For the exclusive use of R. EARHART, 2018.

NA0505

Oilcorp’s Marketing Campaign:

Mixed Reactions to a CSR Initiative
Juan Manuel Parra, Inalde Business School

In May 2010, Carlos Cardona—a 35-year-old member of the marketing team at

Oilcorp, owner of the largest regional chain of service stations in Colombia—was
concerned about mixed reactions to a social campaign Oilcorp was promoting with the
Red Cross. Some were openly questioning Oilcorp’s motives, accusing the company of
using a social cause to sell more gasoline and persuade customers to give their personal
data to the company. For Carlos, this was an early warning sign.
Carlos pulled up the campaign’s website and reviewed the joint marketing program
again. When he finished clicking through it, a photo of a smiling child appeared on the
last screen with a “thank you” message. A counter on the side of the screen showed
that a few more than 1,200 people had registered on the website. Carlos noted that the
results to date of the campaign were significantly below expectations and were not on
track to meet the public promises made by Oilcorp’s CEO. “What should we do if we
can’t meet projections?” Carlos asked himself.

OILCORP ORGANIZATION
Oilcorp, a Colombian company dedicated to distributing and marketing fuels and
lubricants, had a strong regional presence in the country (see Exhibit 1). It was
founded in 1968 as a solution to the gasoline shortage in Colombia’s northeast region.
Over time, Oilcorp became recognized as a key supplier of fuel to the remotest and
neediest regions of the country. It developed a reputation for caring for its customers.
By 2010, Oilcorp was a multinational with a presence in six countries. It was
Colombia’s third largest company and one of the fastest growing firms in Latin
America.
Oilcorp was very proud of its values (integrity, respect, trust, innovation and
excellence1) and its role in society, taking its corporate social responsibility (CSR) very
seriously (see Exhibits 2 and 3). Social work was carried out in all the regions where
the company operated (these efforts were channeled through the Oilcorp Foundation
and focused on education and civic culture).

-----------------------------
Copyright © 2017 by the Case Research Journal and by Juan Manuel Parra. This case study was
prepared as the basis for classroom discussion rather than to illustrate either effective or ineffective
handling of an administrative situation. It describes a real situation in a real organization, but the
names of the organization and individuals involved have been disguised at the request of the
organization. The author wishes to thank John J. Lawrence, Brent D. Beal, and the anonymous CRJ
reviewers for their helpful suggestions on how to make this a more effective case.

Oilcorp’s Marketing Campaign: Mixed Reactions to a CSR Initiative 1

This document is authorized for use only by ROBERT EARHART in 2018.

 For the exclusive use of R. EARHART, 2018.

THE 100TH ANNIVERSARY OF THE RED CROSS IN COLOMBIA

In January 2010, the Colombian Red Cross submitted a proposal to Oilcorp’s CEO
asking for help with a fundraising initiative. As part of its 100th anniversary celebration,
the Colombian Red Cross wanted help raising awareness and encouraging ongoing
donations. The Red Cross felt that Oilcorp, because of its reputation and national
presence, could help it increase brand recognition.
Oilcorp’s CEO forwarded the proposal to Oilcorp’s corporate affairs division
(responsible for the Oilcorp Foundation, an organization that operated independently).
The corporate affairs division declined to participate because it felt the division did not
have the required marketing expertise, the proposed timeline was too short to design a
proposal, and the effort was not included in the division’s annual budget. As a result,
no one at the foundation was willing to take ownership of it. The project was
subsequently assigned to Oilcorp’s marketing department.
Oilcorp’s CSR and sustainability programs were aimed at promoting civic
coexistence and educational programs in areas where Non-Profit Organizations
(NPOs) did not have a strong presence. The marketing team concluded that the
campaign would need to do something other than put up pennants and ask for
contributions from customers in service stations or suggest that customers donate their
change from gasoline purchases. These kinds of donations would create control and
logistics problems. Oilcorp did not own all its branded service stations and at least
85% of its stations were geographically dispersed throughout the country, many in
remote areas. It would be nearly impossible to ensure that cash donations at its stations
reached corporate headquarters.
Looking for an easy way to control and keep records of donations, the team opted
for a small donation per gallon sold during the month of May. The donation would
be made directly by Oilcorp (and not by licensed service stations); it would come out
of its annual budget, without generating a significant financial impact. The most
successful service stations in Bogotá—the largest city in the country—sold
approximately 150,000 gallons a month. The monthly average per station in Bogotá
was 80,000 gallons and close to 40,000 or 50,000 gallons in the rest of the country.
Because Oilcorp was in the process of trying to create a brand community to
promote customer loyalty, the marketing team decided to use its own website for the
fundraising campaign. The team decided to ask for consumers’ information, making
it clear that Oilcorp, in exchange, would contribute to the Colombian Red Cross.
Oilcorp was able to take advantage of advertising discounts to promote the campaign
because of its Red Cross co-branding.2

