ExxonMobil Corporation, one of the biggest Petroleum and Petro-Chemical companies in the world. They achieve superior results in regards to operations and financially. They also adhere to business conduct in a higher standard. In this assignment, we will discuss two things. First we will see how the macro-environment has influenced its marketing decision-making. Secondly, we will see how the marketing mix used by the strategists helps to gain competitive advantage over its competitors. INTRODUCTION ExxonMobil is one of the worlds largest Premier Petroleum and Petrochemical Industry.
The ExxonMobil Corporation was rated as No. 1 US Company for the year 2009 by Fortune 500. The ExxonMobil has developed from regional marketer of kerosene in the United States of America to the biggest publicly traded Petroleum and Petrochemical industry in the world. The mission statement of the company is “Taking on the world’s toughest energy challenges. ” Today, ExxonMobil operates in different part of the world with their well-known brand names like “Esso”, “Mobil” and “Exxon”. The products that are made are petroleum products and helps for the ‘modern transportation’, ‘lubrications’, and ‘powers cities’.
The chemical blocks produced by them are used in thousands of consumer goods. History of the ExxonMobil Corporation: The history of the corporation starts long back in 1859. In that year, Colonel Edwin Drake and Uncle Billy Smith drilled the first oil well in Titusville, Pennsylvania. In 1870, Rockefeller and associates formed the largest refining firm in the world, “Standard Oil Company”. In the year 1879, the Standard Oil Company purchased a three-quarter interest of Vacuum Oil Company. In 1882, Standard Oil Trust was formed which included Standard Oil Company of New Jersey (Jersey Standard) and Standard Oil Company of New York (Socony).
In 1903, both the Jersey Standard fuel and MobilOil lubricants from Vacuum were used by the Wright brothers for their historic flight. In 1911, the Standard Oil Trust was broken into thirty four unrelated companies which included Jersey Standard, Socony and Vacuum Oil. In 1926, Jersey Standard brought a new blend of fuel in the name of “Esso” with the phonetic version of the initials of Standard Oil (‘S’ ‘O’). In 1966, Vacuum Oil celebrated its 100 years and changed its name to Mobil Oil Corporation. In 1972, Jersey Standard officially changed its name to Exxon Corporation.
In 1982, Exxon celebrated its 100 years since the formation of Standard Oil Trust. In its first 100 years, the company has innovated and implemented new technologies in the field of Petroleum and Petrochemical products. It has grown from a regional distributor to a multinational corporation. On November 30, 1999, Exxon and Mobil joined together to form the ExxonMobil Corporation. Lee Raymond and Lou Noto said “This merger will enhance our ability to be an effective global competitor in a volatile world economy and in an industry that is more and more competitive”. Reference: http://www. xxonmobil. com/corporate/history/about_who_history. aspx MARKETING: Before we look in to the macro environment of ExxonMobil Corporation, it is necessary to know what marketing is. The Chartered Institute of Marketing (CIM) has rightly defined marketing as “the management process that identifies, anticipates and satisfies customer requirements profitably”. Many authors have also defined marketing. Kotler defines “Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others”.
Generally, marketing aims at the customer satisfaction at present and in the future at a profit. Marketing Environment: Marketing Environment involves all the activities that affect the growth of the business. It is broadly classified in to three. They are as follows: (i) The micro-environment – includes customers, competitors, suppliers, distribution channels and the general public. (ii) The macro-environment – includes external factors like demographic, economic, political, technological, social and natural factors. (iii) The internal environment – includes the 5 ‘Ms’, Men, Money, Machinery, Materials and Markets.
Reference: http://www. marketingteacher. com/Lessons/lesson_marketing_environment. htm Environmental Analysis of ExxonMobil Corporation: The environmental analysis deals with the all factors that affect the decision making of an organisation. It is very important for every organisation to assess their environmental factors before starting their marketing process. Micro-environment Analysis or SWOT Analysis: The SWOT Analysis helps to find the internal factors that affect the business. The following diagram explains the Strengths, Weaknesses, Opportunities and Threats for the ExxonMobil Corporation.
