SHELL REFINING COMPANY MALAYSIA : 2015 MARKETING ANALYSES
Executive Summary
1.0 Company
Background & Objectives
2.0 Situational
Analysis
2.1 Market Analysis
2.2 Target Market
2.3 Market Demographics
2.3.1 Consumer
Segments
2.3.2 Business
Market Segments
2.3.3 Behaviour
Factors
2.4 Market Needs
2.5 Market
Trend
2.6 Market Growth
3.0 Company
Analysis (SWOT ANALYSIS)
4.0 Competitor
analysis
4.1 Financial Performance 2014
4.2 Organization Size
4.3 Market Share
4.4 Comparative Product Quality
4.5 Growth
4.6 Available Capital & Resources
4.7 Image & Positioning
4.8 Marketing Strategic Partner
5.0 Marketing
Elements
5.1 The Products
5.1.1 Refinery
Products
5.1.2 Crude
Oil
5.1.3 On
The Road
5.1.4 Fuels
5.1.5 Oils
& Lubricants
5.1.6 Solution
For Business
5.2 Price
5.3 Distribution Channels
5.4 Promotion
6.0 Marketing
Strategy
6.1 Mission
6.2 Marketing Objective
7.0 Implementation
& Control
Conclusion
References
1.
COMPANY BACKGROUND AND OBJECTIVES
SRC is the supplier for Shell Malaysia
products, was formed in 1960 and is a public listed company with 49% public
participation.
At its plant in Port Dickson, its produces a
comprehensive range of petroleum products, most of which are consumed within
Malaysia. In 1999 the Company completed its RM 1.4 billion investment in
Malaysia's first Long Residue Catalytic Cracking (LRCC), a medium-sized simple
refinery complex refinery capable of processing 125 kbpd (thousand barrels per
day). The LRCC has quadrupled the refinery's LPG production and doubled its
motor gasoline. It has also enabled the refinery to manufacture propylene for
the first time - a highly valued feedstock for the petrochemical industry.
2.
SITUATION ANALYSIS
2.1
MARKET
ANALYSIS
As
the background of this paper suggests that SRC main products are petroleum,
petrochemical, and diesel with the new diesel processing unit called ‘Hijau’.
Then, we will explore in depth the surrounding matters related to these
products. To start let us define the business terms of ‘downstream’ as it is
the business of SRC. (Strategic Report, 2014, 2014,p. 8) Shell definition of
‘downstream’ is refining and marketing activities for oil products and
chemicals. Refining includes manufacturing,
supply and shipping of crude oil. Marketing sells a range of products including
fuels, lubricants, bitumen and liquefied petroleum gas (LPG) for home,
transport and industrial use, chemicals produces and markets petrochemicals for
industrial customers, including the raw materials for plastics, coatings and
detergents. Downstream also trades Shell’s hydrocarbons and other
energy-related products, supplies the Downstream businesses and provides
shipping services. Additionally, Downstream oversees Shell’s interests in alternative
energy (including biofuels but excluding wind).
Bloomberg had been cited saying (Oil
continues slump as global glut expands, 2015, para 3) “Oil has renewed its
slump after losing almost 50 per cent last year as US crude stockpiles expand
to the highest levels in more than three decades, even as drillers idled the
number of active rigs to the fewest since 2011. OPEC maintained its quota at 30
million barrels a day in November, resisting calls to curb output amid surging
supply from shale producers”.
This by far the reason with Shell Refining
Company Malaysia (SRC) reported (Shell Refining Company FY2014 Results Impacted
By Falling Oil Prices, 2015, para 1) that the company announces revenue of RM14.3 billion YTD Q4-2014, but with
impairment loss of RM461.The revenue registered is 3% lower than the
same period in 2013. It also posted after-tax loss of RM 1,188.7 million in
2014 compared to an after-tax loss of RM155.9 million in 2013. Losses were
mainly due to fall in oil price.
“In 2013,
comparatively, the company recorded a stockholding gain of RM95.5 million,
which resulted in operational losses of RM251.5million. The refinery processed
37.9 million barrels of crude oil, and this is higher by 1% as compared to
2013”, as stated in Shell 2014 Report (Shell
Refining Company FY2014 Results Impacted By Falling Oil Prices, 2015, para 2).
