ABSTRACT

ExxonMobil Corporation, one of the biggest Petroleum and Petro-Chemical

companies in the world. They achieve superior results in regards to operations and
financially. They also adhere to business conduct in a higher standard.

In this assignment, we will discuss two things. First we will see how the
macro-environment has influenced its marketing decision-making. Secondly, we will
see how the marketing mix used by the strategists helps to gain competitive advantage
over its competitors.
 INTRODUCTION
ExxonMobil is one of the worlds largest Premier Petroleum and Petrochemical
Industry. The ExxonMobil Corporation was rated as No.1 US Company for the year
2009 by Fortune 500. The ExxonMobil has developed from regional marketer of
kerosene in the United States of America to the biggest publicly traded Petroleum and
Petrochemical industry in the world. The mission statement of the company is
“Taking on the world’s toughest energy challenges.”

Today, ExxonMobil operates in different part of the world with their well-
known brand names like “Esso”, “Mobil” and “Exxon”. The products that are made
are petroleum products and helps for the ‘modern transportation’, ‘lubrications’, and
‘powers cities’. The chemical blocks produced by them are used in thousands of
consumer goods.

History of the ExxonMobil Corporation:

The history of the corporation starts long back in 1859. In that year,
Colonel Edwin Drake and Uncle Billy Smith drilled the first oil well in Titusville,
Pennsylvania. In 1870, Rockefeller and associates formed the largest refining firm in
the world, “Standard Oil Company”.

In the year 1879, the Standard Oil Company purchased a three-quarter interest
of Vacuum Oil Company. In 1882, Standard Oil Trust was formed which included
Standard Oil Company of New Jersey (Jersey Standard) and Standard Oil Company
of New York (Socony).

In 1903, both the Jersey Standard fuel and MobilOil lubricants from Vacuum
were used by the Wright brothers for their historic flight. In 1911, the Standard Oil
Trust was broken into thirty four unrelated companies which included Jersey
Standard, Socony and Vacuum Oil.

In 1926, Jersey Standard brought a new blend of fuel in the name of “Esso”
with the phonetic version of the initials of Standard Oil (‘S’ ‘O’). In 1966, Vacuum
Oil celebrated its 100 years and changed its name to Mobil Oil Corporation. In 1972,
Jersey Standard officially changed its name to Exxon Corporation.

In 1982, Exxon celebrated its 100 years since the formation of Standard Oil
Trust. In its first 100 years, the company has innovated and implemented new
technologies in the field of Petroleum and Petrochemical products. It has grown from
a regional distributor to a multinational corporation.

On November 30, 1999, Exxon and Mobil joined together to form the
ExxonMobil Corporation. Lee Raymond1 and Lou Noto2 said “This merger will

1
Then Chairman and CEO of Exxon Corporation
2
Then Chairman and CEO of Mobil Oil Corporation
enhance our ability to be an effective global competitor in a volatile world economy
and in an industry that is more and more competitive”.

Reference: http://www.exxonmobil.com/corporate/history/about_who_history.aspx

MARKETING:
Before we look in to the macro environment of ExxonMobil Corporation, it is
necessary to know what marketing is. The Chartered Institute of Marketing (CIM) has
rightly defined marketing as “the management process that identifies, anticipates and
satisfies customer requirements profitably”.1

Many authors have also defined marketing. Kotler defines “Marketing is the
social process by which individuals and groups obtain what they need and want
through creating and exchanging products and value with others”.2

Generally, marketing aims at the customer satisfaction at present and in the future at a
profit.

Marketing Environment:
Marketing Environment involves all the activities that affect the growth of the
business. It is broadly classified in to three. They are as follows:

(i) The micro-environment - includes customers, competitors, suppliers,

distribution channels and the general public.
(ii) The macro-environment - includes external factors like demographic,
economic, political, technological, social and natural factors.
(iii) The internal environment – includes the 5 ‘Ms’, Men, Money,
Machinery, Materials and Markets.

1
Definition by The Chartered Institute of Marketing
2
Definition by Philip Kotler
Reference:
http://www.marketingteacher.com/Lessons/lesson_marketing_environment.htm

Environmental Analysis of ExxonMobil Corporation:

The environmental analysis deals with the all factors that affect the decision
making of an organisation. It is very important for every organisation to assess their
environmental factors before starting their marketing process.

