Professional Documents
Culture Documents
Pso
Pso
Table of Contents
CHAPTER 1......................................................................................................................12
INTRODUCTION.............................................................................................................12
1.0
Industry Overview.................................................................................................13
1.1
PEST Analysis: Downstream Oil Industry............................................................19
1.1.1
Political Factors.............................................................................................19
1.1.2
Economic Factors..........................................................................................21
1.1.3
Social Factors.................................................................................................25
1.1.4
Technological Factors....................................................................................28
1.2
Porters Five Forces Analysis: Downstream Oil Industry.....................................30
1.2.1
Bargaining Power of Suppliers: High............................................................32
1.2.2
Bargaining Power of Buyers: Low................................................................33
1.2.3
Threat of New Entrants: High........................................................................34
1.2.4
Threat of Substitutes: Low to Moderate........................................................34
1.2.5
Rivalry between Existing Firms: High..........................................................35
1.3
Company Analysis: Pakistan State Oil (PSO).......................................................37
1.3.1
Background....................................................................................................37
1.3.2
Mc Kinsey 7S Framework: Pakistan State Oil (PSO)...................................41
1.3.2.1 Structure.........................................................................................................42
1.3.2.2 Strategy..........................................................................................................45
1.3.2.2.1
Market Development Strategy...............................................................46
1.3.2.2.2
Market Penetration Strategy..................................................................46
1.3.2.2.3
Vertical Integration Strategy..................................................................48
1.3.2.2.4
Rationalization Strategy.........................................................................49
1.3.2.3 System............................................................................................................50
1.3.2.3.1
Employee Leadership Team (ELT):.......................................................51
1.3.2.3.2
Management Committee (Man-Com):..................................................52
1.3.2.3.3
Executive Committee (Ex-Com):..........................................................52
1.3.2.3.4
Internal Audit Committee:.....................................................................52
1.3.2.3.5
Health, Safety & Environment (HSE) Steering Committee:.................53
1.3.2.3.6
Cross-Functional Teams (CFTs):...........................................................53
1.3.2.4 Staff................................................................................................................54
1.3.2.5 Skills..............................................................................................................58
1.3.2.6 Style...............................................................................................................60
1.3.2.7 Shared Values.................................................................................................62
1.3.2.7.1
Excellence..............................................................................................62
1.3.2.7.2
Cohesiveness..........................................................................................62
1.3.2.7.3
Respect...................................................................................................63
1.3.2.7.4
Integrity..................................................................................................63
1.3.2.7.5
Innovation..............................................................................................63
1.3.3
Strategic Group Analysis...............................................................................64
1.3.4
B.C.G Matrix.................................................................................................67
1.3.5
G.E Matrix.....................................................................................................72
1.4
SWOT Analysis: Pakistan State Oil (PSO)............................................................75
1.4.1
Strengths........................................................................................................75
1.4.1.1 Market Leadership in all key products......................................................75
Assistant Professor Ms. Zeenat Jabbar
Hypothesis Restated.............................................................................................143
CHAPTER 4....................................................................................................................144
FINDINGS & ANALYSIS..............................................................................................144
4.1
Market Survey Findings......................................................................................145
4.2
AIOD Framework................................................................................................160
4.3
Perceptual Maps...................................................................................................161
4.3.1
Perceptual Map I: Distribution Network Vs Brand Name...........................161
4.3.2
Perceptual Map II: Promotional Effectiveness Vs Level of Innovation......163
4.3.3
Perceptual Map III:Marketing Experience Vs Level of Customer Service. 165
4.3.4
Perceptual Map IV: Market Share Vs HR Competence...............................167
4.3.5
Perceptual Map V: Profitability Vs Overall Reputation..............................169
4.4
Brand Perception Index (BPI).............................................................................171
4.4.1
Brand Perception Index (BPI): SHELL.......................................................171
4.4.2
Brand Perception Index (BPI): PSO............................................................172
4.4.3
Brand Perception Index (BPI): TOTAL.......................................................173
4.4.4
Brand Perception Index (BPI): CALTEX....................................................174
4.4.5
Brand Perception Index (BPI): ATTOCK....................................................175
4.4.6
Brand Perception Index (BPI): ADMORE..................................................176
4.5
Brand Personality Dimension Index....................................................................178
4.6
Brand Asset Valuation (BAV)..............................................................................180
4.7
Young & Rubicam Power Grid............................................................................181
4.8
Actual Brand Foot Printing..................................................................................183
4.9
Ideal Brand Foot Printing....................................................................................184
4.10 Gap Analysis........................................................................................................184
4.11 Interbrands Brand Equity Model........................................................................185
4.11.1
Leadership....................................................................................................186
4.11.2
Stability........................................................................................................186
4.11.3
Market..........................................................................................................186
4.11.4
International.................................................................................................187
4.11.5
Trend............................................................................................................187
4.11.6
Support.........................................................................................................187
4.11.7
Protection.....................................................................................................187
4.12 Graveyard Model.................................................................................................188
4.13 PSO Brand Name.................................................................................................190
4.14 PSO Logo.............................................................................................................191
4.15 PSO Slogan..........................................................................................................192
4.16 Corporate Branding.............................................................................................193
4.17 Strategic Branding at PSO...................................................................................194
4.18 PSO Co-Branding................................................................................................211
4.19 Electronic Ad Analysis: Forever Sunshine Ad.....................................................212
4.20 Electronic Ad Analysis: Castrol GTX Oil...........................................................214
4.21 PSO Transformation............................................................................................216
CHAPTER 5....................................................................................................................221
CONCLUSION & RECOMMENDATIONS..................................................................221
5.1
Conclusion...........................................................................................................222
5.2
Recommendations................................................................................................223
5.2.1
Aggressive Advertising Strategy.................................................................223
5.2.2
Innovative Lubricant Marketing Campaigns...............................................224
5.2.3
Drastic Improvement in Customer Service..................................................225
5.2.4
Greater Focus on CNG Infrastructure..........................................................225
5.2.5
Retail Rationalization Strategy....................................................................225
5.2.6
Excellent Housekeeping/ Cleanliness at Retail Outlets...............................226
5.2.7
Attract and Retain Quality Human Resource..............................................226
5.2.8
Adopt Backward Vertical Integration Strategy............................................227
5.2.9
Use Pipelines rather than Road Tankers......................................................228
5.2.10
Develop Alternate Energy Infrastructure.....................................................228
5.2.11 Benchmark Best Industry Practices.............................................................229
BIBLIOGRAPHY............................................................................................................230
APPENDIX A..................................................................................................................234
CUSTOMER SURVEY...................................................................................................235
List of Figures
Fig 1.0
13
Fig 1.1
15
Fig 1.2
22
Fig 1.3
Michael E. Porter
30
Fig 1.4
31
Fig 1.5
38
Fig 1.6
39
Fig 1.7
40
Fig 1.8
Mc Kinsey 7S Model
41
Fig 1.9
43
Fig 1.10
45
Fig 1.11
47
Fig 1.12
54
Fig 1.13
57
Fig 1.14
58
Fig 1.15
60
Fig 1.16
61
Fig 1.17
61
Fig 1.18
64
Fig 1.19
71
Fig 1.20
74
Fig 2.1
90
Fig 2.2
113
Fig 2.3
133
Fig 2.4
136
Fig 4.1
Perceptual Map I
162
Fig 4.2
Perceptual Map II
164
Fig 4.3
166
Fig 4.4
Perceptual Map IV
168
Fig 4.5
Perceptual Map V
170
Fig 4.6
181
Fig 4.7
188
Fig 4.8
191
Fig 4.9
192
Fig 4.10
193
Fig 4.11
194
Fig 4.12
196
Fig 4.13
197
Fig 4.14
197
Fig 4.15
PSO Cards
198
Fig 4.16
199
Fig 4.17
200
Fig 4.18
200
Fig 4.19
PSO Billboard
201
Fig 4.20
202
Fig 4.21
203
Fig 4.22
204
Fig 4.23
205
Fig 4.24
206
Fig 4.25
207
Fig 4.26
208
Fig 4.27
209
Fig 4.28
210
Fig 4.29
212
Fig 4.30
213
Fig 4.31
214
Fig 4.32
215
Fig 4.33
PSO Turnaround
216
Fig 4.34
217
Fig 4.35
218
Fig 4.36
219
Fig 4.37
219
List of Tables
Table 1.0
15
Table 1.1
17
Table 1.2
23
Table 1.3
23
Table 1.4
26
Table 1.5
32
Table 1.6
36
Table 1.7
59
Table 1.8
Attributes SHELL
67
Table 1.9
Attributes PSO
67
Table 1.10
Attributes TOTAL
68
Table 1.11
Attributes CALTEX
68
Table 1.12
Attributes ATTOCK
Table 1.13
Attributes ADMORE
69
Table 1.14
70
Table 1.15
72
Table 1.16
73
Table 4.1
Survey Finding Q1
145
Table 4.2
Survey Finding Q2
146
Table 4.3
Survey Finding Q3
146
Table 4.4
Survey Finding Q4
147
Table 4.5
Survey Finding Q5
147
Table 4.6
Survey Finding Q6
148
Table 4.7
Survey Finding Q7
148
Table 4.8
Survey Finding Q8
149
Table 4.9
Survey Finding Q9
149
Table 4.10
150
Table 4.11
150
69
151
10
151
Table 4.13
152
Table 4.14
152
Table 4.15
153
Table 4.16
153
Table 4.17
154
Table 4.18
155
Table 4.19
155
Table 4.20
156
Table 4.21
157
Table 4.22
158
158
159
159
Table 4.24
AIOD framework
160
Table 4.25
171
Table 4.26
172
Table 4.27
173
Table 4.28
174
Table 4.29
175
Table 4.30
176
Table 4.31
177
Table 4.32
179
Table 4.33
183
Table 4.34
185
11
CHAPTER 1
INTRODUCTION
12
Franchisees to which the oil marketing companies provide the license, land, and
equipment
Franchisees to which the oil marketing companies provide only the license and
land
The government owns 25 percent of PSO directly and another 74 percent is owned by
government-controlled funds. The Shell affiliate owns 52 percent of Shell while Caltex is
a wholly owned subsidiary. PSO controls the majority of the market and enjoys the
largest market share followed by Shell, Caltex, Total, Attock and Admore.1
1
2
13
Pakistans economic recovery has gained greater momentum during the fiscal year 2005
whereby real GDP growth of 8.4% has been achieved. With the economy expanding at its
fastest pace in the last two decades, Pakistan has positioned itself as one of the rapidly
growing economies of Asia.
The strong economic growth has been well supported by macroeconomic policies,
growing domestic demand, renewed confidence of private sector, fiscal discipline and
competitive exchange rates.
The pro-market reform agenda for the downstream oil industry in Pakistan, with a focus
on private investment, is well underway. Oil & Gas regulatory Authority (OGRA)
undertook stakeholder consultation towards completion of regulatory framework, with
the objective of establishing a free and competitive downstream oil market.
The consumption of Petroleum products grew by around 10.1% over last year, 2004,
which was mainly due to an increase of 5.5% in White Oil and 21.2% in Black Oil.3
In fiscal year 2005 Mogas grew by around 5.3% over last year, which is significantly
correlated to GNP per capita and transportation increase of 12% and 5.6% respectively.
This robust growth is despite a significant growth of 56% in CNG-converted vehicles, i.e.
from 0.45 million in fiscal year 2004 to 0.7 million in fiscal year 2005.3
The following figures illustrate the growth of CNG stations in Pakistan and the market
share of the respective Oil Marketing Companies.
Pakistan State Oil (PSO) Annual Report 2005, Report to Shareholders, Page 34
14
High Speed Diesel (HSD) demand also grew by 5.5% as compared to last year. The
growth is contributed primarily by a significant increase in agriculture of 7.5% and a
broad-based growth in manufacturing of 12.5%.
CNG Development, Pakistan State Oil (PSO) Management Committee Presentation, 09 August 2005
15
Jet Petroleum (JP-1) experienced an un-usual growth of 12.4% over last year which was
mainly due to addition of new airlines, Tsunami relief operations, increased flight
operations and increased upliftment during Hajj season by Pakistan international Airlines
(PIA).5
Industry consumption of Furnace Oil (FO) grew by 23.4%. Main factors contributing to
this growth are the low availability of water for hydroelectric generation during the first
three quarters of fiscal year 2005 and disruption in supply of natural gas.
The situation reversed after March 2005 when water availability increased thus curtailing
Furnace Oil-based thermal power generation resulting in surplus availability of Furnace
Oil from local refineries during fourth quarter of fiscal year 2005.
During fiscal year 2005, local refineries produced 9.2 million tons while the deficit
requirement of around 5.8 million tons was imported. The major chink of demand was
7.7 million tons in High Speed Diesel (HSD) and 4.6 million tons in Furnace Oil (FO),
representing 82% of total POL demand.
The consumption of petroleum products in Pakistan during 2003-2004 was 14.3 million
tones. The drop in consumption compared to previous year is mainly due to lower
demand of Furnace Oil because of conversion of thermal power plants on gas and
availability of additional Hydel power.5
The demand is expected to increase around 17 million tones per annum by the year 201011. Thereafter, it is expected to further increase to around 19 million tones by the year
2017-18. The production of refined products by the local refineries during the year 200304 was 10.27 million tons.
The deficit products import were 5 million tons in 2003-04 while it will remain around 56 million tons per annum up to year 2010-11. Thereafter, it is expected to increase to a
level of around 8.0 million tons per annum by the year 2017-18.
