Bio_Fuel

BIO Fuel September 10, 2008 This marketing plan executed by the energy giant BP, will be marketed primarily to those segments of the market that have the greatest amount of Alternative Fuel Vehicles (AFV). The areas of primary focus will be government agencies worldwide, military vehicles, the large fleets of diesel powered transportation companies, and to the common household driver. The use of alternative fuels in nations is designed to meet the needs of Governments, environmentalists, corporations, and the citizens of nations globally. It is the goal of Bp to meet the fuel needs of nations worldwide, while at the same time satisfying the demands by government agencies and environmentalists. By using bio-fuels Bp plans on being the world leader in reducing the amount of carbon dioxide that is contributing to climate change. It is the objective of Bp to market its products safely and allows the public to access not only its success, but also its environmental track record. The marketing mix includes providing fuel that burns safer and puts money back into the pockets of hard working citizens. Bp plans on marketing its product as a new “green” fuel that is safe for the environment. Part 2: Situation Analysis – Internal Analysis BP is one of the world's largest energy companies. It provides its customers with fuel for transportation and energy for heat and light. BP also offers retail services and petrochemicals products which include gas stations, motor oil, lubricants and liquefied petroleum gas. In 2007, BP reported sales and operating revenues of $284 billion dollars while operating in 29 active markets around the world. BP is a global energy group employing over 96,000 people and operating in over 100 countries worldwide. It owns 17 refineries of which five are in the USA, seven in Europe and five are in other parts of the world. BP Alternative Energy has substantial businesses in Solar, wind and gas fired power and is developing projects in biofuels. BP is also investing in research to explore advance biofuels that will emit less carbon and use non-food crops. External Analysis Historically, pollution has been for the most part a local problem, affecting a given river, lake or the air in a city. Today, scientists are analyzing pollution on a global scale. Concern about the depletion of the ozone has led to international action to curb pollution. Another serious problem today is the dangerously high levels of carbon dioxide contributing to the global climate change. Carbon Dioxide is a by-product of fossil fuels, such as, crude oil, coal and natural gas. Due to the high amounts of fossil fuels currently being burned, carbon dioxide levels in the atmosphere have grown from 280 parts per million in 1900 to over 380 parts per million in 2007. There has been an increase in carbon dioxide in our atmosphere of 2.5ppm per year over the last few years and based on our dependency on crude oil, coal and natural gas, the effects can have a tremendous impact on our environment. BP was one of the first major energy companies to publicly acknowledge the need to reduce carbon emissions. BP Alternative Energy was set up in 2005 and in a short time, has made a tremendous difference. Over the next 10 years, BP aims to invest $8 billion dollars in solar, wind, hydrogen and natural gas power technology and projects that will help reduce carbon dioxide further such as biofuels; and by 2008, it plans to eliminate 24 million tons of carbon dioxide. BP is implementing new technologies in Brazil and the USto produce Biofuels made from Crops such as corn and sugar cane. The initial biofuels are a good start but as concern grows about their ability to meet growing demands and greenhouse gas efficiency. New generation of biofuels are being explored using the whole plant in the process and utilizing feed stocks such as grasses and agricultural wastes. It is expected that future biofuels will reach a higher level of greenhouse gas reduction. Furthermore, advanced biofuels can reduce the need to utilize land currently used for food crops. Biofuels have the potential to reduce overall greenhouse gas emissions compared to conventional fuels. By gaining experience in the more sustainable of today’s generation of biofuels and seeking to produce them as efficiently as possible, BP is well position to deploy advanced technology options in an environmentally and economically approach. Part 3: Marketing Objectives – BP is a large Corporation and markets products in more than 100 countries dealing with several products these products include but are not limited to “gasoline, gasoil, marine and aviation fuels, heating fuels, LPG, lubricants, bitumen.” (BP,2008 ) And they are also working on Bio Fuels. *Chart of global fuel ethanol* production {draw:frame} (BP,2008) BP has a television advertisement now that that states BP stands for beyond petroleum. The fact that BP is investing millions of dollars to research alternative fuels like Geothermal, Solar, Wind, Ethanol and Electricity. BP feels that “Hydropower, wind and wave power, solar and geothermal energy and combustible renewables and renewable waste (landfill gas, waste incineration, solid biomass and liquid biofuels) are the constituents of renewable energy” (BP,2008) This marketing objectiveis trying to reach the public and inform them that they’re not a standard oil company. That they are trying to be more responsible and earth friendly by producing a product in environmentally friendly plants and making a product that is more environmentally friendly. “ BP aspires to minimize the impacts of our activities from initial planning to the running of operations through to the remediation of sites no longer used”(BP environment in society,2008) Part of their market objective is obtained by making the company transparent this lets the public look at information that they have gathered to see whether not they are truly being environmentally friendly an example is