Chevron’s Marketing Strategy & Practice

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Introduction
Market Research
Marketing MIX
International Market Entry Strategy

Introduction

Chevron Corporation is one of the largest firms in the world from the energy sector. It is included in the ranks of the six super major private oil companies that are assumed to control the majority of private oil production across the globe. Chevron participates in a variety of functions in the petroleum industry ranging from exploration and drilling to refining and power generation. This has led to the company being included among the top 25 in Forbes’ list. Chevron Corporation has continued to enjoy massive revenues and profits in recent years, on account of the upward mobility of the oil price and even bucked the downward trend during the current financial crisis.

Market Research

Market Trends

The global oil industry has been very active in influencing the world economy and has a wide impact on the policies and practices of many countries. The industry has seen changing trends since the dawn of the twenty first century. One of the biggest advantages for the industry has been the recent upsurge in oil prices, reaching a high of almost $147 a barrel. This has been a considerably profitable period for many companies considering the inflated revenues and this has been reflected in the stock prices of oil companies across global stock markets. This allowed the petroleum rich countries to get massive cash influx while heavily petroleum importing countries experienced a down turn. Thus the Middle East and a few countries in Europe and Latin America and the state run as well as private run oil companies observed considerably favorable figures during the years. This extravagant period was put to a halt however with the following decline in oil price.

Another challenge companies have faced has been natural. With the American and Mexican coasts being hit by hurricanes and insurgents targeting oil pipelines and drilling facilities in Iraq, the companies in the industry saw mounting challenges in terms of security and sustained production. This trend was bucked in part by the accompanying surge in oil price but it still presented a continuous problem. The Global Petroleum Survey conducted by the Fraser Institute in 2008 highlighted some trends in terms of investment in the industry. In particular, there has been the ever present competition between private run and state run oil companies, where the latter controls the majority of the world’s oil reserves. A certain level of hostility towards the private companies has been observed in Venezuela, Russia, Iran and Yemen where political instability, constant changes in regulations and legal framework and some cases of dishonoring contracts have discouraged private investment in the oil industry and further expansion.

The petroleum industry is one sector which has seen a continuous rise in demand over the years. The global demand for crude oil rose 1.76% from 1994 to 2006 and is speculated to go up nearly 37% up till the year 2030, largely spurred by the transportation sector. Developed countries have shown sustained high demand which is now being augmented by increased demand from India and China. The production of oil has been relatively steady, being constrained by the number of fields in operation and being drilled from. Global supply was nearly 84.5 million barrels per day by 2007 but can be said to fall steadily as the world’s biggest fields in Saudi Arabia and Kuwait mature and show decline in production.

Key Competitors

Chevron has been a part of the private oil industry and as such has had to face stiff competition for the finite oil reserves of the world. The five companies apart from Chevron that make up the world’s super major petroleum companies have all been vying for increased control over oil fields in the Middle East and Latin America and Africa.

Private Competitiors:

Exxon Mobil has been able to set itself at the top with the highest revenues and cash flow and has benefitted tremendously from the opening up of Iraq to private oil companies, getting rid of the state run monopoly.
The Royal Dutch Shell group has similarly enjoyed a very favorable position in the industry. There was a slight hiccup with the advent of fraud charges against the company in terms of its oil reserve valuation but it has managed to keep its position.
British Petroleum has seen fluctuating fortunes recently in Europe.
Conocco Phillips has been strong on the tales of the Chevron in terms of revenue figures.
Total S.A has been relatively restricted.

The private sector aside, the company faces stiff competition from state run oil companies that have access to majority of the global oil fields. Such monopolies pose the major threat in terms of competition to Chevron as all oil companies vie for the limited global oil reserve, access to which can only be granted by the local governments. Thus while the private sector has been able to get access in Africa and Europe, political changes and uncertainty accompanied by changing legislation has resulted in large parts of the Middle East difficult to access.