Source: Available at http://www. businessteacher. org. uk/business-resources/ Reference: Available at http://www. businessteacher. org. uk/business-resources/ Strengths: * A very big established organisation in existence for more than 100 years. This creates a sense of security to the customers when dealing with the organisation * It has diversified its activities in the different areas of energy industry. It also has strong brand names under its group * It has a great corporate citizenship, appropriate crisis management and crisis management strategy. The innovation is the greatest strength of the organisation * It has a global presence and hence has a wider customer base than its competitors Weaknesses: * The organisation has been accused of polluting and destroying the environment * The organisation has a negative publicity due to the Valdez oil spill * The organisation has earned an enormous profit. This has made the people to consider that the organisation is making profit at the expense of the customers Opportunities: * The biggest opportunity the organisation has is the increase in demand of energy by the emerging economies of South Asia and the South East Asia.
Threats: * India and China are the biggest demanders of oil and energy. These countries are being hit by recession and the demand has been reduced. This has brought a decline in the expected level of profit. * Also, the profitability will be reduced in the future due to increased attention in the conservation of the environment. These are the factors that affect the internal environment of a business. The micro-environment analysis is very much needed by an organisation find out its position in the market and to analyse the strategies to be used to improve its position in the market.
Macro-environment Analysis or PESTEL Analysis: The macro-environment analysis helps to know the entire external factors that affects the decision making process of an organisation. The external factors are as follows: Technological Factor: ExxonMobil is well-known for its innovation and advanced technology fuel. The growth of an organisation depends on the growth of its research and development. The ExxonMobil Corporation are leading in their sector because of their technological development. From its inception, the company has developed new products. The technological achievements include the following:
PESTEL ANALYSIS POLITICAL SOCIAL ECONOMICAL ENVIRONMENTAL LEGAL TECHNOLOGICAL Source: Researcher YEAR| ACHIEVEMENT| 1919| Micropaleontology| 1920| Isopropyl Alcohol (First commercial Petro-chemical)| 1927| Use of refraction seismograph to find an oil field| 1937| Invention of artificial rubber – butyl| 1942| First fluid catalytic cracker| 1952| Introduction of Uniflo motor oil| 1963| 3-D seismic technology| 1974| Introduction of Mobil 1 (Synthetic automotive engine lubricant)| 1976| Usage of ZSM-5 catalyst| 1980| Opening of Exxon Biomedical Sciences Inc| 1986| 3-D micro tomography| 1989| Introduction of Exxpol| 997| Introduction of Speedpass| 2001| Development of SCAN fining process| 2002| Initiation of the GCEP| The technological development and innovation has helped the organisation to achieve this position in the market. It is due to their innovations that they stay ahead of their competitors. Political Factor: The Political factor plays a major role in the macro-environment of a business. Political factor deals with the attitude of the government towards the business. The political decisions highly impact the organisation. ExxonMobil Corporation is a multi-national company which operates all over the world.
The political atmosphere of each country plays an important role. Government policies have a huge impact on price of the fuel. Political factor is considered to be fatal for every organisation. Economical Factors: The Economical factors influence the interest rates, economic growth, inflation and exchange rates. The ExxonMobil has its operations worldwide. Every economic factor has its effect on the pricing of the product. Higher interest rates may make borrowing difficult for an organisation, inflation makes higher demand for wages and it may lead to increase the price.
Also, the increase in the national income of a country might increase the demand for the product. Social Factors: The social factors are influenced by the changing trends of the customers. The attitude of the people is also considered. ExxonMobil are also influenced by the social factors. Now, the emerging economies are being hit by recession. This has resulted in the reduction of oil and energy consumption from these countries. This will in turn lead to reduction in the profit of the organisation. It is one of the important reason for increase in fuel prices. Environmental Factors:
The environmental factors are those which have their effect on the environment. Being the largest manufacturer of the Oil and Petroleum products, depend mostly on the natural resources for their production. Oil resources are not available all over the world. However, the organisation has a negative effect on the environment. It is because that the organisation has been accused of polluting the environment rather than to conserve. Also, the natural resources are being exhausted. Legal Factors: These factors are related to the legal environment. Any new change in policy of the government affects the organisation.
