(Caltex Brands 2016-2018)
Executive Summary
This report outlines a marketing plan for Chevron Singapore (Caltex brand). It has been observed that sales volume by Chevron Corporation has been declining over the past three years, and that is why this marketing plan was formulated to increase the sales volume, increase the Caltex brand awareness in those troubled markets and improve stakeholder and customer relationships between Chevron and the public. For a successful marketing plan, certain strategies which include PEST, SWOT, and Industry analysis were carried out. In PEST analysis, the factors arising from political, economic, social and Technological environments were analyzed. To make a conducive political environment, Chevron ensures that all the laws and policies of the government are adhered to by the strict decision procedure. From the analysis, the company is interested in economic growth in those regions it operates by offering equal job opportunities, partnering with NGOs to offer cheap credit to start up business and offering training on financial management. Chevron also supports education in areas of math, science, engineering and Technology and improves access to medical care especially in the developing countries. This is to promote a good economic and social environment for its operations. A SWOT analysis was also done where strengths like strong financial position, increasing demand for oil products and alternative energy products for the company were discovered. There is an opportunity to grow, but the company must fast deal with the weaknesses and threats that it faces currently. From the industry analysis, the marketing plan will be successful, but the budget for the marketing plan must be estimated accurately. Market segmentation and market mix regarding product, place and promotion have been done to ensure clarity. A forecast has been made for the sales revenue so that the people involved are clear about end results required. Implementation activities have been assigned, and timeline set to ensure accountability. An evaluation plan has been set too, to measure success and make adjustments where possible.
1.0 Introduction
This report is designed to give a marketing plan for Chevron’s Singapore Caltex brand. Chevron was started in 1989 in Singapore as a subsidiary of Chevron Global Energy Inc. The company being in the energy industry refines crude oil, markets and supplies energy products internationally and runs convenient stores where they sell snack and drinks at their various service stations. The company has three main brands; Chevron, Texaco, and Caltex. This paper focuses on the Caltex brand, which was formed in 2001 when Chevron merged with Texaco, where a marketing plan will be formulated for the Caltex brand which has a presence in over 60 countries. Among the Caltex brand products are fuel, diesel and lubricants. The product sales have been declining over the past three years with sales’ revenues of about $76000 in 2012, $73000 in 2013 and $66000 in 2014 (Chevronreport.blogspot.co.ke., 2016). This was caused by factors like tax disputes in the USA and high competition from giant oil firms like BP and Shell. The company, therefore, needs to devise a marketing strategy to maintain a competitive advantage, expand its market and remain relevant. This report gives a detailed marketing plan for the company to achieve its growth and market expansion objectives. The report has seven sections; the first part introduces the company, its products, and the purpose of the report and the structure of the paper. The second part analyzes the situation, industry and SWOT analysis for the company. The third part lists the marketing objectives whereas the target market is done in the fourth part. The fifth part discusses the market mix, and the financial forecast for the plan is done in section six. Implementation activities are discussed in section seven and Section eight provides a criterion for measuring the success of the plan.
2.0 Situation Analysis
2.1 PEST Analysis
PEST analysis is done by considering the factors that affect the performance of a company emanating from the Political, Economic, Social and Technological Environments (Rajesh et al. 2013). The analysis helps management to formulate strategies for coping in those environments.
2.1.1 Political Analysis
This analysis is done on factors associated with the government regarding laws put in place in regards to; tax, labor, export and import trade and environmental issues. The support from the government regarding services is also analyzed here.
Chevron ensures that all the laws and policies of the government are adhered to. This is made possible by the strict decision-making procedures regarding political contribution (Rajesh et al. 2013).
2.1.2 Economic Analysis
The economic environment analysis focuses on the following key issues; the growth potential of the economic, lending rates, Forex trade, wage rates and percentage of people without jobs in a country.
Chevron offers equal job opportunities to men and women through the company's interest is in empowering women. The company works along with nongovernmental organizations to offer micro loans at affordable interest rates to start-up businesses, to ensure economic growth. To ensure the success of such businesses, the company offers training on jobs and financial management. The company supports start-up businesses by ensuring access to cheap credit and market through its development projects (Rajesh et al. 2013).
