Background and Motivation
Recently, the international economic landscape and Vietnam's internal situation have undergone significant changes, leading to complex developments The unexpected fluctuations in petroleum product prices have directly impacted the operations of PV Oil and, more broadly, Vietnamese enterprises.
Since Vietnam joined the World Trade Organization in 2007, all Vietnamese enterprises, including PV Oil, must adapt to a market-driven environment with diverse ownership structures This shift has presented both challenges and opportunities for businesses operating in Vietnam.
Founded on July 6, 2008, through the merger of Petro Vietnam Trading Corporation and Petro Vietnam Oil Processing and Distribution Co Ltd, PV Oil is a dynamic player in Vietnam's oil industry Committed to enhancing the comprehensive downstream operations, PV Oil aspires to be a leading oil company in Vietnam and to compete with national oil firms regionally and globally.
PV Oil operates over 50 companies, branches, and representative offices both in Vietnam and internationally, employing more than 2,000 individuals The company leverages the collective strengths and business synergies of its predecessors, Petechim and PDC, specializing in the export, import, and trade of crude oil, as well as the processing and distribution of petroleum products Additionally, PV Oil is involved in the trading and importation of oil-related equipment and materials essential for oil-related projects.
PV Oil has experienced rapid growth both in Vietnam and internationally; however, this success has not translated into stable development that aligns with its potential Key factors contributing to this inconsistency include the swift expansion of its operations outpacing the development of its distribution system and oil terminals, a lack of modern management practices, ineffective supply chain management, insufficiently qualified staff, inadequate business process reengineering, and a failure to establish appropriate management delegation and long-term strategic research for sustainable growth (Party committee report of PV Oil, Dec 2010).
The Vietnamese petroleum trading market has become increasingly competitive, particularly since the government permitted numerous state-owned enterprises to enter the sector As of January 2010, eight additional state-owned companies, including Petrolimex, Petimex, and Saigon Petro, have joined the market, each offering various services such as exporting, importing, and refining Petrolimex stands out as a major player, boasting over 50 years of experience, a robust distribution network with around 2,000 gas stations nationwide, and a workforce of approximately 23,000 employees This established company commands over 60% of the petroleum market share in Vietnam, highlighting its significant presence in the industry.
According to WTO provisions, after 2012, the Vietnamese government plans to adopt an open-door policy for the petroleum trading market, allowing major global oil companies to enter This will significantly increase competition in Vietnam's petroleum sector, as these well-established companies bring extensive experience and substantial financial resources, making the market more competitive than ever.
Until 2010, the Government's policy in the petroleum trading market hindered the creation of a conducive business environment, leading to passive behavior among enterprises Under Decree 55/2007/NĐ-CP, dealers were restricted to purchasing petroleum products from a single source, such as PV Oil, which resulted in a lack of market flexibility and diminished entrepreneurial initiative.
As the petroleum product trading market faces intensified competition in an increasingly globalized business landscape, companies like PV Oil encounter significant challenges Despite achieving notable successes in recent years, PV Oil's growth remains unstable amidst escalating market rivalry Furthermore, the lack of focused attention on business strategies and the absence of official research on this critical issue hinder the company's ability to navigate these challenges effectively.
From the above mentioned statement, we can briefly indicate some problems PV Oil will challenge in the future:
The Viet Nam Oil and Gas Group (PVN) has tasked PV Oil with a crucial role in the import and export of crude oil and petroleum products, as well as the distribution of all products from the Dung Quoc Refinery However, PV Oil is currently unable to fulfill these responsibilities as expected by PVN.
Vietnam's official integration into the World Trade Organization (WTO) has created new opportunities and challenges for Vietnamese enterprises Key challenges include increased competition pressure, shifts in the economic structure, and evolving human resource requirements.
In 2011, Vietnam implemented an open-door policy for the petroleum trading market, attracting numerous leading petroleum companies to enter the sector This shift has significantly increased competition within the petroleum product trading market.
Currently, the government has permitted numerous state-owned enterprises to engage in the petroleum product trading market, leading to their increasing strength as they implement various strategies for trading and infrastructure investment, particularly in distribution systems.
To remain competitive and stable in the current urgent market conditions, it is essential for Petro Vietnam Oil Corporation to conduct a study on strategies aimed at increasing its share of the petroleum products market This strategic analysis will focus on the business development plan for the period from 2011 to 2020, which is crucial for the company's future existence and growth.
