PETRONAS

1.0 EXECUTIVE SUMMARY

The market for petroleum products is highly competitive, with major multinational corporations especially in a mix-market country. PETRONAS markets its products directly to customers as well as through its network of service stations, LPG dealers and industrial dealers. What sets them apart are the variety of products, services, promotional strategy, product branding and image, company identity and marketing strategies. The marketing strategy that been analyzed in this assignment are Dealing with Competition, Segmentation, Targeting Strategy, and Positioning, and Marketing promotion – Integrated Marketing Communications (IMC) and Promotion Mix. In a market, there would be two different market categories: consumer markets and business markets. As for oil and gas company, PETRONAS falls into both market categories which are consumer markets and business markets. Meanwhile, PETRONAS also considered as business market which they selling their oil and gas to business companies for resale or producing another products. PETRONAS major product sale are fuels and lubricants for Malaysia’s market. Meanwhile, lubricant products produced by PETRONAS into five categories that are passenger car motor oil, motorcycle oil, duty engine oil, industrial & marine oil and, transmission and gear oil. Under these segments, PETRONAS offered varieties of products which key is to target different group of market and increase market shares. After examining the market segmenting for PETRONAS products, PETRONAS will then have to devise a promotional effort to market their products. PETRONAS, like any other company, has its own promotion mix.

2.0 INTRODUCTION

The company we have chosen to analyse is Petroliam Nasional Berhad, or more commonly known as PETRONAS. PETRONAS is an oil and gas company developed in Malaysia and aimed at the distribution of the Malaysian oil and gas resource. PETRONAS’ goal is to bring maximum satisfaction to customers through quality products and services, as well as continuous improvement. The market for petroleum products is highly competitive, with major multinational corporations especially in a mix-market country. PETRONAS markets its products directly to customers as well as through its network of service stations, LPG dealers and industrial dealers. Its marketing activities are well supported by a comprehensive logistics and distribution system, all strategically located to ensure a reliable supply of products at all times. PETRONAS has similar products with other oil companies and thus competition is close and tight. Competitors in the market include SHELL, ProJET, and Esso. Furthermore, price controls by the government deter pricing difference with its competition. However, being the national petroleum company, PETRONAS has an advantage over other companies. To overcome these setbacks and make full use of the advantages it has, we have decided to analyse PETRONAS’ marketing strategy using 3 topics; dealing with competition, segmentation, targeting strategy, and positioning, integrated marketing communication and promotion mix. After analyzing the company, its situation and its current marketing strategy, we will draw our conclusions and recommendations on what we think are the best ways to improve PETRONAS’ marketing strategy.

2.1 PETRONAS – Competitive Position

PETRONAS has a number of competitors in the oil and gas market, such as, SHELL, PROJET, BP, and ESSO. Generally, all these companies have similar products and services. What sets them apart are the variety of products, services, promotional strategy, product branding and image, company identity and marketing strategies. Currently, PETRONAS is a major player in the industrial market for oil and gas, within Malaysia, hopefully expanding its branches towards even more prospective neighbouring countries. With the support from the government, as a national oil and gas producer, PETRONAS has set its identity at a level of equal with its major competitors, mainly SHELL.

With these competitions, PETRONAS looks into their marketing strategy in order to rank in more potential customers. In our report of PETRONAS’ marketing strategy, we analyze PETRONAS’ ability of:

· Dealing with competition, segmenting, targeting, and positioning strategy

· Marketing promotion – Integrated Marketing Communications (IMC)

· Marketing promotion – The Promotion Mix

3.0 ANALYSIS AND DISCUSSION

3.1 Dealing with competition; segmenting, targeting, & positioning strategies

A market is anyone with needs, capable of purchasing products or services. In a market, there would be two different market categories: consumer markets and business markets.

As for oil and gas company, PETRONAS falls into both market categories which are consumer markets and business markets. Consumer who uses oil and gas for self used purpose is classified as consumer markets for example household. Meanwhile, PETRONAS also considered as business market which they selling their oil and gas to business companies for resale or producing another products. To illustrate it, a food manufacturing needs fuel as raw material in order to operates its machineries to produce foods. According to website of Petronas Dagangan Berhad’s “About Us”, PETRONAS’s consumers for fuels are motorists, households, airlines, shipping lines, transporters, plantations, processing and manufacturing plants, power stations and commercial enterprises (2006).