Micro-environment Analysis or SWOT Analysis:

The SWOT Analysis helps to find the internal factors that affect the business.
The following diagram explains the Strengths, Weaknesses, Opportunities and
Threats for the ExxonMobil Corporation.

Source: Available at http://www.businessteacher.org.uk/business-resources/

Reference: Available at http://www.businessteacher.org.uk/business-resources/
Strengths:
 - A very big established organisation in existence for more than 100 years. This
creates a sense of security to the customers when dealing with the organisation
- It has diversified its activities in the different areas of energy industry. It also
has strong brand names under its group
- It has a great corporate citizenship, appropriate crisis management and crisis
management strategy.
- The innovation is the greatest strength of the organisation
- It has a global presence and hence has a wider customer base than its
competitors

Weaknesses:

- The organisation has been accused of polluting and destroying the

environment
- The organisation has a negative publicity due to the Valdez oil spill
- The organisation has earned an enormous profit. This has made the people to
consider that the organisation is making profit at the expense of the customers

Opportunities:

- The biggest opportunity the organisation has is the increase in demand of

energy by the emerging economies of South Asia and the South East Asia.

Threats:

- India and China are the biggest demanders of oil and energy. These countries
are being hit by recession and the demand has been reduced. This has brought
a decline in the expected level of profit.
- Also, the profitability will be reduced in the future due to increased attention
in the conservation of the environment.

These are the factors that affect the internal environment of a business. The micro-
environment analysis is very much needed by an organisation find out its position in
the market and to analyse the strategies to be used to improve its position in the
market.

Macro-environment Analysis or PESTEL Analysis:

The macro-environment analysis helps to know the entire external factors that
affects the decision making process of an organisation. The external factors are as
follows:

Technological Factor:
ExxonMobil is well-known for its innovation and advanced technology fuel.
The growth of an organisation depends on the growth of its research and
development. The ExxonMobil Corporation are leading in their sector because of their
technological development. From its inception, the company has developed new
products. The technological achievements include the following:
 POLITICAL ECONOMICAL

SOCIAL
PESTEL ANALYSIS
TECHNOLOGICAL

ENVIRONMENTAL LEGAL

Source: Researcher

YEAR ACHIEVEMENT
1919 Micropaleontology
1920 Isopropyl Alcohol (First commercial Petro-chemical)
1927 Use of refraction seismograph to find an oil field
1937 Invention of artificial rubber – butyl
1942 First fluid catalytic cracker
1952 Introduction of Uniflo motor oil
1963 3-D seismic technology
1974 Introduction of Mobil 1 (Synthetic automotive engine lubricant)
1976 Usage of ZSM-5 catalyst
1980 Opening of Exxon Biomedical Sciences Inc
1986 3-D micro tomography
1989 Introduction of Exxpol
1997 Introduction of Speedpass
2001 Development of SCAN fining process
2002 Initiation of the GCEP

The technological development and innovation has helped the organisation to

achieve this position in the market. It is due to their innovations that they stay ahead
of their competitors.

Political Factor:
The Political factor plays a major role in the macro-environment of a business.
Political factor deals with the attitude of the government towards the business. The
political decisions highly impact the organisation. ExxonMobil Corporation is a
multi-national company which operates all over the world. The political atmosphere
of each country plays an important role. Government policies have a huge impact on
price of the fuel. Political factor is considered to be fatal for every organisation.
Economical Factors:
The Economical factors influence the interest rates, economic growth,
inflation and exchange rates. The ExxonMobil has its operations worldwide. Every
economic factor has its effect on the pricing of the product. Higher interest rates may
make borrowing difficult for an organisation, inflation makes higher demand for
wages and it may lead to increase the price. Also, the increase in the national income
of a country might increase the demand for the product.

Social Factors:
The social factors are influenced by the changing trends of the customers. The
attitude of the people is also considered. ExxonMobil are also influenced by the social
factors. Now, the emerging economies are being hit by recession. This has resulted in
the reduction of oil and energy consumption from these countries. This will in turn
lead to reduction in the profit of the organisation. It is one of the important reason for
increase in fuel prices.

