Summer Training Report - Indian Oil Corporation Limited


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Summer Training Report - Indian Oil Corporation Limited

  1. 1. Widescreen Test Pattern (16:9)<br />ASPECT RATIO TEST<br />Should appear circular<br />4x3<br />16x9<br />1<br />
  2. 2. Post Training PresentationAcademic Session 2009-10<br />Aneesh Bhandari<br />P.G.D.M. (FT)<br />Major: Marketing<br />Roll: 10/2008<br />Corporation Limited<br />Indian Oil<br />
  3. 3. Specifications<br />Profile:- Intern Trainee<br />Division:- Retail Sales, World Trade Centre, New Delhi 110001<br />Mentor:- Mr. Alok Srivastava (Manager, DDO Retail Sales)<br />Period:- 1st April 2009 to 3rd June 2009<br />Project1:- &quot;To study the value-added fuel brands of IOCL for strategy, budgeting, communications, and positioning &quot;<br />Project2:- &quot;To design a sales promotion campaign for XtraPremium Petrol and XtraMile Diesel for implementation in Delhi NCR”<br />3<br />Aneesh Bhandari; LBSIM Delhi<br />
  4. 4. Introduction to the Organization<br />Public-Sector Petroleum Company (Traded on BSE & NSE)<br />Founded in 1964<br />Employee Strength ~ 36,200 (approx.)<br />Key Business Area: Petroleum products: Petrol, Diesel, Kerosene, LPG, Petrochemicals<br />Owns 10 of the 19 refineries in India<br />Ranks 116 on the Fortune 500 list (highest for any Indian company)<br />4<br />Aneesh Bhandari; LBSIM Delhi<br />
  5. 5. Introduction: Statistics<br />Total Assets: US$ 26.20 billion<br />Total Equity: US$ 10.87 billion <br />Revenue: US$ 61.7 billion<br />Net Income: US$ 1.96 billion<br />Growth: 12.9% on 2006-07 (Net Income)<br />47% share in the petroleum products market<br />40% share in refining capacity<br />Capacity of 60.2 million metric tons per year; 17606 Fuelling Stations<br /> * All figures for the financial year 2007-08<br />5<br />Aneesh Bhandari; LBSIM Delhi<br />
  6. 6. To study the value-added fuel brands of IOCL for strategy, budgeting, communications, and positioning<br />PROJECT 1<br />6<br />Aneesh Bhandari; LBSIM Delhi<br />
  7. 7. Objectives<br />To do a detailed study of the value-added fuel brands of Indian Oil Corporation Limited.<br />Parameters of study:-<br /><ul><li> Strategy
  8. 8. Budgeting
  9. 9. Communications
  10. 10. Positioning</li></ul>Brands under study:-<br /><ul><li>XtraPremium Petrol
  11. 11. XtraMile Diesel</li></ul>7<br />Aneesh Bhandari; LBSIM Delhi<br />
  12. 12. Brands at IOCL<br />ENERGY<br />Xtra Mile<br />Xtra Premium<br />Servo<br />Auto Gas<br />Indane<br />Indian Oil Aviation<br />LNG at Doorstep<br />RETAIL<br />Xtra Care<br />Kisan Seva Kendras<br />Swagat<br />Servo Express<br />CUSTOMER LOYALTY PROGRAM<br />Xtra Rewards<br />Xtra Power<br />8<br />Aneesh Bhandari; LBSIM Delhi<br />
  13. 13. Value-added fuel brands<br />Xtra Premium Petrol<br /> Indian Oil’s XTRAPREMIUM Petrol is India’s leading branded petrol boosted with new generation multifunctional additives known as friction busters that prevents combustion chamber deposits. XTRAPREMIUM is custom designed to deliver higher mileage, more power, and better pick up, faster acceleration, enhanced engine cleanliness and lower emissions. XTRAPREMIUM is a sought after fuel among discerning customers who own new generation, high-performance cars who have endorsed its unmatched performance.<br />Xtra Mile Diesel<br />Indian Oil’s XTRAMILE Super Diesel, the leader in the branded diesel segment is blended with world-class ‘Multi Functional Fuel Additives (MFA). Commercial vehicle owners choose XTRAMILE because they see a clear value benefit in terms of superior mileage, lower maintenance costs and improved engine protection.<br /> A growing section of customers who own diesel automobiles, both in the ‘lifestyle’ and ‘passenger’ category, prefer XTRAMILE as a fuel for its added and enhanced performance.<br />9<br />Aneesh Bhandari; LBSIM Delhi<br />
  14. 14. Concept<br /><ul><li>Xtra Premium is a 91 octane premium and is a high end product which comes with friction busters along with other additives.
