22598527 Marketing Project on Shell
Content
Executive Summary
Shell is a superior brand name with more than 100 years history in this region, infact the company is still in possession of a fuel storage tank from 1899. However, the documented history of the oyal !utch"shell group the #ndo$%ak subcontinent dates back to 190& when a partnership was struck between the shell transporter and trading company and the oyal !utch petroleum company
to supply petroleum products in 'sia. (ith their key indicators of progress already soaring to new heights, Shell is committed to dedicate all its energies, resources and the time to bring higher value and satisfaction to their customers, employees and shareholders. )he graph of Shell is going up every year. )he ratio of profit is increasing at good percentage. Shell is serving the people at high level of standard by going according to the wishes of the customers. 'ssessment of the needs and wants of the customers is an ongoing process at Shell, which helps to continually develop new products and services. )o continuously offer courteous, professional and advanced business, the team of shell has recently been re*uvenated by going though training
Shell History in Pakistan
History of Shell programs with a
focus
on
technology. Shell hasinformation an over 100 year’s presence in the Subcontinent
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)he Shell brand name en*oys a 100$year history in this part of the world, dating back to 1899 when 'siatic %etroleum, the far eastern marketing arm of two companies+ Shell )ransport ,ompany and oyal !utch %etroleum ,ompany began importing kerosene oil from '-erbai*an into the subcontinent. .ven today, the legacy of the past is visible in a storage tank carrying the date $ 1898. )he documented history of Royal Dutch Shell plc in #ndo/%akistan subcontinent dates back to 190& when partnership was struck between )he Shell )ransport 0 )rading ,ompany and the oyal !utch %etroleum ,ompany to supply petroleum to 'sia. #n 1918, to enhance their distribution capabilities, the marketing interest of Royal Dutch Shell plc and the 2urmah 3il ,ompany 4imited in #ndia were merged and 2urmah Shell 3il Storage 0 !istribution ,ompany of #ndia was born. 'fter the independence of %akistan in 1956, the name was changed to the 2urmah Shell 3il !istribution ,ompany of %akistan. #n 1960, when 718 of the shareholding was transferred to %akistani investors, the name of changed to %akistan 2urmah Shell 9%2S: 4imited. )he Shell and the 2urmah ;roups retained the remaining 598 in e<ual propositions. #n =ebruary of 199&, as economic liberali-ation began to take root and the 2urmah divested from %2S, Shell %etroleum stepped into raise its stake to 718. )he years 1001$1 have seen the Shell %etroleum ,ompany successively increasing its share, with the ;roup now having a 6>8 stake in Shell %akistan 4td 9S%4:$ an e?pression of confidence.
Company’s Slogan
@You can be sure of ShellA
Company
b!ective
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Statement of "eneral #usiness Principles$
Shell %akistan 4imited ;eneral 2usiness %rinciples govern how Shell %akistan 4td. conducts its affairs. )he ob*ectives of Shell %akistan 4td. are to engage efficiently, responsibly and profitably in oil, gas, chemicals and other selected businesses and to participate in the search for and development of other sources of energy to meet evolving customer needs and the worldBs growing demand for energy. (e believe that oil and gas will be integral to the global energy needs for economic development for many decades to come. 3ur role is to ensure that we e?tract and deliver them profitably and in environmentally and socially responsible ways. (e seek a high standard of performance, maintaining a strong long$ term and growing position in the competitive environments in which we choose to operate. (e aim to work closely with our customers, partners and policy$ makers to advance more efficient and sustainable use of energy and natural resources.
"oal of Shell
)he goal of the company is to position itself as the preferred oil company in %akistan, leading the field in its commitment to safety, customer service, <uality and environmental protection.
Pro%uct an% Services
Pro%uct$
'nything that can be offered to market for attention, ac<uisition, use or consumption that might satisfy a want or need. )he oil products of shell are given below.
Services$
Services are the form of product that consist of activities, benefits, or satisfaction offered for sale that is essentially intangible and do not result in the ownership of anything. )he services that provide shell %akistan limited are given below. )here is credit card that given to the customer, in presence of these credit card shell provide all types of services without getting charges. (hen customer of shell going for pouring oil then also clean the transportation that is coming for being filled the oil.
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Pro%uct &ix
@%roduct mi? is the set of all the products offered for sale by a company.A )he structure of product mi? has both breadth and depth. #ts breadth is measured by the number of product line carried and its depth by the variety of si-es, colors and models offered within each product line. )hus the two main products which Shell %ak. offers are fuel and lubricants. )hese have further classifications in various constituents which form the product line.
Pro%uct line$
Shell has two product lines namely, fuel and lubricants.
'uel$
Shell
(ubricants$
offers a wide range of fuel. )hese are+ Hi$3ctane Super Cnleaded Super Hi$speed !iesel ,D;
)he various lubricants offered by Shell areE imula , imula ! imula F Heli? %lus Heli? Super Heli? Standard Shell Heli?9,D;:
Pro%uct (ife Cycle
Pro%uct (ife Cycle Stages$
%roduct 4ife ,ycle means the changes in the sales volume of the product over the life the product. #n market there is always ups and downs are present because this is a dynamic world. .very thing will have to finish after certain time period, by finishing their life, so the life cycle of Shell is. (e define a product as anything that is capable of satisfying customer needs. )his definition includes both physical products e.g. ,ars, (ashing machines, !G! players as well as services e.g.
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insurance, banking, private health care. 2usiness should manage their products carefully over time to ensure that they deliver products that continue to meet customer wants. )he process of managing groups of brands and product lines is called portfolio planning. )he stages through which individual products develop over time are called %roduct 4ife ,ycle. )he classic product life cycle has four stages.
)ntro%uction Stage$
't the introduction stage market si-e and growth is slight. #t is possible that substantial research and development cost have been incurred in getting the product to this stage. #n addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. #t is highly unlikely that companies will make profits on products at the introduction stage. %roducts at this stage have to be carefully monitored to ensure that they start to grow. 3therwise the best option may be to withdraw or end the product.
"ro*th Stage$
)he growth stage is characteri-ed by rapid growth in sales and profits. %rofits arise due to an increase in output Heconomies of salesI and possibly better prices. 't this stage, itBs cheaper for business to inset in increasing their market share as well as en*oying the overall growth of the market. 'ccordingly, significant promotional resources are traditionally invested in products that are firmly in the growth stage. Shell %akistan introduction stage is successfully done because it comes from the international market and enters in %akistan market. Dow company has about 50$57.78 of market share and still growing
&aturity Stage$
)he maturity stage is perhaps the most common stageE it is in this stage that competition is most intense as companies fight to maintain their market share. Here both marketing and finance becomes key activities. Jarketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. )he maturity stage is the time when most profit is earned by the market as a whole. Shell %akistan not yet enters in maturity stage.
+ecline Stage$
#n the decline stage the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. 't thus stage great care has to be taken to manage the product carefully. #t may be possible to take out some production cost, to transfer production to cheaper facility, sell the product into other cheaper market. ,are should be taken to control the amount of stocks
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of the product. Shell %akistan is a brand name and company is not in decline stage because their sale increases day by day.
Pricing
%rice is the amount of money for which a product is offered in the market. )he amount of money charged for the product of services of sum of the value that consumer e?change for the consumers e?change for the benefits for having or using the product of services price is only which brings revenue in the market, so it plays a tremendous role in the market.
Strategies of Pricing$
)here is to types of strategies present in marketing. • Jarket skimming price • Jarket penetration price
&arket skimming price$
)his is high price settings for a new product to skim ma?imum revenue layer by layer from the segments willing to pa the high price the company makes favor but more profitable sales marketer prefer to this type of price strategies because there is every product that comes in the market will have to go out from the market every product that comes in the market will have to go out from the market every product have its limited life and after spending certain period of time product leave from the market like the computer software program that comes in the market has the time period of > or & months in the past but now there is soft ware programs that have limited life period of eighteen days, and after eighteen days there strategy because there point of view is that product have to go out from the market then they comes up with high prices to earn profit that minimi-es the cost that spends when it was made and finally out of the market.
