market project f
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Department of Economics and Management
MARKETING
Project:
Creating effective marketing strategies on oil market
Done by: Kassenova Zhuldyz
Checked by: Ilyassov Didar
Almaty 2012
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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. Market segmentation.
5. Product Mix analysisa. Product
b. Pricing
c. Place
d. Promotion
6. Strategic Planning
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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 oilmarket.
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 .
InternalOrigin
Strengths:
2nd oil producer afterRussia among theformer republics of theSoviet Union
Over 80 year experience in oilindustry
Large numbers of foreigninvestment
Convenient geographicallocation
High demand for exportingabroad
Good quality and Variety ofoffering goods
Weaknesses:
Low level of Transportation
quality
Deficit of good specialist
Low level of producing
final goods
ExternalOr
igin
Opportunities:
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
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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 manyexpatriates . 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 economicsindexes;
Labor market;
Price Fluctuation;
Globalization;
Production profit and expenses
Export and Import .
Social: Demographic changes;
Mass medias influence
December 2001 accident
Public opinion
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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 thetechnological 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 questionnairesfor citizens of our country and from their answers I collected useful statisticaldata 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
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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
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
stronglysatisfied
dissatisfied
neutral
satisfied
stronglydissatisfied
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Influence of advertisement
0% 50% 100%
very high
high
normal
low
very low
Buying behavior
Analysis of factors influencing to purchase decisions
Consumer behaviour involves the psychological processes that consumers gothrough in recognizing needs, finding ways to solve these needs, makingpurchase decisions (e.g., whether or not to purchase a product and, if so,
which brand and where), interpret information, make plans, and implementthese plans (e.g., by engaging in comparison shopping or actually purchasingaproduct).
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 willusually bargain with a store owner. This,however, is a common practice in much ofthe World. Physical factors also influence
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our behavior. We are more likely purchase a petroleum in stations where ourfriends do , for example, and oil industry marketers have found that it ismore effective to advertise their products on the radio rather than on TV,
because drivers pay more attention to radio advertisements, while there are athome they skip TV advertisements. A persons self-image will also tend toinfluence what he or she will buyan upwardly manager may buy a flashy carto project an image of success, which means higher consumption ofpetroleum. 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 andlearn that it satisfies your expectations and tastes , and the next time you areneed 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 therequirements 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
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ProductGasoline is one of several petroleum products made by refining crude oil.
As figure 1 shows, on average, gasoline constitutes almost half of the totalpetroleum products derived from a barrel of crude oil, although the amount ofgasoline that can be produced from a barrel of crude oil varies amongindividual 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 qualityof gasoline anddiesel fuel produced by the Kazakh oil refineries, lower than most of their Russian
counterparts and do not meet international standards.
PricingAccording to EIA, four elements determine the price consumers pay fora gallon of gasoline at a given time: (1) the price of crude oil, (2) taxes, (3) refiningcosts 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
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From this graph we can see that the price of gasoline depends on the world crudeoil price. Also another element of the pump price includes the labor, materials,energy, transportation and other costs of refining crude oil through a number ofphysical and chemical transformations to create the products. It also includes theprofits 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 withRussia and Belarus.Among the competitors for consumers gasoline dollars are retailers thatsell name-brand gasoline and retailers that sell unbranded gasoline. Which one
you choose can affect the price you pay, and areas with more unbranded retailersgenerally tend to have lower prices, all things being equal. Name-brand gasoline isgenerally higher priced than unbranded gasoline because its price tends to includea premium reflecting the recognized brand name, advertising costs, andguaranteed supply, among other things. Retailers of unbranded gasoline generallyoffer lower prices because that is how they attract customers. Unbranded retailersmay also pay lower wholesale prices for their gasoline because, traditionally, theyhave been able to shop around in the wholesale marketplace, without any bindingcontracts, for the best price. However, this situation may be changing becausesome 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
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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 isprocessed into gasoline and other petroleum products. The gasoline is thentransported again, usually via pipelines, marine tankers, and bargesto storageterminals for wholesale distribution. From there, it is shipped by truck to retailstations, where consumers pull up to fill their tanks. The location of the retailstations located on the convenient places of city, along the highway.
PromotionPromotion of oil products in Kazakhstan is not highly developed. Only biginternational companies, who sell their product in our country, use somemarketing promotions such as discount cards, coupons and only fewadvertisements on TV and radio, while domestic producers dont pay enoughattention to it.
Strategic Planning
All oil companies should systematically review their service offering and assess theextent to which the offering satisfies customer needs. This analysis should involveall staff who deal with customers and include service feedback interviews withcustomers. Companies also should look at competitors among petroleum marketto identify potential improvement areas and ideas for changes to their serviceoffering. A culture of continuous improvement is a leading practice of successfulservice 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 toobserve the market and implement new approaches, while managingthe risks associated with change. At the close of the busy season, the organizationaland financial requirementsof intended changes should be assessed. Service offering reviews should becomepart of a regular marketing routine. Employees should be encouraged to sharetheir ideas and service feedback interviews with customersshould be carried out. This approach will improve service management, customer
relations and employee commitment.
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Reference:
1. http://camonitor.com/archives/1227
2. http://www.slideshare.net/ChevronBrandValuation/oil-and-gas-in-nth-america-industry-profile
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
.
http://camonitor.com/archives/1227http://www.slideshare.net/ChevronBrandValuation/oil-and-gas-in-nth-america-industry-profilehttp://www.slideshare.net/ChevronBrandValuation/oil-and-gas-in-nth-america-industry-profilehttp://www.oilgas.kz/http://www.oilgas.kz/http://oilkz.kz/ru/oil-and-ecology/article/46http://www.cedar-consulting.com/pdf/Petroleum%20Article%20cedar%20view.pdfhttp://www.cedar-consulting.com/pdf/Petroleum%20Article%20cedar%20view.pdfhttp://camonitor.com/archives/1227http://www.slideshare.net/ChevronBrandValuation/oil-and-gas-in-nth-america-industry-profilehttp://www.slideshare.net/ChevronBrandValuation/oil-and-gas-in-nth-america-industry-profilehttp://www.oilgas.kz/http://oilkz.kz/ru/oil-and-ecology/article/46http://www.cedar-consulting.com/pdf/Petroleum%20Article%20cedar%20view.pdfhttp://www.cedar-consulting.com/pdf/Petroleum%20Article%20cedar%20view.pdf
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