The contracts and agreements of the organisation depend up on this factor. The legal factors can influence the price and demand of the product. Thus we have seen how the macro-environmental factors affect the decision making ability of ExxonMobil Corporation. Let us now analyse what are the strategies that are used to gain competitive advantage. TASK: 2 Before we analyse the marketing mix used by the ExxonMobil Corporation, it is necessary to know what marketing mix is all about. MARKETING MIX: The concept of Marketing Mix became popular in 1964, after an article named The concept of marketing mix” was published by Neil H. Borden. The marketing mix has four components. It is also known as the four ‘Ps’. They are: Product Price Place (Distribution) PromotionSource: NetMBA. com The marketing strategists use these four ‘Ps’ in their marketing mix to gain competitive advantage. Let us now look how the ExxonMobil’s strategists use the marketing mix in an efficient way. Reference: http://marketingteacher. com/Lessons/lesson_marketing_mix. htm Product: The products of the ExxonMobil Corporation are oil and oil-related goods. They deal with Petroleum products.
The products are marketed in three brand names all over the world. They are Exxon, Esso and Mobil. Exxon and Esso provide fuels to the people for their personal and business needs. In the United States, Exxon is a trusted brand and Esso is trusted in other parts of the world where it is delivered. The customers trust and rely on these brands. Mobil is known for its innovation and performance. It is recognised all over the world for its advanced technology in fuel and lubricants. All the three brands provide excellent service to its customers. Reference: http://www. xxonmobil. com/Corporate/about_who_brands. aspx Price: The fuel prices are affected by various factors like crude oil price, demand and supply of oil, taxes, regulations, specifications and cost of transportation. The prices of fuels are set by the buyers and sellers in the world-wide market. ExxonMobil continuously takes steps to improve their competing ability and cost reduction through various programs. They also have strong commitment in providing excellence in operation. The recent pricing factors in the fuel pricing in the United States is given below: Source: U.
S. Department of Energy Reference: http://www. exxonmobil. com/corporate/energy_issues_gasprices. aspx Place: The next component of the marketing mix in the place. It refers to the distribution of the products. It also refers to the kind of product distributed in a specified area. For example, Exxon branded products are distributed all over the United States. Esso branded products are distributed all over the world. Both the products are the same, but only the brand name differs. The manufacturer and the supplier of both the brands’ outlet is ExxonMobil Corporation.
The difference in nanes is because, Exxon is famous in the United States and Esso is famous in other parts of the world. Also, Mobil branded fuels are distributed all over the world in the same name. But, the place of distribution or the targeted customers are different. Mobil branded fuels are well-known for their innovations, advanced technology and performance. Source:http://indyposted. com Promotion: The last and final component of a marketing mix is the promotion. Promotion of the products is very much essential for any business to grow. It is very important to know that the promotion is the last step in the process of marketing.
Promotion refers to the communication between the producer and the consumer. An example for promotion is advertising. Advertising is a component of promotional activities. In the United Kingdom, Esso branded fuels are delivered by the ExxonMobil Corporation. The loyalty cards, Esso Cards are being promoted. This card helps customers to avail the brand fuel in any fuel station in the Europe. The users of the card avail number of services like E-invoicing, Online fleet management, Itemised invoices, VAT statement, odometer measurement, etc. , Reference: http://www. essocard. om/Europe-English/EssoCard/About_EssoCard. asp Let us now see how the company can gain the competitive advantage over its competitors. COMPETITVE ADVANTAGE: Competitive advantage refers to the advantage that a company has created for itself over its competitors. This advantage may be achieved by either providing quality services or by having lower prices than the competitors. Michael Porter was the first person to suggest how to gain competitive advantage. According to his theory, the competitive advantage can be gained from four strategies. They are: Source: http://www. organicmonitor. om/r2010_files/image002. jpg (i) Cost Leadership (ii) Differentiation (iii) Cost Focus and (iv) Differentiation Focus The diagram explains that the Cost Leadership and Differentiation strategies are used to gain competitive advantage in a broad range of market. However, we can also see that other two strategies, Cost Focus and Differentiation Focus are adapted in the narrow range. (i) Cost Leadership: The cost leadership strategy aims at being the lowest-cost producer of the product. If the production cost becomes lower, the producer can enjoy the best-possible profits.