2.1.3 Social Factors
Social factors originate from cultures and beliefs of people living in the environment, in which a company operates, the population in that environment, the age distribution, health awareness and safety measures. A company cannot change the social factors of a community but can adjust its strategies to fit in.
Chevron is not only concerned with its success but the success of the community in which they operate too. The company’s investments are geared to benefit the community as well, besides the company expansion and growth. The company supports education and training in areas involving math, science and technology to ensure a better future (Banik et al. 2013). Chevron also improves the lives of people in the communities they operate by providing job opportunities to them. The company is concerned with the good health of the community and therefore, it provides medical care to the people in the less developed countries (Banik et al. 2013).
2.1.4 Technological Factors
Technology has to do with innovation and the rate at which a company innovates especially if the company's business is exclusively technology dependent like Chevron's. For that reason, Chevron has always maintained innovation in to achieve business growth. The company achieves strength in its upstream and downstream technologies, information technology and energy technology by providing skills and knowledge to its employees and getting into strategic partnerships. The company has made technology ventures that innovate, develops and sells emerging trends in the energy industry (Westwood 2013).
2.2 Industry Analysis
The industry is analyzed using the Five Forces Models; rivalry among existing firms, the new entrants' threat, and the threat of substitute products, bargaining power of customers and bargaining power of suppliers. This analysis is done to identify internal factors affecting competition and external factors affecting bargaining power (Hollensen 2015).
The government usually restricts competition through its policies and regulations, this will be in favor of the marketing plan. The size of the industry too will determine rivalry. The energy industry is big, and therefore, competitors can amicably share the market. The energy industry is growing at a fast rate and therefore, there exists healthy competition. When exit barriers are low, non-performing firms can easily leave the industry creating more market for the remaining firms (Cole 2010). All these factors support the marketing plan for Chevron.
2.2.1 The threat of new entrants
If the industry requires high amount of capital to start and advanced technologies, it will be difficult for new entrants. If the new entrants need to learn a lot about the dynamics of the industry, it will take them time and money before they can compete and this is positive for Chevron’s marketing plan. In an industry where a strong brand name is a requisite for competition, new entrants must build a strong brand name which comes with years of operation. This factor, therefore, positively affects this market plan. In industries where strong distribution networks must be built, it’s hard for new entrants since that is costly and this works for the marketing plan. In industries where entry barriers are high and geographic factors restrict competition, it is difficult for new entrants. The marketing plan will be successful with such factors (Chevronreport.blogspot.co.ke. 2016).
2.2.2 Threats of Substitutes
If the substitutes are of low quality, customers will want the original product. The substitute product is likely not to perform as well as the original product. These factors will therefore for Chevron’s marketing plan. Further, if the substitutes are of low quality switching to those products is costly for the customer who may prefer to use Chevron’s products instead. All these factors support the marketing plan. Limited availability of the substitute products or services may also work in favor of Chevron’s marketing plan (Mullins et al. 2012).
2.2.3 Bargaining Power of Customers
When customers are not sensitive to price changes, they will still buy a product even if the prices went up. In such an environment, the marketing plan will succeed. If customers value product, they will buy it regardless of the price which is a positive factor for the marketing plan. When the customers are many in the market, no single customer can dictate price, and this will work for Chevron’s marketing plan.
2.2.4 Bargaining Power of Supplier
When there is high competition among suppliers, prices drop which is a benefit for producers. In industries where distribution channels are many, no single distributor can dictate the market dynamics. I f suppliers are dependent on high volumes to make profits, producers who buy in bulk have a more bargaining power. All these factors will work in favor of Chevron’s marketing plan.
2.3 SWOT Analysis
A SWOT analysis outlines the internal strengths and weaknesses of a company, the threats that the company faces and the opportunities available for the company to explore. The table below outlines the strengths, weaknesses, threats and opportunities of Chevron SingaporeSource: Author
3.0 Marketing Objectives
This marketing plan is designed to achieve the following goals for the Caltex brand:
Launch environment-friendly products like green automobile fuels and biogas and increase production by 30% yearly.
Reach 50% of new customers every year in the Asian-Pacific due the increasing population and economic growth in that market.
Availability of capital will enable us to penetrate new markets internationally and gain market of 10% per year in these new markets.
