Sasol Limited: New Product, Service, and Marketing Metrics - Term Paper Example

? NEW PRODUCT/SERVICE DEVELOPMENT AND MARKETING METRICS Table of Contents Table of Contents 2 Introduction 3 Market Analysis 3 Evaluation of Relationships and Processes 6 Marketing Metrics 8 Conclusions & Recommendations 10 12 References 13 Introduction Sasol Limited is a multinational public organisation which operates in the petrochemical and energy sector. A wide range of products is offered by the company in various geographical regions of the world such as Africa, North America, Europe, Asia, and Middle East. Some of its product offerings include coal and synthetic fuels based on coal, oil, natural gas, illuminating paraffin, and other petroleum products. The company is headquartered at Johannesburg, South Africa, and was founded in 1950 (Yahoo Finance, 2012). This report entails introducing a product manufactured by Sasol into a new market. The report has been divided into three broad parts. Firstly, a detailed market analysis about the market facts and trends where the company’s product is suggested to be introduced for the first time has been discussed. Secondly, the key relationships between the buyers, suppliers and other key stakeholders involved in the process of marketing the product in the new geographical market in a profitable and effective manner has been included in this study. Lastly, some key measurement metrics have been discussed in this study, which can help to measure and evaluate the set objectives of delivering the product in the new market. At the end, some recommendations have also been provided for the company to launch its product successfully in the proposed new market. Market Analysis If we look at the business activities followed by Sasol Ltd. it can be found that the company is primarily engaged in the field of oil production in Gabon, gas production in Mozambique and coal mining operations in South Africa. The company has a network of 418 Sasol retail convenience centers through which its fuel products are marketed all over the world. The company’s revenues are generated through four business segments. They are: a) Energy cluster of South Africa, b) International energy, c) Chemical cluster, and d) Others. In order to achieve the objective of this study, one of the products produced by Sasol that has been chosen to be offered in a new market is the wax and associated products produced by Sasol Wax. Sasol Wax is considered to be a market leader in the field of supplying liquid paraffin, petroleum jellies, and waxes all over the world. These products are mostly derived by Sasol from the feedstock of Fischer-Tropsch and Oil Refinery (Sasol, 2012a). Next, the new geographical market that has been selected for introducing this product is in the country of Vietnam. The business operations of Sasol are carried out in the Asia-Pacific region through its regional offices located at New Zealand, Australia and Malaysia. Wax related products are manufactured and marketed by the company in the speciality and commodity wax market worldwide (Sasol, 2012b, p. 105). However, it has not marked its presence in Vietnam as yet. Hence, it can be a great opportunity for the company to capture the Vietnamese market and add to its profitability. The core idea of this study is to assess the strategic alternative of Sasol to explore and analyze the feasibility of introducing an existent product of the organisation into a new national market, i.e., Vietnam. Hence, before analyzing this strategic alternative, it is required to identify and assess the internal and external environmental factors that can create a sustainable opportunity for the company to introduce the proposed product in the new market of Vietnam. SWOT analysis can best serve the purpose of assessing the existing internal strengths and weaknesses and external opportunities and threats of the company that can be helpful in identifying the competitive advantage that can be gained through entering into a new market (Griffin, 2011, p. 68). The SWOT analysis of the company is presented in the table given below: Strengths Weaknesses Integrated operations followed by Sasol help it to increase the economies of scale Wide range of business portfolio Presence in diverse geographical areas helping it to offset the concentration risks Allegations related to excessive pricing and collusion leading to regulatory obligations for the company Opportunities Threats Expanding business into international markets Efforts to improve carbon and energy efficiency Operating margins could be affected due to stringent regulatory requirements Volatility in fuel prices The SWOT analysis of Sasol presented in the table above indicates that the company already has a broad business and product portfolio. Its presence in various geographical locations helping it to offset the concentration risks and a loss in one location can be offset through profits in other locations. Moreover, expanding the business activities of Sasol into international markets is an opportunity for increasing its revenue generation. Hence, it can be concluded that introducing an existing product in the form of wax products manufactured by Sasol Wax into the new national market of Vietnam could be a feasible strategic option for Sasol. This strategic alternative of Sasol corresponds to one of the four strategic opportunities that can be depicted through Ansoff’s strategic opportunity matrix. The proposed idea can be named as a market development strategy that needs to be followed by Sasol (Lamb, Hair and McDaniel, 2010, p. 22). Now, if we analyze the business environment in Vietnam, it can be found that according to the Doing Business 2013 Report published by the World Bank (2012), Vietnam has been ranked in the 99th position out of all the 185 nations that have been