OPTIMIZING THE EXPANSION OF FUEL

RETAIL OUTLET NETWORK IN KERALA

Done for INDIAN OIL CORPORATION
LIMITED
OBJECTIVES
• TO STUDY AND ANALYZE THE RETAIL OUTLET
NETWORK OF IOCL IN KERALA
• TO CRITICALLY EVALUATE THE SCOPE FOR
EXPANSION OF RETAIL OUTLETS

• SUB – OBJECTIVES
• EVALUATE KERALA AS A POTENTIAL MARKET FOR
FUEL RETAILING
• OPINION FOR INTRODUCING LOYALTY CARDS
FACTORS THAT INFLUENCE THE SCOPE FOR
EXPANSION IN KERALA:
• CONSUMERS
• DEALERS
• GOVERNMENT
• COMPETITION
• OTHERS:
• MOTOR VEHICLE SALES
• DISTRICT WISE PER CAPITA INCOME
• INFRASTRUCTURE DEVELOPMENT
• RESEARCH METHODOLOGY
• The nature of the study is descriptive research.
• Primary and secondary data collection methods

• DATA SOURCES
• Primary data – using questionnaire
Personal, telephonic and online interviews were conducted.
• Secondary data sources – economic review, budget sppech
2011 journals, websites etc.
CONSUMERS
• A sample of 100 consumers is collected from population
of 14 districts of Kerala.
• Sample size: 100
• Type of sampling: Random sampling
• Data collection tool: Questionnaire

• Major points covered- brand specific, awareness of and

preference to loyalty cards, criteria for selecting a fuel
station, importance attached to features like location,
driveway attendants, air pressure check, availability of
ATM, engine oil, toilet etc.
DEALERS
• All Kerala Federation of Petroleum Traders which
represents 1720 fuel retail outlets of the 3 PSUs namely
IOCL, HPCL, BPCL.

• Method of data collection: Interview with the opinion

leaders.

• Major points covered:

• Obstacles for new retail outlets; opinion about loyalty
cards; responses with respect to consumer’s suggestions
on major facilities and functioning of fuel stations at night.
GOVERNMENT
• Kerala has a total area of 38863 sq. km. and the land
area is limited and not properly utilized.
• For a proper allocation of land area in the state. Petrol
pumps consume a lot of area.
• Too many petrol pumps may lead to shut down of many
other petrol pumps which will lead to labor retrenchment.
• The average of 220 KL per retail outlet is not met by
majority of the retail outlets.
• The Government fears that here is a chance for promoting
terrorism.
• Kerala Government is not that much geared to act to an
emergency situation like fire when it is highly populated.
 16%

COMPETITION 1%

IOCL
46% BPCL
18% HPCL
Other PSUs
Private Parties

• Competitive forces 20%

• Threat of intense segment rivalry (HPCL, BPCL)

• Threat of new entrants (RIL, Shell)

• Threat of substitute products (CNG)

• Threat of buyer’s growing bargaining power (facilities)

• Threat of supplier’s growing bargaining power (OPEC)

Motor vehicles population
• Growth in motor vehicles population is proportional to the
fuel consumption.

Growth in num of motor vehicles

6000000

5000000

4000000

Growth of motor vehicles

3000000

2000000

1000000

0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Per capita income
• Source: Secondary data from Economics Review by
Planning Board, Government Of Kerala.
• Ernakulam district stands first with the per capita income of
` 79553 followed by Thiruvananthapuram, Pathanamthitta,
Thrissur and Alappuzha
• The highest rate of per capita income of 11.44% was
recorded in Kasargod District in 2009 – 10 followed by
Palakkad (11.29%), Ernakulam preceded by Idukki,
Malappuram and Kannur.
• Related to expansion of fuel retail outlets because, an
increase in purchase of vehicles increase in fuel
consumption  need for more retail outlets.
Infrastructure development
• There are 9 National Highways passing through the State
of Kerala with a total length of 1535 km.
7%

20%

Major District Roads

State Highways
National Highways

• According to Budget
73%
2011, ` 1000 crore is set apart for
Comprehensive Road Restoration.
 Major findings
There is scope for expansion of retail outlet network in Kerala
provided the conditions as per the Government rules and
regulations are satisfied.
Positives:
• Government budget - new roads and developments in
Infrastructure
• Growth in per capita income
• Growth in motor vehicle population
• IOCL as a market leader
Obstacles: The already not well running pumps which may have to
be shut down.
Loyalty cards- Many customers are unaware
Major Suggestions
• Promotion strategies can be further improved so as the
company can compete with the private players.
• If the dealer feels there is no scope for premium brands
in this outlet, the case could be studied and considered for
further action.
• Customers can be educated regarding loyalty cards by
using leaflets.
• Dealers need to be involved in the promotion strategies.
Limitations
• The analysis of the study has mainly depended on the
personal views of the respondents and as such an
element of subjectivity can’t be ruled out.

• The study was conducted in the fourteen districts of

Kerala and the findings can’t be generalized to all areas.

• The period of the study was limited to two months; this

period was too short for conducting broad and deep study.

• All limitations pertaining to the questionnaire method

might also affect the study.
Conclusion
• Kerala is an emerging market for the fuel retailing
because of its fast growing infrastructure, population, sale
of vehicles and more working age group.
• Fuel is a necessity for all the above mentioned factors.
Therefore, the is a great scope for expansion of retail
outlet network for IOCL in Kerala.
• Many factors which effect the expansion were identified in
the project- customers, competitors, government, dealers,
sale of vehicles etc.
• Each was critically evaluated and interpretations were
made. From these evaluations, major suggestions were
formulated that can support the objectives of the project.
THANK YOU