Marketing Management Term paper on ConocoPhillips

Marketing Management Term paper on ConocoPhillips

Marketing Management Term Paper on

ConocoPhillips

A Term Paper Presented to the Faculty of Business

Administration in the partial fulfillment of the

requirements of the Masters in Business

Administration (MBA)

Submitted to

Professor M. Madmodul Hasan

Faculty EMBA/ MBA Program,

North South University, Bangladesh

Submitted By

Kochhoper Dim

Group Members

Sabrina Awal Upoma

ID:

Signature:

Md. Shamsul Arafin

ID: 151 2223 060

Signature:

Syeda Shotorupa Zafar

ID: 151 2772 660

Signature:

MBA- BUS 620: Marketing Management

Section: 4, North South University, Bangladesh

Date of Submission: 22 nd August, 2015

Letter of Transmittal:

14 August 2015

Professor Dr. M. Mahmodul Hasan

Faculty EMBA/ MBA Program, North South University

Plot: 15, Block: B, Bashundhara, Dhaka 1229, Bangladesh

Subject: Submission Term Paper on ConocoPhillips

Dear Sir,

This is our sincerely pleasure in submitting term paper on ConocoPhillips as

was the term paper requirement of the Marketing Management course for

MBA program this Summer 2015 in North South University.

We tried utmost to make and let it look like a professional one through some

practical analysis and research. Any shortcomings are expected to have a

kind view for our encouragement. Thank you for your sincere & honest try

and help us to make the paper a successful one.

Our efforts will be valued; if this term paper serves the purpose for what it’s

been assigned.

Sincerely Yours,

Name ID Signature

Sabrina Awal Upoma

Md. Shamsul Arafin 151 2223 060

Syeda Shotorupa Zafar 151 2772 660

Acknowledgement: At first, we would like to express our gratitude to almighty ALLAH who has

given us the opportunity to go through the total process of Marketing

Management and to write a paper in this regard.

The term paper on ConocoPhillips in light of the course Marketing

Management (BUS-620) results from considerable intellectual and moral

support given by our honorable course instructor, Professor Dr. M.

Mahmodul Hasan, Faculty EMBA/ MBA Program, North South University.

Over the last three months, he has been our guide from whom we got the

inspiration and guidance to learn “Marketing Management”. We strongly

believe works like this one will surely help us to develop & make us better

adapted as well as capable to cope with the issues & practical exposures in

this field as well as to the whole of the legislative tools that are being

extensively exploited in today’s world.

Finally we want to thank each other. As without the team effort the work

may not happen. Each and every member tries to give their best effort to

finish the report as per guidelines.

Executive Summary:ConocoPhillips Co. is an American multinational energy corporation with its

headquarters located in the Energy Corridor district of Houston, Texas in

the United States. It is the world’s largest independent exploration and

production company, based on proved reserves and production of liquids

and natural gas. They explore for, develop, and produce crude oil and

natural gas globally. A commitment to safety, operating excellence and

environmental stewardship guide our operations.

The company strategy, at the core, is based on a diversified approach to the

business – one that does not rely or depend on any particular product type,

geology or geography. Their diversified portfolio has helped them continue

operating long-term business without the need to react to short-term

market volatility. They run their business under a set of guiding principles

that are called their SPIRIT Values.

ConocoPhillips has big brand name and strong market position, high level

marketing, approximately 17000 employees’ worldwide, largest Exploration

and Production (Upstream) company. But the cost of environmental

hazards, declining oil reserves and production, pollution and increasing cost

and complexities of new exploration and production projects are the biggest

weaknesses of this industry.

Yet immense opportunities of increasing natural gas market, more oil well

discoveries, increasing demand for gas and refined products are on the line.

Perhaps, Government regulations, pollution guidelines, high labor costs and

hybrid cars not using Fuel can be giant threats to this industry.

ConocoPhillips is the simultaneous pursuit of differentiation and low cost.

The main head to head competition is with Chevron. The aim of

ConocoPhillips is not to out-perform the competition in the existing

industry, but to create new market space or a blue ocean, thereby making

the competition irrelevant. Marketing activities are performed through

offices in the United States, Canada, Europe and Asia. They mainly attempt

to minimize flow disruptions, maximize realized prices and manage credit-

risk exposure.

The company has a strong internal environment and in near future it finds

attractive to explore in Senegal, West Africa.

