Introduction
BP is an organization involved in oil and gas industry globally, its headquarters are in London, Britain. BP is one of the largest global companies and is involved in activities such as exploration, refining of crude oil, distributing, generating power and production of renewable energy among other roles.
The company operates in over 80 nations across the globe and manages more than 22,400 gas outlets globally (Cheremisinoff and Davletshin 443). The United States division is the largest outlet for BP and thus plays a huge role to the organization as far as revenue generation is concerned.
Current Business Problem
With the division in the US being the most important for the company, the Gulf of Mexico oil spill has had many negative effects to the company. The oil spill led to deaths of 11 people, loss of trust in the company, destruction of the surrounding ecosystem and a bad reputation for the organization (Farrell 43).
Tourism, marine life and the ecology were enormously affected in the coast by the oils spillage. BP has already spent over $3.12 billion on the spillage on actions such as containing the spillage, responding to the disaster, drilling the well, payment of grants to the states affected by the spillage, payment of claims and costs to the federal government (Cheremisinoff and Davletshin 443).
The spill was the largest oil disaster in the history of the industry in regards to off shore drilling in the United States. The problem is identifying the challenges the company is facing in the United States after the oil spillage and the impact of this event by applying ethical perspectives.
BP Competition
BP is a global company that faces huge competition from other organizations that deal with oil, gas, and petrochemicals. There exist huge competition within the industry as well as in other industries in regards to the supply of gas, fuel and meeting other needs of the energy sector, commerce, industrial, and for home use (Hitt et al. 50-54).
There is need by organizations to cut costs and management of BP to focus on efficiency and gaining support of the market. Some of the main competitors of BP include Total, ExxonMobil Corporation, Chevron Corporation, Schlumberger Limited, and ConocoPhillips among others (Hitt et al. 65). These companies are involved in the energy sector in the United States.
Population Sample
The sample population shall be 150 individuals from the areas affected by the Gulf of Mexico oil spill as well as staff of BP. The geographical area shall be mainly in the Louisiana Coast and shall include organizations and individuals in the region. To be eligible as a respondent, one must be a resident of the area.
Steps in the Research Process
The research shall involve the development of the survey, which includes the various stages that shall be applied in conducting the research. This will include use of questionnaires. The descriptive data analysis shall include the presenting of the results after the profile of each respondent has been analyzed and the information recorded.
The measurement scale analysis will evaluate the measurement scale analysis that shall be employed in the analysis of the information. The assessment section assesses the results after the analysis and is essential in determining the recommendations and developing a conclusion for the study. The recommendations and conclusion shall be necessary to the management in the future determination of BP’s path.
BP is one of the most outstanding oil and gas world companies. Despite the power and success of this company it is impossible to appeal to every representative of the world market that is why most popular companies focus on the target market or subsets of the overall markets. Identifying the target market is one of the most important methods to have a success at the world market.
It is necessary to know the customer in order to satisfy their demands. Different factors about target market such as population, interests, the level of life and the level of business activity should be taken into account. There are a lot of questions that should be put during identifying the target market:
- How large is your target market now? How large has it been? How large can it become in the near future?
- What are the geographical boundaries of your target market?
- How many people use your products? What do you know about these people?
- How sensitive is your target market to price changes?
- What are the trends in your market?
- How mature is your market (shrinking, growing, and stable)? (Griffin 33).
The target market of BP has been broadened from its foundation. The products of BP are sold in Europe, Africa, Asia, the North and South America and Australasia (Maharg-Bravo, Swann and Cox 39). The market is growing now and it will be broader in the near future. First of all, the company should focus on the potential customer itself.
It is necessary to know why these people are your customers and how they use your products. BP takes into account different groups of consumers and they seek to satisfy all their demands. For example, in October 2005 BP produced a new fuel including three separate products: BP Ultimate 102 Unleaded, BP Ultimate Unleaded and BP Ultimate Diesel satisfying the demands of different groups of consumers (BP in Business 78). Each consumer may choose the necessary fuel.
BP resorts to the use of primary and secondary researches firstly to find out what segments the market is divided into and secondly to assess the particular product requirements for each of them. The main aim of primary research is to find new information that has not been already researched. For example, BP asked their customers about their points of view about the new BP Ultimate range.
Questionnaires, personal interviews, postal surveys, telephone interviews, focus groups are used in primary researches to obtain the necessary information. Secondary research is based on the results that have been achieved in previous studies. For example, BP uses information about the predictions of customers’ future demands.
A proper sampling technique should be used in a good market research. It is impossible to ask every customer about his/her point of view and demands. That is why it is necessary to choose the representatives from different groups from the target market to take into account the changes of their demands.
‘Sampling’ is the process of deciding who takes part in the primary research namely whose point of view should be taken into account. There are a lot of ways to do it namely quota, random, cluster or stratifying sampling. Factually, primary research is used to define the target market namely its personality traits, interests and lifestyles.
BP target market is known as mainly medium-sized businessmen (Amanjeev 47). They are people who use their automobiles nearly every day and the quality of petroleum is very important for them.
