This action might not be possible to undo. Are you sure you want to continue?
Retail fuel • Premier XL • Green XL 2. Gaseous fuel • CNG • LPG 3. Cards • Fuel Based Cards a) Fleet and Corporate Card b) Prepaid Card c) PSO loyalty Card d) PSO Eid Card • Reward Based Cards • Reward Based Cards • Fleet Management System • VIS • Strategic Alliances 4. Lubricant • PSO Automotive oil • PSO Industrial oil • PSO Fuel oil PSO largest profit generating product is PSO Fleet and Corporate Card which has been successful product in the recent times. About the Company PSO is the market leader in Pakistan’s energy sector. The company has the largest network of retail outlets to serve the automotive sector and is the major fuel supplier to aviation, railways, power projects, armed forces and agriculture sector. PSO also provides Jet Fuel to Refueling Facilities at 9 airports in Pakistan and ship fuel at 3 ports. The company takes pride in continuing the tradition of excellence and is fully committed to meet the energy needs of today and rising challenges of tomorrow. Pakistan State Oil, the largest oil marketing company in the country, is currently engaged in storage, distribution and marketing of various POL products. The company’s current market share of 82.3% in the black oil market and 59.4% share in the white oil market, alone speak volumes about its success. PSO caters to POL requirements of a wide spectrum of customers comprising
the retail consumer, various industrial units, government, power projects, aviation and marine sectors of Pakistan. We are truly the drivers of economy of this country. It has a network of 3612 retail outlets enables us to reach Pakistanis from Nagarparkar to Sost. We are proud to cater to the fuel and non fuel needs of approximately 2.8 million customers per day. PSO industrial consumer dominance in the government sector can be judged by the fact that all the major government entities like OGDC, Pakistan Army, Pakistan railways, Navy, NLC, PAF Wah and HIT have entrusted PSO to meet their POL needs. Besides supplying fuel to national power utilities like WAPDA and KESC, PSO is the sole furnace oil supplier to all Independent Power Projects (IPPs) in Pakistan with a share of over 80% in furnace oil market. Moreover, PSO is also playing its due role in meeting the growing energy demand of the country. PSO also supplies fuel to industrial units like textile, cement, agriculture, transport etc. Our industrial consumer base includes prestigious entities like the Presidency and the Prime Minister Secretariat, where PSO has developed consumer outlets for timely refueling of their fleets. Furthermore, PSO also serves the fuel needs of both national & international air carriers. We also provide jet fuel into-plane refueling facilities at 9 airports of Pakistan i.e. Karachi, Lahore, Islamabad, Peshawar, Multan, Faisalabad, Turbat, Pasni and Sialkot. They also supply fuel to ships at Karachi Port, Korangi Fish Harbour & Port Qasim. Moreover, we cater to the fuel requirements of Pakistan Navy, Maritime Security Agency, Karachi Port Trust, PNSC, Faisal Marine Oil Services (Pvt) Ltd. PSO Major Highlights - FY 2009 Sold 7 million tons of furnace oil – the highest in the last 8 years Efficiently managed supply to the power sector despite the liquidity crisis Imported approximately 90% of the country’s POL imports - 3.4 million tons of HSD and 5 million tons of FO Helped in the revenue collection of more than Rs. 161 billion to the GOP (Sales Tax: 97 billion, taxes: 1.4 billion,PDL: 61 billion) Extended support to various charitable organizations in the health & education sector including contribution for the rehabilitation of IDPs due to the Swat operation
Marketing Mix of the brand Product: And PSO Corporate Card is a smart way to track individual spend profile. It is a personalized card with pre-approved credit limit provided by the employer. Corporate Card has the Employer and Employee name embossed on the Card for effective management and control.
Price: PSO Corporate Card is available for the customers at a minimal cost: • • • • • • Place: First time application-processing charges per card is Rs. 100/-. Charges for issuance of replacement (lost or damaged card) for the second time are Rs. 100/Renewal of a card is free of cost Customers are required to pay Security Deposit depending on their financial position. A nominal service charge of 1.65% on monthly consumption will be charged each month. A late payment surcharge of 2% is applicable
PSO Corporate Cards are needed to buy from the company and it is used on every retail outlet of PSO.