Conoco Philips’s recent move of focusing on oil for next five years is well

aligned with its energy outlook and long-term investments in relatively high-

growth area of energy. At the end we can conclude it by saying that their

presence in Bangladesh will definitely advance the national energy industry

in Bangladesh and will also add to the growing base of ConocoPhillips’s

core operations.

Table of Contents

Chapter 1:...............................................................................................................................................1

1.1. Definition of Marketing Management:.........................................................................2

1.1.1. Definition of Marketing Management (Theory 2000 – 2011).......................2

1.1.2. Definition of Marketing Management (Theory 2012 – 2016 ±)..................2

1.1.3. Marketing Management and ConocoPhillips:....................................................2

1.2. Mission-Vision-Business Plan-Corporate Strategy:..................................................3

1.2.1. Mission of ConocoPhillips:........................................................................................3

1.2.2. Vision of ConocoPhillips:...........................................................................................3

1.2.3. Business Plan of ConocoPhillips:............................................................................3

1.2.4. Corporate Strategy:.....................................................................................................7

Chapter 2:...............................................................................................................................................9

2.1. SWOT:........................................................................................................................................10

2.2. PASTLE:....................................................................................................................................11

2.3. Michael Porter’s Five Forces:...........................................................................................12

Chapter 3:.............................................................................................................................................13

3.1. Marketing Strategy of ConocoPhillips:.........................................................................14

3.2. Core Marketing Concept of ConocoPhillips:...............................................................15

3.3. Market Segment:...................................................................................................................18

3.4. Marketing Mix (7p& 4c):....................................................................................................19

Chapter 4:.............................................................................................................................................24

4.1. Value Chain Model:...............................................................................................................25

4.2. TQM- Loyalty-Quality-Control:.......................................................................................288

Chapter 5:.............................................................................................................................................31

5.1. Brand and Branding:............................................................................................................32

5.2. Box Analysis and Brand Elements:.................................................................................33

5.3. Brand Dynamic Pyramid:....................................................................................................35

5.4. The five M’s advertising:....................................................................................................37

Chapter 6:.............................................................................................................................................38

6.1. Mass Marketing:....................................................................................................................39

6.1.1. Advertising Budget and Campaign Cost:..............................................................39

6.2. Marketing Budget and Expenditure of ConocoPhillips...........................................41

6.3. Pricing Strategies of ConocoPhillips:.............................................................................42

6.4. Breakeven Analysis with Graph:......................................................................................43

Chapter 7:.............................................................................................................................................47

7.1. Recommendations:................................................................................................................48

7.2. Conclusion:..............................................................................................................................49

Chapter 8:.............................................................................................................................................50

8.1. References:..............................................................................................................................51

8.1.1. Reference from Book:...................................................................................................51

8.1.2. Reference from Online Report:.....................................................................................51

8.1.3. Reference from Internet:............................................................................................51

Appendices:............................................................................................................................................. i

Appendix 1: Annual Report of ConocoPhillips:......................................................................ii

Appendix 2: Blog Spot...................................................................................................................iii

Appendix 3: Academia 1-.............................................................................................................. iv

Appendix 4: Academia 2-...............................................................................................................v

Appendix 5: Academia 3-..............................................................................................................vi

Chapter 1

Kocchoper Dim | Marketing Management Term Paper 1

1.1.Definition of Marketing Management:

1.1.1. Definition of Marketing Management (Theory 2000 – 2011)

Marketing management is the art and science of choosing target markets

and getting, keeping, and growing customers through creating, delivering,

and communicating superior customer value.

1.1.2. Definition of Marketing Management (Theory 2012 – 2016 ±)

Marketing management depends on the size of the business and the

industry in which the business operates. Effective marketing management

will use a company's resources to increase its customer base, improve

customer opinions of the company's products and services, and increase the

company's perceived value.

