Executive Summary
Armstrong (2000, p.22) defines a marketing plan as a written document which details the necessary actions necessary to achieve the marketing objectives formulated. A Marketing plan is a blueprint for communicating the value of your products and services to your customers (Anon, 2005, para. 2).
Ricker Oil limited was founded in 1979 and currently operates 49 convenience stores in Indiana State. The company distributes high quality oil products to various categories of consumers in Indiana. The company according to Simpson (2010, p.15) is committed to community service, customer service and corporate trust as its foundation.
This Marketing plan is a one year strategy in response to the recent spillage in the Gulf of Mexico. The spill has affected the business. The future implications that it has to the company is analyzed. The spillage is a threat to the business and hence there is a need to have a clear way forward in handling the situation at hand. In order to attain this, the firm has developed a marketing plan. The strategies herein are in line with the overall business plan and acts as a strategic blueprint.
Situation analysis
One of the major challenges facing the oil industry in United States is as a result of oil spillage in the Gulf of Mexico by the contracted supplier that is British Petroleum Public Limited Company. The outcome of the spillage according to BP (2010) has affected a large number of entrepreneurs and independent distributors who deal with the brand.
Being one of the businesses dealing with BP products as a distributor, the management team has to consider how to survive in business amid customer complaints regarding the situation. Some of the stations such as the Ricker Oil which deal with BP brands cannot distance themselves from the challenge facing the oil company as stated by Elliot (2007, p.130).
This is due to the fact that these stations are in existence as a result of a contract between them and BP Oil. These contracts stretch for a number of years hence it is impossible to terminate them without incurring huge financial obligation and legal consequences.
Company analysis
The Companys goal is to run the most profitable and professionally managed petrol station in the United States. In its operation, the firm focuses on customer care, employee and shareholders satisfaction. The company’s objective is to own 50% of the oil market share in Indiana by the end of the 2010.
Its market share has decreased recently as a result of customers shunning companies carrying BP brands which are attributed to the oil spillage crisis in the Gulf of Mexico. However, the management team is determined to ensure that the crisis does not greatly affect the business.
Competition within the oil sector in Indiana is not stiff. In addition, there are a few established brands in Indiana. Most of these dealers are independent stations.
The company has adequate resources available to fully implement the marketing plan. For example, during the previous financial year, the firm managed to register high profits. A significant proportion of the profit was put in the reserve which is in line with its policy. This means that the firm has sufficient amount of finances to implement the marketing plan.
PESTEL Analysis
According to Decision Group (2000, para. 2), the US political environment has undergone a change over the recent past. The government has formulated a policy aimed at enhancing the oil industry’s capacity to deal with the oil spillage crisis. For example, the government offered tax rebate to cushion against diminishing sales as the crisis is being dealt with.
This cushions Ricker Oil against economic changes such as inflation and rise in interest rates. This is favorable to the company’s operation. The daily journal carried an article which showed that drill oil in Indiana would be hard. In an effort to promote oil industry, the US government has formulated a policy aimed at increasing exploration of oil and gas (Department of Energy, 2010, para. 5).
In order to exploit this opportunity, firms dealing with oil production are required to invest heavily on technology in order to be effective in drilling. Changes in the social environment have had the largest impact on business operation. One of the social changes relate to the low demand for the company’s products as a result of change in consumer behavior and attitude towards BP brands.
On the other hand, technology has played a favorable role in the operation of the firm. This arises from the new eco-friendly petrol products launched by BP. Currently; the petrol product is the best quality in the market. Incorporation of new technology in oil storage and transportation will greatly reduce losses incurred through evaporation and spillage.
This will significantly reduce costs incurred by the firm. Legal issues in relation to health and safety are still unchanged though there are indications that the government will enact new regulation to prevent future oil spillage crisis and in handling oil crisis.
Market Analysis
The oil market has a high potential for growth despite the low sales which are attributed to the oil spillage crisis. Ricker Oil is well established in Indian state. However, the firm’s management team intends to acquire a 50% market share within the next one year.