Promotion: The promotion of PSO Corporate Cards is done below the line through its websites, by giving loyalty cards to corporate customers, joint ventures and brand partners, through newspapers and giving number of discounts on the Retail outlet.
Defining the type of buying decision behavior PSO Corporate Cards have high security for consumers other than corporate consumer because it needs high security amount. Moreover, it is a high involvement decision, not frequently purchased, expensive, and highly self expressive.Also,it has significant difference in the brand when it comes to Cards of shell. On the other hand, it would become low involvement decision for those who are corporate consumer because company is buying in place of consumer.
Describing the buyer decision process with respect to PSO Corporate Card:
PSO Corporate Cards needs are recognized by the unavailability of money at the retail outlets. Also, recently Post paid system has increase the desires of the customer in order to pay after the services for their convenience. Information Search cannot be the part of buyer’s decision making process because if a consumer is from Corporate System then he would buy it without any search because company is giving him. There might not be evaluation of alternatives for those who are getting cards from corporate system but those who need Corporate Card on his own name will definitely search for alternatives. And other alternative for Corporate Card is PSO own cards like Fleet Card and Prepaid Card.
Also the alternatives in the competitors Cards in only Shell Cards are available which are as follows:
• • •
Card A- The Driver Card Card B- The Non-Driver Card Card C- The Dual Card
The Driver Card (Gold in Colour) – The cardholder/Driver’s name, company name, and the Vehicle Registration Number and Make will be embossed on the Card. The Card can only be used by the designated Driver for the designated vehicle.
The Non- Driver Card (Gold in Colour) – Only the COMPANY name and the Vehicle Registration Number and Make will be embossed on the Card. It is most suitable if you have a pool of Drivers driving the same vehicle.
The Dual Card – Two Cards will be issued: A Payment Card (Gold in colour) and a Vehicle Card (Blue in color). Both Cards must be used together to complete a transaction. Market Segmentation PSO’s Fleet Card is only for the corporate clients (Business to Business) and NOT for the public in general. Due to this, the market segmentation strategy is different from organizations with products and services catering to the consumers (Business to Customer). The typical Fleet Card consumers are those corporations looking for a secure and reliable way to cut down operational costs vis-à-vis fuel expenses. According to Ms. Subiha Shakeel (Managing Executive), “Fleet Card in essence is a Business product helping the operational activities of business”. This type of a target market is not very easy to capture and PSO’s Fleet Card division had to approach each potential organization on an INDIVIDUAL bases.
PSO Card Division segmented its business clientele for the Fleet Card market based on three major factors. These factors have to meet if the organization is to become a potential Fleet Card consumer: :: Size :: The larger the organization structure, the more there will be potential users of the Fleet Card. Keep in mind that the Fleet Card targets corporate clients only. So if companies have a larger hierarchal framework of managers, directors, admin officers etc, they will be more profitable a target for the PSO Fleet Card division! :: Financials :: When the Fleet Card was first launched, finances were first considered to be the most important factor when it came to selecting target organizations. Initially, the PSO Fleet Card service did not carry any service charges but with the changing economic conditions, strictness was imposed and PSO started focusing only on corporations that could pay for those charges. The Managing Director Zulfiqar Jafri stated that even though this strictness resulted in PSO losing out on many clients, they “always came back” because of the greater feasibility of the Fleet Card with respect to its competitors. :: Status :: Status is different from financial standing here because status based targeting involves the corporations dealings in the business environment. Is the organization considered respectable, trustworthy and well reputed? How transparent is the corporation? Are the organizations dealings legal and corruption-free? Such questions run through the minds of the people at the PSO Card Division when choosing which corporations to target. Product Attributes :: Physical :: Fleet Card is credit based – The Fleet Card in essence is a credit-based card where consumers can pay for the total fuel consumption on a monthly basis. The product differentiation on the part of PSO Cards comes from their Customized facility where consumers can set their own liter limits and at the same time allows the consumer to choose between a Rupee-based fuel system or a Liter-based fuel system.