This strategy can be used by the producers who produce a standard product. They may also provide discounts to increase his sales and thereby increases the market share for the product. (ii) Differentiation: The differentiation strategy analyses the market first and then produces their product accordingly. Here, the producer does not provide products at a lower price. But, the price they fix for the product is justified by the features and services they offer for the product. The products are unique and in this way the producer gains competitive advantage, even when the price of the product is higher. iii) Cost Focus: This strategy is used in the narrow market. The product gains advantage by having lower price than the same product which is priced higher. These products are often referred to as “me-too’s”. (iv) Differentiation Focus: This strategy is used in the narrow markets and these products are not focused by the producers who target broad market. In simple words, there is a valid basis for differentiation and the competitors in the market do not meet all the needs of the customers. The Cost Focus and Differentiation Focus are together called as the ‘niche strategy’.
This strategy is commonly used in the narrow markets by the smaller firms. Stuck in the Middle: Stuck-in-the-middle is situation when a company chooses one or more strategies and fails to achieve its objectives. The situation makes the company to be stuck in the middle without gaining competitive advantage. Five Forces Analysis: The Five Forces Analysis helps the marketing strategist to analyse the environment of competition of the product. This concept was introduced by M. E. Porter. The five forces that are considered in this analysis are: i) The threat of new entrants (ii) Bargaining power of the buyers (iii) Bargaining power of the sellers (iv) Threat of substitute products (v) Competitive Rivalry All these five forces help the strategists to focus a company as a single business unit, though it may have various production units. Conclusion: The ExxonMobil Corporation has used its marketing strategies very well to achieve its goal. It has created a great value for its products in the market. It has also managed to provide secure and quality fuel to its customers and also have profitable outlets.
This was possible because they mainly focus on their main fundamentals of business: * Superior safety and Environmental performance * Efficiency improvements from global scale and integration * Disciplined portfolio restructuring and capital management * Customer-focused marketing initiatives With all the above said fundamentals, ExxonMobil Corporation has achieved its position in the global market. It is one of the well-established and well-managed companies of the world. Through its research and development, it has created a difference in the sector.
Thus, in this assignment, we have seen the environmental analysis, marketing mix and the marketing strategy of the ExxonMobil Corporation. REFERENCES: http://www. exxonmobil. com/corporate/energy_issues_gasprices. aspx http://www. exxonmobil. com/corporate/energy_issues_recent. aspx http://www. exxonmobil. com/corporate/energy_issues_earnings. aspx http://www. exxonmobil. com/Corporate/about_who_profile. aspx http://www. exxonmobil. com/Corporate/about_what_fuelsmarketing. aspx http://www. marketingteacher. com/Lessons/lesson_marketing_environment. htm http://www. netmba. om/marketing/mix/ http://www. essocard. com/Europe-English/EssoCard/About_EssoCard. asp http://tutor2u. net/business/strategy/competitive_advantage. htm http://www. organicmonitor. com/r2010_files/image002. jpg http://www. businessteacher. org. uk/business-resources/ http://marketingteacher. com/Lessons/lesson_marketing_mix. htm ——————————————– [ 2 ]. Then Chairman and CEO of Exxon Corporation [ 3 ]. Then Chairman and CEO of Mobil Oil Corporation [ 4 ]. Definition by The Chartered Institute of Marketing [ 5 ]. Definition by Philip Kotler