Research Purpose and Questions
The Viet Nam Oil and Gas Group (PVN) plays a crucial role in the national economic development strategy, significantly contributing to the national budget PV Oil, as a key corporation within PVN, has made substantial contributions to its success In the context of integration and globalization, PV Oil must develop strategies that align with the new business environment while supporting economic growth, political stability, and national defense This research aims to propose effective strategies to enhance the sales of petroleum products for PV Oil.
1 To assess and improve quality of sales service and petroleum products of PV Oil
2 To analyze the competitive ability in sales in order to increase market share
To enhance the market share of PV Oil's petroleum products from 2011 to 2020, this research aims to provide the Management Board with effective strategies for sustainable growth and development The findings will be presented to the Management Board for practical implementation in line with PV Oil's current circumstances To achieve these objectives, several key questions have been formulated.
1 What are the factors affecting the quality of sale products and service?
2 What do the consumers (End users) think of the quality of service and products in petroleum product trading?
3 What do the distributors (Dealers) think of quality of PV Oil’s service and products among Viet Nam petroleum product trading market?
4 How do the factors affect the sales of PV Oil?
5 What possible strategies should be promoted to increase the petroleum product share market of PV Oil in Viet Nam?
Research Scope and Limitation
We choose Petro Vietnam Oil Corporation for this research for the following reasons:
PV Oil is the second largest player in Vietnam's petroleum trading market, with an annual output of 2.5 million tons of petroleum products, representing 20% of the total market share in 2009 The company operates numerous subsidiaries across the country and is tasked by the government with supplying all petroleum products from the Dung Quoc refinery to ensure national energy security In addition to its core activities in petroleum product trading, PV Oil engages in crude oil import-export, supplies crude oil for the Dung Quoc refinery, participates in international oil trade, imports petroleum equipment and machinery, and offers construction investment consulting However, this research focuses specifically on the petroleum product trading sector in Vietnam.
Due to time constraints, this thesis focuses exclusively on the business operations of PV Oil within the domestic market While the company has numerous subsidiaries across the country, the research is limited to Ho Chi Minh City and Can Tho, which are the leading consumers of petroleum products in Vietnam.
Literature Review
Petroleum Market Environment in Viet Nam
Petroleum products play a crucial role in various industries and are essential for sustaining industrial civilization, making them a significant concern for many countries The global oil consumption reaches approximately 30 billion barrels annually, with developed nations being the primary consumers Notably, the United States accounted for 25% of the world's oil consumption in 2007.
Over 80% of the world's oil and natural gas reserves are controlled by national oil companies, with the largest 50 oil companies primarily comprising privately owned firms Notably, "super major" companies contribute to less than 15% of the global oil supply, highlighting the dominance of state-owned enterprises, as 15 out of the 20 largest oil companies are government-owned.
The petroleum industry encompasses global activities such as exploration, extraction, refining, transportation, and marketing, with fuel oil and gasoline being its primary products Additionally, petroleum serves as a key raw material for various chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics The industry is typically categorized into three main segments: upstream, midstream, and downstream, with midstream operations, such as oil tankers, refiners, retailers, and consumers, often falling under the downstream category.
According to Wikimedia foundation, Oil companies used to be classified by sales as "super majors" (BP, Chevron, ExxonMobil, ConocoPhillips, Shell and Total S.A.),
"majors," and "independents" or "jobbers." In recent years however, National Oil
National Oil Companies (NOCs) dominate the global oil landscape by holding the rights to the largest oil reserves, with the top ten companies all classified as NOCs The accompanying table lists these ten largest oil companies, ranked according to their reserves and production levels.
Table 2-1 Top 10 Largest World Oil Companies by Reserves and Production
Total Reserves in Oil Equivalent Barrels (10 6 bbl)
Abu Dhabi National Oil Company
Global oil consumption rose significantly from 63 million barrels per day in 1980 to 85 million barrels in 2006, with an average annual growth rate of 1.76% from 1994 to 2006, peaking at 3.4% during 2003-2004 Projections indicate that world oil demand will increase by 37% from 2006 levels by 2030 A study in the Journal Energy Policy warned that demand could exceed supply by 2015 unless strong recessionary pressures limit consumption.