5
Pakistan State Oil (PSO) Annual Report 2005, Report to Shareholders, Page 34
16
The long term petroleum products demand/supply scenario is indicated in the following
Table:-
Ministry of Petroleum & Natural Resources Website, http://www.mpnr.gov.pk/, [Accessed 20 July, 05]
17
A small, 30,000 bbl/d refinery operated by private Bosicor Pakistan Limited (BPL) near
Karachi began commercial operation in November 2003. The plant is supplied with
shipments of crude oil from Qatar. The Bosicor plant will allow Pakistan to become a
new supplier of naptha to Far Eastern markets. Naptha makes up approximately 9% of
the plants output. The plant produces about 10,800 bbl/d of fuel oil, 6,980 bbl/d of
diesel, and 4,350 bbl/d of kerosene, among other products.
Another major planned project is the Iran-Pak refinery, which would have a capacity of
130,000 bbl/d. The refinery will be located near the border with Iran in Baluchistan
province and would be a 50:50 partnership between Pakistans Petroleum Refining and
Petrochemical Corporation (PERAC) and the National Iranian Oil Company (NIOC). Oil
processed at the Iran-Pak refinery would come almost exclusively by sea from Iran, and
would be unloaded at a terminal to be built for the refinery. The project has failed to
reach financial closure, however, as NIOCs demand for a guaranteed rate of return is at
odds with Pakistans policy against such guarantees.
As part of its energy sector reform program, the government is committed to privatizing a
15% stake of PPL (see above), the largest gas producer in the country, capable of
producing 770 million cubic feet per day (Mmcfd). The largest currently productive fields
are Sui, by far the largest at 650 Mmcfd, Adhi and Kandkhot (120 Mmcfd), Mari, and
Kandanwari.
Pakistans demand for natural gas is expected to rise substantially in the next few years,
with an increase of roughly 50% by 2006, according to Pakistans oil and gas ministry.
Pakistan also plans to make gas the fuel of choice for future electric power generation
projects, hoping to substitute domestic gas supplies for imported foreign oil. This will
necessitate a sharp rise in production of natural gas, and also has generated interest in
Pakistan in pipelines to facilitate imports from neighboring countries.7
18
Ministry of Petroleum & Natural Resources Website, http://www.mpnr.gov.pk/, [Accessed 20 July, 05]
Country Analysis Website, http://www.eia.doe.gov/emeu/cabs/pakistan.html, [Accessed 19 July, 05]
19
Development of new natural gas fields with the help of foreign investors is proceeding,
with Pakistans government expecting recently discovered fields to add about 1 billion
cubic feet per day (Bcfd) to Pakistans natural gas production. Currently, fields in
production include Sawan at about 366 Mmcfd, Bhit at about 316 Mmcfd, and Zamzama
in Sindh province producing about 248 Mmcfd, but possibly able to produce 380 Mmcfd
following a new gas discovery in January 2004.
Another political factor is the natural gas import possibility, an eventual link with the
Dolphin Project, a scheme to supply gas from Qatars North Dome gasfield to the United
Arab Emirates and Oman, via a subsea pipeline from Oman.10
To help industry meet the challenges of the WTO regime, the cost of investment will be
reduced by lowering the custom duty on import of plant and machinery not manufactured
locally to 5 percent. In addition, 15 percent sales tax and 6 percent import duty have been
abolished. To reduce the cost of production and also to make GST a truly value-added
tax, adjustment will be allowed for input tax on almost all items, including diesel used in
generators for producing electric power by registered persons. Electricity tariff for
industrial users has also been reduced.11
Oil product taxation provides the government with a significant amount of its current
revenue. The development surcharges on all petroleum products have amounted to 1015
percent of total revenue. The ex-refinery price is based on an import parity price. Added
to this are customs duties (unchanged since 1992) together with the margin allowed to the
distributors and the commission allowed to the dealers. All three elements are set directly
by the government and together determine the prescribed price. To the prescribed price is
added the inland freight margin (to equalize delivery costs on a national basis) and finally
the development surcharge.12
10
20
21
Energy sector in Pakistan comprises power, gas, petroleum and coal. The total primary
energy supplies measured in terms of tones of oil equivalent (toe) stood at 50.8 million
toe in 2003-04. The primary energy supplies have been rising steadily over the last
several years. It was 45.2 million toe in 2001-02, increased by 4.4 percent in 2002-03 and
further grew by 8 percent in 2003-04 to stand at 50.8 million toe. Oil, natural gas,
electricity, coal and LPG contribute 29.9 percent, 49.7 percent, 13.5 percent, 6.5 percent
and 0.4 percent, respectively to primary energy supplies in 2003-04.14
14
15
22
23
electricity generation has declined substantially as the former has shifted to gas as well as
on coal while gas is increasingly being used to generate electricity. While average
consumption of petroleum products has registered an average decline of 6.5 percent per
annum since 2000-01 consumption of gas, electricity and coal has grown at an average
rates of 10.4 percent, 6.0 percent and 14.6 percent, respectively. The higher consumption
of electricity correlated with higher supply of electricity from Ghazi Barotha hydro power
project. The consumption of petroleum product, gas, electricity and coal during the first
nine months (July-March 2004-05) of the current fiscal year increased by 17 percent,
10.1 percent, 10.7 percent and 15.8 percent respectively over the corresponding period of
last year.
The acceleration in growth of energy consumption during 2004-05 is not surprising when
seen against a 15.4 percent increase in large scale manufacturing and 8.35 percent growth
in real GDP. Higher consumption of energy simply reflected the rising level of economic
activity in the country.17
The product pricing and margins are set by DG Oil and Oil Companies Advisory
Committee (OCAC) at all stages in the supply chain. With the exception of lubricants, oil
products are sold at fixed sales prices. The government maintains a policy of panterritorial energy pricingthat is, uniform pricing across the country. The origins of the
policy lie in the past when a key political imperative was to promote the unity of
Pakistan. At a time when most electricity was produced in the north and most oil products
were produced in the south, pan-territorial pricing was seen as a means of balancing
supply and demand. For oil products, pan-territorial pricing is achieved through the
freight pool whose cross-subsidy mechanism allows products sent to distant destinations
to be priced on a common basis with those closer to source.18
17
18
24
19
25
Being economical, clean and environmental friendly fuel, Liquefied Petroleum Gas
(LPG) is the most popular domestic fuel in areas where the supply of natural gas is not
available. As a result of governments investment friendly policies production of LPG has
increased by 50 percent in the first three quarters of the outgoing fiscal year. Increased
availability of LPG to the consumers will bring down the prices of LPG and thus
reducing household fuel bills.21
The government is promoting the use of Compressed Natural Gas (CNG) in a big way to
reduce the pollution level being caused by vehicles using motor gasoline and to improve
the ambient air quality. Presently, some 700 CNG stations are operational in the country
while 200 are under construction. By March 2005, about 700,000 vehicles were
converted to CNG as compare to 450,000 vehicles during the same period last year,
showing an increase of 56 percent.
20
21
26
With these developments, Pakistan has become the leading country in Asia and the third
largest user of CNG in the world after Argentina and Brazil. Investment of Rs. 17 billion
has already been made in CNG sector and Rs. 2 billion investment is expected in near
future. Moreover, the CNG industry has created 15,000 new jobs.
In view of short supply of indigenous liquid fuels, a great scope exists in the country for
development of alternate fuels, especially natural gas that is locally available at low price,
while at the same time a widespread infrastructure for transmission and distribution of
gas is already in place. There is a strong need for replacing diesel oil to the extent it is
possible with CNG for reducing the level of air pollution.
The techno-economics of converting diesel engines to CNG, however, are not very
attractive due to high conversion cost, little differential in the price of diesel oil and CNG,
and several engineering and management problems related to conversion of bus fleets. In
order to address these problems, the government is working on a program which will
initially start in the federal and the provincial capitals, where dedicated CNG city-buses
will be put on road.22
22
27
23
28
24
29
30
The Five Competitive Forces in context of the Pakistani Oil Marketing Industry are as
follows:
27
31
28
Oil Marketing Competition Heats Up, http://www.pakistaneconomist.com/database1/cover/c200125.asp, [Accessed July 25, 2005]
29
32
There is the possibility of the supplier integrating forwards in order to obtain higher
prices and margins. This threat is witnessed to be especially high in Pakistan downstream
oil sector where recently Attock Refinery Ltd (ARL) has launched its own oil marketing
company, namely Attock Petroleum Ltd (APL).
The forward integration has provided economies of scale for the supplier and allowed it
to tap in to the more profitable buyers industry.
The bargaining power of suppliers in the downstream oil industry is also high owing to
the fact that there are no direct substitutes for the particular product input offered from
the suppliers and the switching costs from one supplier to another are reasonably high.
33
34
Other than CNG threat of all other substitutes in the oil marketing industry is low. These
other substitutes to petroleum products include the solar energy, wind energy, nuclear
energy and energy through hydrogen fuel cells. All these sources of alternate energy are
in a very nascent stage in Pakistan owing to the massive amount of investments required
in their research and commercial development. Despite all efforts to tap on to these
alternate energy resources, no significant progress has been made as such.
30
Pakistan State Oil (PSO) Annual Report 2005, Report to Shareholders, Page 34
35
The following table gives a comparison of the top two Oil marketing Companies of
Pakistan:
31
36
32
37
All along PSO did not take any steps to upgrade its retail network and improve its range
of products and services, which obviously resulted in negative customer perception of
PSO as a brand thus losing ground in the marketplace. PSO, a national company with
the largest infrastructure, was fast losing both image and market share to Shell and
Caltex.
Over a five year period 1994 to 2000, PSOs market share in Mogas declined from 47%
to 39% and HSD from 73% to 60% as illustrated below:
33
38
In lubricants, the story was not much different. During the same period, the lubricant
share also plunged to 38% from 73% with CAGR of over 8%. With new petroleum policy
announced by the government in 1994 in which lubricants were deregulated, PSO failed
to manage the challenges of free market conditions and did not expand its product lines to
cater to the growing consumer needs.
34
39
Internally also, PSO had been struggling owing to lack of controls, deteriorated and
obsolete systems, malpractice and declining productivity and efficiency. As a result, the
company lost its immunity against all environmental forces and desperately called for
major overhauling in all business areas.35
35
40
36
41
1.3.2.1
Structure
The Structure of a company is all about its basic organization, its departments, reporting
channels, areas of expertise and responsibility.
The Pakistan State Oil (PSO) board of management is a fully autonomous board which
comprises of the Chairman and nine other members, as per the rules of the Companies
Ordinance 1984. The federal Government has constituted the Board of Management to
control, manage and direct affairs of the Company, whereas the direct management is
vested in the Managing Director who exercises and performs all the powers and function
of the Board of Directors of the Company.
The following table summarizes the names and positions of the PSO Board of
Management according to the Ministry of Petroleum & Natural Resources.
42
38
Ministry of Petroleum & Natural Resources Website, http://www.mpnr.gov.pk/, [Accessed 20 July 2005]
43
In the past, many support services were working under the umbrella of non-core
businesses, which now have been de-linked and merged with marketing operations. For
instance, Logistics, previously known as Distribution used to report to operations and has
now been merged in Marketing to implement the modern and contemporary concept of
value-chain, as logistics has always been considered as an integral part of marketing.
In addition, unnecessary layers in management have been reduced to make PSO more
lean and flexible in line with the best international practices.
One of the top priority areas of PSO's corporate reform is Human Resource
Development. The Company has undertaken several initiatives to ensure induction and
training of professionals with the objective of ensuring high level of professionalism and
productivity at all levels of its employees. Through computer training, various in-house
courses, sponsorship of staff for studies at professional institutions and seminars, the
Company is providing its employees the opportunities for continuous development and
exponential learning.
Effective implementation of corporate reform and business development strategies in line
with best international practices has enabled PSO to maintain its market leadership
position in a highly competitive business environment.
44
1.3.2.2
Strategy
39
45
1.3.2.2.1
PSO has been operating in an industry that had been growing steadily primarily in retail
area. In order to regain the lost market shares and improve the brand image, PSO
management came up with an aggressive marketing strategy of development to tap
unexplored markets.
PSO expanded its New Vision Network by adding new sites in un-tapped areas. With the
reconstruction of Afghanistan, the company proactively captured major fuel businesses
and exported major chunk of Jet A-1, Gas Oil, Mogas and exported lubricants to all the
major cities of Afghanistan40.
1.3.2.2.2
In order to penetrate in the existing market, PSO has started remodeling of existing retail
network and regained some major industrial customers that had been lost in the past.
Following are a few important actions that have been taken in this regard:
40
46
Owing to PSOs customer-focused approach, the company has been able to converts its
retail outlets into Islands-of-Excellence with superior customer service, all in all
beautifying the landscape of the country.
41
47
1.3.2.2.3
Keeping in view the impending competitive scenario, PSO has adopted Vertical
Integration Strategy (both forward and backward) to enter into profitable ventures with
assured income streams.
By virtue of the vertical integration strategy, the company has mitigated business risk
arising from the probable substitution of fuel oil into gas thus ensuring adequate returns
to all stakeholders.
Following are a few significant actions that have been taken in this regard:
Working closely with Attock Refinery Limited (ARL) on joint venture around 450
km White Oil pipeline from Machike (Lahore) to Tarujabba (Peshawar)
48
1.3.2.2.4
Rationalization Strategy
In the wake of deregulation and stiff competition, PSO has embarked on a rationalization
strategy aimed at weeding out uneconomical outlets and facilities. This has reduced the
fixed level of expenses that had been borne by the company regardless of inadequate
returns. In the past, there had been a mushroom growth of retail network irrespective of
cannibalization effect on vicinity outlets.