Through acquisition, the firm has been able to increase the number of its petrol stations. The recent acquisitions entailed two stations which were previously under one of our competitor’s brand. BP Company is communicating facts related to oil spillage to the consumers hence retain their trust to the brand.
Recent demand for high quality eco-friendly petrol products coincided with introduction by BP of the same to the market. This gives the company differential advantage over its competitors. Establishment of a new college, a branch of the State University in the region with a capacity of 1,000 students will generate new market for our products.
Consumer Analysis
The current oil spillage crisis has resulted into a change in consumer buying decision. The 5.4% drop in sales is attributed to the crisis. Compared to other players in the market, Ricker Oil has a high potential of growth. The new drive inns experienced depicts the trust customers have on the brand.
According to Simpson (2010, p. 6), consumers are loyal to the company because of the good customer care and efficiency in service provision compared to the competitors. If consumers cease purchasing from the company’s stations, they will be hurting the local economy. This is one of the the public relations campaigns that the company has considered in order to deal with the situation.
The changing consumer behavior and attitude is attributed to the BP crisis. Consumer dissatisfaction is minimal and the crisis has been blown out of proportion as shown by groups in Facebook and other social websites.The company considers this as a personal issue. It therefore does not cut across the whole consumer base.
SWOT Analysis
Gillespie (2007, p. 4) defines a firm’s strengths and weakness as inherent advantages the company has over other players in an industry. The strong brand and good distribution networks maintained by Ricker Oil, financial capability and operating capabilities are our strengths. Employees of the firm will have to play a critical role and use their skills for the company to grow.
To overcome our weaknesses the company will be launching a new brand of engine oil from its own production line hence reduce overreliance on BP brands. The oil crisis has provided Ricker Oil with an opportunity to buy of our competitors stations at bargained price hence establishing a higher market share and effective distribution network.
Launching of new eco-friendly petrol product coincided with demand for high quality environmental friendly fuel. This gives the company an added opportunity over its competitors in the market (Anon, 2010, para. 3).
The only threat experienced relates to competition from stations carrying other brands which have been innovated as a result of the crisis. However, this is temporary and the company expects normal operations in two month’s time. Threats of new entrants to the market have been foreseen and the company is repositioning itself as a leading oil provider. In addition, the firm offers other services such as convenience stores, free oil change and Children Park.
Marketing analysis
The market for oil products has grown tremendously over the past one year.This trend is expected to grow in the future due to the favorable economic environment brought about by strong dollar relative to other currencies. In addition, implementation of the stimulus package will promote market growth.
The company expects a market growth of at least 5% per month which will be consistent throughout the period of the plan. The company is expanding its market target to satellite towns within the state through recruiting small distributors who have established businesses in these areas.
Market segmentation
It is important for Ricker Oil to expand its market by targeting institutional customers such as corporate organizations and schools in the region.This category of customers are loyal and entering into contractual agreement with them to be their suppliers ensures a sound customer base.
The company intends to use market segmentation strategy in order to retain customers and to create product differentiation to meet the customer needs. Market segmentation is important in the company’s effort to position itself in the market as the leader via provision of high quality and reliable oil products. Price discrimination will also be exercised thanks to clear market segments and target as stated by Bangs (1992, p.3).
Market share
Ricker Oil market share has undergone a significant increase over the past few years it has been in operation. For the next one year, the firm projects its market share to increase with a margin of 50% as a result of marketing its products in Indiana. The market share is expected to be boosted by the convenience stores. This arises from a change in consumer behavior. For example, consumers are considering purchasing product at convenience store while refueling.
This plan sets a one year period as the maximum time allowed to gain half of the share of the oil products market (Figure 1). Increasing the market share is expected to generate more sales. Convenient stores contribute more than half of its annual profits. Over the last period, there has been a sustainable growth in customer base.