&arket penetration price$
Settings a low price for a new product in order to attract a large number of buyers and large market shares. ,ompanies also adopt this strategy when they enter in the market. Shell %akistan limited also comes up with the penetration strategy because it is an international market and they *ust want to enter this market now this company en*oying the high profit and continuums in the product life cycle.
#asic
b!ectives of Pricing$
Survival$
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Dow days companies pursue survival as there ma*or ob*ective of pricing especially when they are plagued by intense competition and changing consumer wants. Shell %akistan ltd also tends to its lubricants in order to survive the tough competition lubricants industry. )he pricing of fuels is not in the bands of Shell %akistan limited or any other such company. )he price of fuels is in the hands of the government.
&aintenance of current profit$
)he ne?t ob*ective of pricing is the maintenance of current profits. 't the moment shell %akistan ltd is the leader in fuel and lubricants industry and there for tends to maintain its profits through appropriate pricing.
Pro%uct ,uality (ea%ership$
Shell lubricants and fuels have been especially formulated to meet the demanding re<uirements of a wide range of customers in most sectors of the company.
Selection of Pricing ðo%$
,ompanies usually select the price of their products in accordance to the following three+ customer demand schedule, the cost function and competitors price. However companies adopt various strategies in order to price their products. )he strategies adopted by the shell %akistan ltd are+ 1+ 1+ &+ 5+ 7+ %rice of competitorBs product %rice premium for high <uality %rice premium for high purity %rice premium for better services #s the appropriate price for shell.
"oing price rate$
@;oing price rate means that a company bases the price of its product in accordance to the price offered by its competitors.A #n fact shell %akistanBs competitors are likeE
%S3 )3)'4 '))3,K ,'4).F '!J3 .
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-arget &arket
' target market is the market segment which a particular product is marketed to. #t is often defined by age, gender socio$economic grouping. )argeting strategies is the selection of the customers u wish to service. #ncludingE How many segments to targets (hich segment to target How many product to offer (hich product to offer in which segments -here are three steps to targeting$ Jarket <uality )arget choice %roduct positioning
-argeting strategy %ecision is influence% by$ Jarket maturity !iversity of buyers need )he companies si-e Strength of the competition )he volume of sales re<uires for profitability
&arket -argeting
#t is the process of evaluating each market segmentBs attractiveness and selecting one or more segments to enter. Jarket targeting depends upon the financial positioning of company. #f company is strong financially then he must go for market targeting. Shell in %akistan produces verities of products. 'll these products are available urban as well as rural area.
&arket Segmentation
Jarket is the processing which dividing a market in to distinct group of buyers on the basis of needs characteristics or behave who might re<uires separate products or marketing mi?ing.
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Jarket consist of buyers and buyers differs in one or more ways they may differing their wants, resources, locations, buying attitude and buying practice. Shell %akistan ltd. !ivide his market in to following segments+ !emographic segmentation ;eographic segmentation %sychographic segmentation
+emographic Segmentation$
!emographic segmentation is dividing the market in to groups based on demographic variables such as+ 'ge ;ender .ducation #ncome =amily si-e 3ccupation Social class Shell introduces their product for upper class, upper middle class and middle class. #n other words shell produces its products for everyone who have automobile.
"eographic segmentation$
;eographic segmentation is dividing the market in to different geographical units such as. egion !ensity ,ities )his is all about the segmentation of shell. Shell provides facilities of petroleum to urban as well as rural areas. Segmentation basically depends upon %opulation of that area 4iving standards of people
(evels of &arket Segmentation
)here are three levels of market segmentations Jass marketing Segment marketing Diche marketing
&ass &arketing$
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Shell %akistan limited go for the mass marketing because its distribution is very e?tensive. #nternationally its products are goes into international market.
Positioning$
)he process of arranging of product to occupy clear distinct and desirable place related to competing products in the minds of target consumer. Shell %akistan companies lies its growth stage in the market and en*oys >78 shares. Dow gradually with the increase of growth rate is e?pands its products line and also its distributions.
&arketing Channel
@Jarketing channels are set of interdependent organi-ations involved in the process of making a product or service available for use or consumptionA )he entities involved in the distribution of Shell products in %akistan are+ Supply ,hain !epartment Shell !epots !istributors =uel Stations ,onsumer
-he &arket Share of Shell
't the moment Shell %ak. has a market share of about 508 to 578 in %akistan. #t is trying hard to become the market leader in %akistan. =or this purpose it is taking the following steps.
.ualities of a goo% &arket (ea%er
Customer /no*le%ge$
Shell %akistan is fully committed to achieve e?cellence in customer services and product <uality. )his can only be done by having complete knowledge of the needs and wants of their customers. #t is due to this reason that Shell %akistan has established a special customer service centre by the name of @Shell .dge.A
(ong -erm Planning$
Shell en*oys a 100$years history in the sub$continent. ShellBs long term commitment towards developing the petroleum industry in %akistan is reflected by a capital investment of s.60& million in 100>.
(ine Extension$
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@4ine e?tension means including new products in the product line.A Shell has recently e?tended the product line of its lubricants by producing ,D; lubricants by the name of @Shell ,D; .ngine 3il.A
Heavy 0%vertising$
'nother feature of a good market leader is to heavily advertise in order to compete with the competitors and to create more awareness amongst already e?isting and new customers. Shell also adopts the same strategy. #t advertises both on electronic and print media to keep its customers well informed. )he company has also started a maga-ine named @SpiritA to promote its products.
Effective Placement of Pro%ucts$
Shell has established a special council called @%roduct %lacement ,ouncil.A #ts sole function is to keep an eye on proper placement of the various products offered by the company. )he council makes contracts with dealers and retailers regarding the placement of the products and also keeps checks in order to see that there is no violation of the contracts.
Price %iscounts an% 0llo*ances$
Shell %akistan 4td. offers different kinds of discounts to its customers. Cash +iscount$ @' cash discount is a price reduction offered to buyers to pay their bills promptly.A Shell offers such discounts to its distributors. )he distributors take the products from the depots and have to pay in a certain time period.
Sche%ule of Cash +iscounts
ffere% by Shell
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+iscount 1"10 net &0 5"10 net 50 >"17 net 70 8"10 net >0 10"17 net 60
+escription #t means that the distributor can get 18 discount, if he makes the payment within 10 days which is due in &0 days. !istributor can get 58 discount, if he makes the payment within 10 days which is due in 50 days. !istributor can get >8 discount, if he makes the payment within 17 days which is due in 70 days. !istributor can get 88 discount, if he makes the payment within 10 days which is due in >0 days. !istributor can get 108 discount, if he makes the payment within 17 days which is due in 60 days.
.uantity +iscounts$ 1' <uantity discount is a reduction in price on the basis of <uantity purchased or consumed.A )here is no set pattern according to which Shell offers <uantity discounts, however it keeps on introducing certain schemes in order to keep its customers and consumers satisfied and intact. Examples of .uantity +iscounts$ 3ffering 1 or 1 liter of fuel free for the purchase of 10 or 10 liters of fuel from a Shell =uel Station. Shell distributors offering a free bottle of Shell 'dvance S5 90.6 ltr: for every purchase of Shell 3il carton.