:: Psychological :: The corporations in Pakistan prefer the PSO Fleet Card brand over other fuel cards due to the following intangible qualities :: Transparency :: Prior to the introduction of fleet cards, most organizations practiced a ‘parchi’ system for their daily fuel transactions. This basically involved paper receipts that were given to the drivers on the purchase of fuel and the petrol stations were later reimbursed on the basis of the amount on these receipts. However, it was observed that plenty of time, the drivers on the basis of goodwill with the station staff made sure that the amounts were overstated so that they could get a cut from the whole amount. With the advent of these cards, a sense of transparency and security was now associated with these transactions as the fear of theft and pilferage was eliminated.
:: Reliability and Security :: With card acceptability base as wide as 1,600 stations nationwide, consumers feel secure that there wherever they go, PSO card acceptability shall be there. Interestingly enough, PSO competitor Shell, as per the interview conducted with Ms. Subiha, is way behind in this regard; since its total outlets are around 1/3 that of PSO and not all of them have the card acceptability facility. It is due to these attributes that the consumers are willing to pay a premium in the form of services charges, which they can easily avoid if they choose the competitor’s product; yet they do not as Ms. Subiha aptly put, once a PSO consumer-always a PSO consumer. Life Cycle Stages
:: Product Development :: Prior to the launch of PSO cards, the concept of using a card for refueling cars was unheard of in the Pakistani environment. The only concept prevailing precards era was the one where either the customer was using cash for the transaction or using a company/ petrol distributor cheque book (i.e. the company would provide their employee with a cheque book, the employee would in turn go to the gas station and without any payment, tear off a cheque book leaf as per his/her need). The challenge faced by PSO was to contemplate if this new idea would establish enough credibility and acceptability among the market to make it a profitable venture. :: Introduction :: The challenge to find acceptability in the Pakistani market with a revolutionary new way of paying for car refueling was not easy to overcome. As mentioned in the previous module of the report, some of the challenges faced by PSO during the introduction phase were: -
PSO gas stations started carrying registration forms which were being picked up by rikshaw, truck, maal gari and taxi drivers who were flooding the registration process by trying to qualify for the card, and not declaring any business or legitimate source of income as supporting documents. SOLUTION: The company changed its policy of carrying forms at gas stations and now exclusively carries it at the head office
Trying to convince the various administration executives to allow PSO to formally present this revolutionary new idea became a huge challenge in the corporate arena. Since the concept entirely eliminates the margin to pilferage, many executives in the administration block were uncomfortable with the idea. SOLUTION: By hammering out the right contacts and personnel in the corporate industry, PSO delivered presentations that were informing executives of the benefits they would achieve by incorporating PSO’s cards system.