Amir Bakar the Managing Director of the Shell Refining
Company (Federation of Malaya) Berhad said that, (Shell Refining Company FY2014
Results Impacted By Falling Oil Prices, 2015, para 4-6), “ “The Company
will continue to pursue operational excellence, proactive margin improvement
and cost effectiveness whilst maintaining a strong Health, Safety and
Environment performance”.
In lieu to the turbulence scenario and commitment given by the SRC and
Shell Malaysia top management, thus any information about customer will be
leveraged on how to serve and feed their needs.
2.2 TARGET MARKET
Below is the Target Market as stated in the global Shell report (Strategic
Report, 2015, p.40) globally and by Shell Malaysia locally:
Ø
Retail,
Lubricants, Business To Business, and Chemicals
2.3 MARKET DEMOGRAPHICS
Shell Refinery Company under Shell Malaysia has
customer consist of Consumers end users and Business Markets as following:
2.3.1 CONSUMERS
SEGMENT –
(“Shell at Glance”, n.d., para 4), there are 1,000,000 retail customers
served daily with more than 950 geographically
Retail Station in Malaysia, where else (Strategic Report, 2015, p.40) close to
43,000 Shell-branded retail stations in over 70 countries at the end of 2014.
More than 100 years’ experiences in fuel development and in recent years have
concentrated on developing fuels with special formulations designed to clean
engines and improve performance. Shell V-Power brand in more sell in more than
60 countries.
Shell products is for fuel automobile consumption and suit to all type
of person that can drive with ‘quality and safe driving’ in their mind
2.3.2 BUSINESS
MARKETS SEGMENT-
Shell Malaysia provides its products for industrial and commercial customers in Malaysia and aviation industry.
They are big size companies. In
Malaysia Shell has appointed nationwide
approved agent.
On the other hand globally Shell Global was reported stated (Strategic
Report, 2015, p.40) “Our Business to Business (B2B) activities encompass the
sale of fuels and speciality products and services to a broad range of
commercial customers.
Shell Aviation fuels more than 7,000
aircraft every day at approximately 800 airports in around 40 countries and
Shell Malaysia served 175 aircrafts daily… for industrial machinery in the
manufacturing, mining, power generation, agricultural and construction sectors.
(“Shell at Glance”, n.d., para 4) 600 types of lubricants made for
various sectors in Malaysia alone. Further explained by Shell Global “Across
approximately 100 countries we make, market or sell technically-advanced
lubricants not only for passenger cars, trucks and coaches but also for
industrial machinery in the manufacturing, mining, power generation,
agriculture and construction sectors (“Strategic
Report”, 2015, p.40).
In manufacturing (“Shell at Glance”, n.d., para 4) 125,000 barrels are
produce in refinery production daily in Malaysia. It has also enabled
the refinery to manufacture propylene. At Global scale (“Strategic Report”, 2015, p.40) “….plants produce a range of base chemicals, including ethylene, propylene
and aromatics, as well as intermediate chemicals, such as styrene monomer,
propylene oxide, solvents, detergent alcohols, ethylene oxide and ethylene
glycol. We have the capacity to produce nearly 6 million tonnes of ethylene a
year”.
2.3.3 Behaviour
Factors
For consumers, since the price is
determined by floating managed system and as under controlled goods items then
it is meaningless to compare in terms of price. The only thing is which one can
suits their preference based on their preference. Thus, Shell should take
advantage of being the pioneer leader as established worldwide companies may
attract customers easily.
2.4 MARKET NEEDS
Consumer, be it the industries and consumers
are aware of the green house effects. As such technological driven is at its
utmost driver to affected petroleum and petrochemicals industry over the
future. Thus the cheapest, renewable, and safest products are required.
(Strategic Report, 2014, p. 5) “In the long
term, we expect demand for energy to continue to rise as populations and
prosperity increase. Billions of people across the developing world need better
access to energy to improve their lives.
(Strategic Report, 2014, p. 8) “Such levels of
investment in R&D enable us to advance technologies that help us access new
resources and better meet the needs of our customers and partners….As in 2014,
in 2015 we continue to focus strongly on technologies that support our various
businesses and reduce the environmental footprint of our operations and
products”. This by far is meant to reduce CO2 emission as the global related
authorities have set priority to use more LNG then gas.