PETRONAS level of market segmentation is classed into mass marketing because the petrol in Malaysia is the same price with other petrol station such as Shell or Esso. PETRONAS delivered its products throughout the country, directly to customers as well as through its network of service stations, LPG dealers and industrial dealers.

PETRONAS major product sale are fuels and lubricants for Malaysia’s market. The fuels were divided into three segment that are automotive, aviation, and industrial fuels. Meanwhile, lubricant products produced by PETRONAS into five categories that are passenger car motor oil, motorcycle oil, duty engine oil, industrial & marine oil and, transmission and gear oil. Under these segments, PETRONAS offered varieties of products which key is to target different group of market and increase market shares. Referring to appendix ……… PETRONAS Corporate Website (which I put at da folder of must print appendix)………………..... it shows the segmenting on fuels and lubricants products which produced by PETRONAS.

PETRONAS can be seen as having the transition of entering differentiated strategy. Differentiated strategy defined as where an organization focuses on two or more segments where it is an expansion from concentrated strategy. The oil and gas industry for PETRONAS is vast and the market can be of both consumers and business purposes. Preparing and anticipating the competitors are one of the drives that cause he change in PETRONAS to diversity. In differentiated strategy field, PETRONAS equipped themselves against rivalry such as SHELL and ESSO in Malaysia by offering numerous products that target specific market for varieties consumers to strengthen the identification on the market. Thus, it boosts the total of market share. According to Petronas Dagangan Bhd’s annual reports, the CEO reported the Company strengthened its market leadership position and widened the gap against our closest competitor. Where overall market share (total all product) improved to 40% from 38.9% in the previous year, in the other hand, major competition only accounted only 30.2% (2005).

It was fact that Competitors in the same oil and gas industries business have the same, segmenting, targeting and positioning strategies because they produce same products, which are fuels and lubricants. To deal with the competitive business environments, PETRONAS should look into other marketing strategies to strengthen their products and brand in the market. Therefore, marketing promotion is extremely essential as PETRONAS’s promotion is to create fundamental images and brands to the markets. PETRONAS had its own ideology in attempting consumers. According to an article name “Who is Master Ma?” by AdAgeChina, an advertising agency, it report that PETRONAS used ads to create buzz in mysterious campaign to captured the attention of hundreds of thousands of curious Chinese viewers (Madden 2006). Refer to appendixes …………Chinese (I put in da folder)…………………These unique types of ads determine why PETRONAS is successful marketing strategies to attract buyers in new market such as China.

3.2 Integrated Marketing Communications (IMC)

Integrated Marketing Communications (IMC) is the coordination of promotional efforts for maximum informational and persuasive impact (Pride et al. 2006, p. 379). In another definition, IMC is claim as the concept under which a company carefully integrates and coordinates its many communications channels to deliver a clear, consistent and compelling message about the organisation and its products (Kotler et al. 2003, p. 410).

After examining the market segmenting for PETRONAS products, PETRONAS will then have to devise a promotional effort to market their products. The promotional effort depends on PETRONAS decision on how much they would want to spend.

In the diagram below, it shows IMC’s main communications elements.

Diagram 1.1 Integrated Marketing Communications (IMC) Elements

Steps in Integrated Marketing Communication (IMC)

In PETRONAS, there would be steps in ensuring IMC. Below is an example for a PETRONAS Synthium product:

1. Identify Target Audience

PETRONAS has identified the target audience for their Synthium product, which is the motorcyclist. Motorcyclists are also within the age group of youths, who are seeking for motorcycling adrenalin.

2. Identify Communication Objective

The main purpose for the communication objective is to inform the public, mainly the motorcyclist, about PETRONAS products. After informing the targeted audience, PETRONAS will then persuade them to purchase their product.

3. Select A Message

There are different appeals that PETRONAS could aim for in order to market their Synthium. One of which for the product would be that of safety. With one of their tag line, “Safety Outdoor”, PETRONAS targets their message to safety, which is an appropriate tag line because, generally, safety is the main concern in everyone. Below is a few examples of the message PETRONAS conveys to its consumers.