Promotion
0%vertising$
@'dvertising is any paid form of non$personal presentation and promotion of ideas, goods or services by an identified sponsor.A /in%s of 0%vertisement$ )here are different kinds of advertisements which a company may adopt during the %4,. Shell also re<uires advertising its products in order to create awareness about the new or already e?isting products. 12
)he types of advertisements which Shell %akistan 4td. Has adopted are as follows+ )nformative 0%vertisement$ @)he type of advertising which is done during the introduction stage of a product is known as informative advertising.A Shell adopted this strategy when it launched its Shell Heli? ,D; 3il. #t adopted all kinds of media to inform the public about the new product. Shell advertised through )elevision, Dews %apers, billboards, etc.to build a good product image in the minds of the customers. Persuasive 0%vertising$ @)he advertising done to compete with the competitors and to create more demand of the product in comparison to the competitorBs products, is known as persuasive advertisement.A Shell %ak 4td. also adopts such strategy to compete with its competitors. Lou must have seen various adds of Shell featuring celebrities like Jichael Schumacher in order to make them attractive and also adds in which comparison is made among Shell and competitorBs products. ,omparison features include purity, viscosity, efficiency and performance.
/in%s of &e%ia to be 2se% for 0%vertising
@Jedia is basically a carrier which carries a message or any kind of information from the sender to the receiver.A )he different kinds of media used by Shell %ak .4td. are+ • )elevision • adio9.specially =J stations: • • • • • #nternet )elephone Service 9)his function is performed by @Shell .dgeA customer services centers. )heir toll free number is 0800-22737: Dewspapers Jaga-ines 9Shell has its own maga-ine 1Spirit3: 2illboards
-he #C" &atrix
)he business portfolio is the collection of business and products that make up a company. )he best portfolio is the one that fits the companyBs strengths and helps to e?ploit the most attractive opportunities. )he company must+
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• •
'naly-e its current business portfolios and decide which should need more or less investment. !evelop growth strategies for adding new products and businesses to the portfolio while, at the same time, deciding which products and businesses should no longer be retained. 'n S2C is a unit of the company that has a separate mission statement and ob*ectives and that can be planned independently from the other businesses. 'n S2C can be a company division, a product line or individual brands.
Stars$
Stars are high growth businesses competing in the market. 3ften they need heavy investment to sustain their growth.
Cash Co*s$
,ash cows are low growth businesses with relatively high market share. )hese are mature successful businesses with relatively little need for investment.
.uestion &arks$
)hese are the S2Cs with low market share but which operate in higher growth market.
+ogs$
!ogs refer to businesses that have relatively low share in unattractive low growth markets. 3rgani-ations prefer to divest from dogs.
Shell in #C" &atrix
(e put Shell in Stars in the 2,; Jatri? because shell has a good market share and it has the opportunities to grow more.
-he S4 - 0nalysis
S(3) stands for Strengths, (eaknesses, 3pportunities 0)hreats. #n which, Strengths and weaknesses are related with internal environment of the organi-ation and opportunities and threats are related with e?ternal environment of the organi-ation.
Strengths$
Shell strengths mean what are the positive points of the organi-ation. )he strengths of shell %akistan 4td are+ )he managers regard their sub ordinates. Jain focus of the organi-ation to increase their customers. 14
Janagers use participative approach. )heir employees are highly motivated. )hey hire local employees. Do clash with ;3G). or any agency. )hey care about the hygienic factor. Shell is using effective means for the promotion of its products. Shell provides in time deliver to their petrol pumps. #ncentive based policies for motivating employees. Shell has international Standard petrol pumps. Jobile training units keep the staff up$to$date.
4eaknesses$
)hey are not offering any package to their regular customers. )hey are not offering any bonus package scheme. Shell has eight regional retail managers. )hey are insufficient to handle the problems. )hey have no proper shades and sitting arrangement at the filling stations. )here is no proper drainage system at filling station.
pportunities$
Shell is an international company so it should introduce packages. ,ompany has an opportunity to give special packages to its employees. ,ompany has opportunity to install more ,D; as well as petrol pumps in rural areas of %akistan.
-hreats$
)hreats are actually competitors. %S3 and ,'4).F improvement. #nstallation of stations by )3)'4. )he smuggling of petrol in 2alouchistan from #ran. .ntry of new companies in the refinery sector.
Environmental 0nalysis
External Environment$
=or the analysis of e?ternal environment following are important factors 9%.S):.
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%olitical forces .conomic forces Socio cultural forces )echnological forces
Political forces$
#n %akistan there are rapid changes of ;overnment since poison. .ach government that came in power condemned the planning work done by the precious government. )he slow development due to political instability but now the preset government is very stable to grow because govt. is providing incentives to different industries.
Economic forces$
#n %akistan ;D% is 7.51 and inflation rate is very high which is 11.6. )he balance of payment position in %akistan is $&.78. )he employment rate is &5.95 million.
Socio5cultural forces$
#n %akistan population is increasing and social values are also changing so the demand of fuel consumption is also increasing. %eople are coming from rural areas to cities and their motor cycle for traveling. %akistanBs attempt to raise the living standards of its citi-ens has meant that economic development has largely taken precedence over environmental issues.
-echnological forces$
%akistan environment regarding the technology is not very advance due to the lack of resources. Datural gas, because of its environmental <ualities, efficiency, and technological advances are going to play an increasingly important role in meeting demand for clean energy.
)nternal Environment+
,ustomer Supplier 4abor component ,ompetitors
Customer$
3ur customer is high class, low class and also middle class, because every class is used petrol for consumption.
Supplier$
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3ur suppliers are %akistan refinery, Dational refinery and 'ttock refinery and !hodak refinery.
(abor component$
4abor is fre<uently available in %akistan because of high unemployment rate. Skilled and unskilled persons are available at lower wages.
Competitors$
Ja*or competitors of Shell are %S3 with petrol pumps and ,alte? with petrol pumps. 2ut shell %akistan limited operates in the petroleum refinery sector. Shell %akistan limited also competes with three other petroleum refiners in 'sia
rgani6ational 7esources
Shell has established 1505 petrol filing station in different areas of %akistan. 2ut now the company is trying to reduce the number of petrol filing station because they do not need that filing station, whose monthly sales are less then 700000 liters. Cp till now about 70 pumps are renovated in different cities of %akistan. 8umber of +epots in Pakistan$ Shell has got 15 depots in different areas of %akistan.
-ypes of 7esources$
1: 1: &: 5: 7: >: Jarketing =inancial esearch and !evelopment Human esource 3peration #nformation System
&arketing$
Shell has strong distribution channels. )heir market si-e is very large. )herefore, marketing staff is very efficient and their main ob*ective is satisfying the customer and people have the brand loyalty. &arket lea%ership %ue to innovation$ Shell is considered to be the market leader in innovation. #t was the first company to get legal approval to operate mini$market. #t was the first among its competitors to introduce 9rainbow: *et wash and
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9prosper: branded oil change facility. #t provides suggestive literatures to its customers while launching a new product such as Heli? super and Heli? 4ubricant etc. #t was also the first company to introduce the concept of Jobile )raining Cnit 9J)C: for the purpose of training the workers and workers and introducing <uality and <uantity control units, which check the <uality and <uantity of ma*or gasoline at various filing stations. )nnovation the key to opportunity$ #nnovation use of technology is the key to other possible opportunities related to remote gas reserves that remain stranded due to the prohibitive cost of development.
7esearch an% +evelopment$
esearch and development strategy deals with product and process innovation and improvement. Shell spends on research and development more than most in the other companies to differentiate the performance of its products to its competitors.
Human 7esources$
Shell provides the training facilities to their labor and management to create the good relation to their employees. Shell ,ompany also motives its employees and provides different incentive on their good performance.
peration$
3peration of the company is based on continues improvement is the acknowledgement that workers e?perience and knowledge can help to shoe production problem and contribute towards tightening variances and reducing error.