  15. 15. The additive package contains proprietary components including a detergent dispersant, a friction modifier and a corrosion inhibitor, as a perfectly optimized formulation in synthetic carrier oil.
  16. 16. The detergent dispersant cleans the fuel system and the friction modifier drastically reduces friction in the non-lubricated engine area contributing to fuel economy.
  17. 17. Xtra Mile is the premium fuel in diesel category. It prevents engine from knocking, improves performance of the engine and adds extra life to it. It improves acceleration and cuts down on maintenance costs.</li></ul>10<br />Aneesh Bhandari; LBSIM Delhi<br />
  18. 18. Methodology<br />STRATEGY<br />B2B interviews conducted with people who were a part of the initial branding team for XtraPremium Petrol and XtraMile Diesel.<br />Secondary data sources majorly the internet for articles, journals and case studies on the related subject. <br />BUDGETING <br />B2B interviews with industry experts and people in Indian Oil.<br />Secondary data from the internet on spending behavior and data supplied by the company.<br /> COMMUNICATIONS <br />By studying the advertisements that have appeared in the newspapers, on the television and other sources with respect to the nature, timing, objectives and success/ROI. <br />POSITIONING <br />Designing, conducting and analyzing a surveyfor branded fuels.<br />Target Group: Any Indian Citizen who owns/drives their own vehicle and is in the age bracket ‘18 years and above’.<br />Methods: Online and face to face interviews. Assigning equal weightage to responses from either source.<br />Sample Size: Minimum 100, no cap on maximum ~depending on available time.<br />11<br />Aneesh Bhandari; LBSIM Delhi<br />
  19. 19. Strategy<br /><ul><li>Launch
  20. 20. Competitors
  21. 21. Constraints
  22. 22. IOCL
  23. 23. Branding
  24. 24. Competitors
  25. 25. Constraints
  26. 26. Naming/Designing of Brand Mark
  27. 27. Value Association
  28. 28. Value Communication
  29. 29. Brand Evolution
  30. 30. Competitors
  31. 31. IOCL
  32. 32. Brand IOCL</li></ul>12<br />Aneesh Bhandari; LBSIM Delhi<br />
  33. 33. Budgeting & Pricing<br /><ul><li>At the time of launch of XtraPremium and XtraMile, IOCL spent between 50mn to 70mn INR
  34. 34. In the year 2008, IOCL spent 4bn INR on promotions; combined spending of IOCL, BPCL & HPCL was around 8bn INR
  35. 35. Indian Government raised questions on the magnitude of spending
  36. 36. Most of the expenditure was for brand IOCL and Servo lubes
  37. 37. No spending for Branded Fuels (by IOCL) for Print & Electronic
  38. 38. Majorly BTL Activities (by IOCL); BPCL promoted Speed through Print
  39. 39. IOCL spends around 20mn INR for educating people on conservation related issues as a CSR activity</li></ul>13<br />Aneesh Bhandari; LBSIM Delhi<br />
  40. 40. Budgeting & Pricing<br />PRICING<br /><ul><li>Initial Pricing Strategy
  41. 41. Evolution of Pricing for Branded Fuels
  42. 42. Fluctuations in 2008
  43. 43. Recent</li></ul>14<br />Aneesh Bhandari; LBSIM Delhi<br />
  44. 44. Communications<br /><ul><li> Motive
  45. 45. Brand Ambassadors
  46. 46. IOCL
  47. 47. Competitors
  48. 48. The “Sports” association
  49. 49. Major Event Sponsorships
  50. 50. Indian Oil Asia Cup 2004
  51. 51. Indian Oil Cup Tri Series in Sri Lanka 2005
  52. 52. ICC Champions Trophy 2006
  53. 53. ICC World Cup 2007
  54. 54. Indian Oil Cup – India Pakistan Test Series 2007</li></ul>15<br />Aneesh Bhandari; LBSIM Delhi<br />
  55. 55. Communications<br />PROMOTIONS XTRAPREMIUM AND XTRAMILE: Electronic/Print/Outdoor<br />16<br />Aneesh Bhandari; LBSIM Delhi<br />
  56. 56. Communications<br />17<br />PROMOTIONS XTRAPREMIUM AND XTRAMILE: Sales Promotion<br /><ul><li>Aish in Malaysia Offer (2004)
  57. 57. Indian Oil Aao Roz Ek Truck Pao (2004)
  58. 58. Educational Campaign (2005)
  59. 59. Extra Pickup Contest (2005)
  60. 60. Car in a Tank Offer (2007)
  61. 61. Car in a Tank Offer (2008)</li></ul>Aneesh Bhandari; LBSIM Delhi<br />
  62. 62. Communications: Other Brands<br />18<br />Aneesh Bhandari; LBSIM Delhi<br />
  63. 63. Communications: Mother Brand<br />19<br />Aneesh Bhandari; LBSIM Delhi<br />
  64. 64. Positioning<br /><ul><li>A survey was conducted with a total of 115 responses (breakup: 49 responses from the internet and 66 responses from face to face interviews).