THE “FILL YOUR CAR WITH SMILES” CAMPAIGN

Oilcorp designed an advertising campaign called “Fill Your Car with Smiles.” Clients,
each of Oilcorp’s 1,267 employees (plus another 1,637, through outsourcing), and
several contacts in available databases received an email asking them to “fill their cars
with smiles ... more than once.” Employees forwarded the email to their contacts and
every service station distributed flyers.
The email stated that everyone should help the campaign because it was for a good
cause. It emphasized that “by donating a few seconds of your time, many children
would be given the opportunity to smile.” The email invited recipients to forward it to
their list of contacts and “help build a better tomorrow” by following some links.
The Red Cross also advertised the campaign with press releases:

2 Case Research Journal Volume 37 Issue 4 Fall 2017

This document is authorized for use only by ROBERT EARHART in 2018.

 For the exclusive use of R. EARHART, 2018.

When Colombians stop at one of the more than 1,300 service stations operated
by Oilcorp throughout the country, they will not only fill up their cars with
regular or premium gasoline, or diesel, they will also fill their cars with smiles,
because for each gallon of fuel purchased, Oilcorp will donate US$0.0005 to
the Colombian Red Cross to support its Integrated Management of Childhood
Illness (IMCI) program and to provide health care to children and pregnant
women. 3
One of the links mentioned:
Another way in which all Colombians can contribute to this humanitarian
mission is by visiting our website, www.oilcorpworld.com. For every citizen
who registers, Oilcorp will contribute an additional US$0.50 to the Red Cross.
In April 2010, the Colombian Red Cross and Oilcorp launched the campaign with
radio spots on some of the country’s most popular radio stations. Press releases
suggested that the Colombian Red Cross expected to raise US$1,250 a day during the
month of May from fuel sales. Oilcorp’s CEO reported that, with additional donations
made when customers registered on its website, it expected to raise a total of
US$50,000.

AN UNFLATTERING COMPARISON:
CHEVRONTEXACO’S UNBEATABLE PROMOTION
When Carlos invited his friends to join the campaign, he was surprised by some of
their reactions. He was particularly concerned about the comments of Ricardo, a 45-
year-old senior manager of a big multinational with experience in retail. In Carlos’s
estimation, Ricardo had a good sense of ethics and social responsibility.
Ricardo was aware how frequently different organizations asked him for help
through different channels. He frequently contributed part of the change he received
when buying groceries in retail stores and donated at ATMs and as part of different
fundraising activities at work.
A few months earlier, Ricardo had participated in a campaign (“The Unbeatable
Promotion”) run by a major Oilcorp competitor (ChevronTexaco4). He had learned
about it after visiting one of the service stations close to his home. Customers were
encouraged to participate in a contest to win prizes in exchange for registering on the
website. Clients were informed about the main features of a ChevronTexaco product
(a special type of gasoline, with an exclusive patented additive called Techron). Ricardo
did not win anything, but he tried several times. In fact, the campaign was still ongoing
after several cycles with different prizes.5
As part of the promotion, ChevronTexaco hired Eccos Contact Center, a
nonprofit organization whose objectives included training people with physical
disabilities and who were victims of the Colombian armed conflict (especially victims
of landmines). It promoted feasible and sustainable life projects aimed at nurturing
civic and labor competencies. This information was not a secret, but it was not
advertised.
Ricardo’s own social awareness was more sensitive than usual. He was donating
part of his salary to a school in a depressed area in Bogotá, because he knew the zone
and felt it was in a painful situation. Moreover, the company he worked for also had a
foundation devoted to a few social efforts, contributing significant but discreet aid. In
addition, he regularly participated in some campaigns promoted internally among the