Energy demand is categorized into four main sectors: transportation, residential, commercial, and industrial Among these, transportation is the largest sector for oil consumption and has experienced significant growth in recent decades, primarily driven by the increasing demand for personal-use vehicles that utilize internal combustion engines.
Despite the highest demand growth occurring in developing nations, the United States remains the world's leading petroleum consumer, with consumption rising from 17.7 million barrels per day in 1995 to 20.7 million barrels per day in 2005, marking a 3 million barrel daily increase In contrast, China's consumption grew from 3.4 million barrels per day to 7 million barrels per day during the same timeframe.
As countries advance, factors such as industrial growth, rapid urbanization, and improved living standards contribute to increased energy consumption, primarily of oil According to the International Energy Agency (IEA), global oil demand decreased by 0.3% in 2008 and is projected to decline by 0.6% in 2009 However, the IEA anticipates a rise in global oil demand by approximately 1.6 million barrels per day in 2010, with Asian economies, particularly China, driving this growth China's oil demand is expected to increase by over 5% in 2010, compared to a 3.7% increase in 2009, as reported by the China National Petroleum Corporation (CNPC).
According to William J Cummings, Exxon-Mobil company spokesman, December
In 2005, it was noted that the majority of easily accessible oil and gas resources have already been discovered, leading to more challenging exploration and production environments Lord Ron Oxburgh, former chairman of Shell, emphasized in October 2008 that the likelihood of finding significant amounts of inexpensive oil is very low, indicating that any new or unconventional oil sources will come at a higher cost.
Oil extraction begins with the discovery of oil reserves, a process that peaked in 1965 with approximately 55 billion barrels discovered annually, as noted by Wikipedia and the Association for the Study of Peak Oil and Gas.
Total conventional crude oil reserves, as defined by Wikipedia, include crude oil with a 90-95% certainty of being producible (1P/Proven), those with a 50% probability of future production (2P/Probable), and reserves with a 5-10% chance of production (3P/Possible) These figures exclude liquids derived from mined solids or gases, such as oil sands and coal-to-liquid processes Current estimates suggest 2P reserves range from 1150-1350 Gb, but due to misinformation and misleading calculations, actual reserves may be closer to 850-900 Gb Notably, reserves peaked in 1980, marking the point when production outpaced new discoveries, complicating accurate assessments of current reserves.
Current technology can extract approximately 40% of oil from most wells, with future advancements potentially increasing this extraction rate However, such future technologies are typically already factored into the Proven and Probable (2P) reserve estimates.
Many major oil-producing countries have not subjected their reserve claims to external audits, and most easily accessible oil has already been discovered Recent price hikes have prompted exploration in more challenging environments, including deep wells and sensitive ecological areas, where advanced technology is necessary for extraction This decline in discovery rates per exploration has resulted in a shortage of drilling rigs, rising steel prices, and overall increased costs due to the complexities involved in extraction.
Following its unification in 1975, Vietnam implemented two five-year plans from 1976 to 1985 aimed at rebuilding and developing its economy Despite efforts to address challenges stemming from the previous economic system, this period was marked by slow economic growth.
(i) agricultural reform: shifting from a cooperative management system based on work-days to an output contract system
(ii) reform in prices, wages and money in 1985: raising prices in the public sector to cope with the market price, increased wages and monetary reform
The 1997 financial crisis significantly impacted several Asian economies, including Indonesia, Thailand, and South Korea, with ongoing effects into 1998 Despite predictions of a slowdown, Vietnam's economic growth remained relatively stable through the end of 1998, largely avoiding the chaos and adverse effects experienced by its regional counterparts.
Marketing Strategies for Petroleum Products
2.2.1 Marketing models in petroleum industry/products
Elias Berge and Lillian (1993) highlighted the significant evolution of marketing models, which serve three primary purposes: measurement, decision-making, and theory building Measurement models specifically assess product demand based on various independent variables, typically related to the marketing mix According to The Time 100 Edition, marketing focuses on identifying, anticipating, and fulfilling customer needs, with market research playing a crucial role in understanding consumer desires Effectively meeting these needs involves the marketing mix, thus ensuring that marketing models accurately reflect these components Additionally, insights from Scott M Smith and William R Swinyard further emphasize the importance of these models in the marketing landscape.