Environmental Factors:
The environmental factors are those which have their effect on the
environment. Being the largest manufacturer of the Oil and Petroleum products,
depend mostly on the natural resources for their production. Oil resources are not
available all over the world. However, the organisation has a negative effect on the
environment. It is because that the organisation has been accused of polluting the
environment rather than to conserve. Also, the natural resources are being exhausted.

Legal Factors:
These factors are related to the legal environment. Any new change in policy
of the government affects the organisation. The contracts and agreements of the
organisation depend up on this factor. The legal factors can influence the price and
demand of the product.

Thus we have seen how the macro-environmental factors affect the decision
making ability of ExxonMobil Corporation. Let us now analyse what are the
strategies that are used to gain competitive advantage.

TASK: 2
 Before we analyse the marketing mix used by the ExxonMobil Corporation, it
is necessary to know what marketing mix is all about.

MARKETING MIX:
The concept of Marketing Mix
became popular in 1964, after an article
named “The concept of marketing mix” was
published by Neil H. Borden. The marketing
mix has four components. It is also known
as the four ‘Ps’. They are:

Product
Price
Place (Distribution)
Promotion Source: NetMBA.com

The marketing strategists use these four ‘Ps’ in their marketing mix to gain
competitive advantage. Let us now look how the ExxonMobil’s strategists use the
marketing mix in an efficient way.

Reference: http://marketingteacher.com/Lessons/lesson_marketing_mix.htm

Product:
The products of the ExxonMobil Corporation are oil and oil-related
goods. They deal with Petroleum products. The products are marketed in
three brand names all over the world. They are Exxon, Esso and Mobil.
Exxon and Esso provide fuels to the people for their personal and business
needs. In the United States, Exxon is a trusted brand and Esso is trusted in
other parts of the world where it is delivered. The customers trust and rely
on these brands. Mobil is known for its innovation and performance. It is
recognised all over the world for its advanced technology in fuel and lubricants. All
the three brands provide excellent service to its customers.
Reference: http://www.exxonmobil.com/Corporate/about_who_brands.aspx

Price:
The fuel prices are affected by various factors like crude oil price, demand and
supply of oil, taxes, regulations, specifications and cost of transportation. The prices
of fuels are set by the buyers and sellers in the world-wide market. ExxonMobil
continuously takes steps to improve their competing ability and cost reduction
through various programs. They also have strong commitment in providing excellence
in operation. The recent pricing factors in the fuel pricing in the United States is given
below:
 Source: U.S. Department of Energy
Reference: http://www.exxonmobil.com/corporate/energy_issues_gasprices.aspx

Place:
The next component of the marketing mix in the place. It refers to the
distribution of the products. It also refers to the kind of product distributed in a
specified area. For example, Exxon branded products are distributed all over the
United States. Esso branded products are distributed all over the world. Both the
products are the same, but only the brand name differs. The manufacturer and the
supplier of both the brands’ outlet is ExxonMobil Corporation. The difference in
nanes is because, Exxon is famous in the United States and Esso is famous in other
parts of the world. Also, Mobil branded fuels are distributed all over the world in the
same name. But, the place of distribution or the targeted customers are different.
Mobil branded fuels are well-known for their innovations, advanced technology and
performance.

Source:http://indyposted.com
Promotion:
The last and final component of a marketing mix is
the promotion. Promotion of the products is very much
essential for any business to grow. It is very important to
know that the promotion is the last step in the process of
marketing. Promotion refers to the communication
between the producer and the consumer. An example for
promotion is advertising. Advertising is a component of
promotional activities. In the United Kingdom, Esso branded fuels are delivered by
the ExxonMobil Corporation. The loyalty cards, Esso Cards are being promoted. This
card helps customers to avail the brand fuel in any fuel station in the Europe. The
users of the card avail number of services like E-invoicing, Online fleet management,
Itemised invoices, VAT statement, odometer measurement, etc.,

Reference: http://www.essocard.com/Europe-English/EssoCard/About_EssoCard.asp

Let us now see how the company can gain the competitive advantage over its
competitors.

