Chevron Corporation - Essay Example

Segmentation, Targeting and Position Of Chevron Corporation Introduction In the era of the modern competitive business environment, organisations always choose the best strategies to achieve competitive advantage (Sharma, 2013). In this regard, companies are keen to adopt the modest strategies to stay ahead of their competitors. As such, marketing is one of the areas that organisations have been able to use to their full advantage to remain relevant in the contemporary business environment (Wilson & Gilligan, 2012). Thus, it is common to hear companies choosing the best strategies or approaches to segment, target and position their brands in the market. Market segmentation is the grouping of the target customers into sub-units based on their common needs while targeting entails reaching out to the important customer segments then developing products that have good image among the customers, otherwise brand position (Burke, 2011). Successful market segmentation, targeting and position are the bases for Chevron Corporation's success in the energy sector. The company, through high commitment from approximately 62, 000 operates in a global scope, opening businesses almost in 180 countries with the product portfolio comprising oil and gas, geothermal and as such, explores, produces, refines and also market chemicals for power generation (Chevron, 2015). The success in marketing Chevron as a brand has earned the company impressive global rankings because the corporations always appear in the Fortune 500 company list (The Ohio State University, 2010). Therefore, it is imperative to find out how the organization segments, targets and positions its brand relative to the competitors like BP, Shell, Exxon Mobile and Marathon. Segmentation Market Segmentation, by definition, is the grouping of customers into sub-units or segments based on their needs implying that a particular market segment has the same needs and as such, a business develops the same marketing strategy to respond to the needs (Weinstein, 2013). Segmentation of target markets takes three approaches namely undifferentiated, concentrated and differentiated. In this regard, undifferentiated segmentation entails a business treating customers as the same or when an organisation targets homogenous market while concentrated segmentation occurs when a firm focuses on several market segmentations that have same needs and preferences, for instance, price sensitive consumers (Cleveland, Papadopoulos & Laroche, 2011). However, differentiated market segmentation entails a business targeting many market segments or heterogeneous markets as with the case of Chevron Corporation because it has various business segments (University of Oregon Investment Group, 2009). Chevron’s market segmentation depends on both the upstream and downstream business segments. Upstream business operations include exploration, development and production of natural gas as well as crude oil while downstream operations involve crude oil refinery, marketing in addition to the transportation of the finished or the final petroleum products (University of Oregon Investment Group, 2009). Nonetheless, businesses divide their market using demographics, psychographic, behavioural and geographic criteria when segmenting their markets (Cleveland, Papadopoulos & Laroche, 2011). Demographic segmentation takes into consideration customer characteristics including gender, age, education, income status, cultural background and job. In terms of age, Chevron has segmented its markets to include children by stressing on importance of education, young adults and the adults as the individual demographic segment that buy finished oil and gasoline products (University of Oregon Investment Group, 2009). On the other hand, psychographic segmentation entails looking at the lifestyle of the customers including their personality, attitudes, social class, opinions and lifestyles. The corporation produces natural gas to target personalities and attitudes that are environmentally conscious since the ventures on the renewable energy source, natural gas, targets customers who have the need and urge to protect and conserve the environment. In terms of social class and lifestyle, the corporation has ventured into oil and gas exploration developed and the developing countries and as such, prices favour both the economies of high and low social class (Chevron, 2015). Moreover, Chevron Corporation adopts a behavioural segmentation where it divides buyers based on their uses, responses, and knowledge. Behavioural segmentation takes into consideration such variables as benefits, user status, user rates, loyalty status, readiness stage and attitude towards the product. For instance, there are market segments that buy crude oil products while other segments prefer the finished products like gasoline and other ready petroleum products (University of Oregon Investment Group, 2009). Moreover, Chevron Corporation has a unique geographic segment where the Asian segment that accounts for 32% of the total oil production provides 770, 000 barrels daily(Chevron, 2015) On the other hand, there are the US and Canada segments with 32% production accounting for 745,000 barrels a day (Chevron, 2015). The African segment is also a significant segment with 18% production capacity or 433, 000 barrels a