Improve stakeholders’ relations by 60%.
Enhance customer relationships by 70%.
Improve internal communication by 90%.
4.0 Target Market
Chevron’s customer base for lubricants, crude oil, fuels and gas is composed of; industries, marine, commercial and retail customers. These customers are across the world in the following continents; Europe, Asia, Middle East, Africa, North and South America and Australia. The company is aware of the market needs which include; safe, efficient, reliable and renewable energy that is why it partners with governments, schools, colleges and universities for the same (Banik et al. 2013). The company is also aware of the market trends such as lifestyle, customer attitude and interests and will tailor its brand to meet such needs.
Positioning Map
Source: Author
Based on the above positioning map, Caltex remains to be the most competitive brand compared to its close competitors such as BP, Kenol Kobil, and Shell. The Caltex brand is of high quality and most competitive in the market.
5.0. Marketing Mix
5.1 Product
The Caltex brand offers a wide range of products among them; crude oil, fuels, diesel and gas. Each product life cycle stage represents, at least, a Caltex product, and since the products are not new in the market, the stages may be a little different from the brand products are already established in the market. The introduction stage, for instance, is where crude oil is drilled from oil fields. The company can distribute the crude oil locally and internationally or refine it. This presumably takes place in the growth stage of the product’s life cycle. The crude oil can be refined into petroleum products and gas and later be sold locally and internationally, and this is where a large percentage of sales revenues are derived. The Caltex brand is currently undergoing the decline stage which is reflected in the declining sales volume. However, there is hope that the sales volume will rise due to the uniqueness of its products. The unique additive; Techron, that is used in Caltex fuels and diesel is a selling point for the brand since it adds to the quality of the Caltex's products.
5.2. Place
The Caltex brand has a presence in over 60 countries around the world. The products are transported to these markets through the pipeline using the various shipping services of Chevron, later on, the products are transported using tankers to various Caltex service stations across the world, mostly in town centers and cities of those countries (Chevronreport.blogspot.co.ke. 2016).
5.3 Promotion
Television is the most appropriate tool for advertising in this plan. This is because its coverage is wide compared to other media and bears picture messages. Personal selling will not be employed since the products are explosive and cannot be carried around by sales persons. Sales promotion will be employed through roadshows and events since its coverage is huge. Publicity as a form of product promotion will be employed through the company sponsoring events and functions that are intended to improve the communities’ welfare in those places that the company operates.
5.4. Price
Sensitive customers characterize the energy industry to price changes. The plan, therefore, is to set a more competitive price for the products to increase sales volume and maximize profits.
6.0 Financial Forecast
The following table outlines the expected sales revenue and net profits over the three years. The sales revenue is expected to increase by 100% every year due improved quality and efficiency of products, the fair prices, and increased brand awareness through advertisements and promotions that will be carried out.
Source: Author
7.0 Implementation Activities
The table below shows the activities that will be undertaken in implementing the marketing plan.
Source: Author
8.0 Evaluation Plan
The evaluation plan is used in measuring how successful the marketing plan has been progressively or at the end of the plan period. This report will evaluate success at the end of every year. This will be done by comparing sales revenue for the then past year, 2016 and sales revenue for 2017. Efficiency regarding costs minimization, marketing, and sales volume will be compared to the year 2016 and 2017, and the subsequent years. In the case of effectiveness would not have been improved by the end of the fast year, or the sales revenue would not have doubled, then certain strategies will be changed.
Reference List
Banik, R., Saha, S., Rana, S., Islam, A. & Habiba, J. U. 2013. Strategic Analysis of Chevron Corporation. Bangladesh: ASA University Bangladesh
Chevronreport.blogspot.co.ke. (2016). The Chevron Report. [online] Available at: http://chevronreport.blogspot.co.ke/ [Accessed 1 Apr. 2016].
Cole, D., 2010. The Complete Guide to Book Marketing. Skyhorse Publishing Inc..
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Mullins, J., Walker, O.C. and Boyd Jr, H.W., 2012. Marketing management: A strategic decision-making approach. McGraw-Hill Higher Education.
Westwood, J., 2013. How to write a marketing plan. Kogan Page Publishers.
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