Essential of marketing Case Study Shell Company
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Essential of marketing Case Study Shell Company
Introduction
In the current modern business company, marketing plays a vital role; as it involves various concepts which include having a deeper understanding of the market place, how the demand of the consumers in the market behave, the strategies to use in order to drive the consumers in the market, and the quality of the products to be supplied to the market for the consumers. Due to the increased competition in the market, the organisations have come to realize the importance of marketing of their products. Therefore they strive to innovate which they can use to have an approach towards the marketing strategy for their products in the market. In the current market strategy, marketing has become very critical; thus marketing essential awareness has become very vital to any firm which has an aim of remaining competitive in the market.
As an example Shell Company is an oil based organisation which has what is known as B2C market structure. Shell Oil Company is a wholly owned subsidiary of Royal Dutch Shell PLC, an international firm that is one of the largest oil corporations in the world. The organisation is headquartered in The Hague, Netherlands, and Ben van Beurden is the company’s current chief executive officer. Its U.S. headquarters are based in Houston, Texas. When combined with its share in equity firms as well as its consolidated entities, Shell Oil Company is among the United States’ largest producers, manufacturers, and marketers of oil, natural gas, gasoline, and petrochemicals (Shell, n.d.). The company also operates various joint ventures in various parts of the world, including Saudi Arabia, Canada, the United Kingdom, Malaysia, the Philippines, and Africa, among others. The firm operates in over 70 nations and employs more than 82000 people, which makes it a crucial player in the global economy.
The organisation has an annual revenue of over 10,000,000 £ per annum. The reason why the organisation has the high rate of revenue is due to approach the organisation has towards its client to ensure they are satisfied with not only the quality of the products the organisation sells in the market but also the services the customers receive.
Roles and responsibilities of the marketing function and their relation with organisational context
The term marketing function is defined as the responsibility of the business organisation which helps the organisation in the identification of the potential market and its specifics, to make potentially successful products for the market and create awareness of them as well as assists the company in the promotion of the products. These marketing functions are standard in the business organisation, and they involve various purposes such as marketing research, commodity plan, development system, promotion, sales of the products, and customer services (Brassinton and Pettitt, 2012.p.45). The marketing function in a firm involves various roles which are believed to be the sole responsibility for the growth of the organisation.
Market Research is concerned with the specific of the market. Having deep knowledge of these specifics allow the organisation to predict a future changes in the conditions. Regarding market research, in an organisation, it is the role of the marketing function to identify the market needs and segment the customers according to those needs. .
Another responsibility of marketing function is communication .In an organisation, it marketing function act as the link between the organisation and the market or the external environment. Hence, it is the responsibility of this function to communicate to the market concerning the organisation’s activities and objectives and relay the market feedback to the organisation. For example, the marketing function identifies that market demands clean energy, then it communicates to organisation e.g Shell, which starts focusing on solar power.
Planning is the responsibility of the marketing function. Planning is based on the results of market research and the organisation’s mission and objectives. The marketing function accomplishes planning by integrating the financial situation of the organisation and competition factors. For example, when the marketing function at Shell identifies that there a push to lower the carbon footprint, it lays a plan to lower its carbon footprint by a certain time, which is in line with its objective of efficient and responsible operations.
Product promotion is also a crucial role of the marketing. It is the responsibility of the marketing function to enhance organisation’s brand awareness in the market and to convince customers to buy it products and services. The methods involved in this role, for example, the case of Shell include advertising to and differentiation campaigns such as oil that increases engine life.
All sales are result of the effective implementation of the above stated functions, however the process of selling also include selling techniques as well with after sale service, ensuring the maximum satisfaction of the customers.
2.1 The role of marketing concerning the marketing environment
The term marketing management can be interpreted as the process of planning and executing the various concepts of marketing. The marketing concepts refer to pricing of the products, promotion strategies, distribution of the products as well as the sales of the products. Thus marketing concerning the marketing environment involves marketing strategies. The first responsibility of marketing consists of the development of marketing strategies and planning for the business organisation. For example the managers at Shell Company need to have identified the needs and the requirements of their target market and thus provided them with products following their needs and demand. The managers have identified and established a well-structured marketing strategy will bring out the balance between the organisational objectives and the opportunities available in the market.