Instead of controlled new retail development, there were 900 approved stations for
further development, approvals for which were cancelled. Had these uneconomical
outlets been developed by PSO, the retail network would have expanded to over 4,800
thus further cannibalizing sales from other PSO outlets and wasting shareholders money
resulting in further reduction in throughput per outlet.
A comprehensive study was undertaken by PSO to identify negative contributors in retail
segment. Around 900 outlets were initially identified for rationalization. The matter was
taken up to the board of management, which accorded its approval for the
implementation of Retail Rationalization Program. During the last two years, almost 250
outlets have been closed down in line with the legal parameters.
The company also applied rationalization strategy on lubricant business where surplus
capacity existed at 11 blending plants. The company acquired its joint venture lube
blending plants to improve the operating efficiency of company-owned plants, to ensure
the consistency and integrity of products and curb the flow of spurious and counterfeit
products.42
42
49
1.3.2.3
System
In the pre-good governance period, PSOs internal systems had been weakened owing to
obsolescence, mismanagement and leakages and as a result the companys financial
systems and controls were badly affected and a negative public perception took roots a
fate majority of the state-owned companies suffer.
In order to plug all leakages and to strengthen internal controls, PSO has implemented
SAP, which is an Enterprise Resource Planning (ERP) system. The ERP system has
provided online and real-time information; eliminated financial misreporting and has
improved funds management and strengthened efficiencies further in all aspects of the oil
marketing business. Prior to deciding to go for SAP, the company successfully conducted
Business Processes Reengineering so as to streamline business processes and
procedures for improved efficiency.
To provide necessary infrastructure for successful implementation of SAP, a major WAN
(Wide Area Network) project was completed for setting up an online integrated
communication system connecting PSO headquarters in Karachi to all Installations,
Depots, Plants and Divisional offices all over the country.
The management also instituted Business Planning & Reporting system so as to monitor
business performance against scientifically planned targets. A comprehensive Business
Plan is developed in advance for every forthcoming year and is presented to the Board for
approval. The plan covers Specific, Measurable, Attainable, Realistic and Time Bound
(SMART) corporate objectives supported by investment opportunities and budgetary
allocations.43
43
50
The Limits of Authority, Purchasing, and Human Resource Manuals have been updated
after 30 years so as to eliminate ad hoc management practices and empower the
professional managers as well as to ensure accountability at all levels.
To facilitate standardized and structured process flow, Operations and Logistics manuals
have also been developed as part of the Total Quality Management System. With proper
systems in place, any deviation or discrepancy irrespective of nature, position or status is
indicated promptly and handled swiftly according to the clearly spelt out procedures.
Considerable man-hours have gone into making PSO a system-driven company. Various
fully empowered Cross Functional Teams (CFTs) and committees have been formed to
develop operational and tactical plans and chalk out prudent implementation strategies.
The Managing Director has all along performed his cardinal role of providing leadership,
guidance and long-term vision for the business while functional general managers are
responsible for their activities. In order to make all business affairs transparent, smooth
and effective, following committees and teams have been formed which work cohesively
and independently:
1.3.2.3.1
ELT is chaired by the Managing Director with Executive Director (Human Resources &
Services), Executive Director (Finance/ Information Technology), Executive Director
(Customer Services) and General Manager (Operations & Construction) as members.
ELT committee meets on regular basis and reviews all matters pertaining to human
resource including recruitment, transfers, disciplinary actions, promotions, and employee
benefits.
The
committee
also
reviews
succession
plans
and
organizational
developments.44
44
Pakistan State Oil (PSO) Annual Report 2005, Board Committees, Page 44
51
1.3.2.3.2
1.3.2.3.3
1.3.2.3.4
The Internal Audit Committee is responsiblefor reviewing any deviations from the
approved policies and procedures and suggest modification where necessary. It reviews
periodical financial statements prior to their approval by the Board of Management and
ensures compliance with listing regulations and other statutory requirements. In addition,
amongst other areas, it monitors internal control systems and their effectiveness.45
45
Pakistan State Oil (PSO) Annual Report 2005, Board Committees, Page 45
52
1.3.2.3.5
To steer and review HSE compliance, the HSE Steering Committee meets periodically.
The committee ensures that all PSO operations are environment friendly and reviews
major HSE projects that are being undertaken. In addition, the Committee also presents
the status on HSE audits, trainings and incidents analysis.
1.3.2.3.6
46
47
Pakistan State Oil (PSO) Annual Report 2005, Board Committees, Page 45
19th World Energy Congress, Sydney, Sept 2004, http://www.worldenergy.org/wec-geis/congress/
papers/kirimanit0904.pdf, [Accessed 22 July, 05]
53
1.3.2.4
Staff
At Pakistan State Oil, Human Resource is acknowledged as the single most important
factor that can, and does, bring about change. It is a pity that while all other inputs and
assets, from a pin to a skyscraper, have their book value, market value and replacement
value there is no methodology to reflect the human resource in our balance sheets, though
it is only a fully empowered, motivated and satisfied professional workforce that makes
or breaks any venture.
48
54
To bridge the vacant slots in management, the company, during the last few years, hired
around 200 high caliber professionals, mostly MBAs, Qualified Engineers and Chartered
Accountants, purely on merit increasing the professional strength to 47% from 19%.
Owing to congenial working environment and gender balanced approach of the company,
female professional strength has also risen to 55% from a nominal figure of 7% and the
company is proud to be an equal opportunity employer.
One of the top priority areas of PSOs corporate reforms has been the initiative to align
the compensation structure in line with the oil marketing industry. The management has
revised employees remuneration so as to retain quality professionals and improve their
morale and productivity.
Regular two-way communication driven from the top with employees at all levels,
including the union, has been established for the clarity of focus on corporate goals,
business challenges and the need to maintain the tempo of change. As part of candid and
open communication philosophy, the communication meetings with the Managing
Director & CEO are held on regular basis. Periodical marketing and operations
conferences are held which allow all participants to interact candidly and directly with
the top management.
PSO has an established Bell Curve method of appraisal for forced ranking of employees.
All promotions, salary increments and bonuses are strictly performance-based. A change
has been brought about in recruitment with merit being the sole criterion. Human Asset is
considered as the only asset, which appreciates with the passage of time. The
management also believes that all employees are leaders as leaders create leaders not
followers.
Training sessions, presentations, workshops and seminars for employees are conducted
regularly to keep them abreast of the latest management philosophies and the skills
needed in this dynamic, competitive environment.49
49
55
An extensive orientation program has been devised to give new inductees a clear
understanding of PSO operations. The internship program at PSO has become a valuable,
on-hand experience for students from various prestigious institutions. In fiscal year 2005
more than 200 students from various institutes have been give summer/ winter
internships.
The recognition of employees is demonstrated through the launching of Reward and
Recognition Program. Two coveted annual awards, besides other forms of recognition are
in place. Managing Directors Performance Award in January and Shaukat Mirza
Excellence Award in July are given to outstanding employees. In addition, performance
appreciation letters are also awarded to give due recognition to the employees who
surpass the expected performance level or go beyond the call of duty.
In order to blend work with recreation, the company has developed a gymnasium
equipped with modern fitness machines and all indoor games. Traditionally, the company
headquarters, PSO House, Karachi, used to have three separate canteen facilities; one
each for the Managing Director and senior officials, the middle management, and the
non-management employees. Not only has this arrangement been abolished but cafeteria
facilities have also been upgraded at all regional offices, oil depots and installations so as
to bring them up to the level of those at the headquarters.50
Pakistan State Oil (PSO) Annual Report 2005, Report to Shareholders, Page 39
Pakistan State Oil (PSO) Annual Report 2005, Report to Shareholders, Page 40
56
Before the fiscal year 2001, the company used to have dilapidated office furniture with
shabby look. In order to give workplace a professional ambience and to promote equity
and harmony among employees, the company redesigned the floor arrangement with
modern modular furniture on open seating basis. This interior furnishing implemented at
PSO House is comparable to any global benchmarked company.
Emphasis on strict compliance and adherence to Business Ethics and Code of Conduct
Policies has been the key area of management focus. Swift and stringent actions are taken
against employees found in violation of the stated and prescribed principles as part of
management commitment towards Zero Tolerance for any intellectual or financial
impropriety.51
57
1.3.2.5
Skills
The management of Pakistan State Oil (PSO), being fully cognizant of the training and
development needs of its employees has launched an ongoing training program to equip
its workforce with necessary skills and knowledge.
Over 3,500 forecourt attendants all over Pakistan have been trained on customer services
as part of the WOW experience launched since fiscal year 2002. The company has also
launched ongoing internship program for graduating university students so as so to train
the future professionals by assigning different pragmatic assignments.
Rigorous SAP training has been imparted to all users for Materials Management (MM),
Sales & Distribution (S&D) and Human Resource (HR) Module.
52
58
Around 1,500 employees have been imparted training on the following Technical,
Management and Skills development programs:
General
Customer focused Operations Department
How to make Operations activities efficient
Concept of New Vision - Operations
Presentation Skills
Communication Skills
Brainstorming
Motivation of operational workforce
Time Management Skills
Decision Making Skills
Public Relation
Six Sigma
Product Management
Crisis Management
Negotiation Skills
Brand Management
Consumer Behavior
Effective Leadership
Value Based Management
Total Quality Management
Changing Organization Culture
Management By Objectives
Boosting Performance
Technical
Cathodic Protection Systems
Preventive/ breakdown Maintenance
Storage Tank Cleaning & Maintenance
Storage Tank Construction
Tank Lorry Calibration
Metering Systems
Auto Tank Radar Gauging Systems
Controller Automation System
Pipeline Hydraulics
ISO 9001/ 14000
HSE Awareness
Lighting Equipments
Fire Fighting Equipment
Pumps
Maintenance Management
Production Management
Construction Management
1.3.2.6
Style
The PSO Style of management adopted revolves around teamwork promoted through
formation of various Cross Functional Teams at PSO House, Karachi to expedite
development and prompt decision making.
53
59
55
60
61
1.3.2.7
Shared Values
PSO used to have no well-defined shared values before fiscal year 2000. During the
period since, PSO has developed and inculcated Shared Values among all its employees
and takes them very seriously and not as mere words.
Through concerted efforts, PSO has been able to develop and inculcate among employees
the values of ethics and integrity; health, safety and environment; customer satisfaction;
quality and productivity; leadership and teamwork; candid and open communication;
innovation and creativity; diversity; respect of individuals and employee growth and
development.56
The shared values of PSO are illustrated as follows:
1.3.2.7.1
Excellence
We believe that excellence in our core activities emerges from a passion for satisfying our
customers needs in terms of total quality management. Our foremost goal is to retain our
corporate leadership.
1.3.2.7.2
Cohesiveness
We endeavor to achieve higher collective and individual goals through teamwork. This is
inculcated in the organization through effective communication.
56
62
1.3.2.7.3
Respect
We are an equal opportunity employer attracting and recruiting the finest people from
around the country. We value contribution of individuals and reams. Individual
contributions are recognized through our reward and recognition program.
1.3.2.7.4
Integrity
We uphold our values and business ethics principles. Professional and personal honesty,
dedication and commitment are the landmarks of our success. Open and transparent
business practices are based on ethical values and respect for employees, communities
and the environment.
1.3.2.7.5
Innovation
1.3.2.7.6
Corporate Responsibility
We promote health, safety and environment friendly culture both internally and
externally. We emphasize on community development and aspire to make society a better
place to live in.57
57
63
SHELL, PSO
CALTEX, TOTAL
A1
A2
A3
ATTOCK, ADMORE
Marketing Intensity
Fig 1.18: Strategic Groups: Oil Marketing Companies
64
1.3.3.1
Strategic Group: A1
The strategic group A1 consists of the two major players Shell Pakistan Ltd (SPL) and
Pakistan State Oil (PSO). These organizations combined are responsible for meeting most
of the countrys demand of petroleum products. Pakistan State Oil (PSO) alone has a
storage capacity of 860,000 tonnes and can meet the countrys oil demand for around
three weeks.
The geographical coverage of these two companies is immense. PSO alone has a retail
network of over 3800 sites followed by Shell Pakistans network of around 1250 sites.
The retail outlets spread from Hunza in the North to Karachi in the South. The marketing
intensity as a percentage of total costs is also very high for both the oil marketing
companies as compared to the other players.
Combined Sales volume for the two players for the fiscal year 2005 has been 12.9 million
tonnes out of which PSO had a share of 9.7 million tonnes while Shell had a share of 3.2
million tonnes. Likewise, the combined Sales Revenue for both the companies is Rs
365.272 Billion in which Rs 253.777 Billion accounts for the Sales Revenue of PSO
while Rs 111.495 is the Sales Revenue of Shell Pakistan Ltd.58
1.3.3.2
Strategic Group: A2
The strategic group A2 consists of Caltex Oil Pakistan Ltd (COPL) and Total-Parco
Pakistan Ltd (TPPL). Caltex has been operating in the sub-continent since 1938 and
established its subsidiary Caltex Oil (Pakistan) Limited in 1947. Apart from the main oil
storage facility at Karachi, Caltex has 12 depots throughout the country, which include
three inland terminals in Rawalpindi, Machike and Shikarpur.