2.5 MARKET TREND
REFINING AND PETROCHEMICAL MARKET TRENDS
Industry refining margins were higher on
average in 2014 than in 2013 in the key refining hubs of the USA and Singapore,
and were little changed in Europe. In particular, margins improved in the USA
where increased domestic crude oil and natural gas production lowered oil
acquisition costs (relative to international prices). Some demand growth,
especially around the summer driving season in the USA, also contributed to
higher US Gulf Coast margins. In 2015, increased demand for middle distillates
is expected to be a key driver of refining margins, supported by demand for
gasoline in the middle of the year.
In Chemicals, industry naphtha cracker margins increased
from 2013, particularly in Asia where there was less cracker capacity
available. US ethane cracker margins were high relative to naphtha cracker
margins in other regions due to ample ethane supply. The outlook for
petrochemicals for 2015 is dependent on the growth of the global economy,
especially in Asia, and developments in raw material prices.
Source: (Strategic Report, 2014,p. 15)
2.6 MARKET GROWTH
Shell has projected the global gas and oil
demand and supply as stated in their report (Shell, 2015, p.14) Reflecting the
economic conditions described above, global oil demand rose by 0.7% (0.6
million barrels per day (b/d)) in 2014, according to the International Energy
Agency’s (IEA) January 2015 Oil Market Report. The IEA repeatedly revised down
its oil demand growth estimate for the year from 1.4 million b/d in early 2014.
Demand grew in emerging economies, while remaining almost flat in advanced
economies.
On the non-OPEC supply side, the US Energy
Information Administration
Reported that another year of continued supply
growth in the Lower 48 US states: in 2014 supply grew by some 1 million b/d
year-on-year. As a consequence of somewhat reduced demand growth and strong
non-OPEC supply growth, oil prices fell from about $110 per barrel (/b) in
mid-2014 to $75/b just ahead of the November OPEC meeting at which the members
decided to maintain their production at 30 million b/d, rather than to reduce
their production to balance non-OPEC supply growth. The market interpreted this
decision as an increased risk of oversupply and oil prices further declined to
lows of around $54/b in December.
3.
COMPANY ANALYSIS
At the moment 90% of refined
products produced by SRC are sold in Malaysia (“SHELL MALAYSIA DOWNSTREAM – REFINING”, 2014,
p. 5).
SRC gets its raw supplies for
refinery from Malaysia (40%) far east Australia & Africa (32%), and Russia
(28%) (“SRC REFINERY INTAKE _ SOURCES OF SUPPLY”, 2014, p. 16).
Meanwhile, SRC next data is SRC’s Turn Over by
Products as produced for June 2014 :
Gas Oil – 44%, Motor Gasoline – 38%, Jet Fuel – 9%,
LPG – 4%, Propylene – 2%, HCO – 2%, TOPS – 1%
Source: (“SRC TURNOVER PRODUCTS”, 2014, p. 17)
SWOT ANALYSIS
STRENGTH
1.
(“Highlights”,
n.d., para 3-5) “With over 900 service stations, Shell has the leading market
share in the petroleum retail business in Malaysia. Our fuels are tailored to
improve engine and environmental performance…..Shell is the only petrol
retailer in the country to offer premium fuels through Shell V-Power Racing and
Shell Diesel with Fuel Economy formula….In Malaysia, we make and sell more than
600 different lubricants for the automotive sector, heavy-duty transport, food
processing and power generation. We are the lubricants market leader in Sabah
and Sarawak”
2.
PROJECT
HIJAU diesel – big capital to swift
operation.“Known as Project
Hijau, SRC last year constructed and commissioned a 6,000-tonne/day diesel
processing plant at the refinery, the company said in its 2013 annual report
(Robert, 2015, para 4-5). In an effort to improve refining margins at Port
Dickson, SRC last year constructed and commissioned a 6,000-tonne/day diesel
processing plant at the refinery, the company said in its 2013 annual report (OGJ Online, Sept. 29, 2010).
3.
R&D - Shell Global. (2015, para 9), “Such
levels of investment in R&D enable us to advance technologies that help us
access new resources and better meet the needs of our customers and partners”….