Improving outlook, display, branding and services in the stores will eventually increase sales from oil products and increase customer base and market share. Sustaining the existing customers is key to achieving the desired levels of sales and a consistent 5% monthly increase in sales level. According to Lewis (2002, p.1), sustaining a company’s projects is more important and crucial than mere implementation of strategies.
Competition
There is stiff competition in the industry arising from independent stations which sell oil products for other brands. Competition is based on customer relations and service. The company will focus on efficient and effective customer service, relationship building and reliability in services provision.
To gain a competitive advantage, the company will embark on expanding its convenience stores to include children parks in an effort to attract potential customers who have families. The Chartered Institute of Marketers (2008, para. 4) states that relationship marketing is important in achieving company goals and a database of all customers will be created within this period.
The company will carry community empowerment and social responsibility twice this year, the main aim is to restore trust and market confidence as stated Verma (2006,p.20 ).
Marketing strategy
The company will adopt a new marketing strategy which will consider value addition. By offering extra services to clients ranging from free oil change, windscreen wiping, expanding convenience stores and free oil products delivery to loyal customers will go along way in building customer relations.
There will be a change in positioning of premium unleaded petroleum products to suit needs of the corporate target market. The company will cease from selling repackaged diesel engine oil, rather it will act as a reseller to BP’s oil. These will lead to savings in relation to production costs.
Product
The Company’s oil products will still carry the BP brand. However, the convenience stores will introduce new customized products relating to the brand. Extensions in petrol oil products are necessary due to rising competition and changing consumer demand. Our products are known to be reliable, convenient and dependable and this is our strong foundation that we should uphold.
Branding of company products is integral and with the BP brand under scrutiny from the market in the short run, the company will focus on selling benefits rather than the brand it carries. In the long run the company intends to do branding on the products but under license from BP.
Price
Pricing decisions for oil products will be based wholly on global prices, forces of demand and supply and competition. In order to retain and maintain the current customer base amidst the oil spillage crisis, quantity discounts will be offered to customers. For corporate clients, base payment options will be available provided.
This will enable the company to achieve high levels of customer retention. Price discrimination will be exercised by charging different prices to different consumers groups. The criteria to practice price differentiation will be based on geographical distance and consumer loyalty.
Consumers with loyalty cards will get cash discounts on products thus building loyalty and trust. Pricing decisions will be based on total cost plus mark up at same time ensuring the prices are competitive in the market for the sake of market penetration and market expansion.
Promotion
In the short run, that is the next three months, depending on the outcome of the oil spillage crisis to the business and public relations will be the main promotional which will be used. The BP brand will aid in communicating and advertising to leverage the company against the oil crisis for the next two years. BP will send sales representatives who will work with the company’s sales force in implementing new sales promotion to be launched in 6 months time.
Cash discounts will be given to loyalty card holders and bulk buyers at a rate of 5% on total purchase. In addition, advertisement will form a major promotion tools.Bangs (1992, para. 4) stated that advertisement is critical in building brands and reminding consumers of the products existence in the market during their buying process.
In most cases, consumers will purchase brands they are aware of. Advertisements serve in enhancing brand awareness. The company will for the first time run game shows to be aired in the local television. This will help in building brand awareness thus countering competition.
To increase product availability in the market, distributors will be awarded trade discounts and rebates. A sales promotion targeting distributors will be launched to increase their competitiveness and reward them for carrying Ricker Oil products.
Distribution
The Company has the largest distribution network in Indiana State. Another station will be opened in the sprawling up market of Indian town. New logistics software is in place to aid in logistics related to electronic distribution hence a high level of efficiency in the network. With regard to warehousing, the refurbishment will be completed in a month time. This will in turn increase holding capacity by more than 25% of the current holding capacity.
The company has considered incorporating small independent distributors in an effort to ensure that its products are accessible in the entire market. Kotler (1996, p.120) describes a good channel of distribution as one which takes the shortest time and is cost effective to operate. Based on this definition, the company has integrated the Critical Path Method of identifying the shortest and most effective distribution channel to use (Heerdens, 2005,p.76).