Besides, the role of marketing concerning the marketing environment includes the marketing information framework. The purpose of the marketing information framework in a business organisation is to provide information concerning the product, the plans, the implementation, and the strategies used to control the market. Thus the marketing information framework will offer information related to the logistics on the real-time, which will assist in the distribution of network effects. Marketing function also helps in monitoring the market environments. In an organisation, the marketing process has a vital role in identifying new developments in the market surrounding. This development will offer an effective response to the development of the product and the services provided by the organisation.
The latest developments involve various concepts such as changes in the marketing strategies, the socio-economic factors, political and the legal framework, among others. The market research is also playing a significant role in the marketing process. Marketing research includes specific information of the product, the market prices, and the consumers of the product to provide accurate information to the organisation so that they can provide the quality product and services to their customers.
Interrelations of marketing function with other functional units of organisation
The marketing also plays various roles such as advertisement, distribution of the products, and communication, among others. These activities which are performed by the elements of marketing function are believed to come under the various process of the marketing process. There is a critical interrelation of the essential marketing function with other functional units of the organisation. For instance, the finance department has a direct connection with the marketing department. In the organisation, the marketing function calls for the economic resources to have a complete implementation, planning, research and the evaluation of the marketing strategies used in the business organisation, the finance department in the organisation provides all these information. Thus it is clear to state that the marketing function cannot work without proper communication and also having an adequate interrelation with the finance department in the organisation.
Moreover, the marketing function needs accurate information from the production department concerning the products and the services provided by the organisation to develop a complete marketing plan for the organisation. Additionally, the marketing function will require the human resource management department and the value chain network in their marketing plan.
For example Shell Company services improve the living standard of not only the people who are employed by the organisation bust also creates revenue for the government through the taxes which the organisation pays to the government. Thus there is the need for the organisation to maintain a competitive environment in the market through offering quality services to its clients. Therefore the marketing department of the Shell Company needs to keep the demand for the services by providing support for the product supply services in the organisation. In the organisation, the marketing function is viewed as part of the business organisation; thus, there is a relationship between the marketing function and another department in an organisation (Groucut and Hopkins, 2015p.56). For the Shell Company to establish an effective plan and effectively implement it, there is the need to have the support from the finance department of the organisation, the human resource department, the sales, and any other departments in the organisation. For example if there is a new product of the company such as bio-diesel then the marketing function is to create awareness for the existing customers by letting them know through the acquired contacts such as emails and phones. Also it should also attempt to promote it to the potential new customers by using the media. Now a days with the help of the social media, the company may increase the goodwill of the brand by showing some good initiatives for the environment or society.
Furthermore the finance plays a vital role in various activities of the organisation because it is sufficiently related to the entire performance of the organisation. Therefore the marketing is affected of the financial function and every marketing activity must be approved financially before its actual implementation. Therefore Shell marketing strategies entirely depend on the financial potential of the organisation (Blythe and Martin, 2019.p.99). With the support of the marketing department, the finance department in the organisation is in a position to make vital decisions whether the products they are offering to the clients will yield profit or make a loss by making sale anticipations and net margin expectations.
In Shell, the operational department entirely depends on the marketing department. The quality of the product produced, the various category, and the service area, among other activities in the organisation, are fully determined by the marketing of the organisation. In the organisation, the sales department have direct and regular communication with the clients. The value of the organisation’s clients on the services and the products and the sales service gets their support through the promotional activities which are offered by the marketing department of the organisation. Thus, the marketing of Shell plays a vital role in the success of the organisation activities (Jobber and Chadwick, 2012.p.57).