1.1.3. Marketing Management and ConocoPhillips:

ConocoPhillips Marketing Strategy both Relate to Theory 2000-2011 and

Theory 2012-2016±. No doubt, ConocoPhillips choose its target markets

getting, keeping, and growing customers through creating, delivering, and

communicating superior customer value. Besides, ConocoPhillips is the

world’s largest independent exploration and production company based on

reserves and oil production. ConocoPhillips now focuses on exploration and

production. The company explores for produces, transports, and sells crude

oil, bitumen, natural gas and so on. Moreover, Effective marketing

management will use a company's resources to increase its customer base,

improve customer opinions of the company's products and services, and


http://www.businessdictionary.com/definition/services.html

http://www.businessdictionary.com/definition/product.html

http://www.businessdictionary.com/definition/opinion.html

http://www.businessdictionary.com/definition/customer.html

http://www.businessdictionary.com/definition/improve.html

http://www.businessdictionary.com/definition/customer-base.html

http://www.businessdictionary.com/definition/effective.html

http://www.businessdictionary.com/definition/perceived-value.html

http://www.businessdictionary.com/definition/services.html


http://www.businessdictionary.com/definition/opinion.html

http://www.businessdictionary.com/definition/customer.html

http://www.businessdictionary.com/definition/improve.html

http://www.businessdictionary.com/definition/customer-base.html

http://www.businessdictionary.com/definition/effective.html

http://www.businessdictionary.com/definition/operate.html

http://www.businessdictionary.com/definition/industry.html

increase the company's perceived value. Its prove ConocoPhillips relates

with Marketing Management strongly.


http://www.businessdictionary.com/definition/perceived-value.html

1.2.Mission-Vision-Business Plan-Corporate

Strategy:

ConocoPhillips Co. is an American multinational energy corporation with its

headquarters located in the Energy Corridor district of Houston, Texas in

the United States. It is the world's largest independent pure-play

exploration and production company and is also one of the Fortune 500

companies. ConocoPhillips was created through the merger of Conoco Inc.

and the Phillips Petroleum Co. on August 30, 2002

1.2.1. Mission of ConocoPhillips:

ConocoPhillips’s primary mission is to develop innovative ways to treat and

reuse by-product water from oil and gas production and refining operations.

1.2.2. Vision of ConocoPhillips:

The vision of the Global Water Sustainability Center (GWSC) is to become

the center of excellence for key water-related technologies particularly

those applicable to the petroleum and municipal sectors.

1.2.3. Business Plan of ConocoPhillips:

Oil and gas production is serious business. Over the years, ConocoPhillips

has undergone various changes, and now, it has become a much-organized

business. It comprises three sectors:

The upstream sector: The upstream sector entails oil prospecting

and exploration, drilling for oil, and drawing it out of the ground.

These activities are the earliest stages of oil production.

The midstream sector: The midstream sector entails transportation,

storage, and wholesale marketing or crude or refined petroleum


products. Activities in this sector are aimed at moving crude oil from

the site where it is drawn to refineries where it will be processed into

the various petroleum products.

The downstream sector: The downstream sector entails storage of

petroleum products as well as transportation, marketing, and

everything else that happens until the products finally get to

consumers.

Although several products are made from crude oil, only four of them are in

huge demand. These are:

o Petrol or gas (also called gasoline or PMS—premium motor spirit)

o Diesel (also called AGO–automotive gas oil)

o Kerosene (also called paraffin or DPK—dual-purpose kerosene)

o Cooking gas (also called LPG—liquefied petroleum gas).

The demand for these four products is high because they are widely used

for everyday activities such as transport, domestic cooking, and so on. With

the above in mind, let’s now look at the steps involved in starting an oil and

gas company.

For Business Plan, ConocoPhillips usually follows the steps are given in the

below:


Figure 1: Steps of Winning Corporate Plan of ConocoPhillips

For making a market winning corporate plan ConocoPhillips does market

research to understand the intricacies of the market and pitfalls or

challenges that new entrants are likely to encounter. This research always

helps them to make and know goals and objectives of your business,

required startup costs, operation plan and cost, market analysis and

competition, projected income over the first few years, marketing strategy,

unique selling point, exit strategy, and other vital information through

which ConocoPhillips easily make the entry planning in the new market and

develop the existing market by hiring effective employees and Buy and

install the necessary equipment. By following these steps ConocoPhillips

turn into a successful industry now.

1.2.3.1. Environment Analysis of ConocoPhillips:

The company business plan, at the core, is based on a diversified approach

to the business – one that does not rely or depend on any particular product

type, geology or geography. Their diversified portfolio has helped them

continue operating long-term business without the need to react to short-

term market volatility. With a steady stream of production from legacy

assets, conventional and unconventional opportunities in development

drilling programs, major project startups across the portfolio, and an


extensive inventory of exploration prospects, they are well positioned to

deliver organic growth. They believe this is the right formula for a company

of our substantial size.

1.2.3.2. Goals Formulations:

ConocoPhillips runs their business under a set of guiding principles that are

called their SPIRIT Values. These set the tone for how they behave with all

their stakeholders, internally and externally. ConocoPhillips has both long

term and short term goals. To formulate the long term and short term

goals, company strictly follows some steps:

Safety- Company operates everything safely.