:: Growth :: PSO cards is currently rigorously expanding and growing exponentially vis-à-vis sales and value added services. Some factors that were identified by Ms. Subiha Ahmed were: • • Most industries have been captured and others are being targeted Companies are enjoying the service throughout the nation in about 1600 PSO (New Vision Retail Outlet) as apposed to their competitors like Shell, which has 500-600 outlets nationwide (as per the interview conducted with Ms. Subiha) Value-added services are being introduced such as FMS (fleet management solution) where one can SMS PSO at 776 to find out their last fuel transaction. It also monitors the fuel consumption and efficiency of customer’s vehicles by keeping odometer records. In the wake of the global recession, a large number of companies are actively pursuing cost-saving measures; the demand for stringent fuel accountability has risen directly increasing the demand for PSO corporate/ fleet cards. Providing complimentary privilege loyalty cards to their corporate customers. This element keeps a strong hold on their corporate customers, even after the individual has left the corporation. Highly customizable card options provide flexibility to all types of customers. For example: customers can restrict the card use to fuel type (HOBC, Supreme, Diesel), to exact rupee amount (Rs.5000 per month, Rs.10,000 per month or Rs.500) or per products (Engine Oil, Petrols, Diesel or Car wash) A huge challenge that PSO identified against the growth stage was that of keeping a strong relationship with their outsourcing companies. E.g. customers only focus on the fact that if they use their card on any given outlet, they expect it to work and if there are any network failures at the outlet, they associate the failure with PSO. In reality, that is not the case, many gas stations are owned by private individuals who are facilitated by an outsourced company of PSO to equip them with receipt rolls, machines and fast connected networks, so if PSO does not religiously monitor and 8
communicate effectively with these outsourced companies over inventories and network issues, they might end up loosing customer satisfaction. It is important to note that PSO cards are right now at their GROWTH stage. The aforementioned points have highlighted the fact the PSO is growing rapidly in its life cycle right now. :: Maturity :: Upon discussing the maturity stage, Ms. Subiha added that PSO is right now trying to grasp as many new industries and avenues as possible to fully expand its network of the cards program. Before moving into a stage where the product becomes a cash cow, PSO wants to fully extend its tentacles nationwide and create a concrete brand image when it comes to fueling cards. She facilitated the research as much as she could by telling us all the many aspects of the cards program and reserved her comments after the maturity stage. She also humbly informed us that any other information might lead to leakages and would break company code if she were to explain any further about the company’s maturity plan. :: Decline :: PSO has a very optimistic view about the cards program, they informed us that the market has received the product with great acceptability and responded with a lot of positive feedback. Keeping that in mind, the company does not see a decline stage coming anytime soon especially considering the fact that the market is yet to be saturated by players like PSO itself, Shell and Total who share a very small piece of the pie in the market. An educated guess can place the decline stage in our view somewhere from around five to ten years.
Product Pricing and Pricing Strategy
As mentioned previously, the fleet/ corporate cards did not carry any service fee with them, making it readily available and feasible for all corporate’ and business clients. This pricing strategy was in accord with the management perspective at that time since the goal at hand was to increase awareness, allow room to experiment, create a presence nationwide and elevate the client lifestyle. PSO continued this policy from 2003, the first time the card facility was launched till the fall of 2008. It was only last year that the company introduced a 1.65% service charge that their pricing strategy took a u-turn. Ms. Subiha informed us that buying petrol or any other fuel from cash or card is basically the same price. The margin that the retailer gets from PSO is his profit and it gets absolved in the retail business, hence leaving no cut for the cards division. For e.g. if the real price of petrol is rs.60 at PSO and PSO sells it to the public for Rs.61.50, the margin is not going towards the cards division at all. To help propel the department and make it stand on its own two feet, the management took an executive decision and introduced the service fee that would directly benefit the PSO cards division. This way the cards division would be able to finance their own campaigns, ads, and departmental needs as apposed to knocking on the finance departments door. The shift in pricing strategy took place partly due to the recession and partly due to the fact that PSO has already offered a non-fee service for approximately 5 years.
Distribution Channel Unlike most consumer goods where a complex distribution channel is followed, PSO Cards division being a service oriented department follows a direct channel of distribution between the consumers and itself. The contact between the two parties takes place at the consumer touch points such as retails outlets and card division complaint centre. However, before the card reaches the consumer, there is a lot of activity that takes place at PSOs end between and among other organizations. For instance, the operations of point of sale terminals where the fleet cards are used by the consumers is critical in determining PSO’s success. This is because if there are any mechanical issues taking place with the workings of the terminal, it’s the PSO name that gets a bad reputation even though the blame of the inefficiency lies with the outsourced organizations. In order to ensure that the point of sale terminals are working effectively, the PSO Cards Division has 3 teams working in Karachi consisting of 15 field trainers in all. They monitor the performance and workings of these terminals and report if there are any discrepancies. Apart from the Card Division’s field trainers, the PSO Retail Department has also deployed personnel to monitor the workings of the retails outlets. However since the scope of the Retail Division was very vast, it was deemed necessary the Cards Division had their independent monitoring team. Secondly, the production and distribution of the actual card packages have also been outsourced to other organizations. Whenever the corporate organizations place orders for cards, these orders are forwarded to card manufacturers who are not only responsible for the printing but also for the distribution of these to the relevant organizations.