COMPETITVE ADVANTAGE:
Competitive advantage refers to the advantage that a company has created for
itself over its competitors. This advantage may be achieved by either providing
quality services or by having lower prices than the competitors. Michael Porter was
the first person to suggest how to gain competitive advantage. According to his
theory, the competitive advantage can be gained from four strategies. They are:

Source: http://www.organicmonitor.com/r2010_files/image002.jpg
(i) Cost Leadership
 (ii) Differentiation
(iii) Cost Focus and
(iv) Differentiation Focus

The diagram explains that the Cost Leadership and Differentiation strategies are used
to gain competitive advantage in a broad range of market. However, we can also see
that other two strategies, Cost Focus and Differentiation Focus are adapted in the
narrow range.

(i) Cost Leadership:

The cost leadership strategy aims at being the lowest-cost producer of the
product. If the production cost becomes lower, the producer can enjoy the best-
possible profits. This strategy can be used by the producers who produce a standard
product. They may also provide discounts to increase his sales and thereby increases
the market share for the product.

(ii) Differentiation:
The differentiation strategy analyses the market first and then produces their
product accordingly. Here, the producer does not provide products at a lower price.
But, the price they fix for the product is justified by the features and services they
offer for the product. The products are unique and in this way the producer gains
competitive advantage, even when the price of the product is higher.

(iii) Cost Focus:

This strategy is used in the narrow market. The product gains advantage by
having lower price than the same product which is priced higher. These products are
often referred to as “me-too’s”.

(iv) Differentiation Focus:

This strategy is used in the narrow markets and these products are not focused
by the producers who target broad market. In simple words, there is a valid basis for
differentiation and the competitors in the market do not meet all the needs of the
customers.

The Cost Focus and Differentiation Focus are together called as the ‘niche strategy’.
This strategy is commonly used in the narrow markets by the smaller firms.

Stuck in the Middle:

Stuck-in-the-middle is situation when a company chooses one or more
strategies and fails to achieve its objectives. The situation makes the company to be
stuck in the middle without gaining competitive advantage.

Five Forces Analysis:

The Five Forces Analysis helps the marketing strategist to analyse the
environment of competition of the product. This concept was introduced by M.E.
Porter. The five forces that are considered in this analysis are:

(i) The threat of new entrants

(ii) Bargaining power of the buyers
 (iii) Bargaining power of the sellers
(iv) Threat of substitute products
(v) Competitive Rivalry

All these five forces help the strategists to focus a company as a single business unit,
though it may have various production units.

Conclusion:
The ExxonMobil Corporation has used its marketing strategies very well to
achieve its goal. It has created a great value for its products in the market. It has also
managed to provide secure and quality fuel to its customers and also have profitable
outlets. This was possible because they mainly focus on their main fundamentals of
business:

- Superior safety and Environmental performance

- Efficiency improvements from global scale and integration
- Disciplined portfolio restructuring and capital management
- Customer-focused marketing initiatives

With all the above said fundamentals, ExxonMobil Corporation has achieved
its position in the global market. It is one of the well-established and well-managed
companies of the world. Through its research and development, it has created a
difference in the sector.

Thus, in this assignment, we have seen the environmental analysis, marketing mix and
the marketing strategy of the ExxonMobil Corporation.
REFERENCES:
http://www.exxonmobil.com/corporate/energy_issues_gasprices.aspx

http://www.exxonmobil.com/corporate/energy_issues_recent.aspx

http://www.exxonmobil.com/corporate/energy_issues_earnings.aspx

http://www.exxonmobil.com/Corporate/about_who_profile.aspx

http://www.exxonmobil.com/Corporate/about_what_fuelsmarketing.aspx

http://www.marketingteacher.com/Lessons/lesson_marketing_environment.htm

http://www.netmba.com/marketing/mix/

http://www.essocard.com/Europe-English/EssoCard/About_EssoCard.asp

http://tutor2u.net/business/strategy/competitive_advantage.htm

http://www.organicmonitor.com/r2010_files/image002.jpg

http://www.businessteacher.org.uk/business-resources/

http://marketingteacher.com/Lessons/lesson_marketing_mix.htm