Castrol Company's Research & Development | Free Essay Example

Castrol Company’s Research & Development

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Topic: Business & Economics

Importance of R&D in Businesses

The business environment continues to witness numerous changes that affect the way organisations operate. In the wake of the inevitable wave of globalisation, changing consumer demographic factors, and technological advancement, it has become vital for firms to commit resources to proactive Research & Development (R&D) (Davcik & Sharma 2015). Moreover, research indicates that competition has intensified and the aforementioned changes can easily put organisations out of place in the modern business environment. As such, R&D plays a crucial role in helping businesses to remain competitive and relevant in a changing arena.

Company’s growth and competitiveness in a changing environment have become impossible without committing resources to research and development. To this end, organisations must undertake whatever methods will enable them to thrive ahead of the competitors and keep up with the changing environment (Doh, Lawton, & Rajwani 2012). Castrol Company has shown its commitment to research and development in its products.

Research endeavours to make discoveries and unravel new facts and perspectives that are presently unrecognised in the market (Chao-Hung 2015). On the other hand, development embodies the utilisation of the most economically feasible methods that together with the discovered facts and/or principles help in the production process (Conti, Gambardella, & Novelli 2013). The benefits of research and development might not be realised in the short-term. However, it is important for organisations to allocate resources in R&D for tomorrow’s profits. The future of organisations, especially those technologically based such as Castrol largely depends on R&D.

The commonest areas of research for business organisations include fundamental research, applied research, product research, manufacturing research, materials research, market research, and operations research. Each of these key areas of research has its strengths that contribute to the survival and competitiveness of organisations (Schlager & Maas 2013). First, the fundamental research seeks to provide basic knowledge.

This research undertaking does not consider commercial benefits. Rather, research efforts endeavour to gain knowledge of the detailed study of various theories regarding knowledge development. Pure research has been correlated with significant breakthroughs for many organisations. Mega companies such as BMW, Castrol, General Electric, IBM, the Google Inc., and owe their unmatched success to pure research (Schlager & Maas 2013)

Second, applied research is employed when an organisation intends to solve practical problems that correspond to practical purpose. For instance, Castrol developed specialised lubricants for specific engines to meet particular lubrication needs. Applied research enables organisations to identify practical problems affecting the different consumers and develop products offer practical solutions. Third, product research attempts to uncover new product ideas that target serving prevalent customer needs.

As consumption keeps changing, organisations ought to invest R&D to uncover these changes and develop products that correspond to the present needs. Product research can lead organisations to come up with new commodities that provide a revolution in consumption (Conti, Gambardella, & Novelli 2013). For example, the birth of the iPad and the iPhone revolutionised the smartphone use around the world. The Apple Inc., through its robust R&D techniques, managed to position itself well above its rivals in the market.

Moreover, for manufacturing companies research towards the development of tools and equipment, handling devices, and manufacturing techniques can help in costs reduction and increase productivity. Manufacturing research compliments product research and has been utilised by many technology companies such as Fibre Optics, Robotics, and Just in Time (JIT) manufacturing as they seek to reap the benefits of R&D. In addition, market research is another area where R&D plays a vital role (Shankar 2014).

It is a systematic, objective-oriented collection and analysis of data regarding specific markets and the competitive environment with a view of providing insight for strategic marketing decisions (Akgul & Gozlu 2015). The primary purpose of market research is to provide information regarding the target market to help the internal environment to reorganise through manufacturing and production. It helps the organisation to make products that serve the current needs while offering the most competitive value relative to their competitors. Market analysis is worth investing in if the organisation intends to remain relevant and beat the increasing challenges in the modern business environment.

R&D for Castrol

Castrol has integrated its business with intensified research and development. Its advanced automotive lubricants owe their superior quality and market success to R&D. The company, through its excellent partnership working culture, invested in R&D to come up with Castrol Oils that have served varied consumer needs in the entire global market. It applies its specialist expertise and the latest technical developments to provide customers with the best possible products. Besides, research and development have enabled the company to offer diverse lubricants for domestic, profitmaking, and engineering uses.

The Castrol Company operates in a rapidly changing business environment. Consumer behaviour and demands have increased over the recent decades. As such, the company undertakes intensified research to identify the new trends in consumption to ensure its products serve the latest relevant purposes. R&D technology has enabled the Castrol Company to respond appropriately to changing market needs (Bang et al. 2015).

In fact, the company applies R&D to product research by working closely with Original Equipment Manufacturers (OEMs) such as BMW, VW/Audi, Ford, Jaguar, and Toyota. This research helps the company to develop high-quality products that complement the needs of modern engines (Shankar 2014). As a result, the company’s sales have increased significantly over the last decade. Moreover, its marketing research entails finding out critical information from the OEMs and customers in a bid to manufacture lubricants of premium quality required by modern engines. R&D helps the company to identify different factors affecting the external environment including legal, economic, completion, technological and sociological. For instance, new technologies have led to the manufacture of complex engines (Challagalla, Murtha, & Jaworski 2014).