Oilcorp’s Marketing Campaign: Mixed Reactions to a CSR Initiative 3

This document is authorized for use only by ROBERT EARHART in 2018.

 For the exclusive use of R. EARHART, 2018.

staff to help victims of floods, or to buy Christmas gifts for sick children. Nevertheless,
Ricardo did not feel equally attracted to Oilcorp’s proposal. In fact, the campaign made
him feel uncomfortable. He did not understand why conditions were being placed on
“helping those most in need” and why Oilcorp appeared to be taking advantage of a
legitimate social cause for marketing purposes. He also was not sure about why
Oilcorp was asking him to register on its website in exchange for a donation that he
felt Oilcorp should make on its own.

CARLOS’S DILEMMA: INCENTIVES TO GENEROSITY?

In mid-May, Carlos met with the marketing team to discuss his friends’ reactions and
to address the fact that relatively few individuals had registered on Oilcorp’s website.
He told the team that the most frequent negative reaction was “if you really want to
help, you could simply give money and keep quiet about it!” He also informed the team
that the campaign was not on track to meet the CEO’s target of raising $50,000 for the
Red Cross during the month-long campaign.
In this meeting, the advertising manager had complained that the Red Cross
campaign had been a distraction. “Didn’t we have a more practical alternative to help
them?” she had asked. “We have never done anything like this!”
“Remember what our CEO said when we first learned about the initiative. It is not
a marketing issue, but about putting our values into practice,” the marketing vice
president had replied. The chair of the Oilcorp Foundation added, “Maybe our unique
visibility helps to mobilize these common causes.”
It was not clear that Oilcorp’s brand awareness goal was being advanced by the
campaign, nor was it clear that Oilcorp’s involvement was motivating its customers to
contribute to the campaign.
“What action plan should we adopt in order to fulfill the Red Cross expectations?”
Carlos asked his team.

Exhibit 1: Financial data from Oilcorp Organization (as of December 31, 2009)
in millions of US$
Operational Income $2,948.8
Net Profit $97.3
Cash Flow (at the end of the year) $66.9
Total Assets $1,241.8
Current Assets $287.7
Total Liabilities $504.7
Current Liabilities $169.5
Source: Oilcorp Management Report 2009

Exhibit 2: Data from Oilcorp Foundation (as of December 31, 2009)

Total Income from donations (in US$ millions) $2.09

% of co-founding from 3rd parties 29.9%
% from Oilcorp Organization's own resources 70.1%
# of people benefited: 194,000
Directly 140,000
Indirectly 54,000
Source: Oilcorp Foundation Management Report 2009

4 Case Research Journal Volume 37 Issue 4 Fall 2017

This document is authorized for use only by ROBERT EARHART in 2018.

 For the exclusive use of R. EARHART, 2018.