State-run Competitors:

Petrobras has gotten access to majority of Brazil’s oil reserves and is engaged in exploration in the South American continent.
Pemex, the company in Mexico has been going strong in North America.
Petróleos de Venezuela S.A has gotten exclusive access to Venezuelan oil reserves which is a trend bound to continue as the government attempts to expel foreign companies.
Indian Oil is going strong in India with its vast stretch of mineral abundant land.
Aramco in Saudi Arabia is a powerhouse in the industry with control of some of the biggest oil fields in the world.
Kuwait Oil Company enjoys sole access to the second largest oil field in the world.
National Iranian Oil Company, being the sole driller in closed up Iran.
Petrokazakhstan is a growing company with potential since it has access to some of the few unexplored and untapped oil reserves of the world.
Rosneft and Yukos in Russia have been the subject of state takeovers and enjoy access to the vast reserves of Siberia.

Marketing MIX

Product

Chevron’s primary product is crude oil which it pumps daily through its drilling facilities across the globe. It further boasts refining facilities which allow it to refine the crude oil into various other products. The company further has control over some gas production facilities and provides natural gas as a product to commuters and to companies as well as to households. Lastly, the company is involved in power generation and sale across three continents which all provides for the company’s involvement in nearly every aspect of oil and gas industry.

Price

The price of the products that Chevron provides has been largely dictated by cartels such as OPEC and the actions of the larger petroleum exporting countries across the globe. Thus it has enjoyed little control over the price of oil and gas. The price maintained itself below the $50 per barrel mark for quite some time before it hiked up to a high of nearly $147 per barrel following 2005 which signaled extravagant times for the company. However, easing of international political conditions and some intervention by global players and countries has resulted in a fall in oil prices once again, making the revenue forecasts relatively moderate for the company. The power generation and supply by Chevron has also seen a consistent dictation by government, providing little room for maneuver by the company.

Placement/Distribution

Chevron employs extensive distribution networks for its products. It handles its own retailing by employing nearly fifty nine thousand people worldwide with a global marketing network in nearly eighty four countries, handled by almost 24000 retail sites that are run by the Chevron Corporation, with a few being managed by affiliate companies. In addition, the company operates thirteen power generation facilities across the United States, Canada, and the European Union and in Asia. The merger of Texaco with Chevron resulted in Texaco branded oil products also being distributed by Chevron’s network of wholesalers.

Promotion

The company has been involved in promotion of its products through multiple avenues. First off, it makes use of television advertisement to promote the Chevron brand and particularly highlight features of appeal, such as Chevron’s commitment to stemming environmental pollution and the fact that the company is the highest spender in this regard in the US oil industry. This helps promote the oil provided by Chevron as well as appease those concerned about the pollution aspect of oil production and use. Furthermore, promotion is carried out through the gas and filling stations that the company owns and operates, allowing it to go to the consumers directly. Another strategy has been alliances with motor companies such as Toyota and General Motors which only use Chevron oil when testing automobiles.

International Market Entry Strategy

Host Country Analysis

Pakistan could be a suitable country for Chevron Corporation to enter. The country is relatively unstable but enjoys a steady level of growth and a rise in commuters as the demand for automobiles rises, leading to expansion of the transportation market. The market is primarily catered to by the Royal Dutch Shell group and state run companies with a slight impact by Total as well. By bringing the Chevron name into the market, the company may not only be able to exploit a growing market in the company but many also be able to enjoy exploration opportunities in the country which is at the center of forecasted pipeline deals through Central Asia and oil rich Iran. It further enjoys a low level of regulation with regards to the oil industry which will pose less problems for the company.

Mode of Entry

The country’s oil demand is catered to primarily by Shell and state run companies but there is some level of presence of other brands. Chevron could exploit this by starting a joint venture with one of these low market share holders to enter the market and then follow it up by possible expansion of the filling stations under the Chevron name via franchising, once it is established in the country. This will not only allow it to get a strong foothold but also provide experience in dealing with the bureaucratic setup that accompanies most third world countries. Bringing its own name to the market is important as Chevron enjoys high rates of brand loyalty in North America which could be exploited to create the same in this country, in order to deal with the already established competitors.

Click Here To Order Now!