In addition, new legal requirements such as climate change mitigation call for an ethical production culture. Finally yet importantly, the changing levels of consumers’ income levels have increased the demand for more sophisticated products for both manual and automatic transmission systems. For these reasons, R&D has helped Castrol’s business to be sensitive to these changes.

Policy Guidelines for Improving Castrol’s Market Competitiveness

Castrol has succeeded in occupying a competitive position in the market for oil lubricants. Sustaining its competitiveness in the changing business environment requires the company to adopt various policy guidelines (Lehmann, McAlister, & Staelin 2011). These include market segmentation, marketing strategy, market research, pricing, placement, and value chain.

Market Segmentation

Castrol recognises that achieving marketing breakthrough needs providing the best possible products to its varied market segments (Lehmann, McAlister, & Staelin 2011). Market segmentation is based on product categories, geographical location, and consumer category. Castrol segments its product category into trucks, motor cars, motor cycles, leisure boats, and aircraft. Performing a market segmentation analysis is the first step in managing firm’s strategy development process (Hui, Wong, & Wong 2012). It entails looking at the overall market and rethinking it in smaller and focused units that are more manageable. Grouping the small portions of the mass market is a strong marketing strategy that helps organisations to offer services and/or products that correspond to these segments.

Moreover, it helps the marketing managers to identify the most productive segments that can leverage the company’s strength and competitive advantage. Market segmentation provides a firm with key information that helps in the allocation of marketing resources. Particularly, Castrol can intensify marketing efforts to the segments that are more promising. This way, the company can minimise marketing costs that do correlate positively with sales outcomes.

Finally yet importantly, market segmentation can help Castrol to identify the customer needs for the varied products properly. The company will use the information to determine the value as desired by the different markets (Hui, Wong, & Wong 2012). Only those products that provide relevant value command the largest market share. Thus, its competitiveness will remain unshaken.

Marketing Research and Competitive Intelligence

Developing a thorough knowledge about the industry is vital if Castrol intends to sustain and/or improve its competitive position. This strategy calls for the company to employ reliable intelligence data collection to gather information about current trends in the industry. Having a thorough knowledge about the industry in which Castrol operates will help it to make appropriate adjustments in its production, operations, distribution, and advertising undertakings (Cuadros & Domínguez 2014). Adjustments can entail updating systems to match current standards or creating new ones that place the company ahead of its rivals. Market research is necessary to influence firm-wide decisions (Bulmuş, Zhu, & Teunter 2014).

In addition, industry research will help the organisation understand the changing aspects of consumption. Audience analysis will help Castrol to identify customers’ new consumption behaviour and latent needs that give the company an unbeatable competitive advantage.

Furthermore, market research can help the company to monitor and modify its marketing strategy. Research shows that Castrol invests heavily in market research. In fact, the company’s R&D includes collaborating the manufacturers of original engines such as BMW and Jaguar (Kemper, Engelen, & Brettel 2011). The partnership strategy helps Castrol to gain knowledge of new customer needs even before the first new engines reach the first customer. The information provided by these manufacturers is critical as it makes the company manufacture new engine oil lubricants that meet the needs of the new engines.


Product pricing is a powerful tool for that can be utilised by Castrol to develop a marketing strategy. Researchers reveal that two pricing techniques are common in competitive markets (Ellickson, Misra, & Nair 2012). First, some marketers designate to skim the market with a high price as they enter the market then reduce it gradually as new substitutes are introduced by competitors. This technique is perfect for innovative products. The company enjoys high prices before competitors get it and begin introducing competing products. The newness and uniqueness are the key strengths of the new innovative products. Second, the Castrol Company can use the penetration pricing strategy to enter markets that are already flooded by numerous products from established firms (Ellickson, Misra, & Nair 2012).

This strategy entails pricing products lower than the prevailing market prices to attract customers through creating an impression of lowly-priced but same quality products. This strategy has worked for established brands such as the Wal-Mart. Castrol can adopt the same technique when launching substitute products in highly competitive markets. Castrol should be cautious when choosing the second technique. Too low pricing can attract losses to the company and threaten its economic strengths. It can also create the impression of low quality. The majority of customers relate low pricing with low quality (Davcik & Sharma 2015). On the other hand, attaching too high prices on the new products can appear

Castrol’s approach

Businesses can decide whether to adopt either a product or a market orientation (Xie & Chen 2013). While a product oriented business focuses mainly on its products to increase and maximise sales, a market-oriented business is majorly concerned with the nature of the market. A market-oriented business concentrates on market statistics and customer demands as an important prerequisite for establishing itself in the business world.