Exhibit 3: Examples of Oilcorp’s CSR projects

PROGRAM RESULTS
Global Promoted by Oilcorp’s CEO to aid organizational learning on
Reporting specific topics (suppliers’ development, creation of new enterprises
Initiative hand-in-hand with former employees, etc.)
(GRI) For Colombia’s stock exchange, Oilcorp’s example was important
for stimulating transparency and governance
Stakeholder Corporate governance and shareholders
Programs Quality of working life (with regard to its employees)
Environmental care vis-à-vis society
Responsible supplying (with regard to its suppliers)
Community development in areas of influence (e.g., programs
adapted to a country’s specific circumstances, and not to a standard
report determined by foreign headquarters with different interests,
such as helping abandoned children in Ecuador and after the 2010
earthquake in Chile)
Responsible marketing to clients
Social Operated regionally
Investment Goal of promoting social projects in their major areas of influence
Committees through volunteer work
Seven projects in 2008; almost 100 employees in different regions
contributing ideas, time, and know-how to 2,300 beneficiaries
Projects included: center for ethnographic studies; training for both
male and female household heads (craftmaking using recycled
materials, mechanics, arts and crafts, etc.); community center with
financial support from employees; training for children and young
people as peace conciliators and conflict mediators
Oilcorp Aimed to develop educational and civic cultural programs that
Foundation improve knowledge, values, and attitudes of citizens and students,
and to promote responsible behavior of its drivers
Strategic Intended for several foundations and regional projects, through a
Donations policy designed to prioritize education, culture, recreation, and
health in local areas
Responsible Focused on studying complete customer satisfaction, complaint
Marketing to handling procedures, and follow-up of delivery times; promotion of
Customers training workshops for all involved in Oilcorp’s value chain; R&D
of new products that generate fuel savings, longer driving range, and
less pollution; natural gas production for vehicles. Website aimed at
service station consumers registered in the program, who could
receive monthly bulletins from the company and permanent on-the-
road assistance

Oilcorp’s Marketing Campaign: Mixed Reactions to a CSR Initiative 5

This document is authorized for use only by ROBERT EARHART in 2018.

 For the exclusive use of R. EARHART, 2018.

NOTES
1 Oilcorp’s corporate values: integrity (behaving with honesty and consistency); respect
(fair dealings, building solid and transparent internal relationships, paying attention to
everyone’s needs, and keeping promises); trust (believing in others, listening to them,
valuing their proposals, and regulating itself); innovation (the highest exaltation of
customer orientation through differentiating proposals and market intelligence); and
excellence (improving and developing its people and the organization).
2 Advertising costs were approx. US$120,000, including the discounts offered by radio
stations to the Red Cross. A TV spot in prime time could be at least 10 to 15 times more.
3 The average monthly price of a gallon of regular gasoline in Colombia changed according
to oil prices in the world market. In the three months before, during, and after Oilcorp’s
campaign, prices in Bogotá moved between US$3.64 and US$3.73 per gallon. Nevertheless,
even if gas prices were highly regulated in the Colombian market, the Government allowed
every station to have different prices. For cab or truck drivers, minimal differences in gas
stations’ prices could represent significant savings. The free margin number for distributors
(5.5%) did not include service stations’ operating expenses and had variations in different
areas of the country. The net estimated margin per station could vary between 1.5% and
4%. A small car could be filled with approx. 10 gallons.
4Chevron operated a nationwide network of nearly 400 Texaco service stations. They had
10-18% market share in automotive and aviation fuels, and in lubricants. Under the Texaco
name, since 1958, the company had sold a full line of branded products through stations,
sales agents and distributors in Colombia. The firm also marketed lubricants, coolants and
greases under several brands for consumer, commercial and industrial use. In 2007,
Chevron began offering fuels containing the Techron® additive.
5 According to this campaign, “every time you buy fuel at Texaco service stations identified
with the promotion, you will receive a card with a hidden code of eight letters. You will
receive one or more cards depending on the amount of Texaco gasoline that you fill your
tank with.” Customers had to enter the hidden codes either through their cellphones (via
text messaging) or on the website. Some of the data asked of customers included their
region, contact information, and type of vehicle. The list of prizes included 46 brand new
cars, 90” LCD TV sets, 20 stereo players, and 40 DVD players. The total cost of those
products was almost US$800,000 (assuming market prices). Texaco also gave the
promotion considerable airtime on the best primetime TV slots on weekdays.

6 Case Research Journal Volume 37 Issue 4 Fall 2017

This document is authorized for use only by ROBERT EARHART in 2018.