass marketing
Segment marketing
Niche marketing

Mass Marketing:
Shell Pakistan limited goes for the mass marketing because its distribution is very
extensive. Internationally its products are goes into international market.

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Ansof Model For Shell Pakistan Ltd.

There are two separate aspects, which are needed consideration for development
alternative strategies.
1. The alternative direction in which the organization may choose to develop.
2. The alternative methods by which the direction of development might be
achieved.

Decision on direction and methods are not independent of each other. Now we
shall discuss the direction in which the shell limited may choose to develop.
1.
2.
3.
4.
5.
6.

Selling out
Consolidation
Market penetration
Product development
Market Development
Diversification
a) Related
b) Unrelated

SELLING OUT:
In selling out if the company feels any danger about the survival of company; the
company would like to dispose of its assets. Shell is the biggest company of the
world. It has a strong financial position. That is why shell does not choose such
type of direction even in Pakistan because it has healthy market share in Pakistan
too.

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CONSOLIDATION:
In such direction, the company will change the way of operation but concentrate on
present state of business. Shell is waving on this direction. The shell is waving by
following factors!

Maintaining a share in a growing market

Competing in a declining market
Improving quality
Increasing market activity
Imposing productivity through capital investment

MARKET PENETRATION:
Opportunities often exist for gaining market shares as a deliberate strategy
This is called market penetration. The shell is also working on this direction by
providing better services on its company operation sites.

MARKET DEVELOPMENT:
In market development, the company locates any new areas where it could start its
business to minimize the risk. Market development can include new market
segment. Shell has no capital problem that is why Shell is working on the direction
of market development. The proof of this is that Shell has expanded its business
more than hundred countries. Now Shell is expanding its business in all small and
big cities of Pakistan.

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PRODUCT DEVELOPMENT:
Shell will feel that the consolidation in their present market does not adequate
opportunities after the search for coping with changing environment. Shell
developed the product of CNG. This shows that shell is also working on this
direction.

DIVERSIFICATION:
Diversification means new product and new market. The two broader concept of
diversification are:

a) Related diversification
b) Unrelated diversification

a) RELATED DIVERSIFICATION:
Related diversification means development beyond the present product and market,
but still within the broad confines of the industry in which the company operates.
Shell has introduced CNG that is the best example of related diversification.

b) Unrelated Diversification:
It is the development beyond the present industry into product/market, which have
not clear relationship with present product/mkt. Shell is interested in other business
e.g., petro chemicals, coal and metals.
We have selected two strategic options for improvement of shell performance as
maintain the leader of quality in the customer services. For this purpose we
evaluated them, which is better to achieve the organizational objectives.
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 Product Development
Market Development

CONCLUSION
Shell is a global group of energy and petrochemicals companies. Its products
include oils, fuels, and card services as well as exploration, production, and
refining of petroleum products .As like other organizations Shell has its own
Mission, Vision, ways of carrying out the all the marketing functions. It has its own
structure and hierarchy as well as leadership style. It functions as a complete
organization having its braches worldwide carrying out different strategies and
techniques to reach its goals and mission.

It has positioned well in customers mind and has created good brand image. All of
its marketing strategies are very effective and are helping Shell reach the heights.
Shell Pakistan has maintains its image in this fast moving world with its core
values and giving more importance to its customers. With the research and
development that its departments carry puts the results into time-to-time changes
and innovations that lead the organization to better performance and achievement
of goals.

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PART-04

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Recommendations
There should be proper shades and proper sitting arrangements at the filling
stations.
Lubricants should be disposed in a proper way to protect the environment
from being polluted.
Shell should provide small incentive to its customers.
Shell should make company operation site in every city to capture the new
market.
There is only one thing that is constant that is change; shell should invest on
research& development to cope with dynamic environment.
Company should establish new regional office to control the activities of
company operations.
The company should provide the facility of free oil change on all its outlets.
Shell should develop modern retail outlets. These outlets should have all
possible facilities for customers because one of the reasons behind decrease
market share is modernization of competitors.
Shell should develop effective marketing programs that help the company to
increase sales that will lead to increase the market share. In these market
programs emphasis should be given to advertising, which is the most
effective and efficient tools of promotion for such type of business.

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References:

http://shell.com
http://wiki.answers.com
http://allbusiness.com
http://en.academic.com
http://thefreedictionary.com
http://scribd.com
http://wikipedia.com
http://soopertutorials
http://slideshares.com

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