studied, and the ranking relates to the comparison of the nations in relation to the ease with which business can be done in the country. According to one of the business reports published by HSBC (2011), Vietnam has been considered to be an attractive location for doing business and its economic growth has brought into attention most of the multinational organizations which are looking to diversify their business operations away from China. Vietnam has large young workforce and there has been an increase in the disposable income of the Vietnamese people in the recent years. The growth rates in Vietnam have been adjudged to be the highest amongst the Asian economies and the level of poverty has also gone down considerably (New Zealand Trade & Enterprise, n.d.). Various other factors also make Vietnam an attractive country for the investors, such as low costs of labour in the country, the growth experienced in the consumer market, the gradual change leading to a market oriented economy, and efforts made by the Government to attract more foreign investment in the country (HSBC, 2011). Thus, the business environment in Vietnam provides a good opportunity for Sasol to introduce and create demand for its wax products in the market. The final phase of market environment analysis of Vietnam includes determining the potential target market segments in the country that can be used to position the proposed product of Sasol, i.e., wax products by Sasol Wax. The wax business is mainly found to serve a wide range of industrial sectors such as construction boards, cosmetics, candles, inks and coatings, corrosion protection, polishes, rubber and tires, textiles, road construction, polymer processing, etc. Hence, it is a great opportunity for Sasol to target all these business segments in Vietnam to cater to their specific needs and requirements of wax products. Moreover, the company also needs to develop a successful marketing strategy to market its products in these industrial sectors of Vietnam in an effective manner so that it can gain a competitive advantage and add to the profitability of the company. Evaluation of Relationships and Processes For a company to survive and do its business efficiently in a market place, it needs to maintain strong relationships with the stakeholders (Heijden, 2005). The key stakeholders in the industry where the company will be operating are suppliers, customers, employees, intermediaries, banks, and government. The relationship with the key stakeholders is highlighted in the table below: Stakeholders Relationship Supplier Suppliers procure raw materials to the company. The suppliers are responsible for the quality of the product. Distributors Distributors or other intermediaries are responsible for distributing the products to the end customer. For a new product and new market, a wide network of distributors is essential. Consumers Consumers are the most important stakeholder for a company as they provide revenue to the company. Media Media is also another important stakeholder for a new product. It is responsible for promoting the product. The marketing strategy to be followed by Sasol Limited in the markets of Vietnam is detailed below. Among the seven aspects of the service marketing mix, six aspects will be considered for this study. The proposed product by which the company intends to operate is wax. Through this product the company will be able to cater to a wide range of business sectors. Hence, it will be an advantage to the company. The price of petroleum products is highly influenced by the policies of the government of the target country and also, to a certain extent, global supply and demand (Gately and Streifel, 1997, pp. 56-57). Therefore, for pricing the company has to depend upon the international benchmark of the products. However, there are also large possibilities of price fluctuation. The Company can use distributors to sell their products directly to the end consumers. In addition, Sasol can also consider supplying the products to the stockiest, agents and wholesale customers. Now, since the target customers are also business ventures, the company needs to use conventional promotional strategies. Some of the ways by which Sasol can reach the target business customer are trade shows, business conferences, trade notices and also advertisements in the business magazines. Apart from the core elements of marketing mix, factors such as people and processes are important. People are the most essential aspect of the services marketing mix. Moreover, since the target customers of the company are other business ventures, service must be efficiently delivered to the end customers. In addition, the process used for delivering the products and service also plays a crucial role. To satisfy the customers by offering superior service, the company can use customer relationship management techniques. Marketing Metrics It is essential for the company to figure out how the marketing efforts help to build a loyal and large customer base. Marketing metrics is a process by which a company measures its marketing performance (Kotler, 2009). However, companies need to take disciplined measures while using timely, accurate and meaningful information. Therefore, to develop useful and more insightful marketing metrics, the company must focus on five fundamental aspects. The five aspects are customer-acquisition metrics, product "wow" metrics, essential metrics criteria, customer-retention metrics, and strategic accountability. However in this context of the study, the major metrics that has been chosen to measure the performance of Sasol Limited is break-even analysis for financial performance, revenue market share competitor analysis, and brand development index. In addition, several other metrics will be employed to calculate the different elements