Income: R7000 and above
LSM Upper middle and lower middle
Lifestyle: Liberal, adventurous, health orientated
Currently the target market is the adult market and the ice cream is positioned as the ultimate in personal indulgence as per the diagram below
12.1 Size of market
The product consumption patterns for the industry for 2000
are as follows:
Motor oil – 199 million litres
Industrial oil – 152 million litres
Grease – 14 million KGs
12.2 Market Share
Caltex is the industry leader in terms of lubricants, The graph below details the total market share for the Lubricants industry.
Figure 1 Lubricants Total Market Share
13 MARKETING MIX
13.1 MARKETING OBJECTIVES
Product: To increase the market share by 5%
Product: Economise the lubricants product range
Price: Maintain the current price position, between the more expensive & cheaper.
Promotion: Establish Caltex as a brand of choice while increasing brand awareness
Place/Distribution: Improving the current distribution network
Place/Distribution: Increase customer care and satisfaction
Personnel Retain current staff through increased job satisfaction
14. STRATEGIES AND TACTICS
14.1 Product
To increase the market share as well as gain the competitive edge Caltex needs to market the lubricants for the cutting oils industry, this product was created through the technology of Chevron and Texaco. Although the market is small, it is highly specialized and highly lucrative.
It is recommended that presentations be made to stakeholders in the cutting industry, where the product capabilities can be highlighted. An idea might be to offer a 24 hour customer care service which might give Caltex the competitive edge. Another alternative could be to provide the cutting oil free for trails to the customer and only when the client is satisfied, with the performance of the oil, will payment be expected.
The product range should be streamlined so that slow movers which are uneconomical can be removed. More focus should be placed on products that are doing well, like the PCMO’s, HDEO’s and industrial lubricants range, and more brand awareness should be created for these products.
PCMO’s
Caltex has the Havoline range, which caters from the lower spec to the highly specialised fully synthetic oils. The Havoline Energy has outperformed the competitor’s fully synthetic oils though it is a mineral based oil.
HDEO’s
Caltex has a comprehensive range of HDEO’s. It is the Delo range (diesel engine lubricating oil), which caters from running in oil to the highly specialised fully synthetic. It therefore caters for all individuals from high spec to low spec.
Industrial lubricants
Caltex has wide range of industrial oils and greases that are well established within the mining sector. The Meropa range on industrial gearbox oils enjoys a strong position in mining. It has managed to resolve overheating problems in many instances.
Caltex will have to embark on an aggressive promotional strategy running competitions through the service station network and the retail outlets. The competitions will be aimed at getting people to read more about Caltex products thereby creating brand awareness
14.2 Price
The oil industry is very price sensitive. The strategy is to maintain the prices between the most expensive and the cheaper supplier also capitalise on selling a better product for less. In a price sensitive market such as the lubricants market this can create a real competitive edge. Caltex has better products in terms of quality and specifications.
Castrol are the most expensive in the market, they can do so because their aggressive marketing has created the perception that their products are better, because of this, people do not object to paying a small premium. What Caltex also has to do is to maintain their pricing position until such a time that the market realises that they have a better product and they can raise their prices above the market. The current margins are good and viable for the long term
14.3 Promotion
Caltex should embark on a sales promotion project with the help of a high profile sports person to be identified. It will be effective to carry out these promotions on a Saturday after month end, at major shopping malls , when they can reach a maximum amount of people.
It is also recommended that a strategy that creates an awareness of the capabilities of the Caltex products be embarked upon. Currently the perception is that all oils are the same and people do not focus on the real capabilities of the different brands.
While workshops understand a bit about lubrication, their objective is to make this filter down to the vehicle owner so that they may be able to demand that only the best be used in their car. Some customers take a 5 litre of the oil of their choice when they take their cars in for service. This is the level of awareness that Caltex should seek to create.