It should be noted that there are successful businessmen who can afford themselves a high-priced gasoline and the beginners who do not spend a lot of money and have to save their money buying cheap gasoline. That is why there are different categories of fuel produced by BP catering for all these groups.
The main interest of the consumers is to have a qualitative fuel paying for it not a lot of money. There are a lot of cases when consumers complain to the fuel that spoils their transport. The quality is one of the basic aims for BP that is why this company has become popular among consumers appreciating it.
From the above said, we may conclude that identifying the target market which is made with the help of primary research with the use of different ways of questionnaires is very important at developing and broadening the popularity of the company.
BP has a success as far as it has always focused on the demands of its consumers and done all their best to satisfy these demands from its foundation. The interests of consumers are at the top of BP’s basic aims. The quality is very important to a consumer that is why ‘what’ BP does is as important as ‘how’ they do it (Research and Markets 34).
It should be noted that BP Company is developing now and more and more consumers use their products that makes this company take into account the demands of different groups of their consumers. Target market is a potential client influencing the success of the company.
Marketing Research
In the designing of this study, 19 to 40 year olds will be the sample upon which an approximate 300 will be interviewed or supplied with questionnaires. The purpose of choosing this age bracket is to obtain as many BP users as possible and to make sure that they are informed about the company’s operations as well as problems that have been surrounding the company.
For one to qualify as a participant, the audience will be asked to produce their licenses or recite their license numbers. This will not be indicated in any phase of the study to observe ethics of the study. The purpose of the study is to establish the marketing characteristics of BP through the observation of users’ experience.
The objective of the study will be to investigate the business strategies of BP under their operational model and to compare the current model with the previous. The study is dedicated to any subject interested in venturing into business (shareholders mostly) with BP.
Choosing the Audience
The audience of the study is focused only to grownups with licenses and with experience in the using of BP products. The reasons that youths and unlicensed persons are not included in this study or are not considered the right audience is due to their status, both financially and take on responsibilities.
Users of products are the best target groups when reviewing or investigating on the producers of a product (Benoit 37). In this case, it will give them an insight of the company they secure products and services. Considering the use of BP’s products, licensed people who drive regularly and with active schedules are intended to be the audience of this study.
This is because they connect with the services of the company as well as its products. “On the other hand, investors make a better audience because they take interest in finding out the operational models of the company they invest in as well as its strategic solution to some present problems or plans – reason to cover both groups” (Silverstein & Neil 124)
Audience Analysis
The audience intended for this study is divided into segments that exist in three categories. The first category that represents the first segment is heavy-duty industry investors. Secondly, large scale farmers or farming organizations. Lastly are the normal home-to-work drivers who drive on a daily basis.
If the categories can be classified according to their characteristics, heavy-duty industries would geographically be classified to exist between rural and urban (more of setting than topography). Large-scale farmers are found within up country settings and are likely to represent the customer group that provides market for BP’s products and services.
The heavy industry investors are likely to be business partners as well as potential customers. Lastly, the driving audience makes up the regular customer base therefore legible for information on strategic changes within the company (Liuzzo 76).
Audience Perception on Company Brands
British Petroleum is a company that trades brands like Castrol, Aral, ARCO, and the Wild Bean Café. Some of these brands are much popular than others concerning the nature and segment of the audience using them. For example, Castrol is popular for both large-scale farmers and daily office-to-home drivers. These audience segments claim that the Castrol engine and brake oil is much reliable than many other rival brands.
To top it all, this brand trades fairly as compared to alternatives brought to the market by competitors. The Wild Bean Café is a brand that audiences from all sectors tend to celebrate except for the heavy-duty sector that has limited access to the premises (Myers 578). The perception of this audience on the Wild Bean Café is that it delivers quality services (authenticity of the claim cannot be verified) but is limited to gas stations.
This audience feels that the marketing strategy of this BP’s brand can lure a bigger market share if diversification strategy was included in BP’s strategy. The importance of diversification, in terms of rolling more joints is to increase the market share and limit operational costs through joint venture (Kotler 98).
Dislikes and Likes
By accessing the audience segments through their perceptions on BP brands, it is clear that they do not have issues with the marketing strategies of promotions, pricing, place of marketing, and the product.
However, on the aspect of diminishing reputation brought about by the Gulf of Mexico Oil spill, a considerable percentage of the audience dislikes the way the company handled the issue and the implications the spill had on the environment.
Ethical concerns
The difference between an audience and a study participant is that the former is intended for listening and giving feedback on a researched topic while the latter provides the necessary information needed to complete the research. In this case, ethical concerns are legible for either group.
The research should observe the participants’ anonymity and privacy. Classified information should be kept from audience because exposure of vital details can comprise the company’s reputation, competitive advantage, and maximization of profits (Liuzzo 187).
Results
Being one of the biggest petroleum and oil companies and corporations, BP has been thinking of international activities in more than 75 countries with over $250 billion incomes, and hundreds of employees and workforce. BP focuses on oil in addition to gasoline discovery and processing, petrochemical products distribution, and the production and promotion of various oil products. Currently, BP owns six popular brands in the international scenes that comprise among others Castrol and ARCO (Benoit 233).