People- Company respects one another, recognizing that the success

depends upon the commitment, capabilities and diversity of the employees.

Integrity- ConocoPhillips is ethical and trustworthy in their relationships

with stakeholders.

Responsibility- Company is accountable for the actions.

Innovation- Company anticipates change and respond with creative

solutions. Teamwork: The “can do” spirit delivers top performance.

Company encourages collaboration, celebrate success, and build and

nurture long-standing relationships.

1.2.3.3. Strategy Formulations:

ConocoPhillips remain committed to our 5 strategic priorities:

Maintain a relentless focus on safety and execution.

Offer a compelling dividend.

Deliver 3 to 5% compound annual production growth.

Deliver 3 to 5% compound annual margin growth.

Achieve ongoing improvements in financial returns.


1.2.3.4. Program Formulations and Implementation:

To achieve organizational goals ConocoPhillips continue investing and

implementing its goals and strategies in projects and programs that deliver

long-term production and margin growth.

In 2013, the company was funded a $16.3 billion capital program for

continuing operations and prepaid $2.8 billion obligation to our 50%

owned FCCL business venture.

In 2013, budget allocated approximately 10% of this capital toward

maintenance of the legacy base assets, 45% to development drilling

programs, 30% for major growth projects, and 15% for exploration

and appraisal programs.

1.2.3.5. Feedback and Control:

After implementing all goals, strategies and programs ConocoPhillips takes

feedback and control the feedbacks. If the plan is not according to the

schedule, then Company evaluates it and adjusts for the betterment and this

continuous process of improvisation remains present all the year.

1.2.4. Corporate Strategy:

ConocoPhillips corporate strategies are:

1.2.4.1. Corporate Mission:

ConocoPhillips’s corporate mission is to- develop innovative ways to treat

and reuse by-product water from oil and gas production and refining

operations.


1.2.4.2. Strategic Business Units:

ConocoPhillips’s Strategic Business Units are:

Energy Efficiencies Units

Units of Centralized Facilities. Because, Centralizing water collection

reduces truck mileage which is more energy efficient and creates less

emissions

Using Green Completions Technology in 2007

1.2.4.3. Asses Growth Opportunities:

ConocoPhillips is setting a goal to grow up its productions. Because

company believes that, through its asset base, technological capacity

and world class workforce and financial strength company can easily

add its value propositions.

Besides company’s investments and financial strength indicates its

high volume of productions. For Example, The Company estimates to

increase its production from 1.8 billion barrel of oil to 2.5 billion

barrel of oil.

ConocoPhillips wells have the highest oil rates.

Focus on improving financial returns by through Capital Discipline

and ongoing cost efficiencies.



Chapter 2

2.1. SWOT:


Figure 2: SWOT analysis of ConocoPhillips


Threats1.Government regulations 2.Pollution guidelines3.High labor costs4.Hybrid cars not using Fuel

S W O T

2.2. PASTLE:

Figure 3: PASTEL


T rad e R estr ic tio n s

E n v iro n m eta l R eg u la tion s

T ax P o lic ies

E m p loym en t L aw s

P o litic a l E c o n o m ic a l

H ea lth C o n csiou sn ess

E m p h asis o n S a fe ty

V a lu es & B e lie fs

C S R A ctiv itie s

S o c ia l T e c h n o lo g ica l

Ecological Legal

Supplier Power

Importance of the large volume to the suppliers

Switching costs in the same industry

Relative cost benefit judgments & preference to uphold core values

2.3. Michael Porter’s Five Forces:

Figure 4: Michel Porter’s Five Forces


Threat of Substitutes

new energy conserving technologies that are being developed.

Alternative fuel products are a threat to the oil and gas industry in the long run.

Price-performance trade off substitutes.

Switching costs

Threat of New Entrants

High barriers to entry with existing large & powerful companies

Brand identity

Absolute cost advantages

Growth of industry with access to inputs

Buyer Power

Influential bargaining power in forcing the price down.

Bargaining Leverage & price sensitivity due to the prevailing market conditions of crude oil.

Amount of product differentiation.

Degree of Rivalry

Intense competition among the existing companies, as ConocoPhillips is the world’s largest exploration & production company

Chapter 3


3.1. Marketing Strategy of ConocoPhillips:

Marketing Strategy:

As a Successful company ConocoPhillips follows some marketing strategies.