  65. 65. The respondents were from SEC A and SEC B. Some of the responses were received from students (and were not classified under the usual SEC grades)
  66. 66. Using Pearson coefficient, an error of approximately 9% was calculated.
  67. 67. FINDINGS:-</li></ul>20<br />Aneesh Bhandari; LBSIM Delhi<br />
  68. 68. Positioning: Preference<br />21<br />Aneesh Bhandari; LBSIM Delhi<br />
  69. 69. Positioning: Perception<br />22<br />1  Strongly Disagree<br />2  Disagree<br />3  Neutral<br />4  Agree<br />5  Strongly Agree<br />Aneesh Bhandari; LBSIM Delhi<br />
  70. 70. Positioning: Advertisements<br />23<br />Aneesh Bhandari; LBSIM Delhi<br />
  71. 71. Positioning: Reasons & Value<br />24<br />Aneesh Bhandari; LBSIM Delhi<br />
  72. 72. Positioning: Recall<br />The highest recall was for Speed petrol of BPCL. This can be attributed to the active promotions carried out by BPCL for speed in recent times when activity for other brands was dormant.<br />25<br />Aneesh Bhandari; LBSIM Delhi<br />
  73. 73. Positioning: Correlations<br />26<br />There is a no relationship between the consumption pattern (in litres) and the usage of branded fuel. Pearson Value = -0.060355811. The value being very close to zero indicates there is a very slight negative relation. After doing the error corrections, we will not find any correlation.<br />There is a slight positive correlation between the usage of branded fuels and the type of vehicle a person drives.<br />There is no correlation between the Socio Economic Classification and the usage of branded fuel.<br />But there is significant correlation between the educational qualification and usage of branded fuel, and occupation and usage of branded fuel when taken separately.<br />Therefore, we can say that usage of branded fuel is not correlated with affluent class people or people who consume fuel in certain amounts. Usage of branded fuel is behavioral. It can slightly be attributed to the educated class but no significant relation was found. This implies branded fuels can only be behaviorally segmented.<br />Aneesh Bhandari; LBSIM Delhi<br />
  74. 74. Brand Scorecard<br />27<br />Section 1: Segmentation and opportunity sizing<br /> * Priority of each segment: Performance for their vehicle and getting value for their money<br /> * Segment definition: Strictly behavioral and nothing else.<br /> * Total segment size: Affluent and/or educated fuel buyers in India (SEC A and SEC B)<br /> * Total realistic sales opportunity within the segment: All fuel buyers in India<br />Section 2: Brand financial performance<br /> * Sales: 25% of total petrol sales and 16% of total diesel sales.<br /> * Net profit: NA<br />Brands: XtraPremium/XtraMile<br /> * Net profitability: ROI is as high as 33% (Considering 1.50 Rs. the cost of additives for an extra charge of 2.00 Rs.) <br />Section 3: Customer retention<br /> * Number of customers: 25% of Petrol users and 16% of Diesel users<br /> * Average sales per customer: NA<br /> * Average net profits per customer: NA<br /> <br />Section 4: Underlying brand franchise<br /> * Brand stature: Good with doubt in a certain percentage of customers.<br /> * Brand intimacy: Poor<br /> * Brand awareness: Moderate<br /><ul><li>Market position/leverage: XtraPremium Petrol and XtraMile Diesel are market leaders in the highly competitive business segment, with a market share of about 47% and 59% respectively (2008) </li></ul> * Organizational intent to back the brand: Very good as it’s a golden egg<br />Section 5: Communications operational effectiveness<br /> * Message effectiveness: Between effective and somewhat effective<br /> * Channel effectiveness: Very good with television and significantly good with print<br />Aneesh Bhandari; LBSIM Delhi<br />
  75. 75. Limitations<br />28<br />A significant portion of the study is based on secondary information from third party sources.<br />The figures provided in budgeting are rounded of and no information on the trend of expenditure could be obtained.<br />The perception part has its usual limitations of people not responding correctly. In the given project study, a 9% error in the responses was accounted for using the dummy question.<br />The data for brand building exercise pertaining to a period between 2002 and 2006 is not significantly available through reliable secondary data sources.<br />Time constraints.<br />Aneesh Bhandari; LBSIM Delhi<br />
  76. 76. To design a sales promotion campaign for XtraPremium Petrol and XtraMile Diesel for implementation in Delhi NCR<br />PROJECT 2<br />29<br />Aneesh Bhandari; LBSIM Delhi<br />