	(Source:

Diagram 1.1 PETRONAS “Safety Outdoors” Promotion

Diagram 1.2 PETRONAS Gas Recipes, Cooking and Safety Tips Promotion

In Diagram 1.2, PETRONAS strive to promote their products (gas), through recipes, cooking and safety tips. Teaching the public on all these skills, informally, introduces PETRONAS’ Gas and services to the potential consumers

Diagram 1.3 PETRONAS Premium Offers

Diagram 1.4 PETRONAS Patronage Rewards

4. Select Media

PETRONAS has promoted their products through different media. One of which is the commonly seen newspapers. Besides newspapers, PETRONAS has venture into product placement. An example to illustrate PETRONAS’ product placement promotion would be that of a F1 car, which is widely known to anyone who is into F1 car racing.

Diagram 1.5 PETRONAS Product Placement

In Diagram 1.5, a favourite sport, such as F1 racing can be a prospect for companies, such as PETRONAS to make their name known to the world-at-large.

5. Select Message Source

Selecting a message source would be promoting PETRONAS products through endorsement or through word of mouth. It can be similar to that of product placement, as the drivers of the cars are acting as PETRONAS’ endorser / ambassador.

6. Obtain Feedback

Obtaining feedback is a must to ensure that a company is heading in the right direction of satisfying their customers. In PETRONAS, there will be feedback forms available to the public to provide their views on the product and services of PETRONAS.

3.3 PROMOTION MIX

Great products or services would not generate income if not properly promoted. The promotion mix of a company is the combination of different elements of promotion to create a complete package suitable to the company’s product and services. Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amount of one of the ingredients, the final outcome is different. It is the same with promotions. You can 'integrate' different aspects of the promotions mix to deliver a unique campaign. PETRONAS, like any other company, has its own promotion mix. The elements include; advertising, public relations, word-of-mouth, and sales promotion. Below is the detailed discussion of each element.

Advertising

PETRONAS uses a great deal of advertising to promote its product and services. The advertising media PETRONAS applies are newspapers, television advertisements, posters, banners, and magazines. However, the most noticed and effective advertising media used by PETRONAS is television advertisements. PETRONAS’ television ads have always been unique and catchy. These ads are usually released in conjunction with major national celebrations such as the National Day, Hari Raya, Deepavali, and Chinese New Year, to name a few. These ads usually portray family, friendship, and racial values which have an emotional effect on viewers and because of the unique way in which these values are portrayed, PETRONAS ads have become a favourite to viewers.

Public Relations

Public Relations defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). PETRONAS develops its public relations through scholarships, public services, and event organizing. The PETRONAS Scholarship Programme is one of its Corporate Social Responsibility (CSR) activities to help students further their studies. To date, PETRONAS has provided educational assistance to more than 13,000 students from Malaysia, Vietnam, Thailand, South Africa, Sudan and Turkmenistan (Morris 200. Under its CSR, PETRONAS contributes to sustainable economic development by developing infrastructure in areas where it sets up petrol stations. Also, the community in that area benefits from PETRONAS’ entrance to the market as this would provide the community with skills, training and higher income.

Word-Of-Mouth

Word-of-mouth marketing truly is the world's best-known marketing secret. It is an unofficial technique of promoting products and services and it requires basically no cost at all. All companies have this element of marketing in their promotion mix but the difference in every company is the degree of word-of-mouth marketing being applied in their promotion mix. PETRONAS has quite a high degree of word-of-mouth marketing, due to its good public relations and different approach to advertising, consumers would inevitably talk about PETRONAS. That is what word-of-mouth is all about; customers talking about your company. The things they say may not directly promote your product but it creates awareness about your company.

4.0 CONCLUSION

Overall, PETRONAS has ventured into the oil and gas industry for quite some time (32 years) (PETRONAS 2005). With an aggressive market, PETRONAS has adapted to that environment by delivering products and services at their best ability.

5.0 RECOMMENDATION

– PETRONAS could deliver more for their products, through interactive games. These activities can be brought forth to the public, through service stations.

– Through their website, PETRONAS could have an interactive menu to educate the public about their products. This is visible through their PETROSAINS Museum, in Kuala Lumpur, which educates the public, mainly children, on oil and gas history, with games and activities. PETRONAS could target the public even more through their website.

– PETRONAS could segment their products to different target market. In accordance to that, PETRONAS could create a specific product line, targeted to racing enthusiasts, mainly the drivers themselves. This creates in them a sense of belonging and connecting to PETRONAS on a personal level.

– In terms, of maintenance, PETRONAS should have regular maintenance of their services and products. Examples: oil pumps handles, tire pumps and their products at ‘MyMesra’ outlets.