)nformation System$
Shell design and manage high$class information system that improves the productivity and decision$making. #n organi-ation information may be collected, stored and synthesi-ed in such manner that answers important operational and strategic <uestions. #nformation system is one of the strength of the organi-ation. #t provide aid in environmental scanning and in controlling activities, it can also used as a weapon in gaining competitive advantage.
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'inancial Performance$
Sales 0nalysis$
Shell %akistan 4imited reported sales of >&.>& billion %akistan rupees for the fiscal year ending Mune of 1001. )his represents an increase of 6>.18, versus 1000.(hen the companyBs sales were &>.11 billion %akistan rupees. !uring 1001, the companyBs sales increased at a faster rate than all three comparable companies. (hile shell %akistan limited en*oyed a sales increase of 6>.18 the other companies saw smaller increasesE ,hennai %etroleum ,orporation 4imited sales were up 19.18, Dational efinery 4imited increased 17.98, and Jangalore efinery 0 %etrochemical 4imited e?perienced a sales decline of >.&8. Shell %akistan 4imited currently has >08 employees with sales of >&.>& billion %akistan upees.
Stock Performance$
#n recent years, this stock has performed terribly. #n fiscal year 1000 the stock traded as high as &>6.70 %akistan rupees. !uring the past 1& weeks the stock has fallen 80&8. !uring the 11 months ending &0"0>"01, earnings per share totaled &0.11 %akistan rupees per share. )hus, the price".arning ratio is 7.58. .arning per share fell 18.68 in 1001 from 1000.)he ,ompanyBs price to book ratio is higher than that of all three comparable companies, which are trading between 0.17 and 0.96 times book value.
Profitability 0nalysis$
3n the >&.>& billion %akistan rupees in sales reported by the company in 1001, the cost of goods sold totaled 55.67 billion %akistan rupees, or 60.&8 of sales. )his gross profit margin is significantly better then the company achieved in 1007, when cost of goods sold totaled 91.18 of sales. Shell %akistan 4tdBs 1001 gross profit margin of 19.68 was better than all three companies.
Competitor 0nalysis
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Shell %akistan 4imited 3perates in the %etroleum refining sector. )his 'nalysis compares shell %akistan 4imited with three other petroleum refiners in 'sia.
Pakistan State
il$
)he past of %S3 dates back to mid$60s when the ;overnment of %akistan amalgamated three @3il Jarketing ,ompaniesA+ .sso .astern, %akistan Dational 3il 9%D3: and !awood %etroleum as part of its @Dationali-ation %lanA. )he company is the only public sector entity in %akistan that has been competing effectively with three multinationals 9Shell, ,alte? and )otal:. %S3 is currently en*oying over 6&8 share of 2lack 3il market and 798 share of (hite 3il market. #t is engaged in import, storage, distribution and marketing of various petroleum products including mogas, high speed diesel 9HS!:, fuel oil, *et fuel, kerosene, li<uified petroleum gas 94%;:, compressed natural gas 9,D;: and petrochemicals. %S3 also en*oys around &78 market participation in lubricants and is blending"marketing ,astrol brands, in addition to a wide array of its own. #t is considered as one of the most successful mergers in the history of %akistan. )he company has retail coverage of over &,800 outlets, representing 808 participation in total industry network. )he company has been the winner of /arachi Stock Exchange -op Companies 0*ar% for many years and is a member of (orld .conomic =orum. %S3 serves a wide range of customers throughout %akistan including retail, industrial, aviation, marine and government"defence sectors. %S3 has been meeting the countryBs fuel needs by merging sound business sense with national obligation. )he ;overnment of %akistan9;3%: holds appro?imately 758 stake in %akistan State 3il ,ompany 4imited 9@%S3A:, including both direct holdings of the =ederal ;overnment and indirect holdings through ;3% owned institutions. )he ;3% is in the advanced stages of divesting 718 of the in %S3 to a strategic investor.
Current &arketing Strategy of Shell Pakistan (t%
)he current strategy of shell is concentrate on its business and selected market areas. 2y using this strategy company e?pands its business by upgrading petrol pumps in the country. .specially they are concentrating in the following three areas+ ,ustomer Services 20
2rand #mage Nuality and <uantity
Customer Services$
Shell %akistan 4td is working for customer satisfaction because customers play a very vital role in the prosperity or failure of a particular company. )hat is the reason that shell is operating with the basic aim to satisfy its customers and provide better and better service to its customer. #n brief it can be said that shell gives a strong emphasis on customer services.
Seven Steps for better Customer Services$
.very shell operation site follows the seven$point formula for providing customer service to its customer is stated below+ 1. 's customer drive in, guide him to a vacant filing unit by a neatly uniformed attendant of the petrol pump. 1. )hen the attendant well comes to that customer from the driver side. &. 'ttendant takes the keys from the customer. 'fter that the attendant asks to the customer about the <uantities of fuel. 5. )he attendant shows meter reading before filing the fuel to the customer. 7. 'fter filling the tank attendant tells the customer to see the meter reading and amount of liters, hands over the keys and takes amount from customer. >. 'ttendant asks to the customer that he would like to purchase an international high <uality of imula F. 6. )hen the attendant cleans windscreen of the vehicle and say good$bye with smile. 2y this procedure customer feels that he is being given proper attention and he will come again to the filling station to fill the tank of his vehicle.
#ran% )mage$
)he Second strategy of shell is creating a strong 2rand image of the company in the customer mind. #n Gisual terms, the installation of ShellBs etail Gisual #dentity 9 G#: makes a striking and immediate difference between shellBs gasoline stations and those of its competitors, %akistan state 3il 9%S3: and ,alte?. )he G# programmed is massive, for the 1100 or so sites which shell inherited through the take over, around two thirds are scheduled to be developed as G# sites, many of them being completely redesigned from the underground storage tanks up. #n addition, new sites are being ac<uired in strategic locations.
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.uality an% .uantity$
)he third strategy of the company is to set standards for reliability and honest dealing because it is fundamental to the companyBs reputation. =or the improvement of <uality and <uantity following points are important. Jobile )raining units Nuality and Nuantity ,ontrol Cnits
&obile -raining units$
Jobile )raining Cnits Gisit sites keeping staff up to date on a whole range of topics including most importantly, issues of health, safety and environment. Jobile training units train the workers in different filling stations.
.uality an% .uantity Control 2nits$
'nother mobile innovation cover fuels <uality assurance, an area where cynical disregard of standards, manifested by dilution of premium grades with low$cost gasoline has become so common that customers have given up complaining about it. ecogni-ing the importance to the companyBs reputation for delivering the right <uality of fuel, shell has introduced random gasoline testing forecast. )echnicians operate what are, effectively, mobile field laboratories, testing fuels <uality using an octane meter. 'ccording to shell, @ =uel Nuality is fundamental to our reputation for honest dealingA Nuantity control units check that whether the retailers are giving the right <uantity or less <uantity of fuel to the customers. )he <uantity is checked through various instruments. )he <uantity control units also check the digital pump.
7ecommen%ations
22
)here should be proper shades and proper sitting arrangements at the filling stations. 4ubricants should be disposed in a proper way to protect the environment from being polluted. Shell should provide small incentive to its customers. Schemes like @buy 70 liters of super and get a cola drink freeA, should be kept introducing time to time. Shell should make company operation site in every city to capture the new market. )here is only one thing that is constant that is changeE shell should invest on research0 development to cope with dynamic environment. ,ompany should establish new regional office to control the activities of company operations. )he company should provide the facility of free oil change on all its outlets. Shell should develop modern retail outlets. )hese outlets should have all possible facilities for customers because one of the reasons behind decrease market share is moderni-ation of competitors. Shell should develop effective marketing programs that help the company to increase sales that will lead to increase the market share. #n these market programs emphasis should be given to advertising, which is the most effective and efficient tools of promotion for such type of business.