The business approach that is usually settled on by most business organisation is mainly determined by the business size and the line of operation that a particular business organisation has taken to (Henisz & Zelner 2012). Small business organisations tend to have a product-oriented approach as compared to large businesses that tend to concentrate more on the markets. It is, however, important to note that with the dynamics of the business world today, such factors play minimal roles in influencing the business approach that business operations usually take. All business organisations operate within a given environment.

The environment within which a particular business operates tends to influence the strategies that are adopted by the business. As such, businesses are likely to develop different approaches due to the varied and dynamic environments within which the businesses operate.

Considering the heritage of Castrol as a major economic powerhouse, it is evident that its line of business mainly uses a marketing approach to enhance its percentage sales in an increasingly competitive market. Castrol has continued its tradition of having a heightened focus on the market (Alpert & Saxton 2015). Through the identification of the market trends, the oil company has strived to overcome the dynamism that has formed a part of its market today. Castrol has built on its specialist’s expertise as a dedicated producer in ensuring that its products receive the highest bidding (Rubinson 2010).

The market that the company ventures in is not only competitive but also lucrative since the daily operations of the world are dependent on oil as a major source of energy. The management of the company has ensured that an identification of the existing customer needs and requirements is done to anticipate the probable changes that can be experienced in the future. The business has paid increased attention towards ensuring that an appropriate response to any market change is possible (Rubinson 2010).

The marketing team from the company has continued with research and analysis of the market environment to get detailed information that are vital to the success of the business. The day-to-day success of the company is important in positively influencing its long-term sustainability and progress in the market, just as previous managements have done.

Castrol’s method of business operation is centred towards the market due the huge number of competitors. These companies focus on a similar line of production by offering almost similar products to the market. The energy sector has similarly witnessed minimal rates of product innovations in the process of developing new products. Overcoming the market pressure through the production of unique and quality products, as is required of a product approach has become an inevitable task not only to Castrol but also to other oil companies (Aghazadeh 2015).

As a result, the oil companies have ended up with similar products. In spite of the minimal rates of product innovation in this sector, it is, however, an undeniable fact that Castrol has constantly concentrated on revolutionising its product portfolio to help in keeping pace with the ever-changing consumer demands. Nonetheless, the company has been facing a primary challenge of ensuring market continuity due to the delivery of inappropriate products to its consumers. Therefore, to some extent, the oil producing company has also increased emphasis on synthetic oils as a product approach to the business. The main approach for success that has been taken by the company has remained a market-oriented approach (Aghazadeh 2015).

An analysis of the market-oriented approach that has been adopted by the company reveals a number of advantages and disadvantages. Meeting the needs and demands of the consumers enhance the capability of a business to meet its performance objectives in terms of profitability and an appropriate market share. The market also consists of demand for quality by consumers (Kemper, Engelen, & Brettel 2011) Therefore, the company is likely to develop a judgmental performance that can ensure that success is guaranteed through an assessment of the consumer needs.

Judgmental performance includes employee and consumer satisfaction that can promote the accomplishment of the desired organisational goals. Implementation of a market-oriented approach as has been done by Castrol can enhance the knowledge of the consumers to ensure that the business is not phased out because of the resulting pressure from the players in the industry (Alpert & Saxton 2015).

The approach necessitates a company to assess the consumer needs so as to produce products that achieve the desired results in the market. With the long-standing history of operation that the company has had, using this approach to business operation has offered Castrol increased intelligence and has in turn enabled to it to grab intelligence on the market orientation (Bettencourt, Lusch, & Vargo 2014).

This approach to business is, however, disadvantageous in that it is centred toward responding to the customer demands rather than the objectives of the specific business (Alpert & Saxton 2015). Unless the consumer demands are addressed, businesses are likely to fail. Additionally, the extensive research necessitated by this form of business is usually costly. Dealing with consumer dynamics is a challenge to most businesses, inclusive of Castrol. Close partnerships that have been necessitated by this line of business approach are occasionally costly (Alpert & Saxton 2015).

In as much as market-oriented approach may be the business form that Castrol has taken to achieve long-term market sustainability, it is important to recognise the role played by the partial inclination towards product orientation. Product orientation similarly comes hand in hand with a number of advantages and disadvantages. A major advantage of this approach is that the quality and value of the products is usually increased due to greater innovation and research.

Alpert and Saxton (2015) reveal that Castrol is one of the leading companies in the development of lubrication technology. The company focuses on addressing the rapid market changes in motor vehicle technology. The products derived from this approach fit their purpose. However, a major disadvantage of this approach is that it requires a lot of financial investment for its success (Alpert & Saxton 2015).

