Marketing Management in the Largest World Companies

The Role of Marketing in the organization

Shell Oil Company is a global group of energy and petrochemicals organization that specializes in producing oil, natural gas, and chemicals. The company’s major production and exploration units are located in the deep waters in the Gulf of Mexico with origins in Anglo-Dutch, which is amongst the largest petroleum companies in the world. Due to the high demand for its products in the US, Shell decided to partner with Saudi Aramco Company to help in refining and marketing its products in the country. Other products produced by the company include petrochemicals, liquefied natural gas, and gasoline.

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On sustainability and green issues, I intend to narrow down my research my assessing Shell’s company activities in the past decades. We should first analyze the company’s major investments and sponsorships that have been taking place in the past few months such as its interest in conservation initiatives and social investment as part of its commitment to sustainable development. As we enter the second year of recession, companies are striving to survive hard economic times by heavily investing in company resources in turn depleting natural resources and polluting the environment. Therefore sustainability and green issues continue to be important items that incorporate agendas. Shell Oil Company continues to pursue efforts in support of green technology by sponsorship key projects in consulate countries. For instance, on March 17, 2010, the company proposed to support the Doha Green and Sustainability Summit (DGSS) by being the main sponsor of the summit. The summit is aimed at creating a platform for businesses, communities, and individuals to exchange ideas on how to find practical solutions for environmental sustainability (Mashni online).

The chief executive of Shell laments that their contribution to sustainable development is part of their integral way of doing business. The company expands the concept of administrative responsibility by benefiting local communities by reducing the impact of oil emissions on the environment. One of its newest projects in Qatar, the giant Pearl Gas is designed with the latest technology that is highly integrated, efficient, self-sufficient, and enables reuse of heat and water materials hence minimizing the depletion of natural resources. In another project, the company plans to sponsor the Qatar Science and Technology Park research by injected $70 million in the coming few months (Mashni online: Shell 2010)

Another underway project Shell is proposing to undertake is the Science Park specializing in developing innovative and environmental ways to utilize sulfur emissions. The company proposes to replace sulfur with cement in concrete in bitumen. Qatar’s 2030 vision includes the development of human, social, economical, and environmental developments and it anticipates that Shell Oil Company partnership will help the vision become reality. It’s also reported that the company has secured a Chair in Sustainable Development at the Qatar University to help in sustainability visions. Also, the company is committed to investing up to $100 million in programs over the next 10 years. The DGSS Working Committee member upholds Shell Oil company involvement in local and international businesses as the summit will offer the opportunity to engage and exchange knowledgeable ideas (Mashni online).

Climatic change

About Shell’s millennium development goals, the company pledges to commit to global environmental standards and reduce environmental pollutions by subjecting all its operations and joint ventures to Health Safety, Security and Environment (HSSE) policies. Companies are encouraged to operate in line with HSSE values to reduce pollutions. Shell has also considered the impacts of climatic change and launched campaigns calling upon the government, industries, and energy users to take action to curb the threat (Mashni online: Shell 2010).

Biodiversity

Shell was the first company to adopt biodiversity standards by engaging in activities such as protecting construction sites, partnering with other companies to maintain ecosystems and conserve diversity. This strategy has helped conserve natural World Heritage Sites by limiting the extraction of oil and natural gas.

Water

Shell pledges to implement a better mechanism that will economize water usage and minimize depletion.

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Customer support

The company has committed to reducing environmental pollution by providing optional energy supply customers can choose from.

Developing alternative energies

The company plans to extensively invest in research and development by focusing on renewable energy in the coming years. It also proposes to heavily invest in wind power to generate more fuel by increasing its reliability and safety. Plans are also underway to develop thin-film solar aimed at cutting down energy production by half hence reducing gas emissions.

Partnership and Policy dialogue

Shell has partnered with several trade associations throughout the continent in reducing green gas emissions and promoting an eco-friendly environment. Some of the trade organizations mentioned by Mashni include;

International Petroleum Industry Environmental Conservative Association (IPIECA) is a non-profit organization that deals with global and social issues concerning the petroleum industry. Secondly, the Oil Companies International Marine Forum aimed at ensuring safe and environmentally friendly operations of oil tankers and terminals. Thirdly, the World Business Council for Sustainable Development (WBCSD) which comprises a coalition of 180 international companies committed to ensuring sustainable development. Lastly, the company supports international codes that cover environmental responsibility such as the United Nations Global Compact, OECD Guidelines for Multinational Enterprises, and the ICC Business Charter Sustainable Development” (online).