How the marketing mix is applied by various organisation in their marketing plans process
The traditional 4P’s in the marketing mix has been extended to make them the modern 7ps. Due to the high competitiveness in the market and the rampant economic growth, the extended 7p’s have become very popular among the organisations for both the products and the services offered by the various organisations in the market. In that line, the 7P marketing mix of Shell is compared with that of British Petroleum (BP) to understand their strategies they apply to achieve their overall objectives.
Shell product portfolio include petrochemicals, the natural gas, and petroleum. In 2016th, Shell acquired what is known as the BG group and it provided further addition in the company’s activities which are related to the deep-water gas and oil production in Brazil and liquefied natural gas which is produced globally. The vital petroleum products which are provided by the organisation are sold in retail outlets in categories such as engine oil, CNG, diesel petrol and also unleaded petrol. The company also offers other additional services to its clients, such as automotive services and even carwash services.
Similarly, BP products range from petrochemicals, natural gas, motor fuels to biofuels. It provides services such as motor lubrication. In other words, its products are similar to those of Shell.
Place
Both Shell and BP have global operations. They both have global distribution systems, which enable them to deliver oil and gas across different regions. In addition, they have thousands of branded retail stations with operations in different countries. For example, Shell has over 40, 000 stations distributed in about seventy countries.
The main objective of Shell is to strengthen its position in the market as a global leader in both gas and oil production. The organisation has come up with a pricing policy which is believed to be not only beneficial to the organisation and the investors but also their customers. The organisation has gone further and divided its products into various categories which include good-quality petrol, the superior quality petrol, and what is known as the premium petrol which has been fully based on the pricing policy of the organisation. For both Shell and BP petroleum prices are significantly regulated by the government. Furthermore, international oil and gas dynamics influence the pricing.
Shell has aimed at projecting itself as a brand which not only aware of the right and the wrong but also to take part in creating a stable environment in society (Jobber and Ellis-Chadwick, 2012.p.45). To remain competitive and unique in the market, the organisation has established a logo which is the most common and popular commercial symbol globally and also provides a distinctive and recognizable identity. The organisation has also involved itself with various sponsorships deals such as motorsport activities which aim is to promote the brand and the products of the organisation. On the other hand, BP has not been very aggressive in promotion, however, it focuses on brand promotion with it signature “BP” initials and green and yellow logo. At the same time, it has partnered with motor companies such as Ford to develop eco-friendly vehicles, hence promoting itself as a company that cares for the environment. This is despite its image being tarnished by deep sea oil disasters in the past.
The term process is used to outline the full operation of the product development to the distribution of the final product to the consumers. Throughout its marketing research, Shell Company has developed criteria in which the organisation develops its products and their product services with the help of the marketing mix helps the organisation to establish the distribution concept. In the distribution process, the company gets its support from the Customer Relationship management framework. On the other hand, BP employs multiple processes in its upstream and downstream activities. For example, in the downstream it provides shipping services for the customers and ensure that the practices are followed in refinery and distribution of its oil.
In the market, the customers always demand high-quality services. For this reason is crucial for the organisation to recruit professional employees who will ensure the final product which gets to the consumers meets their expectations or even exceed them. Shell has about 82,000 employees. To maintain the high quality of its products, the organisation trains its employees on the various process used in the production of their products. On the other side, BP has around 73, 000 employees around the world working in the upstream, midstream, and downstream activities. In addition, there is significant number who are employed indirectly.
To reach to their consumers effectively, the organisation have ensured that they have a communication channel where the consumers can air their feedback to the organisation. The company has also invested in the use of new technology to ensure that their client’s needs are met. The organisation also has retail outlets which are used to distribute the products to every client in the market. Furthermore, Shell physical presence is noted by the company’s logo and brand red and yellow colours, which are found on the gas stations, petroleum products, and trucks. Similar to Shell, BP has easily recognisable stations characterised by green and yellow logo and the trademark “BP” initials. The logo and the company brand colour are identifiable on all BP products.
