Unpublished MBA Project School Of Business: Analysis Of Marketing And Business Activities Of Saudi Aramco

Overview of Saudi Aramco

Discuss About The Unpublished MBA Project School Of Business.

The following report provides a detailed analysis of the marketing and business activities of the organization Saudi Aramco- is running the operation in UAE and in the international market. The Purpose of the report is to evaluate the current marketing approaches and activities which helps the company to run the operation achieving growth and competitive advantages. The report particularly highlights the customers, suppliers, distributors, current marketing positions and promotion as well as branding strategies. In addition to all these areas, the report particularly assess the 5’C marketing strategy of the organization. In order to make the analysis critical and reliable, the strength and weakness of the organization and the approaches used by the organization have also been considered in the discussion. Based on the findings of the analysis, suitable marketing suggestions have also been provided to the organization.

Saudi Aramco is a state owned oil and company of the Saud Arabia and it is fully integrated global as well as global petroleum enterprise. Moreover, the organization is a world leader with respect to exploration, distribution, marketing, refining and manufacturing of petrochemical products. It is identified that the organization deals with world’s largest proven traditional crude oil. In addition, the organization is known as world’s fourth-largest natural gas reserves of 288.4 trillion. Among other oil and gas organizations, Saud Aramco holds the top position with respect to producer of natural resource such as and forth position with respect to natural gas. The headquarter of the organization is located in Dahran in Saudi Arabia and with its extending operation, the organization employs more than 65,000 staff worldwide (Saudi Aramco 2018).

Vision- The major vision of the company is to become world’s leading integrated energy and Chemicals Company and strengthening its fouls on the long-term future.

Mission-  The mission of the organization is to diversify the national economy beyond oil and establish a thriving private sector which could minimize market reliance  on oil and gas. Tis mission will help the organisation to enable Saudi Aramco to develop the operation to the next level.

Value Statement: The organization has five different core values such as Excellence, Safety, integrity, accountability,  Citizenship as well as accountability which guides Aramco’s business conduct and integrate all it operation.

The values contribute to the development of success and control of marketing positions as one of the most respected organizations in the world.  

Marketing Approaches and Activities

As put forward by Mearns and Yule (2009), because the global population is increasing, the economies increase, it is true that standard of living is also increasing and hence, the energy could continue to become a significant opportunity. Therefore, the organization is seeking to carry out a large range of strategy to make sure that they are at the forefront of providing the essential energy now and in the coming figure. When it comes to marketing, Kim and Mauborgne (2014) mentioned that marketing remains as the art and science of selecting customers, target market and increasing the consumer base by creating and delivering an excellent customer value. On the other side, Gronroos (2016) also mentioned that marketing management relies on the size of the business and the sector in which the organization is running the operation. Hence, Saudi Aramco believes in the fact that professional marketing remains as the trademark of its commitment to customers. The organization achieves its marketing objectives through efficient and innovative techniques that helps to conduct the market research. The mission and vision statement of the company stated to achieve its success in the coming future in the international market. The organization is currently exporting its quality products to several nations. In addition to this, the organisation is also following the B2B strategy. It is a certain fact that petroleum products are the essential communities which can hardly be branded. Therefore, the price is strictly regulated by the industry; however, Saudi Aramco is perfectly serving the customers.  

The organization’s network of refineries around the regions manufactures the products which the customers highly need and the industry which is driving the nation’s economy. The following are some of major products that company produces to the market

• Gasoline
• Diesel
• Crude oil
• Sulphur
• LPG
• Propane
• Butane
• Natural Gasoline (NG)
• Sales Gas
• Fuel oil

It is observed that oil and industry has observed a dynamic scenario, where economy and political factors plays a great. According to Harhara, Singh and Hussain (2015), much of the oil and gas industry survived a stiff few years with the weak as well as low price; thereby, the organizations find it difficult to make effective strategic marketing decision and plan for the future. However, in the present time, the sector has started to emerge from its upheaval. When digging into industry’s current scenario, it has been found out that even though the price seems to be recovering, the crude was up nearly 90% ii 2016, which is over US$50 for each barrel  (Calixto 2016). On the other side Mitchell and Mitchell (2014) provided a fact that “post-recession” high water is reached in 2011 and as the consequence, the organization started to consider to new investment in the development of resource and making it more attractive. The continuous enhancement in the price could perhaps be slow and the supply could be restrained by the cutbacks in reserve development project over the last few years. The major players in the industry are now Abu Dhabi National Oil and Gas Company, Royal Dutch Shell and British Petroleum (Cordes et al. 2016).