Shell also engages in several environmental responsibility and conversations projects by partnering with international companies as mentioned by Mashni as:

Asian Clean air Initiative, national government agencies, NGOs, World Bank, industries, and international development agencies in addressing air quality in Asia. Some of the partnerships include; Partnership for Clean Fuels and Vehicles (PCFV) aimed at bringing together governments, organizations, and industries by working to reduce motor vehicle air pollution by promoting the purchase of clean gases. The EMBARQ World Resources Institute Centre for Transport and Environment by sponsoring the organization into finding solutions to urban mobility problems. Energy and Biodiversity Initiative (EBI) partnership project was aimed at mobilizing energy and conservation companies to work together in promoting best practices in biodiversity conservation. Partnership with Global Gas Flaring Reduction Public-Private Partnership was directed at helping national governments and petroleum industries reduce the exploitation of gases. Lastly, the Renewable Energy and Energy Efficiency Partnership (REEEP) brought together companies, governments, and businesses to commit to speed the development of renewable and energy efficiency systems in their countries (online).

Environmentalists have long argued that Shell’s sponsorship of high technology machinery for oil extraction in developing countries may eventually lead-heavy extraction of oil and higher crude prices. Increased production will also increase the emission of greenhouse gases with the implementation of the new technology.

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Shell’s oil extraction is not as clean as the industry claims since there have been reports of visible heavy hauler trucks in their extraction sites which are not environmentally safe. Preliminary research indicates that greenhouse gas and sulfur dioxide emissions are often higher than those emitted in mining, therefore Shell’s proposal to substitute sulfur with cement will highly intoxicate the environment. It’s also reported that greenhouse emissions use more water compared to mining, therefore the company’s claim to conserve water seems impractical. Shell Oil Company should therefore propose social and environmentally friendly gas and oil extraction activities that operate on reducing air emissions, reduce water use, and reduce greenhouse emissions.

Apple Company

Apple started as a computer company in the 1970s and has continued to expand its products over the decades to more specialized products. Its full inventions came in 2001 when it introduced the iPod, a product that ranked top in the market leader in music players. Eventually, the iPhone came into play in 2008, which has also been widely successful. Throughout the year’s Apple has been able to introduce other products such as Mac, iPad, and iTunes with eminent good customer support throughput its product base. Apple assessment analyses the results of a study presented to examine the extent to which service firm utilizes customer satisfaction data obtained from a formal feedback mechanism.

Apple was voted as the best service company in the American Consumer Satisfaction Index (ASCI) in the second quarter of 2009. The company was credited for offering the best technical customer satisfaction service within the Personal Computers category with a base score of 77 on a 100 point scale and earned 83 points in the second quarter of 2006. Business analysts have argued that the company’s ability to focus on product innovation and customer satisfaction has won the company’s loyal customers compared to other Pc vendors. Quality of customer service is always the determining factor for the success of any company but not its products and Apple in this case have gained tremendously from such strategy. Van Amburg argues that Dell customers were very frustrated with the company’s customer service despite the quality of its PC hence loss of loyal customers and the services continued to deteriorate as years went by (Moore & Knight 2010).

In ensuring quality satisfaction in information collection, Apple Company launched a Consumer Privacy Policy that ensures the collection, use, and disclosure of personal information regarding customer issues are kept at optimum security. The company pledges to safeguard personal information collected when visiting the company’s website, purchase of products and services, and when a customer calls the sales team or support associates. Personal information collected here is aimed at helping the company deliver higher customer service and provide convenient access to the company’s products and services. Information collected from customer’s reviews also helps the company implement and post the latest product announcement on special offers, software, and events (Apple Online).