Tactics applied by various organisation to achieve their business objectives
Organisations in the market have a different culture which they use to apply their tactics to achieve their business objectives in the market. A successful organisation such as Shell Company and the Barclays in the United Kingdom and other parts of the world have utilized various tactics such as the 7ps of the marketing mix among other tactics to achieve their market objectives. Other organisations also use other concepts such as the market segmentation to ensure they have achieved their market objectives (Drummond and Ensor, 2006, p 77). The market segmentation which is used by various companies includes the definition of the market for the organisation; then there is the creation of the market segments which will happen in the market place, there is the evaluation of the various market segments. The organisation goes further and establishes a segment which will be used by the market team. The firm further evaluates the usability of the segment, and later, the target markets are selected for the company to use.
Conclusion
The marketing framework supports the company and ensures the company gets accurate feedback from their clients, which helps the firm not only to achieve its market objectives but also to remain competitive and successful in the market. In the example of Shell, the company have an assurance about their control over their market framework, their openness of their marketing plan and the cost-effectiveness of their established plan. The marketing mix in the market is interrelated with the performance of the company in the market and the market objectives and goals of the organisation. The company has, therefore ensured that there is a careful integration among all the functions which is increasing the overall performance. The manager has to carefully evaluate the marketing plan of the company as the market plan is the reflection of the goals and the objectives of the business organisation.
TASK 2 – Marketing Plan
Business Initiative
Shell Oil Company’s core strategy is based on its objective is to reinforce is global standing as the leading energy firm through production and supply functions that match the changing international energy systems, backed by efficient safety mechanisms and corporate social responsibility. Accordingly, the firm endeavors to provide better and cleaner energy solutions that ultimately facilitate the improvement of the global population’s living standards (Shell, n.d.). The organization’s continuous analysis of its external environment enables it to adopt dynamic business models, improve performance, maximize cash flow, and enhance safety, health, security, stakeholders’ welfare, as well as environmental performance.
Shell’s Mission and Objectives
Shell’s aims efficient, responsible and profitable engagement in oil and gas business and other related activities and to continuously search for other energy sources to meet the changing market demands.
Some specific objectives include: Cutting the carbon footprint by half by 2050.
The company targets, by 2020, to have an increase in cash flow by $5 billion from operations (Shell, 2017).
Target Market
The company is a key player in the global energy sector whose primary goal is to fulfill the ever-increasing need for more, safer, and cleaner energy solutions through socially, economically, and environmentally sustainable and responsible mechanisms. It primarily targets oil and related products’ consumers in an industry that is highly competitive and heavily segmented. Market segmentation allows firms to divide potential customers into groups based on their characteristic similarities and differences to create clusters of consumers who would respond correspondingly to marketing strategies (Robinson, 2014). Accordingly, Shell Oil Company’s target market is split into three divisions, namely, safety firsters, premium speedsters, and simplicity seekers, based on a benefit and personality criterion (Pirog, 2012). This strategy enables the company to produce different products that meet each of these cluster’s expectations and needs. Shell serves both government and private institutions in the business-to-business segment as well as individuals in its retail business-to-consumer segment.
Market Strategy
Product
Shell Oil Company produces, markets, and distributes oil, natural gas, and other petrochemicals around the world. Specifically, the company has three distinct business operations that explore for, extract, transport, and market crude oil, natural gas, liquified petroleum gas, gas-to-liquid fuels, electricity, hydrogen, advance biofuels, and electric batteries, lubricants, Sulphur, and bitumen, among other products (Pirog, 2012). The organization’s products are used in a wide range of industries, including manufacturing, transport, domestic use, power generation, and mining. Moreover, the firm’s activities are aimed at producing goods that meet global standards of safety, low carbon emissions, and cleanliness. Shell continuously drives down the costs of its products to provide economically viable products.