Marketing models, as noted in 1999, can effectively illustrate the dynamics of existing distribution systems, the impact of advertising on consumer perceptions, and the factors influencing purchasing intentions and value structures Additionally, traditional marketing frameworks have evolved from the original Four P’s to the comprehensive 7 P’s of the Marketing Mix, which now include Product, Price, Place, Promotion, People, Process, and Physical Evidence, according to the Epiphany Solution website.
According to Energy Information Administration (EIA Model Documentation -
The petroleum market model encompasses refining activities, marketing of petroleum products, and production of natural gas liquids, while projecting prices and sources of supply to meet demand Its primary aim is to estimate refining activities, capacity expansion, and fuel consumption, as well as to analyze various petroleum-related issues and policies for a better understanding of the marketing industry Essentially, petroleum market models incorporate elements of the marketing mix, including distribution, product, price, and promotion.
In term of the Place
According to the American Petroleum Institute (Wikipedia) divides the petroleum industry into five sectors:
• Upstream (exploration development and production of crude oil or natural gas),
• Downstream (oil tankers, refiners, retailers, and consumers),
Oil companies were traditionally categorized into "super majors" like BP, Chevron, and ExxonMobil, "majors," and "independents" or "jobbers." However, in recent years, National Oil Companies (NOCs) have gained dominance over the largest oil reserves, with the top ten companies now being NOCs, overshadowing International Oil Companies (IOCs).
The selection of crude oils, refinery processes, and logistics is strategically adjusted to minimize the overall cost of supplying petroleum products to the market, as noted by the EIA (2001) While the petroleum market reacts to various pressures, it typically remains aligned with the fundamental refining costs and economics over extended periods In instances of unusually high demand in a specific region, prices will rise, leading to decreased demand and creating economic incentives to source supplies from other areas, ultimately restoring the balance between supply and demand.
The distribution of petroleum products reveals that the world's 50 largest oil companies hold a significant portion of oil and natural gas reserves, with privately owned companies grouped together Notably, "super major" companies contribute to less than 15% of the global oil supply, while over 80% of the reserves are controlled by national oil companies Among the 20 largest oil companies worldwide, 15 are state-owned, highlighting the dominance of government entities in the oil and gas sector.
According to Paul Leo Echkbo (1975), petroleum-importing countries, primarily the industrial nations of the US, Europe, and Japan, determine their net demand for imported oil based on their total energy needs In contrast, petroleum-exporting countries include various non-OPEC sources such as producers from the North Sea, the USSR, China, and Mexico, along with some OPEC members A select group of Persian Gulf nations, including Saudi Arabia and Kuwait, act as "price makers" in the oil market, potentially joined by Libya, Iran, and Venezuela.
In the international petroleum industry, crude oil products are traded on various oil exchanges, with transactions based on established chemical profiles and delivery locations These chemical profiles, known as crude oil assays, detail essential properties like the oil's API gravity Delivery locations are typically sea ports near the oil fields, which are continuously being explored for new sources Pricing is generally quoted on an F.O.B (free on board) basis, excluding final delivery costs.
Research from IBIS World indicates that biofuels, especially ethanol and biodiesel, will continue to support petroleum use, although their production levels remain low and they won't replace local oil production In the United States, over 90% of ethanol is combined with gasoline to create a 10% ethanol blend, which enhances the fuel's oxygen content.
The price of petroleum products is influenced by demand, production costs, and non-competitive behavior, as noted by Paul Leo Echkbo (1975) According to AIP (2010), crude oil, diesel, and petrol operate in distinct regional markets, with prices reflecting the balance of supply and demand rather than production costs Refiner margins, which represent the difference between product and crude prices, are also determined by market forces rather than oil companies Additionally, the international price of diesel is impacted by the demand for other petroleum products, such as kerosene and jet fuel For instance, if Asian refiners increase production of kerosene or jet fuel due to rising demand, it may result in a decrease in diesel production, subsequently affecting its supply and price.
The three most quoted oil products globally are North America's West Texas Intermediate (WTI), North Sea Brent Crude, and UAE Dubai Crude, serving as key indicators for the petroleum industry While there are 46 significant oil-exporting countries, Brent Crude is generally priced around $2 higher than the WTI Spot price, which itself is usually $5 to $6 above the EIA's Imported Refiner Acquisition Cost (IRAC) and OPEC Basket prices.