the 2007 environmental performances summary. This Information was obtained at their website under the environmental performance tab. It shows the difference between their performance in 2007 and 2006. Market Selection: Target Markets The main target market is going to be all those with vehicles that run on biofuels, Ethanol in particular since they seem to be most common. We can also consider our marketing to also be directed toward those that don't have a biofuel car, but we should keep marketing to those who can't easily benefit from using our fuels to a minimum, as it's much more of an uphill battle convincing someone to buy the vehicle to use our biofuels. Those that most commonly use Alternate Fuel Vehicles, or AFVs for short, are those that run a fleet. The largest fleet of AFVs belongs to the United States Postal Service, so we need to pay particular attention to them. Other services that are commonly going to have AFVs are the government, the armed forces, either of which a contract with would be a very good idea, as well as UPS, Sunline Transit, and Super Shuttle (National Institute for Automotive Service Excellence (ASE), 2000). Marketing to other poorer countries seems like a good idea at first thought with the fuel prices being lower, but when you weigh in with the cost of the initial investment for getting a vehicle with biofuel capabilities, it becomes just as much as any other new car. There may be a few cars in those kinds of countries with conversion kits, but the likelihood of there being a concentrated group of them, enough to make profit from, is a very slim chance for quite a few years. One of the other markets we may not want to look into advertising to too much is trucking companies and similar organizations that have to travel long distances from their terminals. This would be due to the fact that a lot of biofuels don't get the same fuel economy as gasoline. The message is starting to get out that ethanol in particular hurts fuel mileage, and there's no need to convince those who would really notice it to use it since it would only result in bad press and perhaps steer more customers away than we would have lost had we simply not advertised as much to them. CNG, or compressed natural gas, is also an up and coming player in the alternative fuel market. With the Honda Civic being one car that offers it as an option, and many shuttles now using it, we should look for it to become even more popular in the coming years. With this being true we need to look into including it in our advertisements. We need to point out why it's better to buy our CNG than to own a Phill home pump, as those particular systems seem to be our biggest adversary at the moment (American Honda Motor Company, 2008). One thing we may benefit from advertising to consumers is that even if their vehicle isn't a flex fuel vehicle, our gasoline still contains 10% ethanol. For those that are environmentally conscious this may help guide them to use our fuels over others. Other benefits to advertise would be that today's vehicles will last longer on a 10% blend of ethanol due to it's ability to burn cleaner and run cooler, as well as keeping fuel from gumming up like regular gasoline will when left sitting for some time. If reducing pollution doesn't get them, perhaps protecting their second most expensive investment will. (EPIC, 2008) One other group we may target our advertising towards is those that believe Ethanol will hurt the performance of their vehicle. This year the factory backed Corvette team in the American Le Mans Series are running their Corvettes on ethanol in order to compete in the series “Green Challenge”. Not only does this prove that ethanol can be used in high performance applications, but the Corvettes also have quite the record when it comes to winning. With the Corvette being a symbol of performance and the team's winning record, it shouldn't be a huge problem to change a few minds about that. As a recap, our targets are those that: A. Own a fleet of vehicles, as they have the most to gain, not to mention it reduces the amount of pollution they make. B. Owners of flex fuel vehicles C. Owners of CNG vehicles D. The environmentally conscious E. Those that want to extend the longevity of their vehicle F. Those that believe their car won't perform as well with a biofuel We have also established that it is in our best interest to avoid: A. Those without a vehicle running on biofuel B. Areas where potential biofuel users are few and far between C. Those that travel long distances on a regular basis The key to having a profitable ad campaign is to target as many people as you can without spending any more than you have to; getting the best bang for your buck if you will. What better way to fulfill this goal than to target the biggest players and the most widely used products' Everyone finds the idea of providing some sort of a benefit for someone else attractive as long as it isn't too far of a stretch. Once the market finds out using biofuel isn't as hard as they once thought, our products will practically sell themselves. Part 5: Marketing Strategy- Tom Adams BP is the world’s third largest oil concern behind Exxon Mobile and Shell. Chevron is close to these just below BP. To get an idea where BP stands in regards to sales and number of employee’s we have provided a chart. This information was obtained from Hoover’s website that listed an overview of the company Bp and their competition. Bp currently competes in 3 areas of the fuel industry according to the following: Energy & Utilities {text:list-item} Chemicals {text:list-item} Retail {text:list-item} While these may be the main areas that they compete with the industry, the one competitive edge is their commitment to alternative fuels and an ever increasing focus on saving the environment and the pocket books of the citizens of the world. The other competitive advantage that Bp will continue to push is the price of their products