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Shell is a superior brand name with more than 100 years history in this region, infact the company is still in possession of a fuel storage tank from 1899. However, the documented history of the oyal !utch"shell group the #ndo$%ak subcontinent dates back to 190& when a partnership was struck between the shell transporter and trading company and the oyal !utch petroleum company
to supply petroleum products in 'sia. (ith 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. )he graph of Shell is going up every year. )he 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. 'ssessment of the needs and wants of the customers is an ongoing process at Shell, which helps to continually develop new products and services. )o continuously offer courteous, professional and advanced business, the team of shell has recently been re*uvenated by going though training
Shell History in Pakistan
History of Shell programs with a
focus
on
technology. Shell hasinformation an over 100 year’s presence in the Subcontinent
1
)he Shell brand name en*oys a 100$year history in this part of the world, dating back to 1899 when 'siatic %etroleum, the far eastern marketing arm of two companies+ Shell )ransport ,ompany and oyal !utch %etroleum ,ompany began importing kerosene oil from '-erbai*an into the subcontinent. .ven today, the legacy of the past is visible in a storage tank carrying the date $ 1898. )he documented history of Royal Dutch Shell plc in #ndo/%akistan subcontinent dates back to 190& when partnership was struck between )he Shell )ransport 0 )rading ,ompany and the oyal !utch %etroleum ,ompany to supply petroleum to 'sia. #n 1918, to enhance their distribution capabilities, the marketing interest of Royal Dutch Shell plc and the 2urmah 3il ,ompany 4imited in #ndia were merged and 2urmah Shell 3il Storage 0 !istribution ,ompany of #ndia was born. 'fter the independence of %akistan in 1956, the name was changed to the 2urmah Shell 3il !istribution ,ompany of %akistan. #n 1960, when 718 of the shareholding was transferred to %akistani investors, the name of changed to %akistan 2urmah Shell 9%2S: 4imited. )he Shell and the 2urmah ;roups retained the remaining 598 in e<ual propositions. #n =ebruary of 199&, as economic liberali-ation began to take root and the 2urmah divested from %2S, Shell %etroleum stepped into raise its stake to 718. )he years 1001$1 have seen the Shell %etroleum ,ompany successively increasing its share, with the ;roup now having a 6>8 stake in Shell %akistan 4td 9S%4:$ an e?pression of confidence.
Company’s Slogan
@You can be sure of ShellA
Company
b!ective
2
Statement of "eneral #usiness Principles$
Shell %akistan 4imited ;eneral 2usiness %rinciples govern how Shell %akistan 4td. conducts its affairs. )he ob*ectives of Shell %akistan 4td. are to engage efficiently, responsibly and profitably in oil, gas, chemicals and other selected businesses and to participate in the search for and development of other sources of energy to meet evolving customer needs and the worldBs growing demand for energy. (e believe that oil and gas will be integral to the global energy needs for economic development for many decades to come. 3ur role is to ensure that we e?tract and deliver them profitably and in environmentally and socially responsible ways. (e seek a high standard of performance, maintaining a strong long$ term and growing position in the competitive environments in which we choose to operate. (e aim to work closely with our customers, partners and policy$ makers to advance more efficient and sustainable use of energy and natural resources.
"oal of Shell
)he goal of the company is to position itself as the preferred oil company in %akistan, leading the field in its commitment to safety, customer service, <uality and environmental protection.
Pro%uct an% Services
Pro%uct$
'nything that can be offered to market for attention, ac<uisition, use or consumption that might satisfy a want or need. )he oil products of shell are given below.
Services$
Services are the form of product that consist of activities, benefits, or satisfaction offered for sale that is essentially intangible and do not result in the ownership of anything. )he services that provide shell %akistan limited are given below. )here is credit card that given to the customer, in presence of these credit card shell provide all types of services without getting charges. (hen customer of shell going for pouring oil then also clean the transportation that is coming for being filled the oil.
3
Pro%uct &ix
@%roduct mi? is the set of all the products offered for sale by a company.A )he structure of product mi? has both breadth and depth. #ts breadth is measured by the number of product line carried and its depth by the variety of si-es, colors and models offered within each product line. )hus the two main products which Shell %ak. offers are fuel and lubricants. )hese have further classifications in various constituents which form the product line.
Pro%uct line$
Shell has two product lines namely, fuel and lubricants.
'uel$
Shell
(ubricants$
offers a wide range of fuel. )hese are+ Hi$3ctane Super Cnleaded Super Hi$speed !iesel ,D;
)he various lubricants offered by Shell areE imula , imula ! imula F Heli? %lus Heli? Super Heli? Standard Shell Heli?9,D;:
Pro%uct (ife Cycle
Pro%uct (ife Cycle Stages$
%roduct 4ife ,ycle means the changes in the sales volume of the product over the life the product. #n market there is always ups and downs are present because this is a dynamic world. .very thing will have to finish after certain time period, by finishing their life, so the life cycle of Shell is. (e define a product as anything that is capable of satisfying customer needs. )his definition includes both physical products e.g. ,ars, (ashing machines, !G! players as well as services e.g.
4
insurance, banking, private health care. 2usiness should manage their products carefully over time to ensure that they deliver products that continue to meet customer wants. )he process of managing groups of brands and product lines is called portfolio planning. )he stages through which individual products develop over time are called %roduct 4ife ,ycle. )he classic product life cycle has four stages.
)ntro%uction Stage$
't the introduction stage market si-e and growth is slight. #t is possible that substantial research and development cost have been incurred in getting the product to this stage. #n addition, marketing costs may be high in order to test the market, undergo launch promotion and set up distribution channels. #t is highly unlikely that companies will make profits on products at the introduction stage. %roducts at this stage have to be carefully monitored to ensure that they start to grow. 3therwise the best option may be to withdraw or end the product.
"ro*th Stage$
)he growth stage is characteri-ed by rapid growth in sales and profits. %rofits arise due to an increase in output Heconomies of salesI and possibly better prices. 't this stage, itBs cheaper for business to inset in increasing their market share as well as en*oying the overall growth of the market. 'ccordingly, significant promotional resources are traditionally invested in products that are firmly in the growth stage. Shell %akistan introduction stage is successfully done because it comes from the international market and enters in %akistan market. Dow company has about 50$57.78 of market share and still growing
&aturity Stage$
)he maturity stage is perhaps the most common stageE it is in this stage that competition is most intense as companies fight to maintain their market share. Here both marketing and finance becomes key activities. Jarketing spend has to be monitored carefully, since any significant moves are likely to be copied by competitors. )he maturity stage is the time when most profit is earned by the market as a whole. Shell %akistan not yet enters in maturity stage.
+ecline Stage$
#n the decline stage the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors. 't thus stage great care has to be taken to manage the product carefully. #t may be possible to take out some production cost, to transfer production to cheaper facility, sell the product into other cheaper market. ,are should be taken to control the amount of stocks
5
of the product. Shell %akistan is a brand name and company is not in decline stage because their sale increases day by day.
Pricing
%rice is the amount of money for which a product is offered in the market. )he amount of money charged for the product of services of sum of the value that consumer e?change for the consumers e?change for the benefits for having or using the product of services price is only which brings revenue in the market, so it plays a tremendous role in the market.
Strategies of Pricing$
)here is to types of strategies present in marketing. • Jarket skimming price • Jarket penetration price
&arket skimming price$
)his is high price settings for a new product to skim ma?imum revenue layer by layer from the segments willing to pa the high price the company makes favor but more profitable sales marketer prefer to this type of price strategies because there is every product that comes in the market will have to go out from the market every product that comes in the market will have to go out from the market every product have its limited life and after spending certain period of time product leave from the market like the computer software program that comes in the market has the time period of > or & months in the past but now there is soft ware programs that have limited life period of eighteen days, and after eighteen days there strategy because there point of view is that product have to go out from the market then they comes up with high prices to earn profit that minimi-es the cost that spends when it was made and finally out of the market.