All Caltex carry approvals and endorsements from all the major OEM’s in the various fields. The plant is to publicise the OEM approvals. For example Caltex has the only AA approved unleaded fuel and Caltex does not utilise this edge to the maximum. The average person on the street does not know this, yet market research has shown that most people are aware of the motto for Castrol as “A Can of the Best”.
The approvals of the products should be loudly displayed on the packaging so that people are drawn into reading it. While most people are not interested in lubricants, they can see that a product that comes highly recommended by most OEM’s must be a good product.
Another marketing tool may be the use of testimonials from other customers that feel that they have attained value from Caltex. This can be done on videos and testimonial letters that are used when making presentations to prospective customers.
More aggressive advertising of their superiority in the cutting oils sector should be embarked upon. The adverts can be placed in print media such as Engineering News, Fleet watch, and Auto Engineering.
14.4 Place/ Distribution
By improving the distribution network and also increase customer care , sales will also be increased, this can be achieved by ensuring that the distribution channels are sufficient to service all potential buyers.
Although the current distribution network is good and has outlets in all-major centres, i.e. in Johannesburg there are three depots (Alrode, Benoni and Krugersdorp), it has been found that they are not enough to effectively service all potential buyers Its imperative to identify the most commonly used industrial products, select a few strategically positioned service stations, which would carry industrial stock on behalf Caltex and get a handling fee. When a customer calls to make an enquiry about a product they would then be directed to the nearest service station that carry both stock of automotive and industrial products.
Its recommended that better co-ordination between manufacturing, distribution and sales is established so as to ensure that customer needs are met and that the expected level of service is achieved.
A customer service centre has to be established so that better customer service can be achieved. The aim is to ensure that with a single phone call, customers can have all their needs met in terms of account queries, technical support and product and price queries.
14.5 Packaging
In order to penetrate the growing township market, the packaging should be taken into consideration. Packaging will remain largely as is it except for a few brands. The idea is to have packaging, which is viable for the individual servicing one vehicle to the small workshop servicing four cars to the big workshop requiring bulk supply. There are several gearbox oils, which are not available in 500ml and only available in 20litres and over. Such a package is not viable for the DIY individual. Discounts can be provided for the township sector if they use Caltex products.
14.6 People / Retention of staff
In order to retain their staff, job satisfaction has to be increased and Caltex has to ensure that the needs of their staff are met simultaneously with the needs of the company. Offering better rewards systems is an option and also shifting from a sales to a marketing orientation organisation where the relationship building with the customers is emphasised and where the relationships are long term and based on adding value and meeting customer needs.
15 RECOMMENDATIONS
In order for Caltex to penetrate the new desired markets of retail sector, pulp and paper and cutting oils, more people will have to be employed and trained to meet these challenges. The sales team will have to be supported by a strong marketing team to direct strategy and provide the relevant information about the market. A business analyst who will be based in Johannesburg will have to be employed. Currently there is one business analyst for the entire business unit, who is based in Cape Town, while 70% of the market is based in Gauteng.
It is also recommended that a Lube Engineer who is familiar with the pulp and paper industry be employed. Two people have already been brought on board for the retail sector and additional two have also been employed for cutting oils.
Another recommendations is that the current Training budget be increased from R17 000 to R67 000 in order to meet the training needs of this sector. The cutting oils sector, is very lucrative and will enable Caltex to meet its objective of attaining and increase in the market share of 5% by year end.
The detailed promotional strategies should also be embarked upon to ensure that increased brand awareness is attained, the financial implications of it, will be evident in the bottom line, as we forecast a 3.5% increase in sales by the end of 4 months.
15. CONCLUSION
Bibliography
16. BIBLIOGRAPHY
Summers, M. (1996): Marketing Management, London: TVU
Kotler, P. (2000): Marketing Management: The Millennium Edition, New Jersey: Prentice-Hall
McDonald, M. H. B. (1992) The Marketing Planner, Oxford, Butterworth-Heinemann.
Etzel, M. J., Walker, B. J. , Stanton, W. J. (1997) Marketing 11th Edition, Irwin – McGraw-Hill