The Major Functions Of An
Organization Marketing Essay
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Marketing is among one of the major
functions of an organization. This specific function helps in identifying and
realizing any organization's existing and potential customers. Through this
process an organization realizes the need of producing products and services,
that is, those products or services that meet the needs and wants of customers.
Moreover, updates and convince the customers to buy these products and
services, and strengthens the customers' confidence in the purchase that they
made.
Everyone does marketing every day,
even when they don't know it. Billboards surround the roads. Logos come into
view all over from t-shirts to international games like cricket, football and
tennis. Considering an example of a young teenager, who begs his parents to use
their car. In reality he does marketing, by marketing himself to his parents
for the swap of the car keys. And this is what marketing is actually all about,
that is struggling to generate relationship of exchange that please and benefit
both parties.
No customer can escape from marketing
campaigns, and thus no business should be operate without a marketing plan as
it helps to identify potential and existing consumer demands, meet their needs
and wants, and keep them consuming more.
Shell Pakistan has been chosen as an
energy company to fulfill the requirements of the assignment.
Target
Market
A target market is the market where a
particular product is marketed to. For example shaving blades are designed for
men, to shave their beard, so the target market of Gillette is men. Now a
teenage boy would not shave so the target market will be specifically men over
18. Hence target market can often be defined by age, gender and socio-economic
grouping.
Market
Targeting
Shell operates worldwide offering a
wide range of products. The company occupies millions of loyal customers.
Whereas talking specifically about Shell Pakistan, it has a significant market
share. Still the company has to go through the process of marketing as it is an
essential part of life of an individual to a multinational organization.
Market targeting is all about
evaluating a market segment's attractiveness. After the evaluation is done a
company then decides to enter a particular segment that is the most attractive
segment which tends to forecasts high profits. It also depends on the financial
position of a company, as a company may wish to enter a bigger market but its
financial position may not allow it to operate in it.
Shell Pakistan's target market is all
domestic customers consuming fuel and lubricants for commercial or personal
purposes. It varies from multinational industries operating in the country for
production of products to people who use fuel operated electricity generators
at home due to lack of domestic electricity shortage. It targets the customers
of operating a transportation business to parents using a vehicle to drop their
children to school. Hence Shell Pakistan has a very big target market as all
its products are available in the urban and rural areas of the country.
Market
Segmentation
Market segmentation is the process of
dividing the target market into different groups of consumers on the basis of
their demands. This is done by evaluating the characteristics of the target
market and then listing them into separate groups of distinct characteristics,
as buyers differ from each other on the basis of their needs, resources,
locations and buying attitudes.
Shell Pakistan's market can be
divided into the following two market segments:
Demographic Segmentation
Geographic Segmentation
Demographic segmentation involves
constructing groups of customers on the basis of demographic attributes such as
age, gender, family size, social class, usage etc. Shell Pakistan offers its
products to everyone in the country.
Geographical Segmentation involves
dividing a market into different areas due to their geographical locations. It
is usually done by evaluating the population of different areas and by
searching the living standards. Shell Pakistan targets almost all geographical
segments in Pakistan by offering its products from the Afghan border to the bay
of Arabian Sea.
Pricing
Everything taking place in the world
has a reason behind. A business that operates has a mission and set of
objectives to achieve, among which generation of high profits is listed on the
top. Whatever, whoever produces seeks to get a price paid for it. Price is
hence the amount of money for which a product or a service is offered.
If a company sets a high price for a
new product to gain maximum revenue in the initial stage, it is known Market
skimming price, while if a company sets a low price upon the introduction of a
new product to attract a larger number of customers and to achieve a higher
market share is known as market penetration price.
Shell Pakistan operates a market
penetration price as the introduction of lubricants was offered at lower
prices, whereas fuel prices are set by the government. This is the reason that
Shell Pakistan occupies 45.5% market share (according to the statistics) and is
still growing.
Product
Mix
Product mix is a collection of all
products and services that a company offers to the market, which are consumers.
Product mix has two attributes, the breadth and the depth. The breadth is
measured by the number of product line being carried, that is the number of
products being offered and the product mix depth is measure by the mixture and
variety of attributes that is different sizes, colors, models and other
representations.
The product mix of Pakistan contains
two products, fuel and lubricants.
Fuel
Shell Pakistan offers all normal
classes of fuel as other companies offer worldwide. Fuel consumption per
customer varies obviously, as it depends upon the use (commercial or personal)
and the type of vehicle as well. The variety of fuel being offered by Shell
Pakistan is:
Super Unleaded Petrol
Unleaded Petrol
Hi Octane
Diesel
CNG
Some of these fuel types are
purchased locally, while the others are imported to keep high standards. Shell
Pakistan purchases 100% of its CNG from the domestic supplies in Pakistan.
Lubricants
Shell Pakistan continues to sell its
lubricants with a statement "Shell lubricants provide increased protection
against engine wear and corrosion in your car, pickup, or motorbike".