58
65
The Caltex retail network consists of over 500 outlets located in all Headquarter towns
and most strategic locations. Caltex also has a distributor's network, which caters to the
demands of the industrial as well as the agricultural sector.
Total Parco Pakistan Ltd (TPPL) has been operating in Pakistan since the last four years
and has currently over 100 retail outlets all over the country. The French company Total
Fina Elf in collaboration with Parco Oil Refinery Pakistan has lad launched Total ParcoPakistan Ltd (TPPL). The marketing Intensity and geographical coverage of both Caltex
and Total is less than that of Shell and PSO. Thus, both Total and Caltex have been placed
in strategic group A2.
1.3.3.3
Strategic Group: A3
The strategic group A3 comprises of the two national oil companies namely Attock
Petroleum Ltd (APL) and Admore Oil Pakistan. APL is a sister concern of Attock Group
of Companies which comprises of organizations like Pakistan Oilfields Limited (POL),
Attock Refinery ltd (ARL) and now National Refinery Ltd (NRL). Currently there are
around 70 retail outlets of APL in Pakistan with its head office in Islamabad.
Admore is a new player in the oil market of Pakistan and has currently less than 10 retail
outlets, most of which are located in the northern parts of the country. The geographical
coverage and marketing intensity for both APL and Admore is very low as compared to
Shell, PSO, Caltex and Total primarily because they are new national players and thus
they have been placed in the smallest strategic group A3.
66
1.3.4
B.C.G Matrix
The market analysis of the six oil marketing companies has been based on the five
attributes in the following tables. These include Overall Reputation, Forecourt/ Customer
Services, Website Quality, Marketing intensity and Non-Fuel Services such as Shop Stop,
Car Wash and Business Centers.
Attributes SHELL
Weightage
Overall Reputation
Forecourt/ Customer Services
Website Quality
Marketing Intensity
Non-Fuel Services
0.250
0.200
0.150
0.250
0.150
1.000
Scale
(1 to 5)
4.700
4.550
4.850
4.600
4.750
Aggregate
Scale
(1 to 5)
4.470
4.420
4.360
4.350
4.700
Aggregate
1.1750
0.9100
0.7275
1.1500
0.7125
4.6750
Attributes PSO
Weightage
Overall Reputation
Forecourt/ Customer Services
Website Quality
Marketing Intensity
Non-Fuel Services
0.250
0.200
0.150
0.250
0.150
1.000
1.1175
0.8840
0.6540
1.0875
0.7050
4.4480
67
Attributes TOTAL
Weightage
Overall Reputation
Forecourt/ Customer Services
Website Quality
Marketing Intensity
Non-Fuel Services
0.250
0.200
0.150
0.250
0.150
1.000
Scale
(1 to 5)
4.250
4.300
4.200
4.150
4.300
Aggregate
1.0625
0.8600
0.6300
1.0375
0.6450
4.2350
Attributes CALTEX
Weightage
Overall Reputation
Forecourt/ Customer Services
Website Quality
Marketing Intensity
Non-Fuel Services
0.250
0.200
0.150
0.250
0.150
1.000
Scale
(1 to 5)
4.100
4.200
4.200
4.000
3.950
Aggregate
1.0250
0.8400
0.6300
1.0000
0.5925
4.0875
68
Attributes ATTOCK
Weightage
Overall Reputation
Forecourt/ Customer Services
Website Quality
Marketing Intensity
Non-Fuel Services
0.250
0.200
0.150
0.250
0.150
1.000
Scale
(1 to 5)
2.950
2.900
2.995
2.850
2.750
Aggregate
Scale
(1 to 5)
2.100
2.200
2.350
2.200
2.350
Aggregate
0.7375
0.5800
0.4492
0.7125
0.4125
2.8917
Attributes ADMORE
Weightage
Overall Reputation
Forecourt/ Customer Services
Website Quality
Marketing Intensity
Non-Fuel Services
0.250
0.200
0.150
0.250
0.150
1.000
0.5250
0.4400
0.3525
0.5500
0.3525
2.2200
69
The industry growth rate according to the PSO annual report is around 8 - 10%. Thus, the
six oil marketing companies would be placed in either the cash cows or the dogs quadrant
in the B.C.G matrix.
In the market share analysis portion of the B.C.G Matrix, a market share of more than
3.50 would be considered high while a market share of less than 3.50 would be
considered as low.
Cash cows are low-growth businesses with a relatively high market share. These are
mature, successful businesses with relatively little need for investment. They need to be
managed for continued profit - so that they continue to generate the strong cash flows that
the company needs for its Stars.
Dogs" refers to businesses that have low relative share in low-growth markets. Dogs
may generate enough cash to break-even, but they are rarely worth investing in.
Sr. No
1
2
3
4
5
6
B.C.G Category
Cash Cow
Cash Cow
Cash Cow
Cash Cow
Dog
Dog
70
20
10
Shell
PSO
Total
Caltex
5.000
Attock
Admore
3.500
71
1.3.5.1
Whilst any assessment of market attractiveness is necessarily subjective, there are several
factors which can help determine attractiveness. The following table illustrates the
weights that have been assigned to the market attractiveness of the oil marketing industry.
Weight
0.20
0.20
0.15
0.15
0.15
0.05
0.10
1.00
Rating (1 to 5)
4.50
4.00
4.50
3.50
4.00
2.00
3.00
Value
0.900
0.800
0.675
0.525
0.600
0.100
0.300
3.900
1.3.5.2
72
The following table illustrates the rated factors that affect the business strength of
Pakistan State Oil (PSO).
Weight
0.20
0.20
0.15
0.15
0.15
0.05
0.10
1.00
Market Share
Product Quality
Brand Reputation
Distribution Network
Promotional Effectiveness
R&D Performance
Managerial Personnel
Rating (1 to 5)
4.50
4.00
3.50
3.50
3.00
2.00
3.00
Value
0.900
0.800
0.525
0.525
0.450
0.100
0.300
3.600
73
Strong
Medium
High
Weak
PSO
3.67
Med
2.33
Low
1.00
5.00
3.67
2.33
Business Strength
74
1.4.1 Strengths
1.4.1.1
In White Oil i.e. Mogas, Diesel, Kerosene and JP -1 despite intense competition PSO is
the market leader with a market share of 58.3% while in Black Oil PSO is the market
leader with a share of 79.2%.
In Aviation trade, PSO is again the market leader controlling 70% of market. PSO is
operating at 8 Airports in Pakistan and has just recently won the tender for the sole
supplier to Pakistans first private sector Sialkot International Airport.
In the south zone, PSO is controlling the operations of Quaid-e-Azam International
Airport Karachi, Turbat and Pasni Airports.
In the central zone it is controlling Allama Iqbal International Airport Lahore, Multan and
Faisalabad Airports and in the North Zone it is controlling Islamabad International
Airport and Peshawar International Airport.
75
1.4.1.2
PSO has the largest retail network compared to any other national or multi-national oil
marketing company in Pakistan. Currently, it has more than 3,800 retail outlets spread all
over Pakistan from Karachi to Karakoram which are responsible for generating 90% of
the companys revenue through sale of PSO products across the country and building
PSOs corporate image by providing reliable quality and quantity, unmatched service and
unparalleled customer care. Shell Pakistan Ltd has the second highest number of retail
outlets of 1250 retail outlets while Caltex Oil has around 500 retail outlets and Total
Parco has around 100 retail outlets. Attock Petroleum has around 70 retail outlets while
Admore has less than 10 retail outlets in Pakistan.
1.4.1.3
PSO has the largest storage and distribution infrastructure of 9 installations and 23 oil
depots spread all across the country. The current storage capacity of 860,000 metric
76axim is more than 82% of the countrys total storage capacity and is sufficient to meet
three weeks country wide demand in case of disruption of any supplies.
1.4.1.4
PSO is the sole supplier of High Speed Diesel (HSD) and Furnace Oil (FO) to the
Independent Power producers (IPPs) of Pakistan. In this regard, Hubco which is the first
and largest IPP of Pakistan has sole fuels supply agreements with PSO. In this regard,
PSO has built 78 km pipeleine exclusively for Hubco Power.
PSO is the only Oil marketing company in Pakistan that is catering to the bunkering
sector. The three major fuels supplied by PSO to marine trade include Bunker Furnace
Oil, Marine Gas Oil and Marine Diesel Oil.
76
1.4.2 Weaknesses
1.4.2.1
One of the biggest weaknesses of PSO is the dearth of quality human resource. Although
PSO has been able to attract quality professionals but it has failed to retain them over the
long-term. The primary reason for the high employee turn-over is the poor compensation
system as compared with all other oil marketing companies. This is the sole reason why
majority of employees have used the PSO brand name as a launching pad to secure their
future career paths in other more rewarding and prestigious international oil companies.
1.4.2.2
Although PSO has the largest retail network of the country, it is important that the
currently low throughput per retail outlet be improved. This can only be achieved by
closing down all uneconomical retail outlets and facilities which are tarnishing company
image and sales revenues.
1.4.2.3
According to the supply department of PSO, lack of assured product supply sources is a
major disadvantage to the oil marketing giant. The primary reason for lack of any assured
supply sources is the shortfall in supply from local refineries. As a result product needs to
be imported on the basis of tenders. This is a very expensive option which has a
tremendous effect on the import bill of Pakistan too.
77
1.4.2.4
The history of PSO dates back to the year 1974 when Federal Government takes over
management of PNO (Pakistan National Oil) and DPL (Dawood Petroleum Limited),
renamed into POCL (Premier Oil Company Limited) under marketing of Petroleum
Products Act, 1974. Since then a lot of storage tanks, facilities, plant machinery and
specialized equipment including dilapidated tankers have become obsolete and need to be
upgraded accordingly.
1.4.3 Opportunities
1.4.3.1
The complete deregulation of the oil sector would play a vital role in enhancing the
market activity in Pakistan, besides increasing the margins. Earlier, for getting permission
for a POL outlet or a gas station, one had to run after the ministry of petroleum and only a
few succeeded in getting the license. Now with the advent of deregulation, the situation is
improving as the oil marketing companies are now being authorized to issue permission
for establishment of petrol pump which has tremendously encouraged the investment in
the sector.
78
1.4.3.2
PSO has a great opportunity of adopting a backward vertical integration strategy and
introducing its own oil refinery in Pakistan. The PSO refinery would aid in increasing the
total refining capacity of the country. It would prove really beneficial for PSO as it would
offer better control over sources of supply, greatly minimize costs and achieve efficiency
in economies of scale.
1.4.3.3
PSO realizes the importance of alternate energy sources for the country. The oil
marketing giant can develop its own R&D department focusing on engineering concepts
of alternate energy by Wind, Solar Cells and Hydrogen fuel cells. It can develop a
complete retail outlet which is powered by Solar Energy and make cost savings and
improve productivity in the long run.
79
1.4.3.4
Privatization
The privatization of PSO offers a great opportunity for the oil marketing giant to further
improve on its record high profits and performance.
With an improving macro economic environment, the Government of Pakistan reiterated
its commitment to privatize PSO by selling 51% equity stake, together with management
control, to a qualified strategic investor, which has received encouraging response from
fifteen quality players, which is a larger group of parties and who are interested to
explore investment opportunities in Pakistan.
The interested parties for PSOs strategic sale include, Kuwait Petroleum Corporation
(Kuwait), Fauji Foundation (Pakistan), Abraaj Capital Limited (UAE), consortium of
Vitol S.A (Switzerland) and Hasan Associates (Pakistan), Lukoil International Trading
and Supply Company (Russia), Dewan Mushtaq Group (Pakistan), Dawood Hercules
Chemicals Limited (Pakistan), the Attock Oil Group (Pakistan), Abu Dhabi Group
(UAE), PAL Group of Companies (UAE) / ATN Modarba (Pvt.) Ltd (Pakistan), AlJomaih Holding Co. (Saudi Arabia), Chevron Texaco (USA), Al Ghurair Investment LLC
& Associates (UAE), United Bank Limited (Pakistan), and Tysons Oil & Energy (UK)59.
59
80
1.4.4 Threats
1.4.4.1
Increasing Competition
With the entry of Total in the oil marketing industry backed by rich experience of global
oil marketing in over 100 countries and in the presence of two existing conglomerates,
Shell and Caltex, the competition in the oil market has really intensified. PSO, on the
contrary, is a national oil marketing company and despite the prevailing challenges has
managed to attain market leadership in all key product categories. However, with the
recent entry of Admore and Attock Petroleum it would be even more difficult for the oil
marketing giant to maintain long-term market leadership.
1.4.4.2
Product Smuggling
The smuggling of oil from Iran in the bordering province of Baluchistan which is being
sold at a much cheaper price is a cause of great concern for Pakistan State Oil. This
menace has now reached up to Lasbella which is in close vicinity of the industrial city of
Karachi. It is feared that if an effective check is not put on, petroleum products may also
be smuggled into Karachi.60
1.4.4.3
PSO is currently importing around 70% of the countrys oil demand and the resulting
expenditure on oil imports is a severe burden on the national economy.
The oil imports during the current financial year have added more than $one billion to the
total bill of $3 billion. An economy like Pakistan obviously cannot afford such high level
of costs on import of a single commodity.60
60
Oil Growing Role of the Private Sector, http://www.pakistaneconomist.com/database1/cover/c200333.asp, [Accessed July 25, 2005]
81
CHAPTER 2
LITERATURE REVIEW
82
2.1 Promotion
Promotion covers the variety of techniques used to communicate with customers and
potential customers and this is where advertising comes in. Along with personal selling,
public relations, and sales promotion, advertising is one of the key four categories of
promotion. It is the non-personal communication of information about products to
customers.61
61
83
62
84
63
85
86
87
64
88
Slice of Life portrays a problem commonly faced in daily life with the product
solving the problem.