Decision Making Units (DMU’s)
Since PSO’s corporate and fleet card are based on Business to Business transactions, the buying centre is always the other organization in this case. PSO’s fuel cards are marketed through direct marketing to other organizations where PSO’s selling team goes and makes a pitch. On the other end, the entities involved as decision making units include gatekeepers, deciders, buyers, influencers and users, who play a vital role in the buying process. :: Gatekeepers :: In the case of PSO’s fuel cards gate keepers play a defining part in the buying process. Mostly the gatekeeper is usually the Administration Officer of the other company. However, in some cases the gatekeeper may also be the Human Resource Manager. When marketing personnel go to companies to carry out presentations and inform about their cards to these officers, it is up to the gatekeeper whether if he or she wants to pass on the information to their seniors.
It may be interesting to note that in order to expedite the whole process; some organizations tend to offer the gatekeepers with a certain sales commission according to the size of the organization where they belong. This speeds up the process of the transfer of information from the gatekeeper to the decider. :: Deciders :: The decider varies from company to company. In some cases the process is extremely simple where the decider is simply the Administration Officer himself who has the authority to carry out the decision. In other cases, the process is a lot more complex, where the deciders are the senior management, sometimes to the extent that even the Chief Executive Officer is also involved. According to Miss Subiha Ahmed, in most cases the deciders are usually the HR Directors or the Administration Officers. Once the gate keeper forwards the PSO’s proposal to the relevant higher authorities, meetings are held between both parties to carry out the negotiations and to finalize the modalities. :: Buyer :: The buyer is the person who actually carries out the purchasing act of the company. In this case, the buyer is again usually the Administration Officer or the HR Manager. These are usually the same personnel who carry out the initial negotiations with the PSO’s sales team. :: Influencers :: The influencers in other companies are sometimes the Administration Officers or the people in the Transport Department. This is because they are usually the ones who place the pros and cons of having the PSO’s fuel cards in front of the deciders. The edge that PSO has is the availability of retail outlets in all areas which provides better accessibility to the end users. According to Ms. Subiha Ahmed this is the reason the employees influence the deciders and the buyers to opt for PSO fuel cards, rather than those of competitors, thereby having a major impact on the buying decision process. :: Users :: These are he end users of the fuel card, the employees of the other organization. Sometimes they are also the ones who initiate the buying process once they have identified the need for fuel cards. It is then that the company sends the notification to various fuel companies to submit in their proposals and hold meetings with them. PSO Sales Team is the group that responds to such a situation and visits the organization to make the sales pitch
The product-positioning map is made by keeping the price factor at the Y-axis and the accessibility and the value added services factor on the X-axis. P.S.O charges its customers Rs.100 at the time of issuance of the first fuel card. Apart from that P.S.O also charges 1.65% service charges of the total billed amount every month from its customers there for in the map it holds a position on the upper level of the Y-axis. The other two competitors only charge an initial amount at the time of issuance of the first fuel card from their customers. However they do not charge any service charges from their customers that make their position nearly at the bottom of the positive Y-axis. P.S.O has more than 1600 fuel stations that have the facility and accept fuel cards throughout Pakistan. P.S.O also provides value added services to its customers therefore the position of P.S.O in the map is on the extreme right hand side of the positive X-axis. The other two competitors do not have as many fuel stations or retail outlets that accept fuel cards and they do not offer any value added services to their customers that make their position on the left hand side of the positive X-axis. The size each company’s representation in the map is determined by the market share it has. P.S.O currently has the largest market share in the market followed by Shell and than Total.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue reading from where you left off, or restart the preview.