Shell Pakistan is among the top sellers of lubricants in the country, as it
spends a lot of money on advertising and offers them in different sizes,
keeping in view that the quality is set to high standards. Shell Pakistan
continues to offer the following types of lubricants to the country:
Shell Helix
Shell Helix Ultra
Shell Helix HX7
Shell Helix HX5
Shell Helix HX3
Shell Advance
Shell Advance AX5 15W-40
Shell Advance AX3 20W-50
Sell Advance AX3 SAE-40
Shell Advance SX 2T
Shell Rimula
Shell Rimula R3 X
Shell Rimula R2 Extra
Shell Rimula R1 Multi
Shell Rimula R1 SAE 50
Shell Specialty Lubricants
Spirax A 85w140
Spirax G 140
Spirax G 80W90
Spirax G 90
Donax TM
Antifreeze Coolant
Multiroad Grease CT3
Brake Fluid
Clutch Fluid
Shell Grease Lubrication
Shell Alvania Greases
Shell Albida Greases
Shell Stamisna Greases
Shell Malleus Open Gear Lubricant
The
Product Life Cycle
Human beings and other living
creatures are not different to the products offered for an exchange in an
economy, as like all living beings products also go through the phases of life
and death. Likewise any living being, which passes through the stages of birth,
growth, maturity, old age (decline) and ultimately death, a product goes
through these stages as well. The product life cycles passes through many
different phases which can be controlled to some extent. Take an example of
electric cigarettes, which were invented about 5-6 years ago. So they went
through the stage of birth and could never enter the next stage of growth until
and unless they were introduced to the world, by marketing free samples and
advertisement all over the world including the internet. Hence the product life
cycle involves many professional disciplines and requires many skills, tools
and processes.
Product life cycle can be defined as
the change in sales volume of a specific product a company offers, over the
expected life of the product. Each product that enters a market goes through
the phases of ups and downs, due to competition, substitutes and other
environmental issues.
The four main stages of Product Life
cycle are described below and have been linked with Shell Pakistan product
line:
Stage
1: Market Introduction Stage
In this stage a new product produced
by a company enters a market. This stage carries high costs, as at this stage
no sales for the new product introduced have been made. In addition it carries
high marketing costs, as the demand for the product has to be created, due to
initial low volume of sales. Money is expended to develop customer attention
towards the product. Hence a company spends a lot of money in the Market
Introduction Stage, which results in high costs of production and low revenues,
hence resulting into initial loss for the company. Companies have to monitor
their products in this stage as they have to ensure the growth of the product.
If they fail to do so they should terminate the production of the product.
Shell went through a market
introduction stage for its lubricant Shell Advance AX5 15W-40 in 2009 when it
started offering it. Company had to construct customer attraction to the
product as they never used to offer lubricant for a two wheeler of 70cc engine
power and 4 stroke engines. The company had to draw attention towards their
invention of this type of lubrication. Later on other competitors entered the
market.
Stage
2: Growth Stage
At this stage company starts to
generate sales and hence profits from a specific product or service. Sales
arise due to customer consuming the product and profits arise due to an
increase in output and better prices. Costs reduce due to the economies of
scale. In this stage public awareness increases and on the other hand
competition starts to begin as competitors enter the market to offer similar
products. Due to this competition prices of the products being offered normally
tend to decrease.
Many of the products offered by shell
have gone out of this stage of growth to the next stage, that is the maturity
stage, because shell has not offered anything new in the market and thus
continues to operate while offering the same products from past three years.
Stage
3: Maturity Stage
Maturity stage is the stage where
costs are lowered as a result of high production volumes and increased
competition. This is the most common stage of all. In this stage of maturity
competition tends to be more intense as companies offer similar products and
fight to maintain their market shares. Sales volume reaches the peak. In this
stage competitors tend to approach a strategy of differentiating their product
from that of their competitor by different marketing and innovation strategies
and by lowering the prices. Hence expenses should be monitored carefully to prevent
the product's profit. In this stage most of the profit is earned by the market
as a whole.
Shell Pakistan's product mix is being
offered by its competitors like Caltex Pakistan, Total Pakistan and other local
companies as well. Fuel is being offered at same price whereas lubricants vary
on their price being offered by the competitors.
Stage
4: Decline Stage
In this stage sales volume tends to
decrease significantly, resulting in lower revenues and lower profits or even
losses in difficult situations. In this stage profit of the overall market as a
whole starts to decline. At this stage careful implementation of pricing and
marketing strategies along innovation should take place. If the product remains
in the decline stage a company should stop offering that particular product and
try to seek markets where similar products are not being offered. Large amount
of care should be taken in this stage.
Shell Pakistan is not in a decline
stage as they continue to gain large volume of sales by every rising day.
Marketing
Channel
"A path through which goods and
services flow in one direction, and payments generated by them that flow in the
opposite direction".
(http://www.businessdictionary.com/definition/marketing-channel.html)
Shell Pakistan's marketing channel
comprises of the supply chain department, shell depots, distributors, fuel
stations and consumers (http://www.shell.com.pk)
Shell Pakistan continues to grow via
the following:
Planning
approach
This is reflected by an investment of
703 million Pakistani Rupee. (According to the investment sources of Pakistan)
Customer
Knowledge
Shell has been continuously investing
on plans which gather customer attraction towards their products and services.