Apple collects personal information on various occasions such as 1). When discussing a service issue on the phone with a customer service representative, downloading software updates, online surveys, registering or purchasing products, and when registering for seminars. 2). Personal information may be collected in events where a client interacts with Apple and information relevant to the situation such as names, phone number, mailing address, in some instances credit card information and about Apple products i.e serial numbers, date of purchase and customers experience with support or service issues may be collected. 3). Personal information may also be collected for market research purposes for example a clients may be asked how often they use their computer and where they use it at. This particular question is aimed at gaining a better understanding of customers’ needs hence provide more valuable services. 4). Information is also collected when customers visit the company’s website, iTunes, and MobileMe stores. The company then uses the data to improve products and determine how best to provide useful information (Apple Online).

Apple also partners with other service vendors such as MobileMe and iTunes stores to help in the collection of information by requiring customers to customer’s to create an “Apple ID” before the purchase of products. The ID is a strategy that is designed to help customers have easier access to web services and saves them time since they don’t have to give their personal information when requesting services. The procedure requires the creation of personal profiles by adding the name, phone number, email address, or credit card number together with a suitable password that will be used to access the profile. Once the signing up procedure is completed, the customer is allocated a personal ID and a password that the system generates automatically. Therefore next time the customer enters the website to re-purchase products is welcomed by personal greetings by mentioning his name and can access up-to-date information regarding the product purchased which can be used wherever the client goes (Apple Online).

Publicly displayed information is public

The information posted in chat rooms or bulletin boards is regarded as public and Apple holds no responsibility for any misuse of such information by third parties. Therefore information regarding personal details can be collected by third parties and used for purposes it was not intended for and Apple for this case should not be held responsible. Apple claims to avail personal information in situations where “ companies may help us process information, extend credit, fulfill customer orders, deliver products to you, manage and enhance customer data, provide customer service, assess your interest in our products and services, or conduct customer research or satisfaction surveys” (online). The companies have therefore delegated the responsibility of ensuring clients’ personal information kept by Apple’s policies of confidentiality (Apple Online).

Cookies

Apple admits to using cookies on its website as a strategy of keeping statistics on what parts of the websites are most hit and how much time clients spend on the website for purposes of product improvement. Secondly, cookies help in tracking the effectiveness of online advertising and for studying online traffic patterns. Thirdly, when personal details like the IP address is tracked, cookies may be used to customize customers’ experiences by offering services that can be found within the client’s location. For example, when a customer visits the sales website, support representatives let the visitor register their name by signing up so that they can be referred by name next time they visit the website and even offered the opportunity to choose the country and language they wish to shop in hence increasing their online experience (Apple Online).

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Apple automatically collects certain information on its website and stores in its log files such as the Internet Protocol address, Internet Service Provider, browser type, operating system, date and time stamps, referring and exit pages and clickstream data which help in analyzing trends, track users movements around the site, collect demographic information and administer site activities. The information collected here is used for market surveys and indirect marketing purposes. Email is also considered an effective marketing strategy if used appropriately. Apple for this case sends emails to clients with “click-through URL” that links customers to the company’s products when clicked through. When the customer links through various links, cookies enable the company to determine a particular group’s interest and the effectiveness of customer communications (Apple Online).

Pixel tags

Tiny graphics are embedded in Apple’s website to help in tracking customers’ activities and measure the effectiveness of click-through links customers perform on the website for purposes of service improvement. Pixel tags also help keep track of opened emails to avoid future spamming and keep customers up to date with software downloads and new company products (Apple Online).

Feedback system

Lately, Apple has been using the feedback system for paying out on defective machines. For example, one of the Company’s products “iMac” was widely reported to be giving clients problems and the company responded by giving 15% refund bonuses to all faulty 27 inch iMac in the UK and was also reported to extend $300 apologies to all its aggrieved customers in the US. In resolving the issue, the company responded quickly by offering free repairs to all the affected machines and launched a support page where it described how minor problems could be resolved and the resulting warranty extension for each affected machine. The company also reimbursed customers who used their own money to repair the faulty machines and advised them to take their drives to official Apple repair channels (Moore & Knight 2010).