Animation includes the use of animated characters such as cartoons (e.g., Jolly
Green Giant).
Fantasy popular for emotional appeals, the product becomes a central part of
situation.
65
89
66
67
90
68
91
2.8 Branding
Branding has been around for centuries as a means to distinguish the goods of one
producer from those of another. In fact, the word brand is derived from the Old Norse
word brandr which means to to burn, as brands were and still are the means by which
owners of their livestock mark their animals to identify them.
According to the American Marketing Association, a brand is a name, term, sign,
symbol, or design, or a combination of them intended to identify the goods and services
of one seller or group of sellers and to differentiate them from those of competition.
The key to branding according to the definition of American Marketing Association is to
choose a name, logo, symbol, package design, or other attribute that identifies a product
and distinguishes it from others.70
Brand is the symbolic embodiment of all the information connected with a product or
service. A brand typically includes a name, logo, and other visual elements such as
images or symbols. It also encompasses the set of expectations associated with a product
or service which typically arise in the minds of people. Such people include employees of
the brand owner, people involved with distribution, sale or supply of the product or
service, and ultimately consumers.71
70
71
92
2.8.2 Benefits
Customers buy benefits, not attributes. Attributes are translated into functional or
emotional benefits. If the product possess the attribute durability, as the consumer the
benefit is that the product would not be replaced frequently
2.8.3 Values
The brand communicates something about the values of the manufacturer For example a
Mercedes as a manufacture values safety, high performance and prestige.
2.8.4 Culture
The brand may also represent a certain culture. Levis are a favored brand abroad because
they represent the American culture.
2.8.5 Personality
Brands are said to be able to project a personality as well. For example, Nike projects a
personality of high performance, with an attitude.
93
2.8.6 User
The brand itself may suggest the type of consumer who would purchase the product.72
According to Philip Kotler, a product is anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy a need or want. Thus, a
product may be a physical good, service, retail store, person, organization, or idea. Brand
on the other hand is a product, then, but one that adds other dimensions to differentiate it
in some way from other products designed to satisfy the same need.
Marketing guru Alvin Achenbaum believes that what distinguishes a brand from its
unbranded commodity counterpart and gives it equity is the sum total of consumers
perceptions and feeling about the products attributes and how they perform, about the
brand name, and what it stands for, and about the company associated with the brand.73
72
94
75
95
Brand loyalty
Perceived quality
Brand associations
Brand equity is a set of assets. Thus, the management of brand equity involves
investment to create and enhance these assets.
76
96
Each brand equity asset creates value in a variety of very different ways. In order to
manage brand equity effectively and to make informed decisions about brand-building
activities, it is important to be sensitive to the ways in which strong brands create value.
Brand equity creates value for the customer as well as the firm. The word customer refers
to both end users and those at the infrastructure level. For assets or liabilities to underlie
brand equity, they must be linked to the name and symbol of the brand. If the brands
name or symbols should change, some or all of the assets or liabilities could be affected
and even lost, although some might be shifted to the new name and symbol.77
Brand Equity can either be positive or negative. Positive brand equity is created by a
history of effective promotion and consistently meeting or exceeding customer
expectations. Negative brand equity is usually the result of bad management.
Positive brand equity can be a significant barrier to entry for prospective competitors.
The greater a companys brand equity, the greater the probability that the company will
use a family branding strategy rather than an individual branding strategy. This is because
family branding allows them to leverage off the equity accumulated in the core brand.
This makes new product introductions less risky and less expensive.78
77
78
97
It is a necessary condition for inclusion in the set of brands being considered for
purchase
It influences that nature and strength of associations that comprise the brand
image.
79
80
98
Research has proved that brand awareness is related to the strength of the resulting brand
node or trace in memory, as reflected by consumers ability to identify the brand under
different conditions.
Brand Awareness can be characterized according to depth and breadth. The depth of
brand awareness concerns the likelihood that a brand element will come to mind and ease
with which it does so. For example, a brand that can be easily recalled has a deeper level
of brand awareness than one that only can be recognized. The breadth of brand awareness
concerns the range of purchase and usage situations where the brand element comes to
mind. The breadth of brand awareness depends to a large extent on the organization of
brand and product knowledge in memory.
Creating brand awareness involves giving the product an identity by linking brand
elements to a product category and associated purchase and consumption or usage
situations.81
81
99
82
83
85
2.14.4 International
Brands that are international are more valuable than national or regional brands, in part
because of economies of scale. More generally, the broader the scope of a brand, the
more valuable it is.
2.14.5 Trend
The overall long-term trend of the brand in terms of sales can be expected to reflect
future prospects. A healthy, growing brand indicates that it remains contemporary and
relevant to consumers.
2.14.6 Support
Brands that have received consistent investment and focused support are regarded as
stronger than those that havent; however, the quality of the support should be considered
along with the level of support.
2.14.7 Protection
The strength and breadth of a brands legal trademark protection is critical to the brands
strength.
As evinced by these criteria, Interbrand takes a business-oriented rather than consumeroriented view of brand. This approach is useful, part, because its a step closer to putting
a financial value on the brandin fact, Interbrand uses its brand ratings to determine a
multiplier to apply to earnings. The subjectivity of both the criteria and assessment of the
brands, however, makes the dimensions difficult to defend and affects the reliability of
the resulting measures.86
86
87
2.16.1 Memorability
A necessary condition for building brand equity is achieving a high level of brand
awareness. Towards that goal, brand elements can be chosen that are inherently
memorable and therefore facilitate recall and/or recognition in purchase and/or
consumption settings. In other words, the intrinsic nature of certain names, symbols,
logos, and the like their semantic content, visual look, and so on may make them
more memorable and therefore contribute to brand equity.
2.16.2 Meaningfulness
Besides choosing brand elements to build brand awareness, brand elements can also be
chosen whose inherent meaning enhances the formation of brand associations. Brand
elements s may take on all kinds of meaning, varying in descriptive, as well as persuasive
content. The associations suggested by a brand element may not always be related to the
product: Brand elements can be chosen that are rich in visual and verbal imagery and
inherently fun and interesting.89
88
2.16.3 Transferability
The third general criterion concerns the transferability of the brand element, both in a
product category and geographic sense. To a large extent this depends on the cultural;
content and linguistic qualities of the brand element. For example one of the main
advantages of non-meaningful names is that they translate well in to other languages
since they have no inherent meaning.
2.16.4 Adaptability
The fourth consideration concerns the adaptability of brand over time. Because of
changes in consumer values and opinions , or just because of a need to remain up-to-date
or contemporary, brand elements often must be adapted over time. The more adaptable
and flexible the brand element, the easier it is to update it.
2.16.5 Protectability
The fifth and general consideration concerns the extent to which the brand element is
protectable both in a legal and competitive sense. In terms of legal considerations, it is
important to choose brand elements that can be legally protectable on international basis,
formally register them with the appropriate legal bodies, and vigorously defend
trademarks from unauthorized competitive infringement.90
90
91
2.18 Co Branding
Co-branding is an increasingly important tool for generating value. It can be an asset in
nearly all aspects of marketing, from creating initial awareness to building loyalty. There
are four main approaches to co-branding that companies should consider.92
92
93
Although upfront investments are often small, the associated risks of co-branding can be
much greater. A celebrity endorser could behave poorly while promoting the brand;
dilution could make the brand lose its meaning to consumers; devaluation is always a
risk, and it can happen overnight. Partner companies must work well together along with
their brands to avoid an operational threat. And companies must remember that no partner
brand is omnipotent, especially when taking on entrenched competitors. The best
protection against these risks is choosing a flexible partner.
Many co-branding benefits are difficult to quantify, such as the increase in brand equity
created in the consumers mind when one brand is associated with another. Other benefits
are seen immediately in top- and bottom-line improvements.94
94
95
96
Aaker cautions that not every brand identity needs to employ all or even several of these
perspectives. For some brands, only one will be viable and appropriate. Each organization
should, however, consider all of the perspectives and use those deemed helpful in
articulating what the brand should stand for in the customers mind.
The following briefly characterizes each of the four perspectives Aaker recommends
firms take into account in formulating their brand strategy.97
97
form the basis of a relationship between customers and the brand (in the same
way human personalities affect relationships between people)
98
visual imagery
metaphors
brand heritage
99
The subgroups will be smaller and more homogeneous than the market as a
whole.
100
2.20.1 Measurability
It is a reference to the degree to which the size and purchasing power of segments can be
assessed.
2.20.2 Accessibility
It is a reference to the degree to which a firm can reach intended target segments
efficiently. Substantialness is a reference to the degree to which identified target segments
are large enough or have sufficient sales and profit potential to warrant unique or separate
marketing programs.
2.20.3 Durability
It is a reference to the stability of segments (whether distinctions between segments will
diminish or disappear as the product category or the markets themselves mature).
Differential responsiveness is a reference to the degree to which market segments exhibit
varying responses to different marketing mix combinations.
Segment accessibility refers to the extent that market segments can be reached, while
differential responsiveness refers to the extent these segments, once reached, respond
differently.101
101
102
104
105
2.21.5 Relevance
Positions that do not focus on benefits that are important to people or reflect the character
of the product will fail. Often in their search for differentiation, marketers seize upon
some attribute in their product which is different but in reality is of little concern to
customers. This is a waste of time and money. The lonely Maytag repairman, who
symbolizes reliability, is an example of a powerful position based on the quality built into
the appliances.
106
2.21.6 Clarity
A position should be easy to communicate and quick to comprehend. Difficulty in either
suggest that a position is to fuzzy to be of value to the brand. We try harder because we
are No. 2 established Avis as a major league competitor quickly and simply.
2.21.7 Distinctiveness
People have few needs that are unfulfilled, and they have many choices to fill the needs
they have. If a brands position lacks distinctiveness it will be forced to compete on the
bases of price or promotion; expensive strategies that will not build brand equity in the
long term.
2.21.8 Coherence
Speak with one voice through all the elements of the marketing mix if you wish to create
a strong position. If, for example, a brand that is positioned as premium quality and price
appears in an end-aisle sale display, its quality image will suffer.
2.21.9 Commitment
Often people will get nervous when a strong position threatens to ignore or even alienate
some segment of the population as a price of clearly communicating to the desired target.
Once a position is adopted, it takes commitment to see it through, in the face of criticism
and pot shots.
2.21.10 Patience
Crest has dominated its market for over thirty years. When it was first introduced
positioned as a cavity fighter its share never rose above 13% for three years. The ADA
approval was the key to launching the brand to over 40% of the market. Had P&G lost
patience after two or three years, someone else would be enjoying the profits of this
powerful brand position.
2.21.11 Courage
It goes without saying that adopting a strong brand position requires bravery. It is much
easier to defend an appeal to everyone with a rather generic sales pitch. You must believe
that the position makes strategic sense for the brand and then stick to your guns.
Adopting a strong position is not a passive act; rather it is a deliberate attempt to
influence events. It requires ignoring certain business targets in favor of others, and if
successful, will yield growth in sales and profits and a consumer franchise who believe
that your brand has no adequate substitute, even if it costs more.
To achieve the benefits of brand positioning, it is necessary to research in-depth the
market position (or lack thereof) of the brand. Brand maps and forms are created to
profile the brand positioning, comparing the results with competitive brands.
In realizing the benefits of brand positioning, it is important to understand that not all
brands are competitors. A consumer may be presented with six brands of one product and
only consider three out of the six as a purchasing choice. The consumer may have
encountered a negative experience with a specific brand and may never consider
purchasing it again, or there may be a brand that simply does not stand out to the
consumer and it is passed up.
The Brand Positioning component involves identifying perceptions that a brand should
own in the minds of its target market.
The process recommended for developing a compelling brand positioning involves
establishing consensus on key brand attributes with internal client stakeholders
incorporating a variety of sensory elements to identify critical brand attributes.107
The positioning strategy a marketer adopts for a brand will influence the knowledge
structures consumers develop. Positioning involves establishing a frame of reference for
the brand, which depends upon the target market and the competitive set, and defining
points-of difference and points-of parity associations.108
107
108
109
110
111
Contexts in which it is often worthwhile to consider what a brand might say to a customer
include those listed below.112
A brand might risk appearing inferior if it tries too hard to be accepted into a more
prestigious competitive grouping. Thus Sears could attempt to associate itself with
trendier retailers and simply come off as being pathetic. The humorous thrust of the Sears
campaign from Young & Rubicam, in which a woman goes there for a Die Hard battery
but ends up buying great clothes, helps avoid this pitfall.113
113
2.24.1 Differentiation
How distinct is your brand? Brand health is built and maintained by offering a set of
differentiating promises to consumers and delivering those promises to leverage value.
Rolls-Royce and Disney stand out from other cars and theme parks.
114
2.24.2 Relevance
Relevance gauges the personal appropriateness of a brand to consumers and is strongly
tied to household penetration (the percentage of households that purchase the brand).
Band-Aid, Maggi, Reynolds, Kissan Ketchup are all strong examples of relevance to the
entire household.
2.24.3 Esteem
The consumers response to a marketers brand-building activity is driven by his
perception of two factors: quality and popularity, both of which vary by country and
culture. Brands such as Kodak, Maruti, Pepsi, Amul and Raymonds are esteemed in the
consumers mind, based on popularity more than quality.