  77. 77. Objectives<br /> To design a sales promotion campaign for boosting sales of XtraPremium Petrol and XtraMile Diesel in Delhi NCR.<br />To study the market dynamics and campaigns run by Indian Oil and its competitors in the past.<br />To study the customer behavior towards campaign and return on investment for previous campaigns.<br />To design potential solutions under the given constraints and finalize on an idea which can be implemented in a feasible manner.<br />  The objectives of the sales promotion campaign designed should be as follows:-<br />To boost the sales of XtraPremium Petrol and XtraMile Diesel.<br />To provide for conversion of ordinary fuel users into branded fuel users at IOCL pumps.<br />To provide for increased tyrefalls at IOCL pumps in order to increase IOCL’s market share for fuels.<br />To revamp the image of branded fuels and induce a behavior of regular usage amongst the customers.<br />30<br />Aneesh Bhandari; LBSIM Delhi<br />
  78. 78. Requirements<br />DEVELOPMENT STAGE<br />In the development stage, we require secondary data of previously run campaigns. We also require fresh primary data regarding the consumer behavior.<br />DRAFTING STAGE<br />In the drafting stage, we require inputs regarding costs and the various limitations of the host company.<br />IMPELEMENTATION STAGE<br />In this stage, support is required in terms of logistics, management – inventories, on-field activities, promotions, legal issues, proper run of the campaign.<br />31<br />Aneesh Bhandari; LBSIM Delhi<br />
  79. 79. Constraints<br />The campaign should be designed to run for a period of atleast 45 days and a maximum of 60 days.<br /> There should be instant gift redemption for the customers who take part in the campaign.<br />The campaign is limited to the 205 Indian Oil and IBP petrol pumps in Delhi NCR (National Capital Region).<br />The campaign should be designed in a manner that IOCL has to incur minimum expenditure.<br />It should be made sure that all available branding opportunity is utilized in the best possible way and should provide for non-fuel revenue for the company.<br />No claims regarding the value added by branded fuels should be made during the campaign.<br />32<br />Aneesh Bhandari; LBSIM Delhi<br />
  80. 80. Methodology<br /> The methodology involves understanding consumer behavior on Petrol pumps. For this the following methods are adopted:-<br />Analysis of previous campaigns using secondary data and information from Project 1.<br /> Short SMS survey randomly asking people about what gift/rebate could act as a motivator for them to buy branded fuels.<br />The options given were:- Free Car Wash, Free Car Shampoo, Fuel rebate, Passes to a concert, Discounts at retail outlets, Discount on clothing accessories.<br /> A field study of select Indian Oil Retail Outlets involving random interviews, observing the behavior of visitors (customers) using video recording and through a firsthand account.<br /> A mall semi structured questionnaire for people who had previously participated in campaigns for branded fuels. The questionnaire aims to find out the motivation behind the participation by these people.<br />33<br />Aneesh Bhandari; LBSIM Delhi<br />
  81. 81. Key Findings<br /><ul><li> Car in a Tank Offer (2007 & 2009)
  82. 82. SMS Survey Findings (Preference) :-</li></ul> Fuel Rebates<br />Passes to a Musical/Concert<br />Discounts at Retail Outlets<br />Free Car Wash<br />Discount at Apparels Stores<br /><ul><li>Findings from Field Study
  83. 83. General
  84. 84. Customers
  85. 85. Supervisors
  86. 86. Issues/Suggestions</li></ul>34<br />Aneesh Bhandari; LBSIM Delhi<br />
  87. 87. Potential Designs<br />SELF REGULATED CAMPAIGN: - A campaign with FUEL REBATE  on next purchase of XtraPremium Petrol or XtraMile Diesel, and DISCOUNTS on products and services available on Indian Oil outlets. In such campaign, revenue earned for giving branding opportunities at IOCL pumps to alliance partners is used to neutralize the extra cost incurred due to fuel rebates being given away as incentive<br />MINIMAL INVOLVMENT: - A campaign giving NO FUEL REBATE but DISCOUNTS on services and products available at stores of alliance partners. In such a campaign alliance partners majorly associate in-kind and one major alliance provides for money that has to be used for providing logistics and promotional expenses. <br />INSTANT GIFT REDEMPTION: - In this type of campaign an INSTANT GIFT like a soft drink can or a packet of chips is given away on select purchase of branded fuel. IOCL provides the alliance partner (that provides free gifts) with major promotional space. Some portion of the revenue earned by selling branding options at IOCL pumps is used for providing logistics and promotional expenses. <br />DOUBLE EVENT CAMPAIGN: - In this two events are organized, one being the sales promotion campaign and the other being the END EVENT for which passes are given away as incentives. Two – way revenue is generation is done from the END EVENT as well as by selling branding options. The revenue earned can be channelized to provide for organization of the END EVENT and the logistics and promotional expenses.<br />FINAL DRAFT<br />35<br />Aneesh Bhandari; LBSIM Delhi<br />
  88. 88. Limitations<br /><ul><li>The actual costs of the various parameters like cost of event, logistics, flex hoardings etc. may vary. The figures mentioned in the cost sheet have been obtained from industry experts in event management.