being affordable for business and families. Another key competitive advantage is providing a product that is safe for your vehicle. One of the fears of alternative fuels is that the new technology was hard on the seals and valves in older and newer vehicles. Bp partnered with Invigorate, a chemical company to assure its customers that its fuel would be safe for the automobiles engines. Our marketing strategy is not to just market alternative fuel, but to responsibly market a safe bio-fuel for the world. Bp recognizes that not all bio-fuels are the same. Bp will take upon themselves the social responsibility of environmental and social concerns. According to the company website on bio-fuels they state the following: “That's why BP is investing in a range of biofuels-related activities around the world, all aimed at bringing biofuels into the mainstream by making them more widely available to motorists. However, some biofuels are better than others, and in a rapidly developing industry and marketplace, it is BP Biofuelsresponsibility to ensure that emphasis is put on achieving better, more sustainable biofuels, sooner.” (Bp, 2008) Bp’s strategy is to continuously provide the public with new technology that is safe for them and their environment. This places the product in the introduction and growth stage of the life cycle. Bp is committed to innovation that leads to a product that everyone needs. Bio fuel is a product that is made from organic material and can be processed in such a way that it creates a replacement oil or combustible fuel for energy use. Bio fuels include bio diesel, and ethanol which is a type of grain alcohol that can easily substitute Gasoline. The fuel can currently be used in part with gasoline and reduces fuel price and green house emissions. There is a push to create vehicles that burn 100% bio fuel in which case it will be an inelastic demand for this product. The product is much different than gasoline in that it is much cheaper and better for the environment. It also reduces our need for foreign imported oil and can be produced in the United States. The fuel will be marketed as green fuel and less expensive than gasoline. Bio fuel unlike petroleum can be locally made and requires much less transportation than oil. Bio fuel can be transported using g local transportation assets such as truck and trains that are equipped with tanks. One example of how this process works is the organic material is harvested in a local farm. This material is transported to a refiner that will use a chemical process to break the organic material down into combustible fuel. This fuel will be pumped into tanks and transported to a local petroleum refinery where it can be pipelined to large markets or blended with petroleum fuels and delivered to local filling stations for consumer use. Bio fuel pricing is determined by several factors. The highest production cost is the refinery process and then transportation of the raw material and the fuel to the market. Then there is the cost of the raw materials themselves. This can be different based on the type of crop being used and the current demand for that raw material. On average bio fuel can be cost anywhere from 25%-50% less than petroleum fuels. Some of the communication objectives for BP are to advertise the fuel as “New” and green. There is a large movement to these fuels and the success in Brazil BP is trying to brand its name as an energy company not just a petroleum company. Oil companies are seen in many countries as the “bad guy” and BP’s marketing team is trying to change the image of oil companies as energy providers. Part 7: Budgets, Control, and Accountability – The objective of Bp in relation to control and accountability will be to use sales analysis to provide key managers with the necessary information relating to sales activity in order to improve profitability. Key measures will be to recognize the most profitable customers and to analyze market trends and geographic buying patterns. Top managers will be responsible for following budgets and will return and report successes and challenges on a scheduled basis. Internal audits will be performed to see that budgeting goals are being met and an external auditing firm will be hired to hold top financial officers accountable for up to date information for its share holders. All employees will be held to strict moral and ethical guidelines as established by Bp and local government agencies. The CEO, top financial officers, and managers, will be held responsible for moral and ethical guidelines for the company worldwide. An Ethics division of Bp will established where employees will feel free to openly discuss matters of moral and ethical concern without the risk of losing their job. References The Number of Gas Stations Offering Non-Oil Product Business Service Run by BP, TOTAL and Royal Dutch Shell Etc. In Europe Accounts For 85% of the Total. (2008, June 11). M2PressWIRE, Retrieved September 14, 2008, from Newspaper Source database. About BP, Products and Services, Alternative Energy, (2008) http://www.bp.com/home.do'categoryId=1&contentId=2006973 Earth2Tech: http://earth2tech.com/2008/04/24/bp-buying-into-brazilian-biofuel/ OECD. (2008). Executive Summary- bio fuel. Retrieved September 19, 2008, from OECD.org: http://www.oecd.org/dataoecd/56/60/41256075.pdf Environmental Science: Toward a Sustainable Future, Tenth Edition, By Richard T. Wright. Published by Prentice Hall, Copyright, 2008 by Pearson Education, Inc. About BP, Products and Services, Alternative Energy, (2008) http://www.bp.com/home.do'categoryId=1&contentId=2006973, Bp. (2008). Bp About Invigorate. Retrieved October 4, 2008, from Bp. (2008). Our committment to bio fuel. Retrieved October 3, 2008, from http://www.bp.com/sectiongenericarticle.do'categoryId=9021782&contentId=7041023 Hoover. (2008). Bp company overview. Retrieved October 3, 2008, from http://www.hoovers.com/bp/--ID__58872--/free-co-factsheet.xhtml