2.24.4 Knowledge
The awareness levels about the brand and what it stands for shows the intimacy that
consumers share with the brand. True knowledge of the brand comes through brandbuilding.
According to this approach to brand equity, brand differentiation is the core of a
successful brand proposition with a distinctive position in the marketplace that will
promote long-term growth. Y&R defines it as the power of a brand to express its
uniqueness and reach top-of-mind status with target consumers.115
Once consumers are aware of the brand, it needs to be relevant to their needs, satisfying
and exceeding their expectations. The way that the brand manager is able to express that
relevancy in a language consumers appreciate will determine its success.
115
Once consumers understand what the brand can do for them, they need to aspire to own
it, or have esteem for it. Finally, when the brand has communicated its unique, relevant
and inspirational message, it will be able to achieve familiarity through repurchase and
re-use.
These four measures form the basis of two equations:
Differentiation x Relevance
Brand Strength
Esteem x Familiarity
Brand Stature
The equations represent an attempt to overcome issues with other methods that assess
brands solely in terms of present earning power. They suggest that scores relating to
brand differentiation and relevance indicate the potential for growth, while those relating
to brand esteem and familiarity indicate its present stature.
The results, however, are dependent on subjective analyses of the four criteria in relation
to the market, the consumer and the company; although there are market research
techniques that can better ensure the necessary analyses accurate reflect the competitive
milieu.116
116
117
2.25.3 Quadrant I
Weak brands that could not leverage their strengths.
2.25.4 Quadrant II
Here the brand managers have not been able to realize the true potential of the brand. The
strategy should be to build the stature of the brand.
2.25.6 Quadrant IV
The last quadrant spells Danger for the brand, an indicator of eroding potential. These
brands have failed to maintain their Relevant Differentiation (their core strength). If
unattended, their Stature will also begin to fall. Unless steps are taken to stimulate the
differentiation and relevance, these brands will lose Esteem and could eventually fade
from consumers consciousness.
The value of a brand depreciates if there is no continuous value addition. This is critical
for the brand to be a source of competitive advantage. The task of a marketer is to go
beyond measuring and leveraging the value of the brand and add perceptible value
continuously.118
118
2.26 Hypothesis
Based on the literature review, the researcher has developed the following hypothesis:
H1:
H2:
In the wake of intense competition, strong brand elements are necessary to create
a strong brand image in the hearts and minds of target consumers
H3:
CHAPTER 3
RESEARCH METHODOLOGY
3.1 Introduction
According to Dr. Uma Sekaran, research can be defined as an organized, systematic, databased, critical, objective, scientific inquiry or investigation in to a specific problem,
undertaken with the purpose of finding answers or solutions to it.
In essence, research provides the needed information that guides managers to make
informed decisions to successfully deal with problems. The information provided could
be the result of a careful analysis of data gathered firsthand or of data that are already
available in the company, industry or archives.
Data can be quantitative, as generally gathered through structured questions or
qualitative, as generated from broad answers to specific questions in interviews, or from
responses to open-ended questions in a questionnaire, or through observation, or from
readily available information gathered from various sources.119
119
120
Analysis of all key brand related attributes of PSO in relation with its competitors
Primary Sources
Direct Interviews with dealers of Pakistan State Oil (PSO) retail outlets
Direct Interviews with employees of Pakistan State Oil (PSO) retail outlets
3.6.2
Secondary Sources
Annual Reports
H2:
In the wake of intense competition, strong brand elements are necessary to create
a strong brand image in the hearts and minds of target consumers
H3:
CHAPTER 4
FINDINGS & ANALYSIS
1. Age:
D
13%
A
13%
a) 18 25
B
17%
b) 26 35
c) 36 50
d) Above 50
A
B
C
D
C
57%
a
9
26
14
11
B
13%
a) Male
b) Female
A
B
A
b 87%
a
52
b) Student
c) Private Sector
A
15%
E
23%
d) Public Sector
A
B
17%
e) Business
C
D
E
f) Other
D
10%
a
9
b
10
c
15
C
25%
d
6
e
14
f
6
4. Monthly Income:
e
10%
a) None
b) Less than 20,000
a
27%
d
18%
c) 20,000 45,000
a
b
c
d
d) 45,000 70,000
e) Above 70,000
a
16
c
20%
b
15
b
25%
c
12
d
11
e
6
5. How long have you been refueling through this PSO outlet:
a) Less than 1 year
d
10%
b) 1 year 3 years
c) 3 years 5 years
d) More than 5 years
a
20
a
33%
c
20%
b
22
d
6
b12
37%
b
22%
a
b
c
d
a
58%
a
b
c
d
a
35
b
13
c
9
d
3
7. On majority of the occasions from where have you been refueling previously:
a) Total
a
5%
b) Caltex
c) Shell
d
35%
d) PSO
a
3
b
12%
a
b
c
d
b
7
c c
2948%
d
21
e
17%
f
0%
a
18%
b
c
d
25%
c
7%
b
33%
d) I trust the quality & quantity of fuel dispensed from this outlet
e) Non-fuel facilities such as Shop Stop, Car Wash, Business Center, Tyre Shop
f) Other, Please identify ____________________________________________
d
e
f
a
11
b
20
c
4
d
15
e
10
f
22%
f
0
g
0%
a
25%
a
b
c
b
8%
e
15%
a) Shop Stop
b) Business Center (Internet Kiosk, P.C.O, Fax,
Photocopy)
e
f
c
10%
d
20%
a
50
b
15
c
20
d
40
e
30
f
43
g
0
10. Which PSO Card do you use for the purpose of fueling:
a) Corporate Card
a
10%
b) Fleet Card
b
8%
e
37%
c) Loyalty Card
d) Prepaid Card
e) I dont use any PSO card
a
6
b
5
c
21
d
10%
d
6
c
35%
e
22
a
b
c
d
e
h
g13%
3%
f
9%
b
c
d
e
e
4%
d
18%
a
23%
c
9%
b
21%
b
35
c
15
d
30
e
6
f
15
g
5
h
21
g
h
12. Are you aware of the launch of the following Oil Marketing Companies:
Admore
a) Yes
b) No
a
8
a
13%
b
52
a
b
Finding
b
87%
b
35%
a) Yes
b) No
b
a
65%
a
39
b
21
a
6
b
34
c
18
d
2
e
0
f
0
a
4
b
17
c
28
d
10
e
1
f
0
ef a
d 0%
3%
5%
a) Caltex
b) Shell
c
32%
c) PSO
d) Total
e) Attock
b
60%
f) Admore
a
2
a
b
c
d
e
f
b
36
c
19
d
3
e
0
f
0
16. In your opinion, which company has introduced Pakistans first Auto-Car
Wash Plant in Islamabad, Lahore and Karachi:
a) Caltex
b) Shell
c) PSO
d) Total
e) Attock
f) Admore
a
1
b
30
c
25
d
4
e
0
f
0
a
53
b
7
18.What are the areas in which you believe PSO has improved its retail outlets:
a) More educated and friendly staff
b) Better forecourt services
c) Guaranteed Quality & Quantity of fuels offered
d) Improved housekeeping/ cleanliness of outlets
a
b
c
d
e
f
g
h
i
j
k
37
30
31
45
50
49
45
51
38
7
0
a
31
b
29
a
b
c
d
e
b
75%
a
2
b
24
c
4
d
1
e
1
21.In your opinion, Ads of which oil marketing company are the most attractive:
a) Caltex
b) Shell
c) Total
d) Attock
e) Admore
f) PSO
a
1
b
41
f
18%
d
e
0%
c c
712%
a
2%
d
0
e
0
b
68%
f
11
a
b
c
d
e
f
22. In your opinion, in the last five years the standard of the following oil
marketing companies has (Tick the relevant choices):
Deteriorated
CALTEX
TOTAL
SHELL
PSO
41
3
5
2
Stagnant
Slight
Drastic
10
20
27
13
Improvement
9
15
17
24
Improvement
0
19
11
21
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
Assistant Professor Ms. Zeenat Jabbar - 157 - NUST Institute of Management Sciences
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
CALTEX
TOTAL
SHELL
ADMORE
PSO
ATTOCK
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
Assistant Professor Ms. Zeenat Jabbar - 158 - NUST Institute of Management Sciences
Segment
Activities
Drivers
Interests
Cars,
Opinions
Politics
Demographics
18-55 yrs,
To refuel
Fuel
Students
Books
Pakistani
Educated and
Vehicles
Seekers
Businessman
Radio
Culture
non educated,
Professionals
Children
Television
Books
Family
mostly men
7-55 yrs,
Teenagers
Concerts
Children
Middle class,
the
Parents
Sports
Entertainment
Upper class,
convenience
Working
Junk Food
Fashion
Mostly
store
Women
Educated,
Drivers
Cricket
Traditional
Both genders
19-48yrs
Professionals
Television
Politics
Middle class
To shop from
Shoppers
To have car
Car Wash
washed
Seekers
Media
Working Men
Hiking,
Science
young boys.
23-45 yrs
To have an
Speedy
Drivers
News
News
Mostly men
oil change
Oil
Students
Traveling,
Music
Educated
Change
Business men
Radio
Drivers
Cars
Savings
Urban Dwelling
Seekers
To have car
Tyre
Working
Books
Pakistani
High Income
tyre service
Shop
Professionals
Radio
Culture
Class
Seekers
Jogging
Mostly men
Assistant Professor Ms. Zeenat Jabbar - 159 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 160 - NUST Institute of Management Sciences
Distribution Network
(Large)
PSO
Shell
Caltex
Brand Name
(Weak)
Brand Name
(Strong)
Total
Attock
Admore
Distribution Network
(Small)
Assistant Professor Ms. Zeenat Jabbar - 161 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 162 - NUST Institute of Management Sciences
Promotional
Effectiveness
(Strong)
Shell
PSO
Total
Level of
Innovation
(Low)
Level of
Innovation
(High)
Caltex
Attock
Admore
Promotional
Effectiveness
(Poor)
Assistant Professor Ms. Zeenat Jabbar - 163 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 164 - NUST Institute of Management Sciences
Marketing Experience
(Less)
Admore
Attock
Total
Customer
Service (Good)
Customer
Service (Poor)
PSO
Caltex
Shell
Marketing Experience
(More)
Assistant Professor Ms. Zeenat Jabbar - 165 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 166 - NUST Institute of Management Sciences
Market Share
(High)
Assistant Professor Ms. Zeenat Jabbar - 167 - NUST Institute of Management Sciences
Shell
PSO
Total
HR
Competence
(More)
HR
Competence
(Less)
Caltex
Attock
Admore
Market Share
(Low)
Assistant Professor Ms. Zeenat Jabbar - 168 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 169 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 170 - NUST Institute of Management Sciences
Profitability
(Low)
Admore
Attock
Caltex
Overall
Reputation
(Low)
Overall
Reputation
(High)
Total
Shell
PSO
Profitability
(High)
Assistant Professor Ms. Zeenat Jabbar - 171 - NUST Institute of Management Sciences
Weightage
Logo Attractiveness
Retail Outlet Color Schemes
Signage Aesthetics
Packaging Quality of Lubricants
Attributes - Verbal
0.200
0.300
0.300
0.200
1.000
Weightage
Advertisement Message
Ad Appeals
Background Music
Word of Mouth
0.300
0.200
0.200
0.300
1.000
Attributes - Experiential
Weightage
Product Quality
Forecourt Services
Housekeeping/ Cleanliness
Non-fuel facilities
0.250
0.300
0.200
0.250
1.000
Scale
(1 to 5)
4.50
4.00
4.00
4.00
Aggregate
Scale
(1 to 5)
4.50
4.00
3.75
4.50
Aggregate
Scale
(1 to 5)
4.00
4.00
3.75
4.00
Aggregate
0.900
1.200
1.200
0.800
4.100
1.350
0.800
0.750
1.350
4.250
1.000
1.200
0.750
1.000
3.950
12.300
Assistant Professor Ms. Zeenat Jabbar - 172 - NUST Institute of Management Sciences
Weightage
Logo Attractiveness
Retail Outlet Color Schemes
Signage Aesthetics
Packaging Quality of Lubricants
Attributes - Verbal
0.200
0.300
0.300
0.200
1.000
Weightage
Advertisement Message
Ad Appeals
Background Music
Word of Mouth
0.300
0.200
0.200
0.300
1.000
Attributes - Experiential
Weightage
Product Quality
Forecourt Services
Housekeeping/ Cleanliness
Non-fuel facilities
0.250
0.300
0.200
0.250
1.000
Scale
(1 to 5)
4.00
3.95
3.75
3.70
Aggregate
Scale
(1 to 5)
3.75
3.50
3.50
4.00
Aggregate
Scale
(1 to 5)
3.70
3.70
3.50
4.00
Aggregate
0.800
1.185
1.125
0.740
3.850
1.125
0.700
0.700
1.200
3.725
0.925
1.110
0.700
1.000
3.735
11.310
Assistant Professor Ms. Zeenat Jabbar - 173 - NUST Institute of Management Sciences
Attributes - Verbal
Advertisement Message
Ad Appeals
Background Music
Word of Mouth
Weightage
0.200
0.300
0.300
0.200
1.000
Weightage
0.300
0.200
0.200
0.300
1.000
Attributes - Experiential
Weightage
Product Quality
Forecourt Services
Housekeeping/ Cleanliness
Non-fuel facilities
0.250
0.300
0.200
0.250
1.000
Scale
(1 to 5)
3.75
3.85
3.70
3.65
Aggregate
Scale
(1 to 5)
3.70
3.40
3.35
3.90
Aggregate
Scale
(1 to 5)
3.60
3.50
3.50
3.50
Aggregate
0.750
1.155
1.110
0.730
3.745
1.110
0.680
0.670
1.170
3.630
0.900
1.050
0.700
0.875
3.525
10.900
Assistant Professor Ms. Zeenat Jabbar - 174 - NUST Institute of Management Sciences
Attributes - Verbal
Advertisement Message
Ad Appeals
Background Music
Word of Mouth
Weightage
0.200
0.300
0.300
0.200
1.000
Weightage
0.300
0.200
0.200
0.300
1.000
Attributes - Experiential
Weightage
Product Quality
Forecourt Services