The company achieves this by continually spending on marketing projects and by
employing large number of marketing personnel, who approach different retail
outlet (not owned by the company) for the promotion of their lubricants.
Advertisement
Shell continues to invest on heavy
advertisement by installing billboards on prime locations throughout the
country. It also radio and television as a medium of advertisement. The company
also offer a magazine to promote its products.
Discounts
Discounts play a vital role in huge
sales volume of Shell Pakistan. The company offers different discounts starting
from cash discounts to the distributors, to quantity discount being offered on
purchase of high volume of fuel and lubricants to the industries as well as
distributors.
SWOT
Analysis
Strengths
The positive points in the macroeconomic
environment of Shell Pakistan could help the company grow at a much higher
rate. The strengths of the company include:
Brand Loyal Customers
Highly advertised Lubricants
More than 100 years of service
history
No clashes with local government
No clashes with other agencies
In time delivery of the entire
product line
International standard retail outlets
Cheap Labor force
Know how of hygienic factors
Motivated employees
Weaknesses
The weaknesses of the company may
harm the growth. Shell Pakistan has the following weaknesses according to my
perception:
Lack of regional managers
Poor build shades on the retail
outlets
Dull and poor representation of the
retail outlets
No loyalty programs for regular
customers
Opportunities
Shell Pakistan could develop and grow
much bigger if it realizes that it could take an edge in the market by
realizing the following:
With huge present funds, could start
offering regular customers with vouchers of discounts
Keep the employees motivated
Installing retail outlets in the
remote areas
Installing more CNG stations
throughout the country
Offering wide range of discounts to
farmers on diesel
Threats
The following are the threats to
Shell Pakistan, which could lower down its market share in the country.
Competitors offering wider range of
products
Domestic competition rising by new
companies entering the market
Existing companies like Pakistan
State Oil are installing retail outlets throughout the country
The internal conditions of Pakistan
like bomb blasts
High taxes being imposed
Unstable fuel prices
Smuggling of petrol from Iran and
other countries
Marketing
plan for a new product
As the agriculture sector of Pakistan
contributes a significant portion in the GDP of the country Shell Pakistan
should take an initiative to generate revenue out of this sector. Shell
Pakistan should take an initiative to produce special advanced lubricant for
tractors as no other oil company in Pakistan is offering such product. This
would not only boost revenues, but will help Shell Pakistan to gain a bigger
market share in the industry it operates.
Target
Market
The target market for this product
will be farmers, which operate tractors for harvesting and cultivation purposes
in the agriculture sector of Pakistan.
Market
Segmentation
This could be done by demographic
segmentation as Shell Pakistan will be targeting the rural areas of Pakistan,
as most of the agricultural production takes place in the country side of
Pakistan. Hence by targeting rural areas means targeting farmers who use tractors
for harvesting and cultivation process.
Pricing
The initial price of advance
lubricant for tractors could have a great influence on the product lifecycle of
the product. This is due to the high illiteracy rate in the country, especially
in the rural areas where people hardly know to right their names. This brings
in the fact that a huge advertisement and marketing campaigns would be required
to let the farmers know about the product. Hence a farmer who hardly knows to
read and right would ultimately look for a low price rather than looking into
the formulae and advantages of the product. So, according to my perception
Shell Pakistan should offer this product at a cheap price initially and then to
increase the price gradually to an optimum level. This should only be done when
the company finds increased demand for the product and by getting customer
feedback on the results of using the product.
Promotion
A product in the introduction stage
of the product lifecycle requires a lot of investments. As Shell Pakistan will
be offering this special advanced lubricant for tractors to the farmers, this
will require huge efforts for the promotion of the product. Shell could bypass
all the hurdles by:
Advertisement through electric media
Discounts on the purchase of bulk
quantity
Offering free gifts on purchase
Delivering samples
Marketing campaigns targeting
individuals
Giving money back guarantee
Expected
Investment Return
Shell Pakistan should expect a return
on the investment made on this project, but it will take some time to achieve
the target. This time span would be small as the product is currently being
only offered to the farmers by the agricultural sector of Pakistan which plays
monopoly. To help achieve the product the stage of growth and maturity company
needs to spend time, effort and money on the product, however to this the
result will be fruitful.
Citations
http://www.shell.com.pk/
http://www.shell.com.pk/home/content/pak/products_services/
http://en.wikipedia.org/wiki/Shell_Pakistan
http://www.shell.com/
http://www.icongrouponline.com/pr/Shell_Pakistan_Limited_PK/PR.html
http://www.ocac.org.pk/shell.html
http://www.sleekarticles.com/pakistan%E2%80%99s-leading-petroleum-company/
http://www.pakistantoday.com.pk/2011/03/pso-loses-market-share-in-february/
http://www.brecorder.com/news/brief-recordings/1154165:news.html
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