Apple extended its repair period for the affected Macs three years from the date it was purchase, which is indeed a very good customer service any company could offer its clients since many extend up to the warrant period. Apple needs to regain the trust of the million iPhone customers who want to share their information across devices and the web by making the MobileMe service free. This strategy will instantly regain the trust of iPhone users hence more sales of their products. The company should also look into giving away unlimited online storage, this way clients will be able to take advantage of MobileMe services and the cost of providing this support will come down. For instance, if the company gave customers free storage amount of 30GB and maybe charge a reasonable fee of $5 a year, in the long run, the company would be benefiting from the low cost of providing support. Lastly, the company should open up user feedback and blogging on MobileMe devices so that users could make suggestions for improvements.

Developing and Implementing Market Plans

Soft drink companies have long been dominated by two companies; Pepsi and Coca-cola. Both companies have spent significant huge amounts of money on advertising and promotion and have been reported to create brand loyalty that has made it difficult for other competitors to enter the market. The two companies have devised a strategy of cutting down prices soon a new competitor tries to enter the market thus forcing them to curtail expansion plans. I will therefore narrow down my assessment to Pepsi Company with intentions of carefully analyzing their competitive models in comparison to their closest competitor. The relevant competitive models chosen for this assessment include Michael Porte’s five forces such as entry of competition, threats to substitutes, bargaining power, power of suppliers, and rivalry which helps assess and analyze the competition strength and position of an organization.

The entry of competition

Several factors have been studied to steer competition which includes economies of scale, capital investment, customer switching costs, access to industry distribution, access to technology, brand loyalty, the likelihood of retaliation, and government regulation. Pepsi Company was reported to have invested over $500 million in its blue project which gained it $30.4 billion in revenue. The company was ranked 20 in the 500 fortunes with averages of 35% in beverages, 37% fast-food restaurants, and 28% in snacks. The Pepsi diet generated over 40% of US beverage sales and 70% of international sales. In brand recognition, when the company changed its brand to blue, consumers viewed it as modern and cool as it was exciting and dynamic and communicated refreshment (Dehmardan 2,22).

Threats to substitutes

Pepsi has been able to gain a competitive advantage over Coca-cola because of its ability to attract the young with the image it portrays of “New Generation”. Also, the Rich Blue branding introduced in the packaging represented eternal youthfulness and openness every youth wanted to be associated with. This strategy made it one of the coolest brands recognized by teenagers all over the world (Dehmardan 5).

Bargaining power of supplies

Previous research indicates that Pepsi customers buy almost five billion gallons of soft drinks a year due to the following reasons; first; the company has enabled high accessibility of their brands by stocking every food venture, gas stations, drug stores, and any available stores. Secondly, good tastes, affordable prices, and good packaging were some of the contributing factors for the company to gain power over competitors. Thirdly; Pepsi avails its customers a wide variety of products to choose from and invests heavily in its promotional campaigns. Pepsi brands are distributed all over the US where customers can easily access the like supermarkets, gas stations, movie theatres, restraint, and at any convenience store, it can supply. Pepsi for this case has lost its bargaining power over the since because of its concentration fast food industries (Dehmardan 4: Palmer and Cooper 241).

Rivalry

About Rivalry, Pepsi has experience intense competition from Coca-cola over the years and continues to devise strategies to beat the markets. For example, the company launched a price-oriented campaign in the 1930s which doubled a nickel. In the 1970s, the company introduced taste superiority to challenge its competitors and invested heavily in advertisements. Also, when a new product has high switching costs, the rivalry is reduced. In terms of stability, Infant industries are often subjected to high competition compared to mature industries and therefore unable to pursue aggressive growth strategies but Pepsi never seemed to experience the problem since it had strong market power and could introduce new products without stressing its budgets. Pepsi changed its advertising image in the 1980s to target teenagers which seemed to have worked well (Dehmardan 5-8)

Power of suppliers

To survive in the competitive environment firms have to devise several strategies to beat their competitors like changing the price of the product which is a temporary solution, Improving product features- key to success, creatively using channels of distribution, and exploiting relationship with suppliers. When we look at these examples, brand recognition seemed to cut down the costs of advertisements, and Pepsi association with youth seemed to have done the trick. Coca-cola tried to re-brand their products by taking a broader and traditional position in re-introducing classic contour bottle and sponsored moist sports events, celebrity endorsements and tried to entice the youths. Pepsi brand identity included changing the old signs with new ones and consistent presentation of the Pepsi brand to customers helped the company gain brand loyalty (Dehmardan 9).