Assessment of 5'C Marketing Strategy

The following are some of the major future development initiatives for oil and gas organizations.

• The largest oil explore Saud Aramco is determined to invest in the refineries as well as petrochemicals in the Asian nations because it is planning to make a strategic partnerships with then nations in Asia such as India
• The foreign investors have the opportunity to invest in oil and gas project which worth US$300 billion in India because the nation is supposed to cut reliance on the import of gas and oil (Ruqaishi. and Bashir 2013)
• State-run oil and gas firms are planning to make the investment worth US$111.30 million) in UAE (Mitchell and Mitchell 2014).

It has been identified that the strength of Saudi Aramco’s lies in its growing edge of science and creativity, which helps to make energy that could further be more beneficial; and sustainable. The following table determines the actual strength, weaknesses, opportunities and threats.

Table 1: SWOT analysis of Saudi Aramco

(Source: Ramiah, Pham and Moosa 2017)

Political factor- As out forward by Mohanty et al. (2011), governments have a strong control over the operation of oil and gas and the reserve of hydrocarbon which has a significant impact on OPEC which controls almost 76.4% of world reserves. On the other side, it is also identified that instability, exploration, nationalization of terrorisms, civil conflicts, strikes and wars have a solid adverse impact on the operation (Ruqaishi and Bashir 2013). The government in UK increased the tariff cost of exporting oil and gas products to UK (Sovacool 2010). Likewise, the recent demonetization under NDA government in India has a strong impact on the global economy. Consequently, many Indian distributors refused to import the products from the foreign nations. The entire scenario has a strong impact on the oil and gas industry.

Economic factor- Downfall of World Bank, Brexit and demonization in India have broadly affected the world economy, which has a strong influence on Saudi Aramco’s operation and even in the entire oil and gas industry (Mohanty et al. 2011). Due to this constant economic inflation, the supply and distribution of oil and gas products were entirely messed up.

Socio-cultural impact: People in each nation have become increasingly concerned about the environmental degradation. Therefore, besides the oil and gas operation, the organization will also have to implement some social responsibility. The organizations in the sector will have to support sustainable natural and human development. Observing the response of the citizens, the governments of UK, UAE and Australia have started pushing the organizations to show their CSR roles (Ford, Steen and Verreynne 2014).

Technology: The oil and gas operation is entirely based on technology, which means the technology drives the entire operation both in upstream and downstream operations. The organizations are thinking of more effective recovery of hydrocarbons from the reserves. On the other side, Kong and Ohadi (2010) mentioned that technology is rapidly developing, and thereby, the organizations in the sector might not have to face the challenge of refineries and distribution or nay other operation. Nonetheless, the industry requires more advanced technology for deep impact on the long-term responsibility.

SWOT Analysis

Competitive rivalry – Moderate: It has been identified that Saudi Aramco does not have to face any high state of competitive rivalry because the organization is state owned player and they will get the preference when making a major deal in the area of expansion and refining. However, for the finished goods such as hydrocarbon products, the organization will probably have to deal with a significant competition because there are large domestic players such as SABIC, ADNOC, Shell and British Petroleum (Shuen,  Feiler and Teece 2014). Nonetheless, it can mentioned that the organization acquires a broad oil reserve in the domestic market which further provides a series of competitive advantages.

Threats of new entrants: Low- The operation of oil and gas requires broad initiatives.  Digging in the oil fields, establishing production and distribution network require time and huge amount of effort, which further requires large investment (Mitchell, Marcel and Mitchell 2012). Moreover, to run operation in the oil and gas industry, the organization  it have support of the government or any other regulatory bodies, Therefore, it can be mentioned that Saudi Aramco may not have to deal with the threats of  new entrants presently in the sector. In this context, Hatakenaka et al. (2011) mentioned that multinational oil organization may enter the market in future if the government of the nation welcome the foreign investors but there is no threat from the small and medium size organizations.

Threats of substitute products:  Low- As put forward by Yusuf et al. (2014), the depletion of the oil research created the urge for using the substitutes such as bio fuels, solar power, and nuclear power. El-Diasty and Ragab (2013) argued and mentioned the fact that the technology is not developed properly to a level where these sources could be utilized to use the substitute the petro products. In future, the organization must have to use substantial products.