Due to the quick changes in the external marketplace, British Petroleum has considered itself as an international, contemporary, hi-technology, autonomous and learning organization which has to learn to be sensitive and flexible (Kotler 33).
The top management is aware that to be capable of maintaining the competitiveness, the management needs to depend on its technical competences, economic in addition to organizational skills because petroleum may be discovered in more demanding global zones and even will be substituted through other energy sources such as hydrogen and solar.
From the management perspective, the company has been capable of using strategic management as a way of adapting to change. In determining the opportunity that its competitors may not think, British Petroleum must develop operational skills all through the companies and business, therefore, learn better and take advantage faster compared to their competitors (Liuzzo 45).
Part of the enterprise framework of British Petroleum is its well-organized access of the international marketplace that makes the company to have full business abroad. Apart from this, the oil sector is capable of seeking progress in its marketing approach and attempts to present creative and greatly beneficial petrochemical products for the desired market segment.
The audience intended for this study was divided into segments that exist in three categories. The first category that represents the first segment was heavy-duty industry investors. Secondly, large scale farmers or farming organizations. Lastly were the normal home-to-work drivers who drive on a daily basis.
If the categories can be classified according to their characteristics, heavy-duty industries would geographically be classified to exist between rural and urban. Large-scale farmers are found within up country settings and represented the customer group that provides market for BP’s products and services.
The heavy industry investors included business partners as well as potential customers. Lastly, the driving audience makes up the regular customer base therefore legible for information on strategic changes within the company.
The sample population included 150 individuals from the areas affected by the Gulf of Mexico oil spill as well as staff of BP. The geographical area was mainly in the Louisiana Coast and included organizations and individuals in the region. To be eligible as a respondent, one had to be a resident of the area.
Data Collection and Analysis
Following the explosion and subsequent fires on an oil field located at the Gulf of Mexico, the field approximately 40 km of the coastline of Louisiana, started leaking petroleum. This market study focuses on assessing the effect of the petroleum tragedy on observations of and concern regarding BP oil products.
Data was collected utilizing an electronic survey. The research involved the development of the survey, which includes the various stages that needed to be applied in conducting the research. This includes use of questionnaires.
The descriptive data analysis included the presenting of the results after the profile of each respondent has been analyzed and the information recorded. The measurement scale analysis evaluated the measurement scale analysis that was employed in the analysis of the information.
The assessment section assesses the results after the analysis and is essential in determining the recommendations and developing a conclusion for the study. The recommendations and conclusion will be necessary to the management in determining BP’s future direction.
Survey Results
Impact of oil leakage on BP oil company products
Before the oil leakage, roughly 6% of the participants had no plans of buying BP products. Approximately 23% of those participants said they had delayed, rescheduled, or stopped buying BP oil products. Another 12% said that due to the oil leakage they no longer have plans of buying BP products. Fortunately, majority of those who responded agreed that they still have plans of buying oil products from BP Company (see figure 1).
Likelihood of buying BP oil products compared to competitor products
Out of the 150 participants, 40% are likely to buy BP oil products and another 17% are likely to purchase Total Oil products. There is likelihood that 14% of the 150 participants would buy ExxonMobil Oil products.
Also 18% of the respondents were willing to buy from Chevron Company. Only 6% of these respondents were likely to purchase their oil products from Schlumberger while another 5% were likely to purchase from ConocoPhillips.
Effect of messaging on intention of buying BP oil products
Regarding effect of messaging on intention of buying BP oil products, 28% of the respondents said that they would be more likely to purchase BP products if Louisiana swamp was not closed due to the oil leakage, another 27% if Louisiana animals were uncontaminated with oil, 25% if Louisiana wildlife could be viewed as they were prior to the oil leakage, and the remaining 20% would buy BP products if the Louisiana coastline was uncontaminated with petrochemical products.
Perception regarding oil leakage and BP products
Regarding perceptions on BP products based on the oil leakage as illustrated in figure 4, most of the respondents believed that the oil leakage had a negative influence on the perception of BP oil products.
Approximately 20% of the respondents were unsure whether the oil leakage had affected BP products negatively. The remaining 15.5% did not believe whether the oil leakage could have negatively impacted BP oil products.
Familiarity with oil leakage problem
Of the respondents, approximately 1.3% was unfamiliar with the oil leakage tragedy while roughly 11.5 were familiar but had not followed the tragedy. Another 50% were familiar and had tried following the tragedy to some extent and the remaining approximately 37.3% were familiar and had tried following the tragedy closely.
Findings
Before the oil leakage, roughly 26% of the participants argue that they still had intentions of buying BP products. More than one quarter (27.1%) of the participants has either delayed or temporary stopped purchasing BP products. The reduction of purchasing willingness (approximately 27%) means that rather than 22.2% of the participants having intentions of purchasing BP products, just 16.5% have intentions.
Also among participants who claimed that they had no intentions of buying BP products, roughly 26% admitted that they would be willing to purchase BP products if the oil leakage did not contaminate the waters.
Limitations
Generally the research will be limited by time. The study would be conducted within a short period of time and this would adversely influence the results and findings of the research. Also the fact that the survey was administered electronically may affect the respondent’s responses which in turn influence outcomes of the study.
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