Shell
Global,“As in 2014, in 2015 we continue to focus strongly on
technologies that support our various businesses and reduce the environmental
footprint of our operations and products”.
WEAKNESS
1.
An erosion of our business reputation - Shell
Global. (2015, para 9), “would have a negative impact on our brand, our
ability to secure new resources and our licence to operate – Our challenge is
to ensure that all employees and contractors, more than 100,000 in total,
comply with these Principles and Code. Failure – real or perceived – to follow
these Principles, or other real or perceived failures of governance or
regulatory compliance, could harm our reputation”.
OPPORTUNITIES
1. Infrastructure world class –
Malaysian Government has tremendously fully support by providing good policies
on Oil & Gas and petrochemical industries. A good governance of long term
vision by Malaysian Government has uplifted the industries. To compete with the
oil refining and storage hub in Singapore, Petronas plans to build a RM60
billion Refinery And Petrochemicals Integrated Development (RAPID) complex in
Pengerang, Johor by the end of 2017 (“Refining, Storage
and Transit”, 2014, p.6). In short the player has been supported by the
Malaysian Government.
2. Tax incentive for Petrochemical
industry - MIDA. ( n.d., p.8) A
corporate tax rate of 25% applies to both local and foreign-owned companies in
Malaysia. A wide range of tax incentives is also available to these companies.
These incentives are constantly reviewed by the government to ensure that
companies in Malaysia maintain their competitive edge.
3. Incentives for Manufacturing
Companies, MIDA. ( n.d., p.8) :
• Pioneer Status: Income tax
exemption of 70% or 100% on the statutory income for five years; or
• Investment Tax Allowance:
Investment tax allowance of 60% or 100% on the qualifying capital expenditure
for five years. The allowance can be utilised to offset against 70% or 100% of
the statutory income.
• Reinvestment Allowance:
Reinvestment allowance of 60% for 15 years on the qualifying capital
expenditure. The allowance can be offset against 70% or 100% of the statutory
income.
• Accelerated Capital Allowance: An
accelerated capital allowance consisting of an initial allowance of 40% and an
annual allowance of 20% is available for three years after the reinvestment
allowance period.
Incentives for High Technology
Companies
• Pioneer Status with a tax
exemption of 100% on the statutory income for five years; or
• Investment Tax Allowance of 60% on
the qualifying capital expenditure for five years which can be offset against
100% of the statutory income.
Incentives for Strategic Projects
• Pioneer Status with a tax
exemption of 100% on the statutory income for ten years; or
• Investment Tax Allowance of 100%
on the qualifying capital expenditure for five years which can be offset
against 100% of the statutory income.
Pre-packaged Incentives
·
Customised
packages that cover tax and non-tax incentives.
·
Incentives
to Strengthen Industrial Linkages
·
Incentives
for R&D
General Incentives
• Industrial Building Allowance, Tariff
Related Incentives, Tax Incentives for Small and Medium Enterprises to register
patent and trademarks.
Incentives for Growth Above and
below:
Among the business organisations foreign
investors can approach for assistance is the Malaysian International Chamber of
Commerce & Industry which represents business communities from about 40
countries.
THREATS
1.
Future competition locally – Oil & Gas
operator in Malaysia are subject to be given contract by Petronas based on Act
1974. There are many Oil and Gas contractors nowadays in Malaysia. (“Marginal Oil Fields Development”, 2014, p.3) over the past few years, Petronas has
initiated Risk Sharing Contracts (RSC) for marginal oil fields development
replacing the Production Sharing Contract PSC)…Petronas
had identified between
25 and 27 to be awarded to RSC contractors for development. As of January 2014,
four RSCs were awarded and successes have been achieved from some of the contract
areas, namely the Berantai Field which first achieved gas production in October
2012, while oil gushed forth from the Balai Cluster in November last year (“Marginal Oil Fields Development”, 2014, p.3). This
will limit Shell Malaysia capacity in producing oil and subsequently lower SRC
production.
2.
Government run companies – (Strategic Report”, 2015, p.9), “Today, these government-run companies control
vastly greater quantities of oil and gas resources than the major, publicly
held oil and gas companies. Government-run entities have access to significant
resources and may be motivated by political or other factors in their business
decisions, which may harm our competitive position or hinder our access to
desirable projects.