Housekeeping/ Cleanliness
Non-fuel facilities
0.250
0.300
0.200
0.250
1.000
Scale
(1 to 5)
3.70
3.80
3.60
3.60
Aggregate
Scale
(1 to 5)
3.70
3.40
3.30
3.75
Aggregate
Scale
(1 to 5)
3.50
3.40
3.50
3.40
Aggregate
0.740
1.140
1.080
0.720
3.680
1.110
0.680
0.660
1.125
3.575
0.875
1.020
0.700
0.850
3.445
10.700
Assistant Professor Ms. Zeenat Jabbar - 175 - NUST Institute of Management Sciences
Weightage
Logo Attractiveness
Retail Outlet Color Schemes
Signage Aesthetics
Packaging Quality of Lubricants
Attributes - Verbal
Advertisement Message
Ad Appeals
Background Music
Word of Mouth
0.200
0.300
0.300
0.200
1.000
Weightage
0.300
0.200
0.200
0.300
1.000
Attributes - Experiential
Weightage
Product Quality
Forecourt Services
Housekeeping/ Cleanliness
Non-fuel facilities
0.250
0.300
0.200
0.250
1.000
Scale
(1 to 5)
3.50
3.50
3.30
3.20
Aggregate
Scale
(1 to 5)
3.50
3.20
3.10
3.55
Aggregate
Scale
(1 to 5)
3.30
3.30
3.40
3.20
Aggregate
0.700
1.050
0.990
0.640
3.380
1.050
0.640
0.620
1.065
3.375
0.825
0.990
0.680
0.800
3.295
10.050
Assistant Professor Ms. Zeenat Jabbar - 176 - NUST Institute of Management Sciences
Weightage
Logo Attractiveness
Retail Outlet Color Schemes
Signage Aesthetics
Packaging Quality of Lubricants
0.200
0.300
0.300
0.200
1.000
Attributes - Verbal
Weightage
Advertisement Message
Ad Appeals
Background Music
Word of Mouth
0.300
0.200
0.200
0.300
1.000
Attributes - Experiential
Weightage
Product Quality
Forecourt Services
Housekeeping/ Cleanliness
Non-fuel facilities
0.250
0.300
0.200
0.250
1.000
Scale
(1 to 5)
3.60
3.60
3.50
3.20
Aggregate
Scale
(1 to 5)
3.40
3.10
3.00
2.55
Aggregate
Scale
(1 to 5)
3.00
3.30
3.40
3.00
Aggregate
0.720
1.080
1.050
0.640
3.490
1.020
0.620
0.600
0.765
3.005
0.750
0.990
0.680
0.750
3.170
9.665
Assistant Professor Ms. Zeenat Jabbar - 177 - NUST Institute of Management Sciences
Sr. No
1
2
3
4
5
6
BPI
Index
12.300
11.310
10.900
10.700
10.050
9.665
Assistant Professor Ms. Zeenat Jabbar - 178 - NUST Institute of Management Sciences
Sincerity
Down-to-Earth
Honest
Wholesome
Cheerful
Total
Excitement
Daring
Spirited
Imaginative
Up-to-Date
Total
Competence
Reliable
Intelligent
Successful
Total
Weight
0.250
0.350
0.100
0.300
1.000
Weight
0.250
0.250
0.150
0.350
1.000
Weight
0.350
0.300
0.350
1.000
Scale (1-5)
4.500
4.500
3.000
3.500
Scale (1-5)
4.000
3.500
3.500
3.500
Scale (1-5)
4.500
4.000
4.500
Value
1.125
1.575
0.300
1.050
4.050
Value
1.000
0.875
0.525
1.225
3.625
Value
1.575
1.200
1.575
4.350
Assistant Professor Ms. Zeenat Jabbar - 179 - NUST Institute of Management Sciences
Weight
0.400
0.600
1.000
Weight
0.300
0.700
1.000
Value
1.400
2.100
3.500
Value
1.125
2.625
3.750
Based on the brand personality dimension index, PSO emerges out to be a competent and
sincere brand. The brand is clearly masculine. His personality is formal and professional.
He is amongst the most successful lot in his class and hes very hard working and
efficient. No wonder hes an admired business acquaintance. The look of his advertising
is somewhat conservative; however most recently the more innovative approach has
given it a look of its own tailored to the target market.
Assistant Professor Ms. Zeenat Jabbar - 180 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 181 - NUST Institute of Management Sciences
High
Shell
High
Brand
Strength
Attock , Admore
Assistant Professor Ms. Zeenat Jabbar - 182 - NUST Institute of Management Sciences
Shell is the only brand that truly deserves to be placed in the first quadrant of the Y & R
Power Grid. Shell as a brand is popular in over 180 countries and has developed very
high knowledge and esteem especially in the downstream oil and gas sector.
4.7.2
Pakistan State Oil (PSO), Caltex oil Pakistan Ltd (COPL) and Total Parco Pakistan Ltd
(TPPL) are brands that have gained both high Knowledge and Esteem and thus have a
high brand stature.
However, all three oil marketing companies need to pursue successful differentiation
strategies in order to gain substantial brand strength.
4.7.3
Attock Petroleum Ltd (APL) and Admore are brands that can best be placed in this
quadrant of the Y & R Power Grid. Both have recently entered in the oil marketing arena
of Pakistan and need to build up their core competencies in the completive Pakistani oil
market.
Assistant Professor Ms. Zeenat Jabbar - 183 - NUST Institute of Management Sciences
Attributes
Brand Awareness
Positive Feeling towards Brand
Uniqueness of Brand
Relevance to Customer
Weightage
0.250
0.250
0.250
0.250
1.000
Scale (1 - 5)
4.000
3.500
3.750
3.500
Value
1.0000
0.8750
0.9375
0.8750
3.6875
Assistant Professor Ms. Zeenat Jabbar - 184 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 185 - NUST Institute of Management Sciences
Leadership
Stability
Market
International
Trend
Support
Protection
Weightage
0.200
0.150
0.200
0.100
0.150
0.100
0.100
1.000
Scale (1 to 5)
4.500
4.000
4.500
2.000
4.000
3.750
4.000
Value
0.900
0.600
0.900
0.200
0.600
0.375
0.400
3.975
Assistant Professor Ms. Zeenat Jabbar - 186 - NUST Institute of Management Sciences
Brand equity occurs when the consumer has a high level of awareness and familiarity
with the brand and holds some strong, favorable, and unique brand associations in the
memory121
4.11.1
Leadership
PSO is a brand that leads its market sector and is thus stable and powerful than other
market entrants. This criterion reflects the economies of scale that Pakistan State Oil
(PSO) has been able to achieve in effective communication and distribution.
4.11.2
Stability
Pakistan State Oil (PSO) is a long-lived brand with an identity that has become part of the
fabric of the marketand even of the culture of the oil marketing industry.
4.11.3
Market
Pakistan State Oil (PSO) is a brand that is valuable owing to the fact that it operates in a
market with growing sales levels and a price structure in which successful firms can be
very profitable. This can also be ascertained from the fact that the current profitability of
Pakistan State Oil (PSO) for the fiscal year 2005 is more than Rs 5.7 billion.122
121
122
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4.11.4
International
Pakistan State Oil (PSO) is a brand that is not an international brand. However, it has to
be appreciated that being a national company it has set international standards whilst
competing with three of the worlds top multi-nationals. Thus, brands such as Shell and
Caltex that are international are more valuable than national or regional brands as
generally, the broader the scope of a brand is, the more valuable it is.
4.11.5
Trend
The overall long-term trend of Pakistan State Oil (PSO) as a brand can be expected to
reflect future prospects. Pakistan State Oil (PSO) as a healthy, growing brand indicates
that it remains contemporary and relevant to consumers.
4.11.6
Support
Pakistan State Oil (PSO) is a brand that has received consistent investment and focused
support both from its top management and the Ministry of Petroleum and Natural
Resources. The company has invested in state-of-the art SAP system which is an
integrated Enterprise Resource Planning (ERP) system functional in only 30 prestigious
companies of Pakistan and 26,000 world renowned organizations.
4.11.7
Protection
The strength and breadth of a brands legal trademark protection is critical to the brands
strength and Pakistan State Oil (PSO) is no exception in this regard.
Assistant Professor Ms. Zeenat Jabbar - 188 - NUST Institute of Management Sciences
High
CALTEX
PSO
SHELL
ATTOCK
Brand
ADMORE
Recognition
TOTAL
Low
Low
Brand Recall
High
Assistant Professor Ms. Zeenat Jabbar - 189 - NUST Institute of Management Sciences
The Graveyard model identifies the brands that are dying and the ones that are
prospering. From the above figure it is evident that Shell and PSO are prospering as the
most recognized and recalled oil market brands.
Total is a brand that has a relatively lesser recognition owing to its presence in the form
of 100 retail outlets, however, its recall is higher owing to its huge petrol pumps with
innovative canopy style and unique layouts.
Total is in fact a niche brand with a high recall among its respective loyal customer
groups and its currently low recognition is not necessarily an indication of poor
performance. Like all healthy niche players Total has the potential to expand recognition
and thus the scope of its customer base.
Caltex is a brand that is heading towards the graveyard as it is losing its recall amongst
the target consumers. Prior to 1990 Caltex had been the most innovative oil marketing
company but with PSO establishing itself and Shell pursuing its Retail Visual Image
(RVI) projects in the late 90, Caltex was the brand that had suffered the most.
Attock and Admore are brands that have both very low recognition and recall owing to
the fact that they are new entrants in the Pakistani oil market and still need to go a long
way in order to win sustained and longterm customer loyalty which would result in both
high brand recognition and recall.
Assistant Professor Ms. Zeenat Jabbar - 190 - NUST Institute of Management Sciences
In the wake of highly intense competition, Pakistan State Oil (PSO) has focused on
building strong band elements including the PSO Brand Name, PSO Logo and PSO
Slogan so as to create strong brand awareness amongst the target consumers.
Assistant Professor Ms. Zeenat Jabbar - 191 - NUST Institute of Management Sciences
123
Pakistan State Oil (PSO) Website, http://www.psocl.com, [Accessed July 10, 2005]
Assistant Professor Ms. Zeenat Jabbar - 192 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 193 - NUST Institute of Management Sciences
to
society
&
constantly
strive
to
innovate
products
that
are
environment-friendly. We also support schools and training centers in rural areas &
provide scholarships & internship to students of reputed professional educational
institutions. PSO brings you sunshine day after day, night after night because at PSO we
never let the sun go down on your needs.126
125
126
Pakistan State Oil (PSO) Website, http://www.psocl.com, [Accessed July 10, 2005]
Pakistan State Oil (PSO) Annual Report 2005, Forever Sunshine, Page 3
Assistant Professor Ms. Zeenat Jabbar - 194 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 195 - NUST Institute of Management Sciences
The company has been striving to launch innovative products and services and is now
recognized as the Leader with Innovativeness. Following are the few glimpses of
innovative services launched by Pakistan State Oil (PSO):
o First Oil Company to introduce Plastic Cards namely Loyalty, Fleet, Corporate
and Prepaid Cards
o Internet Kiosks to increase Internet awareness throughout the nation
o Mobile Quick Testing Units to ensure the best quality and right quantity products
o Oil change facility at customers doorstep
o Countrys first-ever Auto Car wash plant at Karachi, Islamabad & Lahore
o Monolith price displays at all retail outlets
o Pioneer in installing Tallest Signs / Largest Hoarding in Pakistan
o Business Centers at retail outlets with facility of Fax, P.C.O and Photocopy
o First Oil Company to install Easy Payment Centers at Retail Outlets in
collaboration with Citibank
Assistant Professor Ms. Zeenat Jabbar - 196 - NUST Institute of Management Sciences
128
Assistant Professor Ms. Zeenat Jabbar - 197 - NUST Institute of Management Sciences
129
Assistant Professor Ms. Zeenat Jabbar - 198 - NUST Institute of Management Sciences
The launch of Plastic Card Technology by PSO has offered customers a wide array of
convenience in terms of loyalty points, secured transactions free of hash handling and
lucrative discounts.
In order to reinforce the brand image and to further create brand awareness among
customers, PSO has been making considerable efforts by using permanent tools like
billboards and hoardings at strategic locations.
130
Assistant Professor Ms. Zeenat Jabbar - 199 - NUST Institute of Management Sciences
The company has been utilizing the best available resources but in cost-effective
manners. Hoardings, Tall Signs are being installed at retail outlets to further curtail the
investment cost.
131
Assistant Professor Ms. Zeenat Jabbar - 200 - NUST Institute of Management Sciences
132
Assistant Professor Ms. Zeenat Jabbar - 201 - NUST Institute of Management Sciences
PSO has been the pioneer in installing Price Display Units at its monoliths to inform
customers about the prevailing petroleum prices thus making their decision-making
swifter and more prompt.
