Department of Economics and Management

MARKETING
Project:
Creating

effective marketing strategies on oil market

Done by: Kassenova Zhuldyz Checked by: Ilyassov Didar

Almaty 2012

Content
1. Marketing environment scanning; a. SWOT analysis; b. PEST analysis; 2. Marketing research; a. An interview about oil market in Kazakhstan; 3. Buying behavior; a. Analysis of factors influencing to purchase decisions;
4. 5.

Market segmentation. Product Mix analysis a. Product b. Pricing c. Place d. Promotion

6. Strategic Planning

Marketing environment scanning

SWOT analysis
Development of SWOT strategy and tactics of market conduct, and analysis competitive environment is now one of the most important conditions for survival in the oil market. And in this project I will try to create some effective strategies in oil market. I started my survey with analyzing the oil and gas market of Kazakhstan, for which I used SWOT analysis. SWOT analysis is one of the most helpful marketing tool to analyze and evaluate the Strengths, Weaknesses, Opportunities and Threats of market .

Strengths:
2nd oil producer after Russia among the former republics of the Soviet Union Over 80 year experience in oil industry Large numbers of foreign investment Convenient geographical location High demand for exporting abroad Good quality and Variety of offering goods

Weaknesses:
Low level of Transportation quality Deficit of good specialist Low level of producing final goods

Internal Origin

Opportunities:
External Origin Improve the quality of oil Future projects and discovery of new oil field support for local staff and experts beneficial cooperation with neighbouring countries

Threats:
Chinese threat The monopoly merger Increased competition social problems

From this table we can analyze that the oil market of Kazakhstan has more positive sides rather than negative. Internal origins, particularly strengths are take place from the historical time. As a ex member of the Soviet Union Kazakhstan gained a good experience and a strong start

to develop the market of oil , and nowadays it have become a 2nd oil producer after Russia among the former republics of the Soviet Union. In addition, Kazakhstan has enormous stock of oil, there are a lot of unexplored places. The downstream factory, which located in a Pavlodar, is a producer of the one and only type of converting oil in the world .Also the location of Kazakhstan is very convenient for trade operations. However ,there are some deficit of local specialists in the market and because of it there are many expatriates . The problem that arises from it caused dissatisfaction of local workers with differences in a wage. The other weakness of Kazakh oil market is the transaction of extracted oil, which provided on very low level of quality. The reason of it is the level of economy in our country and the lack of required technology and equipment needed for oil operations. The following internals are related with improving the quality of oil products due to improving skills of new specialists and creating new projects with neighborhood countries as China and Russia. The threat origins are increasing world completion. since the wholesale price of gasoline and diesel fuel produced in Kazakhstan can not compete with the wholesale price of imported ones. Also some social accidents such have been in Zhanaozen have a negative influence in the market situation.

PEST Analysis
PEST analysis is the acronym for "Political, Economic, Social, and Technological analysis" and an element of the external analysis when performing market research.

Political:
Government regulation in the oil industry; International relations State regulation of competition; Expected entry to WTO; Changes in politics.

Economic:
Industrys attachment to GDP and other economics indexes; Labor market; Price Fluctuation; Globalization; Production profit and expenses Export and Import .

Social:
Demographic changes; Mass medias influence December 2001 accident Public opinion

Technological:
Manufacturing development; Transportation operations New products; Improving skills.

As I mentioned before the from the economic side the our country strongly related to oil industry and because of it any changes in oil market affects the economic situation in our country. From political side it is clear that government has a great power over the market situation, because all oil and gas companies are under the strict government control. Social analysis include any demographic changes. And also mass medias publishing and news that influence a public opinion. Technological analysis play the main role in the oil industry; the higher the technological improvement the better the quality and quantity production of products. The summarizing of SWOT and PEST analyses gave me an overview of the different macro-environmental aspects of Kazakhstan market that should has to take into consideration to scan the environment market .

Marketing research
To deeply analyze the internal market I decided to create different questionnaires for citizens of our country and from their answers I collected useful statistical data related to my marketing research.

An interview about oil market in Kazakhstan

In the interview Ive asked the audience (consisting 20 people) 3 types of question: General In your opinion how much Kazakhstan economy depends on oil and gas production? Please tick the various forms which you have come across in case of Oil and gas Personal Which gender you are? Your occupation Your age

Your income Specific Do you consume a diesel? How often? What kind of payment do you prefer? DO you satisfied with the price of diesel? Does advertising influence you in any way? Where do you prefer fill up your diesel? You choose a gas station by factors of In this questionnaires participated 20 people ( 10 females; 10 males) The layout of this questionnaires shows us that people how clever idea about the importance of oil and gas industry in our country. However, mostly people concerned about diesel market. 15 people from questionnaire answered that the often consume a diesel, others have a friend or family member who consume a car. 80 % of people not satisfied with price and quality of fuel. Drivers consume a diesel in stations located near house -40%, (25%) near workplace and others depending on situation. Nevertheless 80% of people choose the gas station first of all by price factor, secondly by quality. Also we should admit that the advertising is not developed in oil products market, that is why the influence on consumers choice is very low. Payment Quality and price of diesel
45% 40% 35% 30% 25% 20% 15% 10% 5% 0%
satisfied strongly dissatisfied strongly satisfied dissatisfied neutral

very high high normal low very low

0%

50%

100%

Influence of advertisement

Buying behavior
Analysis of factors influencing to purchase decisions
Consumer behaviour involves the psychological processes that consumers go through in recognizing needs, finding ways to solve these needs, making purchase decisions (e.g., whether or not to purchase a product and, if so, which brand and where), interpret information, make plans, and implement these plans (e.g., by engaging in comparison shopping or actually purchasing a product). Sources of influence on the consumer. The consumer faces numerous sources of influence