3.
(“What can it actually
do?”, 2014, No. 11) “It has mentioned in its 2013 Annual Report that the
challenge is coming mainly from the complex and mega refining capacity surge in
the Asia Middle Eastern region….This is changing the supply-demand balances in
such a way that refining margins are under pressure.
4.
Oil Price drop – due to
oversupply and low in demand with
SRC reported (Shell Refining Company FY2014 Results Impacted By Falling Oil
Prices, 2015, para 1). But on the other hand, SRC will benefit as the raw
material of oil supply become cheaper.
4. COMPETITOR ANALYSIS
The competitive analysis process presents 3
Petronas main downstream public listed companies, they are Petronas Dagangan
Berhad, Petronas Gas Berhad, and Petronas Chemicals Berhad as the combined producers
for Petronas petroleum/petrochemical and gas products and main competitors for
Shell Refinery Malaysia. Keys analyses are as below :
4.1 Financial performance 2014
Petronas Q4 FY performance - (Khairul, 2015, para 6) “PetDag’s plummeting net profits in 4Q14 — down
a whopping 99% due to the oil price slump –dragged down its entire FY14 financial results and doesn’t bode well for
Petronas”.
Shell - (Shell Refining
Company FY2014 Results Impacted By Falling Oil Prices, 2015, para 1) The
revenue as reported in 2014 is “The revenue registered is 3% lower than the
same period in 2013. It also posted after-tax loss of RM 1,188.7 million in
2014 compared to an after-tax loss of RM155.9 million in 2013. Losses were
mainly due to fall in oil price”.
4.2 Organization Size
Ø
Petronas
– (Khairul, 2015, para 6) “PetDag’s retail business also includes the largest
petroleum retail network in the country, with over 1,000 Petronas petrol
stations and 725 Kedai Mesra convenience stores nationwide”.
Ø
Shell -
(“Shell at Glance”, n.d., para 4) “there are 1,000,000 retail customers served
daily with more than 950 Retail Station in Malaysia”.
4.3 Market Share
In terms of market share
Shell has 36% while Petronas 31% in Malaysia and the rest are others (Intan,
2014, para 15-16).
Meanwhile Petronas has 70%
of share in Juet Fuel segment and the rest is including Shell (Intan, 2014,
para 35).
4.4 Comparative Product Quality
In Malaysia, Petronas Dagangan
Berhad is the main arm for Petronas. It is the main competitors for Shell
Refinery Comapany of Malaysia. Christopher
(2011, para 2) “Malaysia's own oil company, Petronas. Does
it gives the best car fuel consumption?”. He further describes (Christopher,
2011, para 4)… “Judging from the
typical long queue of cars at Shell and Petronas fuel pumps, it appears that
Shell and Petronas are the two most popular petrol brands in Malaysia”. This is
the scenario people giving comparison on both giants.
Petronas is the main player in Malaysia
retail oil & gas finish products, this is due to its capability to sustain
by backed by the Malaysian Government. Nevertheless Shell stick to its strategy
and positioning to be the leader based on cost and quality and being the oldest
company with good R&D. (INTERIM REPORT FOR THE THREE MONTHS ENDED 31 MARCH
2014, 2014, p. 18) Refinery margins are expected to be continuously under
pressure. Operational and product quality will continue to remain the
refinery’s key focus area to maximize margin opportunities.
4.5 Growth
RHB Research Institute says
Shell has been expanding at the rate of 20 to 30 stations per year….“This
implies a relatively less aggressive appetite versus PetDag’s 40 to 50 stations
per year. “It remains to be seen if PetDag can eventually dethrone Shell’s
leading position in the retail market,” it says in a note to clients (Intan,
2014, para 21 – 23).
4.6 Available Capital and Resources
Ø
PETRONAS
- in combined has many plants for refinery production in many location, they
are 2 in Melaka 93,000 capacity (bbl/d) and 126,000 capacity (bbl/d), Kertih
40,000 crude distillation (bbl/d).