Implementation
Implementation of the firm’s strategies will be faced with a number of challenges in relation to personnel requirements, financial requirements and change management as described by Kennedy (2000,p.34). The implementation of the strategy will be done in three phases.
These phases include dealing with the challenges brought resulting from the crisis, adopting changes and taking corrective measures. Alternative strategies will be developed to meet changes in the environment and unforeseen circumstances (Klastorin 2003, p.54).
Personnel requirements
New staff will be required in some of the firm’s departments. These include warehousing, sales and marketing, operations, finance and talent acquisition. Recruitment will be done in the next one month. The staff recruited will enable the marketing plan to be well executed by providing enough human capital. As a result, the plan will be achievable within the one year as it is stipulated. Restructuring of the marketing department will be conducted on sale and marketing functions under the head of marketing.
Financial requirement
Huge financial outlay is expected with recruitment of new staff, expansion of convenient stores, establishing a new station, warehouse renovation and increased promotion activity. This will result into a 20% increase in the company’s total expenditure. Returns expected will be 10% of sales revenue. Theis figure is expected to rise to increase so as to cover operational costs over the next phase of the firm’s operation.
Change management
Other than restructuring the Marketing department, all managers are expected to embrace the plan in their departmental levels. As departmental heads, managers will be the change management in implementing the strategies and evaluation will be done at the end of the year to check on performance.
The company expects all departments, staff and management to work together to successfully implement the plan. Deviations noticeable during the implementation process will be communicated directly to the Marketing department under strategic management. All departments will be treated as strategic management units thus ensuring maximum effort and energy is driven towards achievement of the set goals as per the plan.
Financial Summary
The main assumption taken is that the dollar rate will remain constant over the year with no major fluctuations. The balance sheet will change to reflect the inclusion of a new Children Park to be built in convenient stores and a restructured warehouse. A significant change in the income statement is expected with more capital outlay and increased expenses brought about by expansion measures.
The cash flow statement will also be affected because more cash from the reserve will be used in expansion. Therefore a lower profit margin is expected. However, at the end of the year investments, the firm will expect higher returns. According to Kerzner (2003, p.32), capital expenditure and related expenses are considered as investments rather costs to the company’s account.
Scenarios
There are two scenarios expected. First, if the BP oil crisis escalates beyond the firm capacity to deal with, the company will experience a significant loss thus running into the risk of insolvency. Incase of this occurring, there will be a reduction in customer loyalty. The customers will completely cease from purchasing BP products. The only option left to the company will be to close down its operations or obtain its supplies from other suppliers. This will amount into breach of its contract with BP.
The second case scenario relates to whether the crisis will be resolved soonest possible. If this is attained, the firm will attain a favorable business operating environment backed by consumer confidence and trust for its brands. This forms the foundation of this marketing plan (Verma, 2009, p.21).
Conclusion
The marketing plan provides a blueprint which the company will utilize in its operation during the next financial year. The ongoing oil spill crisis has resulted into a challenge in the firm’s effort to improve marketing strategies to meet changing customer demands, behavior and characteristics.
In order to deal with the crisis, the firm’s departments will be allowed to develop alternative strategies. However, these strategies must be in line with the overall plan. This plan acts as a guide regarding Ricker Oil’s market position during the next year of its operation.
The marketing department is responsible for drafting the marketing plan with consultations from other departments. In addition, it will ensure that the plan is effectively implemented. The top management team of the company will be responsible for providing leadership and resources to implement the plan successfully.
The oil market is characterized by fluctuating prices and hence the biggest decisions a firm has to undertake relates to pricing. Market research is very important. Firms which conduct continuous market surveys remain competitive, are adaptable to changing environment and meet changing consumer demands.
In depth understanding of consumer behavior enables a firm effectively meet market needs. As a result, the customers are satisfied by consuming the firm’s products thus increasing the probability of the firm attaining its organizational goals as a going concern entity (Cohen, 2006, p. 21).
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