Often, we take cultural influences for granted, but they are significant. An Kazakh will usually bargain with a store owner. This, however, is a common practice in much of the World. Physical factors also influence

our behavior. We are more likely purchase a petroleum in stations where our friends do , for example, and oil industry marketers have found that it is more effective to advertise their products on the radio rather than on TV, because drivers pay more attention to radio advertisements, while there are at home they skip TV advertisements. A persons self-image will also tend to influence what he or she will buyan upwardly manager may buy a flashy car to project an image of success, which means higher consumption of petroleum. Social factors also influence what the consumers buyoften, consumers seek to imitate others whom they admire, and may buy the same brands. The social environment can include both the mainstream culture. Finally, consumer behavior is influenced by learningyou try product and learn that it satisfies your expectations and tastes , and the next time you are need the good , you may consider it again.

Market segmentation
In developing products and services, the key is to understand your customer. Segmentation is a powerful tool to help marketers identify the requirements of the customers. For example Exxon Mobile segmented the petroleum consumers into 5 segments:

Product Mix analysis Market segmentation

The marketing mix describes the four key elements of a successful marketing strategy

Product

Gasoline is one of several petroleum products made by refining crude oil. As figure 1 shows, on average, gasoline constitutes almost half of the total petroleum products derived from a barrel of crude oil, although the amount of gasoline that can be produced from a barrel of crude oil varies among individual refineries. Figure 1: Products Made from a Barrel of Crude Oil

The final products of oil in Kazakhstan are refined petroleum petrol grades of A-76, A-80, A-85, AI-91-93, AI-96, diesel fuel, fuel oil aviation and lighting kerosene, heating oil, liquefied gas and other petroleum products. The quality of gasoline and diesel fuel produced by the Kazakh oil refineries, lower than most of their Russian counterparts and do not meet international standards.

Pricing

According to EIA, four elements determine the price consumers pay for a gallon of gasoline at a given time: (1) the price of crude oil, (2) taxes, (3) refining costs and profits, and (4) distribution and marketing costs and profits. Figure 5 shows the average percentage of each of these elements in the KZ. price of a gallon of gasoline in 2011

From this graph we can see that the price of gasoline depends on the world crude oil price. Also another element of the pump price includes the labor, materials, energy, transportation and other costs of refining crude oil through a number of physical and chemical transformations to create the products. It also includes the profits to refinery owners. Another factor forcing the price of oil to rise is political situations. Example of this, the price rise of gasoline , after joining Kazakhstan to the Customs Union with Russia and Belarus. Among the competitors for consumers gasoline dollars are retailers that sell name-brand gasoline and retailers that sell unbranded gasoline. Which one you choose can affect the price you pay, and areas with more unbranded retailers generally tend to have lower prices, all things being equal. Name-brand gasoline is generally higher priced than unbranded gasoline because its price tends to include a premium reflecting the recognized brand name, advertising costs, and guaranteed supply, among other things. Retailers of unbranded gasoline generally offer lower prices because that is how they attract customers. Unbranded retailers may also pay lower wholesale prices for their gasoline because, traditionally, they have been able to shop around in the wholesale marketplace, without any binding contracts, for the best price. However, this situation may be changing because some wholesale suppliers of unbranded gasoline are now requiring buyers to sign a binding contract to guarantee their supply.

Place

As figure 2 shows, gasoline reaches the consumer through a complex

system that begins with extracting crude oil and transporting it to refineries, mostly via pipelines, marine tankers, and barges.4 At the refineries, crude oil is processed into gasoline and other petroleum products. The gasoline is then transported again, usually via pipelines, marine tankers, and bargesto storage terminals for wholesale distribution. From there, it is shipped by truck to retail stations, where consumers pull up to fill their tanks. The location of the retail stations located on the convenient places of city, along the highway.

Promotion

Promotion of oil products in Kazakhstan is not highly developed. Only big international companies, who sell their product in our country, use some marketing promotions such as discount cards, coupons and only few advertisements on TV and radio, while domestic producers dont pay enough attention to it.

Strategic Planning
All oil companies should systematically review their service offering and assess the extent to which the offering satisfies customer needs. This analysis should involve all staff who deal with customers and include service feedback interviews with customers. Companies also should look at competitors among petroleum market to identify potential improvement areas and ideas for changes to their service offering. A culture of continuous improvement is a leading practice of successful service providers. The service review should create insights into: -High-value adding components of a service that should be provided -Low-value adding components of a service that could be dropped -Market opportunities for new services -The potential for bundling own services with new or other existing services -Seasonal aspects of service provisioning The busy season offers the opportunity to observe the market and implement new approaches, while managing the risks associated with change. At the close of the busy season, the organizational and financial requirements of intended changes should be assessed. Service offering reviews should become part of a regular marketing routine. Employees should be encouraged to share their ideas and service feedback interviews with customers should be carried out. This approach will improve service management, customer relations and employee commitment.

Reference:
1.

http://camonitor.com/archives/1227 in-nth-america-industry-profile

2. http://www.slideshare.net/ChevronBrandValuation/oil-and-gas-

3. http://www.oilgas.kz/ 4. http://oilkz.kz/ru/oil-and-ecology/article/46 5. http://www.cedar-consulting.com/pdf/Petroleum%20Article

%20cedar%20view.pdf
.