Ø
Shell - The Company's oil refinery at Port
Dickson produces a comprehensive range of petroleum products with its completed
RM 1.4 billion investment in Malaysia's first Long Residue Catalytic Cracking
(LRCC capable of processing 125 kbpd (thousand barrels per day). SRC also has
the completed RM850 million investments on new diesel processing unit “Hijau”.
4.7 Image
& Positioning
Both Shell and Petronas has
been shaping the Oil & Gas industries in Malaysia. Stiff competition
between the two giants has not giving much competitive advantage upon each
other. The only thing is that Petronas is a National Petroleum company and
backed by the Government.
Petronas is set to be the
Market Leader in petroleum oil & gas industries. It always be the proud
national Oil & Gas company for Malaysia, while being global payers it also
trying to reach its customer by the slogan “MESRA”. At the same time Petronas
also wants to secure its place in the technological primary as it invested in
Formula 1 Racing.
Same with SRC, while also
involved in technological advancement in Formula 1 Racing, it on the other hand
will maintain itself as the cost leadership and being the oldest in the
countries will bring a high quality R&D for the benefit of its customers
with its premium and known quality products.
4.8 Marketing
Strategic Partner
Ø
Petronas
- – (Khairul, 2015, para 7) “It also has international partnerships with
various Formula One racing teams for
its retail and lubricant businesses, including its current partner the Mercedes AMG Petronas Formula One team”.
Ø
Shell –
Shell has many strategic partner including ;
(‘The history of Shell's technical partnership with Ferrari”,n.d.,
picture 2012 500 not out) Shell’s technical partnership with Scuderia Ferrari
reached a new milestone in 2012. At the Singapore Grand Prix the teams
celebrated 500 Formula One races together – an incredible achievement marked
with a specially designed ‘Shell 500 Races’ logo on the rear wing of the F2012.
5
MARKETING ELEMENTS
5.1 The
Product
Shell Refining
Company has listed its main products (“REFINING PROCESS”, n.d., para 1 –
6) as below:
5.1.1 Refinery Products
Shell Refining Company (SRC)
produces the following petroleum products:
Ø Liquefied
Petroleum Gas, or "LPG", Propylene, Gasoline, or Petrol, Jet Fuel, or
Avtur, Gasoil, or Diesel, and Sulphur.
5.1.2 Crude Oil
SRC also produces a number of
petroleum components which can either be sold or processed in the refinery.
Petroleum products are made from
Crude Oil. There are many types of crude oil which come from many different
sources around the world.
Selection of the right crude oil
is a key part of the refining process. The decision as to what crude oil, or
combination of crude oil, to process depends on many factors including;
quality, availability, volume, and price.
Shipping costs (or
"Freight") are another important element in crude oil selection and
are determined by the size of the cargo and the distance from the supplier to
the refinery.
SRC has many finish products.
(“Products and Services”, n.d., bla bla
bla) stated that SRC supplies to Shell
Malaysia is divided into 2 categories. The categories and products &
services are :
5.1.3 On the road
CARD – These cards are for the
cashless, convenient, and secure way to buy fuel and other motor-related
products. They are:
Ø Shell Card for Businesses, Bonus
Link, Shell Citibank Credit Card,
Shell easiGO American Express
Prepaid Card.
5.1.4
FUELS
of which are Shell FuelSave and Shell V – Power.
5.1.5 OILS & LUBRICANTS, of which are produced
for :
Ø Cars, Motorcycles, Trucks and heavy
duty vehicles, Shell Lubricants
Authorised Distributors, and Shell LubeMatch.
5.1.6 Solution
For Business
Ø Shell Aviation
Every day at over 800 airports
across more than 40 countries, Shell Aviation provides fuel for around 7,000
aircraft, refuelling a plane every 12 seconds. Shell Aviation’s customers range
from the private pilot to the largest global airlines.
Ø Shell Bitumen
Shell Bitumen provides sustainable
and cost-effective bitumen solutions for professional, trade and home-based
needs.
Ø Shell Chemicals
Shell Chemicals companies operate
around the world, making and supplying a range of petrochemicals that are used
by our customers to make many different materials and end products.
Ø Shell Global Solutions
Shell Global Solutions helps improve
its customers' business performance by providing leading-edge energy consulting
and innovative technology.