day while European, South America and Australian segments produce 8%, 5% and 5% daily, each contributing 179,000, 115, 000 and 108, 000 barrels a day respectively (Chevron, 2015). The way Chevron Corporation segments its markets takes into consideration the five criteria for effective segmentation. Firstly, it must be measurable concerning the size of the market, purchasing power and the characteristics of the market (Cleveland, Papadopoulos & Laroche, 2011). Conversely, it has to be substantial because Chevron chooses large segments that are profitable besides selecting accessible local, national, regional and global markets (Chevron, 2015). Chevron also chooses differentiated segments where some prefer the gasoline products while others prefer liquefied natural gas. Finally, Chevron uses the actionable criterion to choose the target markets since it has formulated programs, differentiated marketing mix, to attract and serve the various segments. Market Targeting After a business segments its markets into different classes and groups, it has to choose the targets (Armstrong, Adam, Denize & Kotler, 2014). However, there are certain factors that a business has to put into consideration before deciding on which targets to choose. Firstly, an organisation has to find out how other manufacturers serve the existing markets because it is always difficult to serve a market segment that is already enjoying services from other manufacturers (Wilson & Gilligan, 2012). On the other hand, a business has to evaluate the size of the market segment and its prospects for growth and finally, it is imperative to assess strength that will help the company become more appealing to the consumers. As such, a company can choose undifferentiated targeting where it considers a market as a group that requires a single marketing strategy while it also has the choice of a concentrated targeting by focusing on a segment and as such, concentrate on understanding its characteristics (Hollensen, 2015). Moreover, an organisation can use multi-segment targeting by settling on more than one market segment and as such, developing a differentiated marketing strategy. For instance, Chevron uses a multi-segment targeting since it identifies with the small businesses through direct advertisement using the small business managers who maximise Chevron’s resources to target the small-scale businesses like gas stations (Chevron, 2015). On the other hand, the company targets children by promoting the importance of education and college students with job opportunities. Moreover, there is the targeting of local as well as foreign communities by advertising the benefits of Chevron as a brand as well as the importance of having Chevron Corporation as an active organisation in their communities (University of Oregon Investment Group, 2009). In this regard, Chevron adopts the differentiated marketing strategy since the company markets its products to several segments thus uses a marketing mix strategy to target gas stations, auto industries and marine services. Market targeting also entails dividing the different market segments into various geographical units including nations, regions, counties, states, cities, population density and neighbourhoods (Armstrong, Adam, Denize & Kotler, 2014). For instance, Chevron targets Australia as a region and a country with various projects for exploring liquefied natural gas. The Gorgon Project is the largest single resource in Australia with the production capacity of 15.6 million metric tons of liquefied national gas annually (Chevron, 2015). The corporation also targets the Australian market with the establishment of a natural gas plan. Also in the Australian region, there is the Wheatstone project as an LNG facility producing 8.9 metric tons of liquefied natural gas annually, in addition to the North West Shelf Venture operating a domestic natural gas plant and LNG processing (Chevron, 2015). All these Australian projects produce various Chevron products as a targeting strategy for the Australian market. Chevron also targets African region with various national projects including the Angola LNG Project where the corporation has plans to revive its operations in 2015 (Chevron, 2015). The company also targets the Nigerian oil market with the Nigerian National Petroleum Corporation partnership to produce natural gas. Besides, the corporation targets Africa with its products through the Niger Delta project in Nigeria where the aim is to develop numerous projects in the Delta as a way of increasing the regional and national power generation capacity and as such, reduce the flaring of natural gas (The Ohio State University, 2010). All the projects in Africa indicate that the corporation is targeting the western African region with its oil and natural gas products. The asian region is also an important target market for Chevron Corporation where, for instance, the corporation has the Bibiyana project in Bangladesh for natural gas production (Chevron, 2015). Also in Thailand, there is the Plantong II project with the aim of boosting domestic gas production, besides, the Chinese target with the Chuandongbei in the Sichuan Basin (The Ohio State University, 2010). Moreover, the corporation does regional and national market targeting in Latin America. In Colombia, for instance, Chevron runs Chuchupa, Roihacha and