&arket penetration price$
Settings a low price for a new product in order to attract a large number of buyers and large market shares. ,ompanies also adopt this strategy when they enter in the market. Shell %akistan limited also comes up with the penetration strategy because it is an international market and they *ust want to enter this market now this company en*oying the high profit and continuums in the product life cycle.
#asic
b!ectives of Pricing$
Survival$
6
Dow days companies pursue survival as there ma*or ob*ective of pricing especially when they are plagued by intense competition and changing consumer wants. Shell %akistan ltd also tends to its lubricants in order to survive the tough competition lubricants industry. )he pricing of fuels is not in the bands of Shell %akistan limited or any other such company. )he price of fuels is in the hands of the government.
&aintenance of current profit$
)he ne?t ob*ective of pricing is the maintenance of current profits. 't the moment shell %akistan ltd is the leader in fuel and lubricants industry and there for tends to maintain its profits through appropriate pricing.
Pro%uct ,uality (ea%ership$
Shell lubricants and fuels have been especially formulated to meet the demanding re<uirements of a wide range of customers in most sectors of the company.
Selection of Pricing ðo%$
,ompanies usually select the price of their products in accordance to the following three+ customer demand schedule, the cost function and competitors price. However companies adopt various strategies in order to price their products. )he strategies adopted by the shell %akistan ltd are+ 1+ 1+ &+ 5+ 7+ %rice of competitorBs product %rice premium for high <uality %rice premium for high purity %rice premium for better services #s the appropriate price for shell.
"oing price rate$
@;oing price rate means that a company bases the price of its product in accordance to the price offered by its competitors.A #n fact shell %akistanBs competitors are likeE
%S3 )3)'4 '))3,K ,'4).F '!J3 .
7
-arget &arket
' target market is the market segment which a particular product is marketed to. #t is often defined by age, gender socio$economic grouping. )argeting strategies is the selection of the customers u wish to service. #ncludingE How many segments to targets (hich segment to target How many product to offer (hich product to offer in which segments -here are three steps to targeting$ Jarket <uality )arget choice %roduct positioning
-argeting strategy %ecision is influence% by$ Jarket maturity !iversity of buyers need )he companies si-e Strength of the competition )he volume of sales re<uires for profitability
&arket -argeting
#t is the process of evaluating each market segmentBs attractiveness and selecting one or more segments to enter. Jarket targeting depends upon the financial positioning of company. #f company is strong financially then he must go for market targeting. Shell in %akistan produces verities of products. 'll these products are available urban as well as rural area.
&arket Segmentation
Jarket is the processing which dividing a market in to distinct group of buyers on the basis of needs characteristics or behave who might re<uires separate products or marketing mi?ing.
8
Jarket consist of buyers and buyers differs in one or more ways they may differing their wants, resources, locations, buying attitude and buying practice. Shell %akistan ltd. !ivide his market in to following segments+ !emographic segmentation ;eographic segmentation %sychographic segmentation
+emographic Segmentation$
!emographic segmentation is dividing the market in to groups based on demographic variables such as+ 'ge ;ender .ducation #ncome =amily si-e 3ccupation Social class Shell introduces their product for upper class, upper middle class and middle class. #n other words shell produces its products for everyone who have automobile.
"eographic segmentation$
;eographic segmentation is dividing the market in to different geographical units such as. egion !ensity ,ities )his is all about the segmentation of shell. Shell provides facilities of petroleum to urban as well as rural areas. Segmentation basically depends upon %opulation of that area 4iving standards of people
(evels of &arket Segmentation
)here are three levels of market segmentations Jass marketing Segment marketing Diche marketing
&ass &arketing$
9
Shell %akistan limited go for the mass marketing because its distribution is very e?tensive. #nternationally its products are goes into international market.
Positioning$
)he process of arranging of product to occupy clear distinct and desirable place related to competing products in the minds of target consumer. Shell %akistan companies lies its growth stage in the market and en*oys >78 shares. Dow gradually with the increase of growth rate is e?pands its products line and also its distributions.
&arketing Channel
@Jarketing channels are set of interdependent organi-ations involved in the process of making a product or service available for use or consumptionA )he entities involved in the distribution of Shell products in %akistan are+ Supply ,hain !epartment Shell !epots !istributors =uel Stations ,onsumer
-he &arket Share of Shell
't the moment Shell %ak. has a market share of about 508 to 578 in %akistan. #t is trying hard to become the market leader in %akistan. =or this purpose it is taking the following steps.
.ualities of a goo% &arket (ea%er
Customer /no*le%ge$
Shell %akistan is fully committed to achieve e?cellence in customer services and product <uality. )his can only be done by having complete knowledge of the needs and wants of their customers. #t is due to this reason that Shell %akistan has established a special customer service centre by the name of @Shell .dge.A
(ong -erm Planning$
Shell en*oys a 100$years history in the sub$continent. ShellBs long term commitment towards developing the petroleum industry in %akistan is reflected by a capital investment of s.60& million in 100>.
(ine Extension$
10
@4ine e?tension means including new products in the product line.A Shell has recently e?tended the product line of its lubricants by producing ,D; lubricants by the name of @Shell ,D; .ngine 3il.A
Heavy 0%vertising$
'nother feature of a good market leader is to heavily advertise in order to compete with the competitors and to create more awareness amongst already e?isting and new customers. Shell also adopts the same strategy. #t advertises both on electronic and print media to keep its customers well informed. )he company has also started a maga-ine named @SpiritA to promote its products.
Effective Placement of Pro%ucts$
Shell has established a special council called @%roduct %lacement ,ouncil.A #ts sole function is to keep an eye on proper placement of the various products offered by the company. )he council makes contracts with dealers and retailers regarding the placement of the products and also keeps checks in order to see that there is no violation of the contracts.
Price %iscounts an% 0llo*ances$
Shell %akistan 4td. offers different kinds of discounts to its customers. Cash +iscount$ @' cash discount is a price reduction offered to buyers to pay their bills promptly.A Shell offers such discounts to its distributors. )he distributors take the products from the depots and have to pay in a certain time period.
Sche%ule of Cash +iscounts
ffere% by Shell
11
+iscount 1"10 net &0 5"10 net 50 >"17 net 70 8"10 net >0 10"17 net 60
+escription #t means that the distributor can get 18 discount, if he makes the payment within 10 days which is due in &0 days. !istributor can get 58 discount, if he makes the payment within 10 days which is due in 50 days. !istributor can get >8 discount, if he makes the payment within 17 days which is due in 70 days. !istributor can get 88 discount, if he makes the payment within 10 days which is due in >0 days. !istributor can get 108 discount, if he makes the payment within 17 days which is due in 60 days.
.uantity +iscounts$ 1' <uantity discount is a reduction in price on the basis of <uantity purchased or consumed.A )here is no set pattern according to which Shell offers <uantity discounts, however it keeps on introducing certain schemes in order to keep its customers and consumers satisfied and intact. Examples of .uantity +iscounts$ 3ffering 1 or 1 liter of fuel free for the purchase of 10 or 10 liters of fuel from a Shell =uel Station. Shell distributors offering a free bottle of Shell 'dvance S5 90.6 ltr: for every purchase of Shell 3il carton.