4 Killer Marketing Strategies that ConocoPhillips are following from many

years are given below:

Figure 5: Marketing Strategy of ConocoPhillips

1. Talk to Those who Matters in the Market:

This is really a tough task for ConocoPhillips to go to the petrol or gas pump

and talk with the industries and customers. But to market its product

ConocoPhillips employees communicate strongly with its target customers

regularly to fulfill their demand and to be updated.

2. Concentrate only one Customer at a Time:


Talk to those who Matters in The Market

Concentrate Only One Customer at a time

Look at Local Small Pump

Advertise on Mass Media

Basically ConocoPhillips is sale its product as station basis. And every day a

huge quantity of Oil or Gas is sold at a time and here every customer and

stations are important for them. So, make a strong and profit making

position in the market, it needs to give full concentration at a single time.

Because, this time increase one customer means increase supply and

increase supply means rising of profit.

3. Look at Local Small Group:

Not only large Companies, to make a strong position in the market

ConocoPhillips also focus on different specific areas even if local groups of a

country, as local station or pump has small tanks, they need to buy huge oil

and gas every day. Through this way ConocoPhillips emerge its networks.

4. Advertise on Mass Media:

ConocoPhillips widely promotes it’s any project or News in the Online news

paper and magazine to branding themselves. It’s a great marketing strategy

ever which makes them a company with a huge success.

3.2. Core Marketing Concept of ConocoPhillips:

ConocoPhillips is one of 23 Integrated Oil and Gas companies. The

Integrated Oil and Gas Industry’s average sales in 2005 were $1.4 trillion.

While 23 companies may seems like a lot of competition, it is in fact

relatively small when compared to the size of the industry. ConocoPhillips’

average sales over the last 3 years were $142 billion; this accounts for

roughly 10% of the industry’s sales in 2005. It is also important to note that

ConocoPhillips’ sales are on the upturn, so this percentage is likely to

increase 6. Its main integrated oil competitors are Amerada Hess,

ChevronTexaco, ExxonMobil, Marathon, and Occidental.


These companies deal in both up upstream and downstream operations.

Upstream operations involve exploration and production while downstream

operations include refining and marketing. ConocoPhillips has other

competitors whose entire business is focused on either downstream or

upstream operations. These competitors included Anadarko, Dynegy,

Valero, and Halliburton just to name a few. ConocoPhillips has a

competitive advantage over these companies because being involved in both

downstream and upstream operations allows the company to remain

profitable when one operation lags. If prices or competition in one operation

becomes unfavorable, the other operation can cover the losses.

ConocoPhillips is the third largest integrated energy company in the United

States and second largest refiner in the United States. Worldwide,

ConocoPhillips has the fifth largest proved reserves and is the fourth largest

refiner. Because the energy business has very high demand and there are

relatively few competitors in the industry, existing firms do not engage in

price wars. Instead, they compete on non-price dimensions. One of the

major non-price dimensions firms compete on is the size and reach to which

they can offer their products.


Figure 6: Core Marketing Concept of ConocoPhillips

ConocoPhillips has a competitive advantage over most of these companies

due to their size, vertical integration, and scope of operations. Because

existing firms do not engage in price wars, firms focus on increasing the

size and reach to which they can offer their products and offer other

products such as asphalts and chemicals. The degree of differentiation for

ConocoPhillips and its competitors is low, so their customers are ready to

switch from one competitor to the other based on price. This is one of the

most competitive markets involving heavy the art of technologies where

both barriers (Entry, Exit) are high. The competition ranges from public and

state owned enterprises and the level of competition varies within different

geographic locations like Latin America, Alaska would be much more

different than the Middle East and that in Asia including Bangladesh.

Company in the entire industry; however, the largest publically owned firms

and competitor of Conoco Phillips are Exxon Mobil, Chevron, Royal Dutch

Shell PLC, BP PLC and Total SA. With decades of experience as an

organization, COP is without doubt one of the dominating market leaders

since they had the third largest worldwide liquids compare to other

competitors include Chevron, Exxon, Santos, BP, Gazporm, etc. Conoco

Phillips competes with private, public and state-owned companies in all

facets of the E&P business. Some of our competitors are larger and have

greater resources. They deliver their production into the worldwide

commodity markets. Chevron is the industry leader with a strong global

presence in the energy sector. Gazporm is more aggressive in and regular

assesses its strength and quality benchmarks which COP can take into

account.

