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FM Sample Shell
FM Sample Shell
Submitted By:
Wajid Ali 3335
Haifa Saleem 3336
Nabita Ishtiaq
3353
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.
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
Product Life Cycle................................................................................................................................21
Competitive Advantage.......................................................................................................................23
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
a) RELATED DIVERSIFICATION..........................................................................................41
b) Unrelated Diversification...................................................................................................41
CONCLUSION.......................................................................................................................................42
PART-04............................................................................................................................................43
PART-01
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
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.
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
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.
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
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.
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 world’s 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.
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.
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.
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”.
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.
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
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.
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
VISION STATEMENT
To be the market leader and deliver the best value to their stake holders.
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.
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.
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:
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
Convenience Store:
Providing snacks and other things of basic necessity to customers
Chemicals:
Different chemicals produced
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.
Go Well Go Shell Page 20
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)
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, it’s 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
Pakistan market. Now company has about 40-45.5% of market share and still
growing.
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.
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 Shell’s 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
Go Well Go Shell Page 23
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 world’s 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 world’s
energy challenge.
Smart technology thinking is helping meet that demand by finding ways to get
more from what they’ve 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.
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.
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.
Shell’s 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 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.
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.
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.
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.
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.
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.
Threats of Substitutes:
Although world is thinking about the substitute products of petroleum for
protecting the world’s 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 Shell’s 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
gas’s shortage that’s why the use of this threat has declined drastically.
• 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.
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.
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
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 Shell’s Retail Visual
Identity (RVI) makes a striking and immediate difference between shell’s gasoline
stations and those of its competitors, Pakistan state Oil (PSO) and Caltex. The RVI
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.
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.
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
Shell and competitor’s products. Comparison features include purity, viscosity,
efficiency and performance.
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.
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.
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. Selling out
2. Consolidation
3. Market penetration
4. Product development
5. Market Development
6. 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.
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!
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.
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.
Go Well Go Shell Page 41
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:
Itis 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.
Product Development
Market Development
CONCLUSION
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.