of marketing. Revenue market share: Market share can be defined as the total proportion of a market which is accounted for a particular product. It is mainly defined in terms of revenue or units. It is important that marketers should translate the overall sales into market share as this will illustrate how the sales target can be attained. The market share aspect mainly portrays the change in competition landscape (Lamb, Hair and McDaniel, 2008, p. 571). Therefore in order to calculate or identify the market share of the wax product in Vietnam, following should be used: Unit market share (%) = unit Sales/Total market unit sales Revenue market share (%) = sales revenue/total market revenue Brand development index and category development index: The brand development index tells us about the performance of a brand in a particular group of customers by comparing it with the standard performance measure among the group of consumers (Davis, 2010, p. 115). Brand development Index: - [Brand sales to group/Households] / [Total number Brand sales/Total number of households] On the other hand, the category development index is intended to calculate the sales performance of a particular product or service among a specific customer group by comparing it with the standard performance measure among the group of consumers (Farris, Bendle, Pfeifer and Reibstein, 2008). Category development Index: [category sales to group/Households] / [Total number category sales/Total number of households] Break Even analysis: Break even analysis is a financial analysis which helps companies to determine the exact point at which the total revenue earned and the cost incurred to earn that revenue is equal. Hence, it mainly calculates the margin of safety. (Source: mainebusinessworks, 2010) Conclusions & Recommendations The study was about the development of a new market for Sasol with one of its existing product portfolio. In other words, it was about the introduction of a product manufactured by Sasol into a new market. For this purpose the chosen market is Vietnam and the product is wax. There are a large number of products that are made up of wax. In addition, it embraces the capability to serve various sectors of business. For example, sectors such as construction boards, cosmetics, candles, inks and coatings, corrosion protection, polishes, rubber and tires, textiles, road construction, and polymer processing can be careered through this product. The study revealed that the market of Vietnam is an attractive location for doing business. The study also illustrated that the country encompasses young labour force, strong market growth, low cost of labour, and also supportive government. In addition, many business houses want to diversify their businesses from China and according to them, Vietnam can be a potential market place. Hence from the findings about the external business environment of Vietnam, it can be concluded that introducing an existing product in the form of wax products manufactured by Sasol Wax into the new national market of Vietnam can be a feasible strategic option for the company. Recommendations The recommendations are meant to help the company to operate effectively in the markets of Vietnam. Therefore, recommendations will be about how the company can foster growth and can increase the visibility. The suggestions are hereby presented below: It is strongly recommended that the company should try to develop its market by increasing its visibility. The visibility can be increased with the help of effective marketing practices. The company must carry out pilot studies before the full fledged operation. This will allow them to perform any kind of modification in the business strategies, if required. Therefore the company should give importance to the feedback of the customers during the development period. It is highly recommended that the company assign an adequate amount of resources in order to effectively execute the marketing programs. It is important that the company define the right process and right objectives for its operation. To satisfy the customers, the company must implement the customer relationship management process with the help of information technology. References Davis, J. A., 2010. Competitive success, how branding adds value. New Jersey: John Wiley & Sons. Farris, P. W., Bendle, N. T., Pfeifer, P. E. and Reibstein, D. J., 2008. Marketing metrics: 50+ metrics every executive should master. New Jersey: Pearson Education Inc. Gately D. and Streifel, S. S., 1997. The demand for oil products in developing countries. Washington: World Bank Publications. Griffin, R. W., 2011. Fundamentals of management. 6th ed. Connecticut: Cengage Learning. Heijden, K. V. D., 2005. Scenarios: the art of strategic conversation. 2nd ed. New Jersey: John Wiley & Sons HSBC, 2011. Doing Business in Vietnam. [Pdf] Available at: [Accessed 7 December 2012]. Kotler, P., 2009. Marketing management: South Asian perspective. 13th ed. New Jersey: Pearson Education. Lamb, C. W., Hair, J. F. and McDaniel, C., 2008. Marketing. 10th ed. Connecticut: Cengage Learning. Lamb, C. W., Hair, J. F. and McDaniel, C., 2010. MKTG. 4th ed. Connecticut: Cengage Learning. Mainebusinessworks, 2010. Assessing your idea with a break-even analysis. [Online] Available at: [Accessed 8 December 2012]. New Zealand Trade & Enterprise, n. d. Doing Business in Vietnam. [Online] Available at: [Accessed 7 December 2012]. Sasol, 2012a. Annual integrated report 2012. [Pdf] Available at: [Accessed 7 December 2012]. Sasol, 2012a. Products and services. [Online] Available at: [Accessed 7 December 2012]. World Bank, 2012. Economy profile: Vietnam. Doing business 2013. [Pdf] Available at: [Accessed 7 December 2012]. Yahoo Finance, 2012. Sasol Ltd. (SSL): Profile. [Online] Available at: [Accessed 7 December 2012]. Read More