Promotion
0%vertising$
@'dvertising is any paid form of non$personal presentation and promotion of ideas, goods or services by an identified sponsor.A /in%s of 0%vertisement$ )here are different kinds of advertisements which a company may adopt during the %4,. Shell also re<uires advertising its products in order to create awareness about the new or already e?isting products. 12
)he types of advertisements which Shell %akistan 4td. Has adopted are as follows+ )nformative 0%vertisement$ @)he type of advertising which is done during the introduction stage of a product is known as informative advertising.A Shell adopted this strategy when it launched its Shell Heli? ,D; 3il. #t adopted all kinds of media to inform the public about the new product. Shell advertised through )elevision, Dews %apers, billboards, etc.to build a good product image in the minds of the customers. Persuasive 0%vertising$ @)he advertising done to compete with the competitors and to create more demand of the product in comparison to the competitorBs products, is known as persuasive advertisement.A Shell %ak 4td. also adopts such strategy to compete with its competitors. Lou must have seen various adds of Shell featuring celebrities like Jichael Schumacher in order to make them attractive and also adds in which comparison is made among Shell and competitorBs products. ,omparison features include purity, viscosity, efficiency and performance.
/in%s of &e%ia to be 2se% for 0%vertising
@Jedia is basically a carrier which carries a message or any kind of information from the sender to the receiver.A )he different kinds of media used by Shell %ak .4td. are+ • )elevision • adio9.specially =J stations: • • • • • #nternet )elephone Service 9)his function is performed by @Shell .dgeA customer services centers. )heir toll free number is 0800-22737: Dewspapers Jaga-ines 9Shell has its own maga-ine 1Spirit3: 2illboards
-he #C" &atrix
)he business portfolio is the collection of business and products that make up a company. )he best portfolio is the one that fits the companyBs strengths and helps to e?ploit the most attractive opportunities. )he company must+
13
• •
'naly-e its current business portfolios and decide which should need more or less investment. !evelop growth strategies for adding new products and businesses to the portfolio while, at the same time, deciding which products and businesses should no longer be retained. 'n S2C is a unit of the company that has a separate mission statement and ob*ectives and that can be planned independently from the other businesses. 'n S2C can be a company division, a product line or individual brands.
Stars$
Stars are high growth businesses competing in the market. 3ften they need heavy investment to sustain their growth.
Cash Co*s$
,ash cows are low growth businesses with relatively high market share. )hese are mature successful businesses with relatively little need for investment.
.uestion &arks$
)hese are the S2Cs with low market share but which operate in higher growth market.
+ogs$
!ogs refer to businesses that have relatively low share in unattractive low growth markets. 3rgani-ations prefer to divest from dogs.
Shell in #C" &atrix
(e put Shell in Stars in the 2,; Jatri? because shell has a good market share and it has the opportunities to grow more.
-he S4 - 0nalysis
S(3) stands for Strengths, (eaknesses, 3pportunities 0)hreats. #n which, Strengths and weaknesses are related with internal environment of the organi-ation and opportunities and threats are related with e?ternal environment of the organi-ation.
Strengths$
Shell strengths mean what are the positive points of the organi-ation. )he strengths of shell %akistan 4td are+ )he managers regard their sub ordinates. Jain focus of the organi-ation to increase their customers. 14
Janagers use participative approach. )heir employees are highly motivated. )hey hire local employees. Do clash with ;3G). or any agency. )hey care about the hygienic factor. Shell is using effective means for the promotion of its products. Shell provides in time deliver to their petrol pumps. #ncentive based policies for motivating employees. Shell has international Standard petrol pumps. Jobile training units keep the staff up$to$date.
4eaknesses$
)hey are not offering any package to their regular customers. )hey are not offering any bonus package scheme. Shell has eight regional retail managers. )hey are insufficient to handle the problems. )hey have no proper shades and sitting arrangement at the filling stations. )here is no proper drainage system at filling station.
pportunities$
Shell is an international company so it should introduce packages. ,ompany has an opportunity to give special packages to its employees. ,ompany has opportunity to install more ,D; as well as petrol pumps in rural areas of %akistan.
-hreats$
)hreats are actually competitors. %S3 and ,'4).F improvement. #nstallation of stations by )3)'4. )he smuggling of petrol in 2alouchistan from #ran. .ntry of new companies in the refinery sector.
Environmental 0nalysis
External Environment$
=or the analysis of e?ternal environment following are important factors 9%.S):.
15
%olitical forces .conomic forces Socio cultural forces )echnological forces
Political forces$
#n %akistan there are rapid changes of ;overnment since poison. .ach government that came in power condemned the planning work done by the precious government. )he slow development due to political instability but now the preset government is very stable to grow because govt. is providing incentives to different industries.
Economic forces$
#n %akistan ;D% is 7.51 and inflation rate is very high which is 11.6. )he balance of payment position in %akistan is $&.78. )he employment rate is &5.95 million.
Socio5cultural forces$
#n %akistan population is increasing and social values are also changing so the demand of fuel consumption is also increasing. %eople are coming from rural areas to cities and their motor cycle for traveling. %akistanBs attempt to raise the living standards of its citi-ens has meant that economic development has largely taken precedence over environmental issues.
-echnological forces$
%akistan environment regarding the technology is not very advance due to the lack of resources. Datural gas, because of its environmental <ualities, efficiency, and technological advances are going to play an increasingly important role in meeting demand for clean energy.
)nternal Environment+
,ustomer Supplier 4abor component ,ompetitors
Customer$
3ur customer is high class, low class and also middle class, because every class is used petrol for consumption.
Supplier$
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3ur suppliers are %akistan refinery, Dational refinery and 'ttock refinery and !hodak refinery.
(abor component$
4abor is fre<uently available in %akistan because of high unemployment rate. Skilled and unskilled persons are available at lower wages.
Competitors$
Ja*or competitors of Shell are %S3 with petrol pumps and ,alte? with petrol pumps. 2ut shell %akistan limited operates in the petroleum refinery sector. Shell %akistan limited also competes with three other petroleum refiners in 'sia
rgani6ational 7esources
Shell has established 1505 petrol filing station in different areas of %akistan. 2ut now the company is trying to reduce the number of petrol filing station because they do not need that filing station, whose monthly sales are less then 700000 liters. Cp till now about 70 pumps are renovated in different cities of %akistan. 8umber of +epots in Pakistan$ Shell has got 15 depots in different areas of %akistan.
-ypes of 7esources$
1: 1: &: 5: 7: >: Jarketing =inancial esearch and !evelopment Human esource 3peration #nformation System
&arketing$
Shell has strong distribution channels. )heir market si-e is very large. )herefore, marketing staff is very efficient and their main ob*ective is satisfying the customer and people have the brand loyalty. &arket lea%ership %ue to innovation$ Shell is considered to be the market leader in innovation. #t was the first company to get legal approval to operate mini$market. #t was the first among its competitors to introduce 9rainbow: *et wash and
17
9prosper: branded oil change facility. #t provides suggestive literatures to its customers while launching a new product such as Heli? super and Heli? 4ubricant etc. #t was also the first company to introduce the concept of Jobile )raining Cnit 9J)C: for the purpose of training the workers and workers and introducing <uality and <uantity control units, which check the <uality and <uantity of ma*or gasoline at various filing stations. )nnovation the key to opportunity$ #nnovation use of technology is the key to other possible opportunities related to remote gas reserves that remain stranded due to the prohibitive cost of development.
7esearch an% +evelopment$
esearch and development strategy deals with product and process innovation and improvement. Shell spends on research and development more than most in the other companies to differentiate the performance of its products to its competitors.
Human 7esources$
Shell provides the training facilities to their labor and management to create the good relation to their employees. Shell ,ompany also motives its employees and provides different incentive on their good performance.
peration$
3peration of the company is based on continues improvement is the acknowledgement that workers e?perience and knowledge can help to shoe production problem and contribute towards tightening variances and reducing error.