Ballena natural gas fields in the La Guajira province(). There is also the El Trapial project in Argentina that started operating in 2014, as the project meant to explore gas and shale oil resources (The Ohio State University, 2010). Nonetheless, the corporation targets the prolific North America and European markets especially with the Permian Basin in the USA, besides other projects in Canada and the USA. In this regard, the corporation targets the rich shale formations in the Permian Basin (Chevron, 2015). In Europe, the company explores the North Sea fields with the capacity of 88 million ft3 per day (Chevron, 2015). Positioning Positioning, by definition, refers to the act of developing a particular brand and as such, creating a brand image to impress the consumers (Blankson, Cowan, Crawford, Kalafatis, Singh, & Coffie, 2013). Simply put, a brand position is the place that a particular brand occupies in the consumer’s mind relative to the competitors. On the other hand, it involves improving the perception of the experience that consumers will enjoy upon purchasing a particular production (Burke, 2011). Chevron Corporation has a positioning map that focuses on target market segments including energy and oil consumers. In this case, the corporation emphasizes quality, reliability, and sustainability to create a good image of its brands. It is important to note that effective positioning takes place after a detailed understanding of the competing brands or products as well as the benefits that the target market seeks after. In this case, Chevron understands the benefits that competitors such as BP, Shell, Exxon Mobile, and Marathon provides to the customers. Nonetheless, a good positioning must involve the identification of the differential advantages that the product offers relative to the competitors. In this regard, Chevron uses low-cost strategy to provide and services at affordable prices. On the other hand, the Corporation differentiates itself from the competitors through value addition on the products since it has highly proficient engineering and technology experts. Competitive Overview/Comparative Analysis The most common competitors of Chevron Corporation are Exxon Mobile, PetroChina, and BP. A 5P market analysis of their products, price, position, place, and promotion offers Chevron Corporation to carry out a comparative analysis of these competitors. In terms of product, Exxon Mobil Corporation diversifies in production, transportation, and sale of natural gas and crude oil besides the diversification into other commodity petrochemicals like aromatics, olefins, and polyethene plastics (Du & Vieira, 2012). PetroChina has diversified its products into diesel oil, gasoline, naphtha, paraffin, and other lubricants while BP enjoys a product portfolio of natural gas and oil (Bhatia, 2013). In terms of place, Exxon Mobil targets United States, Africa, Middle East, Europe, and Asia Pacific while BP targets United States, Canada, Russia, Asia Pacific, Azerbaijan, Egypt, Angola, and Trinidad and Tobago (Du & Vieira, 2012). BP matches prices between its competitors where the pricing strategy is profit oriented and promotion is through advertisements especially home advertisement pumps with the reward program CSR activity (Balmer, Powell & Greyser, 2011). Exxon Mobil's establishes its prices based on supply and demand while the company promotes itself through commercials, advertisements and issuing of discounts and codes. PetroChina uses the same pricing strategy as Exxon Mobil where demand and supply dictates prices and it focuses on customers getting value of what they pay for while promotion is also through advertisements, commercials and even social media promotional strategies (Bhatia, 2013). British Petroleum positions itself as a brand that focuses on environmental sustainability but the tragedies like the Gulf of Mexico saga that was an advantage to strong competitors like Chevron Corporation (Balmer, Powell & Greyser, 2011). On the other hand, Exxon Mobil positions itself as a socially responsible company stemming from its various CSR projects, the same strategy that PetroChina uses to position itself in the energy market (Du & Vieira, 2012). Conclusion In summary, Chevron Corporation effectively uses segmentation, targeting and positioning to gain competitive advantage. In terms of segmentation, the company uses the recommended criteria for dividing its target markets including demographic, psychographic, geographic, and behavioral aspects of the market segments. On the other hand, it targets the segments based on their geographical characteristics and as such, the company has its targets of local businesses, regional businesses as well as the global market opportunities in American, African, European, and Asian regions. In terms of positioning, the company stresses on quality, sustainability, and durability to build a good brand image. However, a comparative analysis shows the company ahead of strong competitors like PetroChina and BP but it has to use effective STP strategies to overtake Exxon Mobil in the energy industry. References Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2014). Principles of marketing. Pearson Australia. Balmer, J. M., Powell, S. M., & Greyser, S. A. (2011). Explicating ethical corporate marketing. 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