In Bangladesh the company such as Petro-bangla and BP are state owned

public ventures with strong support and continuous growth and

development by government, which is a disadvantage or drawback for

ConocoPhillips in the Asia Pacific region. But by the help of advance


technology and skill, it has a huge alive hope to operate in such region in

near future where just like Chevron Bangladesh is operating, which is very

much successful and operates successfully as a biggest energy provider

organization in Bangladesh.


3.3. Market Segment:

ConocoPhillips is broadly classified into three segments in the market. The

upstream segment comprises exploration and production (E&P), while the

downstream segment includes refining and marketing (R&M). In between,

the midstream segment includes the transportation, storage, and trading.

Figure 7: Market Segments of ConocoPhillips

The exploration and production segment is capital intensive, soaking up 70

percent of total investment of ConocoPhillips. The activity is also riddled

with uncertainty with the number of failures outstripping the number of

successful finds. The downstream segment, meanwhile, is a relatively safer

business with operating efficiency and energy consumption governing

profitability.


Segment 1-

Upteam

Segment 2-

Midtream

Segment 3-

Downtream

3.4. Marketing Mix (7p& 4c):

Figure 8: 7p of ConocoPhillips’s


7p of ConocoPHillips

7P in Details of ConocoPhillips

Product

Natural Gas :

Their natural gas production, along with third-party

purchased gas, is primarily marketed in the United

States, Canada, Europe and Asia. Their natural gas is

sold to a diverse client portfolio which includes local

distribution companies; gas and power utilities; large

industrials; independent, integrated or state-owned

oil and gas companies; as well as marketing

companies.

Crude Oil, Bitumen and Natural Gas Liquids

Their crude oil, bitumen and natural gas liquids

revenues are derived from production in the United

States, Canada, Australia, Asia, Africa and Europe.

These commodities are primarily sold under contracts

with prices based on market indices, adjusted for

location, quality and transportation.

Place

Barring a successful addition to ConocoPhillips’s

proved reserves, its future crude oil, bitumen and

natural gas production will decline, resulting in an

adverse impact to the business. This is typical of

energy companies. The rate of production from

upstream fields generally declines as reserves are


depleted. This depends on the extent that

ConocoPhillips conducts successful exploration and

development activities, or, through engineering

studies, identifies additional or secondary recovery

reserves. It’s proved reserves will decline materially

as it produces crude oil and natural gas.

Promotion

Marketing activities are performed through offices in

the United States, Canada, Europe and Asia. They

mainly attempt to minimize flow disruptions,

maximize realized prices and manage credit-risk

exposure. Commodity sales are generally made at

prevailing market prices at the time of sale. In

addition they purchase third-party volumes to better

position the Company to fully utilize transportation

and storage capacity and satisfy customer demand.

A point of note is that since they have separated from

their downstream business since 2012, they have

focused on the production and thus there was a very

limited scope for promotion. However, since COP is

still engaged in marketing their technologies and

products, they utilize exclusive promotional activities

like Advertisements, documentaries, stakeholder

meeting to promote the organization.

Price

The effects of changing commodity prices and

refining margins. The revenues, operating results and

future rate of growth are highly dependent on the

prices that the Company receives for the crude oil,


bitumen, natural gas, natural gas liquids, LNG and

refined products. The factors influencing these prices

are beyond the Company’s control.

Any material change in the factors and assumptions

underlying ConocoPhillips’s estimates of crude oil,

bitumen and natural gas reserves could impair the

quantity and value of those reserves. Reserve

estimation is a process that involves estimating

volumes to be recovered from underground

accumulations of crude oil, bitumen and natural gas

that cannot be directly measured.

Physical Evidence When as ConocoPhillips is an Oil and Gas Company,

its products evidence is its smell.

Process ConocoPhillips’ working process starts from

exploration for oil & gas underwater or underground.

When resources are found, they start collecting them

then refine or process to transform them into finished

goods to transport to the users.

People Mainly there are two types of people get highest

preferences in ConocoPhillips-

The people who works there

Its customers


4C’s of ConocoPhillips:


Figure 9: 4C’s of ConocoPhillips


ConocoPhillips supplies or provides Oil and Gas to different Oil and Gas Stations.

Conocophillips do cost by Long Term Lease, Price Uncertainity, Geographical Placemenr Cost, PromotionalCost.

Company Strongly maintain communications with their clients and all people involve in Company's activities like emplyee, area managers so on

ConocoPhilips gives customer flexibilitiess by giving them supply and transport oil and gas time to time.