The price of diesel in Australia is influenced by international market prices rather than production costs, similar to many countries including the US, Japan, Canada, China, Taiwan, and various European nations According to the EIA, the prices of end-use petroleum products are determined by marginal production costs, which encompass fixed costs, distribution expenses, and taxes These marginal costs reflect the variable costs associated with production, including additional expenses for compliance with reformulated fuel regulations Furthermore, the distribution and marketing costs are calculated by adding fixed distribution expenses to the marginal and refinery costs of the products End-use prices also incorporate a calibration variable that aligns model results with historical pricing data, tailored by product and region.
The marketing and distribution of petroleum products operates on a global scale, involving hundreds of millions of companies and individuals purchasing these products daily With retail outlets numbering in the hundreds of thousands worldwide, the total number of consumers, including indirect users, reaches into the billions.
The petroleum market features various promotional strategies, primarily focused on enhancing customer satisfaction through sales activities at gas stations, which attract billions of consumers.
2.2.2 Marketing strategies of related case studies
The distribution of petroleum products begins with crude oil, which is delivered to refineries via ship or pipeline Refineries then process the crude oil into various products such as feed stocks, jet fuel, diesel, and gasoline These refined products are subsequently transported to wholesale storage facilities using pipelines, ships, or trucks From these facilities, the products are distributed to dealers and retail storage areas, where they are ultimately delivered to local filling stations and airports for direct sale to customers This article focuses on the marketing strategies employed from wholesale to consumer, highlighting the emphasis on customer satisfaction at gas stations through promotional tactics Case studies will be presented to illustrate these marketing strategies in action.
The SWOT Analysis
A strategic vision for a company's future encompasses key elements such as technology and customer focus, targeted geographic and product markets, planned capabilities for development, and the desired company culture that management aims to foster (Thompson & Strickland, 2001).
The vision of individuals and organizations plays a crucial role in the development and selection of effective strategies Sound analysis and intuition are essential for making informed decisions that lead to the formulation of strategies aligned with the business environment These elements contribute to creating highly feasible strategies that support the enterprise's objectives and missions.
A company's mission statement, as noted by Thompson & Strickland (2001), emphasizes its current business scope by answering the questions "Who we are and what we do." These statements provide a broad overview of the organization's existing capabilities, customer focus, activities, and overall business composition.
What we might recognize in the mission declaration is that all of them force the company toward the attractive goals, example: “To become number one”, “the best” and
“the leading supplier of petroleum products”…
Objectives serve as essential performance targets for organizations, guiding them towards desired outcomes and enabling effective tracking of progress (Thompson & Strickland, 2001) Managers across all levels must establish clear and measurable targets for their units, ensuring alignment with the overarching goals of the company In the context of the Vietnam petroleum trading market, utilizing SWOT analysis can help in formulating strategic directions and strategies to achieve these objectives successfully.
PV Oil stated the vision, mission, objectives as following:
Vision: PV Oil becomes market leader and on a par with national oil firms in the region and beyond
- Developing and perfecting the comprehensive downstream operations of Vietnam’s oil industry
- Producing and distributing fresh resource of petroleum products to environment Objectives:
- Increasing and enhancing competitive ability in the new environment
- Carrying out well the significant role of distributing all petroleum products from all refineries in Viet Nam
- Increasing market share and Becoming a market leader in the year of 2020
Philip Kotler (1994) emphasizes the importance for business managers to monitor both macro and microenvironmental factors to achieve their goals Key macro forces include demographic, economic, technological, political, legal, and social/cultural influences Additionally, significant microenvironment actors such as customers, competitors, distribution channels, and suppliers play a crucial role in a business's ability to generate profits in the marketplace.
According to Pearce & Robinson (1994), various external factors significantly impact a firm's strategic direction, organizational structure, and internal processes Fred R David (2003) emphasizes that an external audit aims to identify key opportunities for growth and potential threats to be mitigated The external environment encompasses both general and competitive aspects that influence business decisions.
According to Lumpkin and Taylor (2005), the general environment is composed of factors that can have dramatic effects on firm strategy We divide the general environment into six segments
Managers must consider both the general and competitive environments, as highlighted by Lumpkin and Taylor (2005) The competitive environment significantly impacts industry competition and a firm's profitability A widely recognized framework for analyzing this competitive landscape is Porter’s five forces model, which identifies five fundamental competitive forces that shape industry dynamics.
