Retail marketing strategy for Caltex (Philippines) Inc.

• Main Author: Trinidad, Rico R.
• Format: text
• Language: English
• Published: Animo Repository 2000
• Subjects: Petroleum industry and trade > Philippines; Business Administration, Management, and Operations
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/2765
• Institution: De La Salle University

Caltex is a major player in the Philippines petroleum industry. This study seeks to develop a corporate strategy for Caltex, particularlt for its marketing retail business. Marketing retail is significant for the oil companies because this is where the high value products from crude refininf are marketed. An analysis using Porter's Five Forces model disclosed the following: (1) There are two types of buyers: general motorists and dealer operators. The general motorists have high bargaining power due to lack of switching costs, while the dealer operators have low bargaining power since there are only a handful of petroleum companies currently operating in the country. (2) There are two types of suppliers: crude oil and/or refined products suppliers and service contractors. Both suppliers have low bargaining powers. (3) There is a low threat from substitutes. Although there are technological advances in the development of green vehicles , commercially viable substitutes still have a long way to go. (4) There is moderate threat from potential entrants despite the all-out support being extended by the government to prospective investors. (5) There is a high threat from rivals within the industry. Slow industry growth, balanced competitors, lack of switching costs and exit barriers brings about this intense rivalry. A close look at the company operations revealed the company's strengths and weaknesses. Notable strengths of Caltex are as follows: (1) There is a positive customer reaction with respect to the company's new retail identity (2) Caltex has the benefit of having access to new technologies which it can exploit to its advantage (3) Service stattions operate better in terms of customer service as compared to Shell and Petron. On the other hand, the following weaknesses of the company were noted: (1) Caltex has the smallest retail network in the industry and (2) It has many underperforming service stations. Considering all the factors mentioned above, it is recommended that Caltex adopt a FOCUS strategy. This generic strategy is built around serving a particular target market: the younger, affluent, higher mileage gasoline customers and the professional diesel users. With this in mind, functional strategies are developed for each retail throughout drivers, as follows: Location- New Outlet Program, Lease Renewal Program and Rationalization Program. Facilities- Reconstruction Counselor Training, Equipment Upgrading and Retail Automation Operations- Retail Counselor Training, Formal Dealer Selection Process, Dealer Training Programs, Forecourt Attendants's Program and Customers First Program Brand- Brand Identity Program, Tail Management Program and Advertising.