Price
Shell’s management has reshaped the company primarily through reducing costs, which ultimately reflects on the prices of its products. However, the firm operates in an industry where prices can be extremely volatile and almost always beyond its exclusive control. Oil prices are largely determined on a global level by OPEC nations rather than by a single player. Prices are also affected by demand, production levels, market conditions, and government policies (Robinson, 2014). Nevertheless, the prices of company’s products can be benchmarked against those of key players, such as Chevron, Saudi Aramco, Total, SABIC, BP, and Exxon Mobil.
Promotion
The company has a strong brand name that is synonymous with the development of sustainable fuels as well as a rich history of pioneering, exploration, and innovation(Shell, n.d.). The brand as well as the logo are easily recognizable, which helps in creating brand loyalty. The company also sponsors various media advertisements around the globe showcasing its innovativeness and the efficiency of its products. It also promotes various sporting activities, including Formula One, and other corporate deals.
Place
Shell Oil Company distributes its products through a global network that enables it to make international deliveries. The company boasts of operations in more than 70 nations across the globe and over 44000 service stations. It employs over 82000 people and produces about 3.7 million barrels of oil daily. The firm also has interests in 21 refineries worldwide(Shell, n.d.).
Process
The rules, regulations and strategies regarding product and service delivery are made by the upper management. Customers in need of Shell servicers visit the nearest oil pump where they are served by highly qualified staff that serves them as per the company’s policies. The senior management is also responsible for deciding on the areas where petrol pumps will be situated to ensure that all the target market is covered (Pirog, 2011). Refined fuel is transported to the stations from the closest depots depending on consumption demand the offered to clients by the frontline employees at a priced fixed my prevailing market prices and the government.
People
People are the most important aspect of the 7 P’s of marketing mix. Shell employees working in all the branches are the company’s assets who are responsible for maintaining its good will. The firm has focused on employees’ status by giving them performance appraisal, medical cove and other incentives. The company is also keen training its employees so that they can maintain the quality of the services that they offer.
Physical evidence
Services are intangible in marketing. Consequently, customers depend on physical cues for product evaluation before buying. As a result, marketers develop physical evidence as a replacement for services physical cues. Shell developed attractive and good buildings of the outlets to attract customers and as the physical evidence.
Marketing channel
The marketing channel for shell products is highly dependent on geographic segmentation to work effectively with its customers. Being a natural product, oil is in demand in all parts of the world so geographies are important for product distribution. To satisfy its customers, the company uses a differentiated targeting strategy to satisfy customer needs within the respective segments. Value added services differentiate the company from other firms in the industry. In addition, value-based positioning enables the company to connect with other organizations and communities by offering its services globally.
References
Blythe, J. and Martin, J., 2019. Essentials of marketing. Pearson UK.pg. 99
Brassinton, F, and Pettitt, S. 2012 Essentials of MARKETING. 3rd Ed. Harlow: Pearson p. 45
Drummond, G. and Ensor, J., 2006. Introduction to marketing concepts. Routledge.pg 77
Groucut, J and Hopkins,C. 2015 Marketing ( Business Briefings)Lodon: Palgarve Macmilian p. 56
Jobber , D. and Chadwick, F. 2012 Principles and practice of Marketing. 7th Ed. Maidenhead: McGraw- Hill p. 79
Jobber, D. and Ellis-Chadwick, F., 2012. Principles and practice of marketing (No. 7th). McGraw-Hill Higher Education.p.45
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Pirog, R., 2012, February. Financial performance of the major oil companies, 2007-2011. Library of Congress, Congressional Research Service.
Robinson, M., 2014. Marketing Big Oil: Brand Lessons from the World’s Largest Companies. Springer.
Shell. (2017). Management Day 2017: Shell updates company strategy and financial outlook, and outlines net carbon footprint ambition. Retrieved from https://www.shell.com/media/news-and-media-releases/2017/management-day-2017-shell-updates-company-strategy.html
Shell (n.d.). About us. [online] Shell.com. Available at: https://www.shell.com/about-us.html [Accessed 5 Jul. 2019].
Sluyterman, K., 2010. Royal Dutch Shell: company strategies for dealing with environmental issues. Business History Review, 84(2), pp.203-226.