(1) The threat of new entrants
(2) The bargaining power of buyers
(3) The bargaining power of suppliers
(4) The threat of substitute products and service
Five forces model of M.Porter is described at Figure 2-1
Figure 2-2 Five Competitive Forces Model
From 2000 to 2004, Vietnam experienced an impressive average GDP growth of 7.1% annually This growth peaked at 8.4% in 2005, marking it as the second highest in Asia, just behind China In 2006, the GDP growth was recorded at 8.17% Looking ahead, Vietnam's Minister of Planning and Investment announced a target GDP growth of approximately 8.5% for 2007.
On November 7, 2006, Vietnam joined the World Trade Organization (WTO) as its 150th member after 11 years of preparation, including 8 years of negotiations, aiming to enhance its economy through liberal reforms and trade expansion This accession attracted significant foreign investment, particularly benefiting Vietnam's petroleum sector by providing access to capital, technology, and expertise However, it also posed challenges, as Vietnamese businesses must now contend with increased foreign competition and the pressures of a highly competitive market, necessitating improvements in management and competitiveness.
In recent years, the Vietnamese government has prioritized maintaining political and social stability while developing robust infrastructure to support economic growth and ensure social justice Yearly improvements in policies and laws have created a flexible trading environment, particularly benefiting the petroleum industry, which is vital for national energy security As a conditionally traded commodity, petroleum products are subject to strict government regulations However, the management mechanisms for the petroleum trading market still face challenges that do not align with global changes The government continues to enhance the business environment, promoting integration and expanding international relations Notably, the normalization of diplomatic relations with the United States in July 1995 and subsequent agreements with the European Union marked significant milestones Additionally, Vietnam's accession to the World Trade Organization (WTO) in November 2006 further propelled its economic growth, solidifying its status as an official member of various regional economic and social organizations.
Vietnam, with a population nearing 90 million, has a growth rate exceeding 1.3% annually, particularly in urban and economically significant areas By 2015, the population is projected to reach 93 million This rapid population increase has coincided with a notable rise in national income per capita, significantly boosting purchasing power, especially in the demand for petroleum driven by economic development.
The petroleum industry plays a crucial role in Vietnam's economic development, with the Vietnam Oil and Gas Group reporting an average annual income growth of 22% This sector contributes significantly to the country's GDP, accounting for 18-20% as noted in the report from the party committee conference of Petrovietnam.
Petrovietnam plays a crucial role in Vietnam's economy, contributing 28-30% of the national budget through its comprehensive operations in the petroleum sector, including exploration, refining, and trading The company typically explores around 20 million cubic tons of crude oil annually, highlighting Vietnam's significant energy resources The stability of the petroleum market is influenced by the Dung Quoc refinery, which meets approximately 30% of market demand by supplying 6.5 million tons of petroleum products Future stability is expected to improve with the upcoming operations of additional refineries, such as Long Son and Nghi Son.
In recent years, the Vietnamese government has implemented significant policy changes to enhance technological capabilities, offering incentives to businesses for capital mobilization at preferential interest rates for equipment imports Petrovietnam has successfully acquired advanced know-how in the petroleum sector, enabling Vietnam to operate internationally in markets like Algeria and Russia These government initiatives to promote continuous technological upgrades have bolstered the competitiveness of enterprises, particularly in the petroleum industry, in both domestic and international markets.
PV Oil has enhanced its oil storage terminal and gas station infrastructure to improve operational efficiency and effectiveness, thereby strengthening its competitive edge in the petroleum product trading market.
Summary and Discussions
In term of the international environment, it is estimated that in the period of 2011 –
In 2015, major economies like the United States, Europe, and China experienced significant recovery and growth, creating favorable conditions for Vietnamese enterprises, particularly in the petroleum sector, to boost investment, improve expertise, and enhance import-export activities However, the international petroleum market has recently undergone dramatic changes, characterized by continuous fluctuations in oil prices, which have significantly impacted Vietnam's petroleum trading market.
From 2011 to 2015, Vietnam experienced a stable domestic environment in terms of economy, politics, and society, presenting numerous opportunities for recovery and growth The restructuring of the economy following the crisis has opened new avenues for development, enabling Vietnamese enterprises to invest and expand both locally and internationally Additionally, the average annual increase of 8% in petroleum product consumption highlights a promising opportunity for petroleum trading companies in Vietnam.