5.2 PRICE
Malaysia’s retail fuel products are
part of controlled goods. 2015 onwards there will be no more subsidies due to
global price drop, means it will be managed under floating system mechanism.
“New prices are fixed according to a managed float system, which is based on
the monthly average world price of crude oil. The move was followed by a 4 sen
decline in the price of RON95 from RM2.30 to RM2.26 per litre for the month of
December” (Fiona, 2015, para 4).
As such Shell will continuously
looks at its cost operational efficiency in order to mitigate any further
losses amidst the uncertainties in oil price drops. It means its price will be
based on the current price’s float system mechanism.
5.3 DISTRIBUTION CHANNELS
Kotler & Keller (2012, p. 437) describe
marketing channel or distribution channel as a sets of interdependent
organizations participating in the process of making product or services
available. “With over 900 service stations, Shell has the leading market share
in the petroleum retail business in Malaysia. Our fuels are tailored to improve
engine and environmental performance. On the other hand the distribution of
petroleum products once blended and tested they can then be delivered to the
customers through ship, pipeline, road tanker, and rail car” (Product
Distribution, n.d., para 18).
5.4 PROMOTION
Shell Malaysia has many promotion events and
programs, they are (“Events and Promotions”, n.d., para 1-5) :
Ø Shell Helix Gift with Purchase, Shell
Win Free Fuel, Shell Online Survey, Shell Fuel save College Competition 2014,
and Target One Million. Other program has been realised in the past was Shell’s
Pump and Stand to Win RM500,000 contest. Chai Lee, (2011) “At Shell, we believe
in rewarding all of our loyal customers regardless of which products of ours
they purchase. By the end of November, we would have rewarded more than 23,000
Malaysians for simply filling up with Shell”.
6
MARKETING STRATEGY
Although downstream operations has
been reduced due to oil price uncertainty, nevertheless 20% given as strategic
measures by Shell Global to cut cost has not prevent SRC from moves forward in
2015 in a quest to supply Shell Malaysia. Current Petronas growth is expected
will surpasses Shell as the Market Leader in the near future, as such it is
unadvisable to compete. Thus Shell alternative strategy will be the market cost
leadership.
6.1 Mission
(“Our Mission”, n.d., para 1) it
will “manufacturing and supplying oil products and services that satisfy the
needs of our customers”.
6.2
Marketing Objective
(“Our Objectives”, n.d., para 3)
Shell is committed to deliver sustainable excellence in business performance by
focusing on meeting their customer requirements.
By far Shell Malaysia had decided,
according to Annual General Meeting June 2014 (Shell Malaysia, 2014, p. 1), SRC
will optimise refinery capability and stretch its processing constraints by
continuing with the following measures:
Ø Processing cheaper crude with Hijau.
Ø Increase upgrading of fuel oil to
gas oil.
Ø Drive improvement in energy
efficiency.
Ø Continue to improve with strategies
and initiatives that target cost and capital efficiency.
7
IMPLEMENTATION & CONTROL
Below are the keys to regulates implementation
:
1. “Implementing energy efficiency
measures in our operations” (Strategic Report, 2014 p. 50).
2. “….there is always the possibility
that a new technology brings with it environmental impacts that have not been
assessed, foreseen or determined to be harmful implemented” (Strategic Report,
2014 p. 54).
Below are the keys to regulates
control :
1. “To improve returns and control
costs during this period of low prices, we have also reduced our potential
spending on organic growth by $15 billion for 2015-2017” (Strategic Report,
2014 p. 5).
2. Parts of our Downstream activities
are subject to price controls in some countries. From time to time, cultural
and political factors play a role in unprecedented and unanticipated judicial
outcomes that could adversely affect Shell. If we do not comply with policies
and regulations, this may result in regulatory investigations, litigation and
ultimately sanctions. (Strategic Report,
2014 p. 10)
3. SAFETY – “Sustaining our licence to
operate depends on maintaining the safety and reliability of our operations. We
manage safety risk across our businesses through controls and compliance
systems combined with a safety-focused culture.” (Strategic Report, 2014 p. 50).
CONCLUSION
SRC will focus on cost leadership by providing
its customers with quality product, less emission, and financially objective.
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Prepared By : ram's Apr 2015
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