Clients Cost

CommunicationConventence

Chapter 4


4.1. Value Chain Model:

The value chain is a tool for identifying ways to create more customer

value because every firm is a synthesis of primary and support activities

performed to design, produce, market, deliver, and support its product. For

ConocoPhillips, we can develop their value chain model analyzing their

value delivery system as-

Figure 10: Porter’s Generic Value Chain



ConocoPhillips Value Chain:

Exploration: Using technologies to find new oil resources.

ConocoPhillips performs seismic surveys to get info about possibility of

oil underwater or underground.

Collection: Production of oil is the operation that brings hydrocarbons

to the surface and prepares them for processing. In ConocoPhillips,

production begins after the well is drilled. The mixture of oil, gas and

water from the well is separated on the surface. The water is disposed of

and the oil and gas are treated, measured, and tested. Production

operations include bringing the oil and gas to the surface, maintaining

production, and purifying, measuring, and testing. Artificial lifting

methods are used when the pressure from natural reservoir drive

decreases to the point where the well stops producing. Artificial lift uses

pumps and gas injection.

Transportation: Crude oil must be moved from the production site to

refineries and from refineries to consumers. These movements are made

using a number of different modes of transportation. Crude oil and

refined products are transported across the water in barges and tankers.

On land crude oil and products are moved using pipelines, trucks, and

trains.

Refining (For Crude Oil): Crude oil is processed or refined to produce

useable products such as gasoline. The process is very complex and

involves both chemical reactions and physical separations. Crude oil is

composed of thousands of different molecules. It would be nearly

impossible to isolate every molecule and make finished products from

each molecule.

Processing (For Gas): Natural gas produced from underground

reservoirs must be processed to remove water, impurities, and heavier


hydrocarbons. The impurities are usually hydrogen sulfide and carbon

dioxide. The heavier hydrocarbons or natural gas liquids (NGLs) are

ethane (C2H6), propane (C3H8), butane (C4H10), and natural gasoline.

Natural gas liquids are removed from the natural gas feed to recover the

heavier hydrocarbons and to allow the treated gas to move through the

pipeline network. The liquids are removed from the stream because they

are more valuable (have higher prices) as raw materials to produce

chemicals and gasoline than they are as fuel. In addition the heavier

liquids can condense out of the natural gas stream and cause problems

in transporting the gas through pipelines. After several processing, final

usable gas is ready to transport.

Marketing & Sales: After crude oil is converted into refined products or

gas ready to transport, these must be transported and sold to end-users.

ConocoPhillips uses its own marketing channels and mixed distributors

to sell the final oil to users. So far, ConocoPhillips has not been using

commercial advertisement for this marketing purpose.

After Sales Service: For this product lineup, after sales service is not

applicable.


4.2. TQM- Loyalty-Quality-Control:

ConocoPhillips’s are using Total quality management (TQM) system which is an organization-

wide approach to continuously improve the quality of all the organization’s processes, products,

and services. Product and service quality, customer satisfaction, and company profitability are

intimately connected. TQM ran into implementation problems as firms became overly focused

on how they were doing business and not the why they were in business.


Figure 11: Total Quality Management Process of ConocoPhillips

From the Diagram of TQM, we can say that, ConocoPhillips is very concerned about the

customers’ expectations. & that’s why they follow different types of strategies Technical

development, Risk Management, Organizational Planning. After that, they also monitor the

whole process and analyze it. For Maintaining total quality management ConocoPhillips

identifies the customers need, Customer’s order review. More Over the organization provide

advanced quality products of Oil and Gas by using different types of production planning and

production processes.


Figure 12: Increase Loyalty of ConocoPhillips Consumers

ConocoPhillips now a global company and it is very much concern about

consumer loyalty and retention of its consumers. Some Loyalty programs of

ConocoPhillips are:

1. Rolling out Kick Backs Loyalty Program: It’s a program about branded

marketers through road shows. Those who join in this program

ConocoPhillips will provide them a special pricing consideration.

2. The Kickback Points Coalition Loyalty Program will deliver state-of-

the-art customer relationship management tools, highly personalized

rewards, and real-time program reporting. The program’s flexibility

allows participating retailers to identify their most loyal customers

and engage them through customized offerings.

3. This company’s Gas and oil Stations would issue membership card to

(Individual/Corporate) customers to build the customer's loyalty

through encouragement of continuous expense, sticking to the

company forever. When a member fills gasoline, buy goods in the

chain stores of the gas stations, loyalty points can be calculated and

accumulated into the membership point account. Later to some tier

level, the member may get some special discount or get some reward.