)nformation System$
Shell design and manage high$class information system that improves the productivity and decision$making. #n organi-ation information may be collected, stored and synthesi-ed in such manner that answers important operational and strategic <uestions. #nformation system is one of the strength of the organi-ation. #t provide aid in environmental scanning and in controlling activities, it can also used as a weapon in gaining competitive advantage.
18
'inancial Performance$
Sales 0nalysis$
Shell %akistan 4imited reported sales of >&.>& billion %akistan rupees for the fiscal year ending Mune of 1001. )his represents an increase of 6>.18, versus 1000.(hen the companyBs sales were &>.11 billion %akistan rupees. !uring 1001, the companyBs sales increased at a faster rate than all three comparable companies. (hile shell %akistan limited en*oyed a sales increase of 6>.18 the other companies saw smaller increasesE ,hennai %etroleum ,orporation 4imited sales were up 19.18, Dational efinery 4imited increased 17.98, and Jangalore efinery 0 %etrochemical 4imited e?perienced a sales decline of >.&8. Shell %akistan 4imited currently has >08 employees with sales of >&.>& billion %akistan upees.
Stock Performance$
#n recent years, this stock has performed terribly. #n fiscal year 1000 the stock traded as high as &>6.70 %akistan rupees. !uring the past 1& weeks the stock has fallen 80&8. !uring the 11 months ending &0"0>"01, earnings per share totaled &0.11 %akistan rupees per share. )hus, the price".arning ratio is 7.58. .arning per share fell 18.68 in 1001 from 1000.)he ,ompanyBs price to book ratio is higher than that of all three comparable companies, which are trading between 0.17 and 0.96 times book value.
Profitability 0nalysis$
3n the >&.>& billion %akistan rupees in sales reported by the company in 1001, the cost of goods sold totaled 55.67 billion %akistan rupees, or 60.&8 of sales. )his gross profit margin is significantly better then the company achieved in 1007, when cost of goods sold totaled 91.18 of sales. Shell %akistan 4tdBs 1001 gross profit margin of 19.68 was better than all three companies.
Competitor 0nalysis
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Shell %akistan 4imited 3perates in the %etroleum refining sector. )his 'nalysis compares shell %akistan 4imited with three other petroleum refiners in 'sia.
Pakistan State
il$
)he past of %S3 dates back to mid$60s when the ;overnment of %akistan amalgamated three @3il Jarketing ,ompaniesA+ .sso .astern, %akistan Dational 3il 9%D3: and !awood %etroleum as part of its @Dationali-ation %lanA. )he company is the only public sector entity in %akistan that has been competing effectively with three multinationals 9Shell, ,alte? and )otal:. %S3 is currently en*oying over 6&8 share of 2lack 3il market and 798 share of (hite 3il market. #t is engaged in import, storage, distribution and marketing of various petroleum products including mogas, high speed diesel 9HS!:, fuel oil, *et fuel, kerosene, li<uified petroleum gas 94%;:, compressed natural gas 9,D;: and petrochemicals. %S3 also en*oys around &78 market participation in lubricants and is blending"marketing ,astrol brands, in addition to a wide array of its own. #t is considered as one of the most successful mergers in the history of %akistan. )he company has retail coverage of over &,800 outlets, representing 808 participation in total industry network. )he company has been the winner of /arachi Stock Exchange -op Companies 0*ar% for many years and is a member of (orld .conomic =orum. %S3 serves a wide range of customers throughout %akistan including retail, industrial, aviation, marine and government"defence sectors. %S3 has been meeting the countryBs fuel needs by merging sound business sense with national obligation. )he ;overnment of %akistan9;3%: holds appro?imately 758 stake in %akistan State 3il ,ompany 4imited 9@%S3A:, including both direct holdings of the =ederal ;overnment and indirect holdings through ;3% owned institutions. )he ;3% is in the advanced stages of divesting 718 of the in %S3 to a strategic investor.
Current &arketing Strategy of Shell Pakistan (t%
)he current strategy of shell is concentrate on its business and selected market areas. 2y using this strategy company e?pands its business by upgrading petrol pumps in the country. .specially they are concentrating in the following three areas+ ,ustomer Services 20
2rand #mage Nuality and <uantity
Customer Services$
Shell %akistan 4td is working for customer satisfaction because customers play a very vital role in the prosperity or failure of a particular company. )hat is the reason that shell is operating with the basic aim to satisfy its customers and provide better and better service to its customer. #n brief it can be said that shell gives a strong emphasis on customer services.
Seven Steps for better Customer Services$
.very shell operation site follows the seven$point formula for providing customer service to its customer is stated below+ 1. 's customer drive in, guide him to a vacant filing unit by a neatly uniformed attendant of the petrol pump. 1. )hen the attendant well comes to that customer from the driver side. &. 'ttendant takes the keys from the customer. 'fter that the attendant asks to the customer about the <uantities of fuel. 5. )he attendant shows meter reading before filing the fuel to the customer. 7. 'fter filling the tank attendant tells the customer to see the meter reading and amount of liters, hands over the keys and takes amount from customer. >. 'ttendant asks to the customer that he would like to purchase an international high <uality of imula F. 6. )hen the attendant cleans windscreen of the vehicle and say good$bye with smile. 2y this procedure customer feels that he is being given proper attention and he will come again to the filling station to fill the tank of his vehicle.
#ran% )mage$
)he Second strategy of shell is creating a strong 2rand image of the company in the customer mind. #n Gisual terms, the installation of ShellBs etail Gisual #dentity 9 G#: makes a striking and immediate difference between shellBs gasoline stations and those of its competitors, %akistan state 3il 9%S3: and ,alte?. )he G# programmed is massive, for the 1100 or so sites which shell inherited through the take over, around two thirds are scheduled to be developed as G# sites, many of them being completely redesigned from the underground storage tanks up. #n addition, new sites are being ac<uired in strategic locations.
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.uality an% .uantity$
)he third strategy of the company is to set standards for reliability and honest dealing because it is fundamental to the companyBs reputation. =or the improvement of <uality and <uantity following points are important. Jobile )raining units Nuality and Nuantity ,ontrol Cnits
&obile -raining units$
Jobile )raining Cnits Gisit sites keeping staff up to date on a whole range of topics including most importantly, issues of health, safety and environment. Jobile training units train the workers in different filling stations.
.uality an% .uantity Control 2nits$
'nother mobile innovation cover fuels <uality assurance, an area where cynical disregard of standards, manifested by dilution of premium grades with low$cost gasoline has become so common that customers have given up complaining about it. ecogni-ing the importance to the companyBs reputation for delivering the right <uality of fuel, shell has introduced random gasoline testing forecast. )echnicians operate what are, effectively, mobile field laboratories, testing fuels <uality using an octane meter. 'ccording to shell, @ =uel Nuality is fundamental to our reputation for honest dealingA Nuantity control units check that whether the retailers are giving the right <uantity or less <uantity of fuel to the customers. )he <uantity is checked through various instruments. )he <uantity control units also check the digital pump.
7ecommen%ations
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)here should be proper shades and proper sitting arrangements at the filling stations. 4ubricants should be disposed in a proper way to protect the environment from being polluted. Shell should provide small incentive to its customers. Schemes like @buy 70 liters of super and get a cola drink freeA, should be kept introducing time to time. Shell should make company operation site in every city to capture the new market. )here is only one thing that is constant that is changeE shell should invest on research0 development to cope with dynamic environment. ,ompany should establish new regional office to control the activities of company operations. )he company should provide the facility of free oil change on all its outlets. Shell should develop modern retail outlets. )hese outlets should have all possible facilities for customers because one of the reasons behind decrease market share is moderni-ation of competitors. Shell should develop effective marketing programs that help the company to increase sales that will lead to increase the market share. #n these market programs emphasis should be given to advertising, which is the most effective and efficient tools of promotion for such type of business.
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