The World Bank Mission for Public Sector Review had appreciated this initiative by
PSO and recommended that the Government of Pakistan to implement the same at other
Oil Marketing Companies.
133
Assistant Professor Ms. Zeenat Jabbar - 202 - NUST Institute of Management Sciences
The researcher has taken snapshots of the branding activities followed by Pakistan State
Oil (PSO) at the twin cities of Islamabad and Rawalpindi.
134
Assistant Professor Ms. Zeenat Jabbar - 203 - NUST Institute of Management Sciences
135
Assistant Professor Ms. Zeenat Jabbar - 204 - NUST Institute of Management Sciences
136
Assistant Professor Ms. Zeenat Jabbar - 205 - NUST Institute of Management Sciences
137
Assistant Professor Ms. Zeenat Jabbar - 206 - NUST Institute of Management Sciences
138
Assistant Professor Ms. Zeenat Jabbar - 207 - NUST Institute of Management Sciences
139
Assistant Professor Ms. Zeenat Jabbar - 208 - NUST Institute of Management Sciences
The professionals at Pakistan State Oil (PSO) strive to provide unmatched and diverse
services in line with best inter national practices.
PSO`s state of the art New Vision Retail Outlets are equipped with the most modern
facilities including auto car wash, electronic dispensing units, Convenience stores,
business centers and Internet facilities to name a few.
140
Assistant Professor Ms. Zeenat Jabbar - 209 - NUST Institute of Management Sciences
Pakistan State Oil (PSO) has a network of over 100 Shop Stops throughout the country.
Also as part of Retail Automation Program, PSO has installed Pump Controllers at the
New Vision Retail Outlets for instant flow of transaction data from fuel dispensing units
to the point of scale terminal.
141
Assistant Professor Ms. Zeenat Jabbar - 210 - NUST Institute of Management Sciences
Pakistan State Oil (PSO) believes in environment friendliness as a priority like quality
and safety. This is the reason why PSO has once again taken the lead in launching for the
for time in Pakistan an environment friendly diesel Green XL Plus Diesel which
contains Green burn Combination Technology. It helps in keeping the engine clean and
the environment green. It provides benefits like 27 % less smoke, particulate reduction,
less noise, less carbon deposit, less foam, more power, less maintenance, longer engine
life, fuel economy, efficiency and cleaner environment.
Pakistan State Oil (PSO) is also the first to launch pre-addition gasoline premier XLwhich provides benefits like more mileage, longer engine life, lesser maintenance cost
and cleans the engine while driving, to deliver high value to customers at no additional
cost in terms of improved engine performance, fuel economy and reduced noise and air
pollution.
142
Assistant Professor Ms. Zeenat Jabbar - 211 - NUST Institute of Management Sciences
coming to attend this forum from all over the globe. Spectacular city branding was done
at famous locations within the city, including the Expo center, where the event was held.
Beautiful PSO branded arches and impressive butterfly lights illuminated prominent
locations and round about of the Karachi City. Visitors from the countries like Iran,
Malaysia, China, Sri Lanka and Saudi Arabia showed keen interest in the wide range of
PSO - BP Castrol Lubricants and Engine oils, while a number of local visitors displayed
their interests in Pakistan State Oil (PSO) hi-tech cards.
PSO has also sponsored a number of important events such as IDEAS 2004, Polo Season,
Sindh Sea Festival, Lahore Marathon, and PSO 1 st Asian Junior Boxing Championship,
Azlan Shah Hockey Tournament and Pakistan - India Football Series during the fiscal
year 2005.143
143
Pakistan State Oil (PSO) Annual Report 2005, Forever Caring, Page 14
Assistant Professor Ms. Zeenat Jabbar - 212 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 213 - NUST Institute of Management Sciences
The exact wordings of the forever sunshine ad as illustrated in a print media advert are as
follows:
At PSO, our commitment to serve you goes far beyond providing fuel. We have a number
of services ranging from automated filling to a 24-hr business center. Our Internet
facility, the Shop Stop & our Fuel Management Solution all aim at making the PSO
experience memorable for our customers. We also consider it our responsibility to
contribute
to
society
&
constantly
strive
to
innovate
products
that
are
environment-friendly. We also support schools and training centers in rural areas &
provide scholarships & internship to students of reputed professional educational
institutions. PSO brings you sunshine day after day, night after night because at PSO we
never let the sun go down on your needs.145
145
146
Pakistan State Oil (PSO) Annual Report 2005, Forever Sunshine, Page 3
FCB Grid, http://www.public.iastate.edu/~geske/FCB.html, [Accessed July 10, 2005]
Assistant Professor Ms. Zeenat Jabbar - 214 - NUST Institute of Management Sciences
147
Assistant Professor Ms. Zeenat Jabbar - 215 - NUST Institute of Management Sciences
Search for Adventure ad appeal has been used in the advertisement. The background
music is very strong and the narration is in English. A person is shown starting a car and
then the Ad focuses on the tribology of engine design and in the later part of the Advert
shows the Castrol GTX lubricants.
The target audience for this advert is primarily young and affluent male working
professionals who are concerned about which brand of motor oil they would prefer for
their car.
148
Assistant Professor Ms. Zeenat Jabbar - 216 - NUST Institute of Management Sciences
149
Assistant Professor Ms. Zeenat Jabbar - 217 - NUST Institute of Management Sciences
The following figures illustrate how over the last five years, PSO has been able to gain
phenomenal success and has managed to create a high-quality, corporate image in the
hearts and minds of its target customers.
Assistant Professor Ms. Zeenat Jabbar - 218 - NUST Institute of Management Sciences
The company has not only been able to arrest the chronic decline in market share of
Mogas, which had been declining consistently at a cumulative average growth rate of
3.5% p.a. during the last several years, but was also able to gain almost 4% share during
the last 3.5 years, whereas Shells share plunged to 36% from 43%.151
Had PSO not embarked on strategic initiatives, the company would have not only lost
significant volumes but also its market participation as indicated by the dashed line in the
following graphical illustration.
151
Assistant Professor Ms. Zeenat Jabbar - 219 - NUST Institute of Management Sciences
It is obvious from the following illustration that PSO would have touched 48% share
during fiscal year 2004 if the company had not undertaken its strategic reform process.
152
Assistant Professor Ms. Zeenat Jabbar - 220 - NUST Institute of Management Sciences
153
Assistant Professor Ms. Zeenat Jabbar - 221 - NUST Institute of Management Sciences
CHAPTER 5
CONCLUSION &
RECOMMENDATIONS
Assistant Professor Ms. Zeenat Jabbar - 222 - NUST Institute of Management Sciences
5.1 Conclusion
The hypothesis based on the literature review and introduced in chapter three would now
be either approved or rejected based on the findings and analysis in chapter four.
H1:
In the wake of intense competition, strong brand elements are necessary to create
a strong brand image in the hearts and minds of target consumers
5.2 Recommendations
The researcher would be giving the following recommendations based on the results of
market survey conducted, in the twin cities of Islamabad & Rawalpindi, and the in depth
brand analysis of Pakistan State Oil (PSO).
Assistant Professor Ms. Zeenat Jabbar - 224 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 225 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 226 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 227 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 228 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 229 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 230 - NUST Institute of Management Sciences
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strategy/marketing_strategy.asp, [Accessed July 18, 2005]
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9. Brand Positioning Benefits, http://www.onpoint-marketing.com/brand-positioning
.htm,[Accessed July 21, 2005]
10. Brand Positioning, http://www.brandoctors.com/f2.html,
[Accessed July 21, 2005]
11. Brand Positioning, http://www.sonorusbrand.com/process/brandposition.html,
[Accessed July 21, 2005]
12. Cleaner Fuels, www.worldbank.org/html/fpd/esmap/pdfs/pakistan_cleanfuels.pdf
[Accessed 21 July, 05]
13. CNG Development, Pakistan State Oil (PSO) Management Committee
Presentation, 09 August 2005
14. Condensed Volume of Brand Management
Assistant Professor Ms. Zeenat Jabbar - 231 - NUST Institute of Management Sciences
[Accessed
Assistant Professor Ms. Zeenat Jabbar - 232 - NUST Institute of Management Sciences
Assistant Professor Ms. Zeenat Jabbar - 233 - NUST Institute of Management Sciences
____________________________________________
Assistant Professor Ms. Zeenat Jabbar - 234 - NUST Institute of Management Sciences
APPENDIX A
CUSTOMER SURVEY
Assistant Professor Ms. Zeenat Jabbar - 235 - NUST Institute of Management Sciences
Customer Survey
You have a copy of the Questionnaire for conducting a survey on different oil marketing
companies by a student of NUST Institute of Management Sciences (NIMS) in lieu of
MBA research thesis. The information you give in this section will be used to analyze the
survey results only and no attempt shall be made to identify any individual respondents.
1. Age:
18 25
26 35
36 50
Above 50
2. Gender:
Male
Female
9. Occupation:
Driver
Student
Private Sector
Public Sector
Business
Other
11. How long have you been refueling through this PSO outlet:
Less than 1 year
1 year 3 years
3 years 5 years
More than 5 years
12. What is your frequency of purchase from this PSO outlet:
1 3 times per week
3 5 times per week
5 7 times per week
Daily
13. On majority of the occasions from where have you been refueling previously:
Total
Caltex
Shell
PSO
14. You prefer this retail outlets because of it(s):
Excellent Customer Service
Strategic location (it comes in my way)
Size and cleanliness (lots of free space available)
I trust the quality & quantity of fuel dispensed from this outlet
Assistant Professor Ms. Zeenat Jabbar - 236 - NUST Institute of Management Sciences
Non-fuel facilities such as Shop Stop, Car Wash, Business Center, Tyre Shop
Other, Please identify ____________________________________________
9. Which Non-fuel retail facilities have you tried at any of the PSO outlet(s):
Shop Stop
Business Center (Internet Kiosk, P.C.O, Fax, Photocopy)
Auto Car Wash Plant
Manual Car Wash Plant
Speedy Oil Change Machine
Tyre Shop
Other, please identify_____________________________________________
10. Which PSO Card do you use for the purpose of fueling:
Corporate Card
Fleet Card
Loyalty Card
Prepaid Card
I dont use any PSO card
11. What are the benefits of using the above PSO Card:
Flexibility and convenience
No cash handling risk
No fuel-slip hassle
Reduced transaction time
Personalized credit-card with pre-approved limit
Consolidated computerized billing
Controls pilferage and misuse
World of rewards through loyalty points
12. Are you aware of the launch of the following Oil Marketing Companies:
Admore
Yes
No
Attock
Yes
No
13. In your opinion, which is the largest oil marketing company in Pakistan:
Caltex
Shell
PSO
Total
Attock
Admore
14. In your opinion, which company has introduced Green XL Plus Diesel:
Caltex
Shell
PSO
Total
Attock
Admore
15. In your opinion, which company has introduced Pakistans first hanging
dispensing units in Karachi and Lahore:
Caltex
Shell
PSO
Total
Attock
Admore
Assistant Professor Ms. Zeenat Jabbar - 237 - NUST Institute of Management Sciences
16. In your opinion, which company has introduced Pakistans first Auto-Car
Wash Plant in Islamabad, Lahore and Karachi:
Caltex
Shell
PSO
Total
Attock
Admore
17. In your opinion, has PSO improved its overall image in the last five years:
Yes
No
18. What are the areas in which you believe PSO has improved its retail outlets:
More educated and friendly staff
Better forecourt services
Guaranteed Quality & Quantity of fuels offered
Improved housekeeping/ cleanliness of outlets
Better construction/ layouts/ design of retail outlets
More innovative products/ campaigns
Attractive Signage/ branding at retail outlet
Better non-fuel services offered including Shop Stop, Car Wash, Tyre Shop,
Business Center, Internet, P.C.O, Fax, Oil Change Facility
PSO Cards (Corporate card , Fleet card, Loyalty cards, Prepaid cards)
I dont think PSO has improved itself over the last few years
Other, please identify ____________________________________________
20. Are you aware of the launch of PSOs Forever Sunshine campaign:
Yes
No
20. How did you come to know about this campaign:
Word of Mouth
Witnessed at the outlet
Print Media
TV Advertisements
Not aware of this campaign
21. In your opinion, Ads of which oil marketing company are the most
attractive:
Caltex
Shell
Total
Attock
Admore
PSO
22. In your opinion, in the last five years the standard of the following oil
marketing companies has (Tick the relevant choices):
Deteriorated
Stagnant
Slight
Improvement
Drastic
Improvement
CALTEX
TOTAL
SHELL
PSO
Assistant Professor Ms. Zeenat Jabbar - 238 - NUST Institute of Management Sciences
ADMORE
ATTOCK
Assistant Professor Ms. Zeenat Jabbar - 239 - NUST Institute of Management Sciences
23. How would you rank the oil marketing companies on the following attributes
Branding Activities
(Including Billboards, Mega hoardings, Road Signs, Road Gantries, Company Signage)
(Rank from No 1 being best to No 6 being lowest)
CALTEX
TOTAL
SHELL
ADMORE
PSO
ATTOCK
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
Assistant Professor Ms. Zeenat Jabbar - 240 - NUST Institute of Management Sciences
1
1
1
1
1
1
2
2
2
2
2
2
3
3
3
3
3
3
4
4
4
4
4
4
5
5
5
5
5
5
6
6
6
6
6
6
24. In your opinion, what are the biggest weaknesses of PSO as a brand:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
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