The petroleum trading market in Vietnam is becoming increasingly competitive, with ten enterprises now permitted to import petroleum products from overseas The Government's Decree 84/NĐ-CP, issued on October 15, 2009, has opened the market to all types of businesses, fostering a more flexible environment for new entrants Additionally, the open-door policy introduced in 2012 has led to the entry of major global petroleum groups into the Vietnamese market, intensifying competition within the sector.
According to the literature, there are three primary purposes for modeling in marketing: measurement, decision making, and theory building Measurement models specifically aim to quantify product demand based on various independent variables, which typically include marketing mix elements In the context of petroleum marketing, these models are often articulated through the marketing mix components: place, product, price, and promotion.
2.4.4 Petroleum marketing strategies – case study
Each petroleum trading company employs unique business strategies, primarily focusing on customer satisfaction through sales activities at gas stations that serve billions of consumers This article summarizes some of the most popular strategies adopted by various companies in the industry.
Effective distribution is crucial for the success of petroleum trading companies, enabling them to establish a comprehensive network that enhances customer convenience across vast areas Companies like PV Oil, Petrolimex, Saigon Petro, and PTT recognize the importance of expanding their petroleum product distribution systems to improve their market reach Additionally, maintaining a stable supply of products is vital for trading success, prompting sellers to prioritize this aspect These companies are also focusing on expanding their oil storage terminals to support their distribution efforts.
Bennett (2004) suggests that terminal operators with extensive networks across various geographical regions possess a competitive advantage over those confined to specific marketing areas, likening the terminal system to a banking structure.
In the petroleum industry, product quality is mandated by national standards before importation or market launch; however, consumers in Vietnam prioritize the quantity of petrol received over quality Service quality and competitive pricing at gas stations are significant factors for customers, leading companies like PV Oil, Petrolimex, and Red Hed Oil to implement loyalty programs and credit/debit card options Additionally, integrating grocery offerings at gas stations enhances convenience for customers, particularly those engaged in long-distance travel While some sellers overlook alternative products, companies like Shell and PV Oil recognize their potential to boost sales and market share According to McKenna (2006), an effective customer service infrastructure is essential for maintaining a customer-centric approach, underscoring the importance of quality service in this sector.
In Vietnam, where motorcycles are the primary mode of transportation, the price of petrol is less critical for individual customers purchasing small quantities However, for wholesalers, price plays a more significant role, making credit and debit card options less relevant for their transactions Despite this, the payment method remains important for both end users and wholesalers, indicating that debit cards can effectively encourage purchases at gas stations.
In the future, dispenser marketing at the pump is poised to significantly impact convenience stores, as highlighted by Ward (2007), with in-pump promotions serving as a powerful tool for building brand identity This technology will eventually enable retailers to identify individual customers and tailor promotions based on their purchasing histories Debit cards, widely used in developed countries, play a crucial role in these promotional strategies, as noted by ABA Bank Marketing (2009), which states that debit cards are the most dominant payment method in the United States Furthermore, research by Iturralde, Maseda, and San-Jose (2010) indicates that strong bank-firm relationships can influence loan rates In Vietnam, companies like PV Oil and Petec recognize the importance of banking relationships, collaborating with Ocean Bank to enhance financial operations and offer credit cards for fuel purchases, ultimately improving customer service quality.
Corporate Social Responsibility (CSR) is increasingly emphasized in business operations, particularly in developed countries, while gaining traction in emerging markets like Indonesia, Thailand, the Philippines, India, and Vietnam According to Planken, B., Sahu, S., & Nickerson, C., this growing focus on CSR reflects a broader commitment to ethical practices in various regions.
Corporate Social Responsibility (CSR) has evolved into a key marketing strategy aimed at enhancing a company's image as a responsible corporate citizen while encouraging consumer purchases and investments Major companies like Mobil, Cosmo, PTT, and PV Oil are increasingly focusing on CSR initiatives as an integral part of their business operations, recognizing its role in effective marketing communication.
This chapter explores the key factors influencing market dynamics, including price, quality, service, and distribution A comprehensive literature review highlights the theoretical relationships among price, product, promotion, and corporate social responsibility (CSR) in relation to market share, specifically within the international petroleum market and the Vietnamese petroleum trading sector Supporting case studies further validate these findings.