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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