  89. 89. The actual manpower required for the campaign may not be determined perfectly before the campaign is in its implementation phase.
  90. 90. The campaign may have to be restricted to a period of less than 60 days if the planned amounts of passes are already exhausted.
  91. 91. Factors like meeting a sudden surge in demand for branded fuels have not been considered. The company officials claim that they can meet any possible demand but there is a lot of learning to be done from the SPC of Shell in the USA in the year 1984</li></ul>36<br />Aneesh Bhandari; LBSIM Delhi<br />
  92. 92. Sales Promotions: Shell in USA<br /><ul><li> Make Money (Operation Leo) – In February, 1983
  93. 93. Duration: 6 weeks
  94. 94. Unplanned success
  95. 95. Integrated Network of Pumps
  96. 96. Smart Card Technology and Shell
  97. 97. Triple Rebate Program
  98. 98. October 2005
  99. 99. October 2006</li></ul>37<br />Aneesh Bhandari; LBSIM Delhi<br />
  100. 100. References<br />TEXT<br /><ul><li>Kotler, Philip and Armstrong, Gary Principles of Marketing Pearson, Prentice Hall, New Jersey, 2007 ISBN13 978-0-13-239002-6, ISBN10 0-13-239002-7 
  101. 101. Visha Consultants (nd) Market Research, Marketing Research. Tools and Techniques. 
  102. 102. Bradley, Nigel Marketing Research. Tools and Techniques. Oxford University Press, Oxford, 2007 ISBN-10: 0-19-928196-3 ISBN-13: 978-0-19-928196-1</li></ul> INTERNET<br /><ul><li>Aithal, R & Samanth, A (April 5, 2009). Is branded fuel worth the price. Rajesh Aithal on BlogSpot as a member of IndiBlogger, Retrieved April 17, 2009 from
  103. 103. Convenience Store News (October 2, 2006). Shell Brings Back Triple Rebate Program. All Business, Retrieved April 19, 2009 from
  104. 104. Thakur, P & Dutta, S (April 5, 2009). Are branded fuels worth it. Economic Times. Retrieved April 20, 2009 from</li></ul>38<br />Aneesh Bhandari; LBSIM Delhi<br />
  105. 105. References (contd.)<br /><ul><li>IBA (unknown). International Business Awards 2008 Winner. International Business Awards. Retrieved April 20, 2009 from 
  106. 106. Satchi & Satchi (January 8, 2007). Speed: High Performance Petrol. Marketing Practice. Retrieved April 23, 2009 from
  107. 107. ICMR (2003). The Indian Petroleum Industry: Towards Branded Fuels. ICMR Centre for Management Research, MKTG059. Retrieved on April 30, 2009 from 
  108. 108. Mud Valley (unknown). Brand Scorecard. Mud Valley – Brand Marketing Community. Retrieved on April 30, 2009 from</li></ul>INTERNET – SEARCH<br /> Search keywords: Royal Dutch Shell, XtraPremium, XtraMile, Branded Fuels, Indian Oil, BPCL, HPCL, Sales Promotion Campaigns, Speed Petrol, Power Petrol, Branded Fuels in India, Turbojet, Josh Petrol, Shakti Diesel Car in a tank Offer, Aish in Malaysia Offer, Brand Scorecard, Excel for frequency, Indian Oil Advertisements, Speed Advertisements, XtraPremium Advertisements, XtraMile Advertisements, BPCL Advertisements, Pearson Coefficient ON the following websites:-;;;;; <br />39<br />Aneesh Bhandari; LBSIM Delhi<br />
  109. 109. *****End of Presentation*****<br />June 22, 2009<br />Aneesh Bhandari, LBSIM New Delhi<br />