Castrol’s continuous marketing research programme that can help it keep up to date with business trends and customer needs

Marketing research involves the process of relevant information that can help in the examination and definition of opportunities and problems for the generation of new ideas that can bring about sustainability. It is aimed at providing relevant information on the market factors that can be influenced and those that cannot be influenced to develop products that can guarantee the company a stable position in the market (Bassi 2015).

New tools and concepts are necessary for giving any company a cutting edge in the market. Intensive research is, therefore, necessary for helping companies in their course of gaining both consumer and positional superiority. The process of developing the heritage that the lubricant company has had has only been possible because of effective programmes by the business management. For continued success, however, the company should adopt programmes that can keep it up to date with the dynamics of its products market and can help it address the trends and customer needs.

The company should concentrate on adopting strategies that can ensure that customer satisfaction and loyalty are achieved. This can first begin by the identification of the consumer needs and requirements. With a marketing orientation type of business approach, this can help the company in further establishing its positions in a competitive market (Xie & Chen 2013). The customers comprise the company’s most vital entity hence the need for increased concentration on them. This programme can involve increased attention to innovative processes that can ensure that products that can address the consumer needs are developed.

Lubrication products are required in many industrial applications in the world. The environment within which Castrol operates is constantly changing. Engine fabricators and manufacturers are constantly developing new technology to meet diverse oil requirements (Xie & Chen 2013).

On a different perspective, the world is continually modernising. As a result, consumers have developed an interest in sophisticated motoring products that use special types of lubricants. The Castrol Company should concentrate on adopting strategies that are aimed at ensuring the consumers pay undivided attention to their products. Research on the customers to identify their requirements is perceived to play a major role in influencing the success of the company positively (Xie & Chen 2013). Constantly being ahead of the fellow competitors in terms of innovation should be a major focus of the company. Research should be focused on improving customer satisfaction to ensure that they are glued to the services and products offered by the company.

The use of qualitative research programmes that can encompass the observation of market trends including an analysis of the consumers can ensure that the company matches both the consumer needs and market trends (Kleinaltenkamp, Plinke, & Geiger 2011). Observation of the consumer and competitor behaviour can help Castrol form a possible postulation of future market states. This programme can enable the research team to develop a hypothesis from the information collected and observed during the process of data collection (Autry, Williams, & Moncrief 2013).

Observing and collecting information on consumers’ values, behaviour and choice can help Castrol develop an effective marketing strategy for enhanced success. These characteristics of consumers and competitors can make the management of the company pay increased attention to important market aspects, other than concentrating on non-important ones (Bassi 2015). The technological industry that Castrol has taken to is full of a number of driving factors that vary among consumers.

Castrol’s response to these drivers can define its market position. When such drivers of consumers are effectively addressed by the company, the company is likely to gain technical superiority over other competitors. This state of affairs can necessitate the intervention of an increased number of the researchers (Autry, Williams, & Moncrief 2013).

Additionally, the company should take to establishing a worth for its brand of products and services. The company has done well in various platforms of marketing but has failed to establish a brand name that can be associated with a higher product value and quality. In as much many consumers from across the world have heard about Castrol as a lubricating oil producing company, the company has, however, failed to establish a brand name that can enhance its performance in the market (Zhang & Breugelmans 2012).

The company should direct its marketing programmes towards developing and establishing an excellent brand in the market. Consumers are likely to buy products and services from companies that have established themselves in the market due to enhanced quality of their products. In spite of being an iconic British brand, the Castrol Company has not established its position in the market as other oil companies. Exxon Mobil, an oil manufacturing company, is one of the largest multinational players in the industry that have established their positions as leading manufacturers of oil and gas products.

The company should also diversify its products base to offer a variety of products to the consumers. Castrol concentrates on manufacturing lubrication products. However, it is undeniable that such products are manufactured in oil and gas companies. As a result, the company can explore diverse programmes that can ensure that its product base is widened (Kleinaltenkamp, Plinke, & Geiger 2011). A research on the possible products that the diversification process can take is hence necessary to address the needs of the consumers in all aspects. Production of gas, other than lubricants alone, can be major steps in the process of the company’s marketing since it can enhance the ability of the company to meet the market trends that have seen competitors diversify their products and services.

Finally, the company can consider improving its advertisements to encompass all parts of the world other than Britain majorly. The company has consumers from across the entire world hence the branches that he company has set in specific countries should improve the forms of advertisements for enhanced consumer awareness. Market trends have seen companies continually advertise their products and services on various platforms. Research on appropriate and effective methods of advertisements is hence necessary. Consumer needs can also be addressed in this process through constant updates on the solutions offered by the company’s products.


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