Bargaining power of the customers:  Moderate-it is identified that as Saudi Aramco is the one single organization supported by government, it takes advantage of the monopolistic acquisition. Saudi Aramco controls the market and gains a significant hold over the customers. On the other side, Saudi Aramco is the member of OPEC’ thereby, it can control the oil and the global price. However, Hatakenaka et al. (2011) argued that the customers also have other options such as BP, Shell, and ABNOC.

Bargaining power of customers: Saudi Aramco does not have to deal with any supplier because the organization is its own supplier.

Marketing Suggestions

In order to identify the customer needs, a detailed market analysis has been performed by conducting a survey. The survey has been conducted involving a particular area of the market By Collecting the email address of the customers, a set of 10 questions about the quality of products and services have been sent to the customers and then the responses have been gathered and analysed. Likewise, to learn about the competitors’ threats such as BP’s aggressive marketing strategy, data has been collected from the industry benchmarking report produced by the third party organisation such as PWC and Deloitte. In addition, the information about the dynamic business environment have been collected from the industry research and statistical report provided by Australian Bureau of National Statistics. The information about the collaborators such as the partnership with government has been collected from the annual report and the corporate site of the organization.

In order to strengthen the market positions and increase the market share, the organization Saudi Aramco will have to choose a market where customer responses are high. For example, the firm can pay attention to Asian market such as India because in the recent time, the NDA government in India is approaching the foreign investors. This welcoming news confirms that Saudi Aramco could receive governmental support once it enters the market. India is a broad market, the organization will have a large customer base.

The value proposition for the target market –India will be based on two different segments such as Efficiency and consumers intimacy

Efficiency:

The organization must have to understand the fact that India is a price sensitive market; thereby to place, Saudi Aramco has to produce its oil and gas products at the better price than the competitors (Brohi,  Pooladi-Darvish and Aguilera 2011). The quality of product must reach the industry benchmark and the price should be affordable and better the current oil and gas organization.

Consumer intimacy: The organization must have to develop a close relationship with the customers by providing them additional grocery coupons or voucher code and using the coup, the consumer can buy grocery products at the mall (Wahito 2011). This will create a huge impact on the customers when because a when customer receive an additional value with the product which there can use further, they prefer to choose the same brand to avail the offer.

Positioning statement for the target market

“If you are looking for the best energy solution within the affordability, Saudi Aramco is the solution- providing customers with highest value”.

Future Development Initiatives for Oil and Gas Organizations

Product: Saudi Aramco needs to trade some its core products such oil, petrochemicals, gasoline in the target market-India because there is a growing demand of petrochemical products in the chosen market (Cader and Al Tenaiji 2013).

Price: As discussed above, India is a price sensitive market, therefore, to acquire this broad new market, the organization should develop penetrative pricing strategy which enable the company to charge low price for the product to increase customer base (Mohanty et al. 2011). This means, when the price of the product is low, the customers will prefer to buy because in gas and oil products, people rather prefer to choose the option that saves their money. 

Place: To place the product, the firm has to select four major location such as the metropolitan cities of India where the use of two wheelers and vehicles are high than the suburban areas. The organization can approach or hire the local distributors to place the product.

Promotion: Now, to promote the product, the organization should implement the digital marketing channels which would help them to reach the customer because in the recent time, Indian government started paying attention to technology and internet development. In addition, the consumption of internet is currently in India is 71% which is 9% higher than the previous year (Statista.com 2018). So considering this growth in internet consumption, Saudi Aramco needs to use the social media channels such as YouTube, Facebook, Music app (Savn) in which the rated of visitors is high.  Social media channels will be appropriate for the organization for promotion those tools report the highest users active rate in India. Thus, customers can learn about the brand and their products and services without even searching further in the internet.

Conclusion

In conclusion, it can be mentioned that Saudi Aramco must implement the expansion initiative effectively because running performance in the domestic market for long makes the future doomed. This is because the oil and gas market has become dynamic with respect to needs, refinery process, regulations. Thus, to deal with those dynamic trends, the organization must have to maximize its strength and efficiency which can be done by increasing the market share and paying attention to technology. This report can be further extended by conducting a more detailed market research including digital marketing activities and market segmentation strategies.

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