How Pepsi adopts to a competitive environment

Pepsi Cola beverages were founded by Caleb Bradham as a soft drink company and have over the years grown to be an international brand with branches to over 190 countries. According to Beverage Digest, the customer base for a soft drink is the largest base in the world and more precisely in the US putting Pepsi in a better position to dominate the markets. Pepsi for this case has segmented its markets into four categories; New Generation, Generation Next, Pepsi Generations, and Generation X and uses the categories to attracting different age brackets. The company uses different age groups to adapt to its product which makes it easy to establish loyal customers for life. Although Pepsi strives to dominate the industry, Coca-cola has maintained the household name as evident from their campaigns such as “Always Coca-Cola”, which refers to the traditional heritage name of its classics, a strategy Pepsi has failed to implement. They also reinforce the name “Coca-cola Classic., a name that reflects an image of value, reliability, and old-time values (Biray 1: Palmer & Cooper 241).

Pepsi on the other hand has continued to strengthen its brand by developing the large corporation into strong franchise systems of great entrapped spirit. The introduction of the franchise system was reported to have increased the company’s production during the first years of its invention. The company also puts aside an enormous budget of $225 million in advertisement only in a year. This strategy was implemented to allow the company to introduce new products and make the consumer aware of it. Pepsi is also credited for making wise investment decisions like that of acquiring several large fast-food restaurants and snack companies like the Frito Lay, which did quite well after the acquisition. Pepsi another competitive strategy included the introduction of a variety of soft drinks for clients to choose from. Some of the brands included Mountain Dew, Diet Pepsi, Pepsi, and Caffeine Free Diet Pepsi and the latest Lipton Tea ranged as the number one tea in the United States. Some strong brands include All Sport, Starbucks, Aquafina, Slice, Tropicana, and Ocean Spray Juices which made it to the world’s top beverages (Biray 1).

The markets today require companies to act as separate entities instead of several small units to centralize production and encourage specialization. The disadvantage of Pepsi operating on a franchise system was that first; the company was unable to manage all its operations in all the franchise systems. Secondly, the franchises produced their labels hence a direct competition to Pepsi products. The franchises were also unwilling to make a capital expenditure to keep up with Pepsi’s strongest competitor Coca-cola that does not operate on franchise levels. Despite the contributions the franchises made to Pepsi, it was concluded that ownership of fast-food restaurants weakened the company’s soft drink division franchises

Pepsi has over the years continued to change its brand hence causing inconsistency and lack of recognition and integration, a strategy that made the company lose its customers to its competitor. Another shortcoming of the company’s competitive model is that it did not have any particular color to brand its identity. Colors kept shifting from red blue, red-black, red white and so much more. The company also failed to express the energy essence and did not work well on the sides of its marketers like the trucks or vending machines. Clients also complained their Pepsi cans look like motor oil. The company should have instead designed a more attractive Pepsi can with attractive colors that would attract people of different generations. To strengthen the brand identity, the company needs to develop a flexible design it plans to use for the rest of its years. Instead of shifting from one color to the other, Pepsi needs to use blue as a dominant color, develop a mnemonic device, and create a modern Pepsi look that will contrast Coke’s traditional positioning. The company should realize that is it cheaper to maintain an old customer than it is to attract a new one by sticking to one color theme and brand recognition.

Works Cited

Apple. Apple Customer Privacy Policy. Web.

Biray, Dennis. “Coca-Cola vs. Pepsi: Which Stock is a Better Buy?” Ezine Article (2006):p.1.

Dehmardan, John. “Pepsi Blue”. Marketing classes (2008):p.1-50.

Mashni, Rima, A. Shell partners with Doha Green and Sustainability Summit. Web.

Moore, Charles & Knight, Dan. Apple Retains Lead in Customer Satisfaction, iMac Screen Problem Resolved, 64 GB for Mac Pro and More. Web.

Shell. Goal 7: Ensure environmental sustainability. Web.

Palmer, R., Cockton, J. and Cooper, Graham. Managing marketing: marketing success through good management practice. Oxford: Elsevier, 2007.

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