Chapter 5


5.1. Brand and Branding:

A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify

the goods or services of one seller or group of sellers and to differentiate them from those of

competitors.

Branding is one of the most important aspects of any business, large or

small, retail or B2B. Branding is endowing products and services with the

power of the brand.

The process involved in creating a unique name and image for a product in

the consumers' mind, mainly through advertising campaigns with

a consistent theme. Branding aims to establish a significant and

differentiated presence in the market that attracts.

ConocoPhillips individual name, its logo and symbol, identity, products and services are

differentiate them from those of competitors. That is called brand of ConocoPhillips Company.

Basically this brand:

Identify the maker.

Simplify product handling

Organize accounting


http://www.businessdictionary.com/definition/market.html

http://www.businessdictionary.com/definition/significant.html

http://www.businessdictionary.com/definition/establish.html

http://www.businessdictionary.com/definition/aim.html

http://www.businessdictionary.com/definition/consistent.html

http://www.businessdictionary.com/definition/advertising-campaign.html

http://www.businessdictionary.com/definition/consumer.html


http://www.businessdictionary.com/definition/image.html

http://www.businessdictionary.com/definition/process.html

http://www.entrepreneur.com/marketing/branding/

Offer legal protection

Signify quality

Create barriers to entry

Serve as a competitive advantage

Secure price premium

And using this name, sign, symbols, branding process ConocoPhillips basically take huge

advantages like:

• Improved perceptions of product performance

• Greater loyalty

• Less vulnerability to competitive marketing actions

• Less vulnerability to crises

• Larger margins

• More inelastic consumer response

• Greater trade cooperation

• Increased marketing communications effectiveness

• Possible licensing opportunities

5.2. Box Analysis and Brand Elements:

The energy sector is intensely focused on increasing ROI and improving

customer relationships, but branding strategy usually takes a backseat.

However, ConocoPhillips is now realizing that a brand identity can help

survive the existing competitive market.

Memorable Meaningful

Likeability Transferable


Adaptable Protectable

Brand Elements Box

Analysis: From these six brand elements, ConocoPhillips has basically

three criteria:

1. Memorable : An oil and energy company logo symbolizes what your

business represents – the quality of service, your promise to the

customer, your company’s unique selling features. So, ConocoPhillips

has a brand identity through its Logo and this logo and symbol of this

oil and energy company becomes a unique identity with which

customers recognize your existence and have a lasting memory of the

trademark its carry. ConocoPhillips used its name in its logo with its

own symbol through which a customer can easily understand this

indicates ConocoPhillips or can easily recognize when they again see

the logo. So, logo is very important for any Oil and Gas companies

like ConocoPhillips. Moreover, ConocoPhillips is a globally organized

company. So people can easily memories the name and its logo.

2. Adaptable : It is widely adapted and accepted by the consumers.

3. Protectable : This brand name is very much protected. As it’s is a

market leader and exists in the market from a very long time.

In Conclusion it’s clear that, ConocoPhillips’s branding through its logo,

symbol and name-

Catch interest and intrigue people to know more about the brand

Create strong memory about ConocoPhillips

Inspire brand loyalty among customers


5.3. Brand Dynamic Pyramid:

Figure 13: Brand Dynamics Pyramid of ConocoPhillips


ConocoPhillips exist to power civilization. It explores to produce explore for,

produce, transport and market crude oil, natural gas, natural gas liquids,

liquefied natural gas and bitumen on a worldwide basis - the energy that

plays a foundational role in enabling global economic development and

human progress. Its key focus areas include safely operating producing

assets, executing existing major projects and exploring for new energy

resources in promising areas. Besides its portfolio is included legacy assets

in North America, Europe, Asia and Australia; growing North American

shale and oil sands businesses; a number of major international

development projects; and a global exploration program.

Moreover ConocoPhillips is active in a wide range of geologic and

geographic settings, including some of the world’s most challenging areas.

From the frozen Arctic to the arid desert, it has a proven track record of

responsibly and efficiently finding and producing oil and natural gas.

Through this discussion it is clear that, ConocoPhillips is now in the

Advantage Position, where it is deliver something better than others. There

is lot of competitors in the market. Competitors of Conoco Phillips are

Exxon Mobil, Chevron, Royal Dutch Shell PLC, BP PLC and Total SA. And

ConocoPhillips still tries to deliver its consumers better products.


5.4. The five M’s advertising:


Figure 14: The Five M’s of Advertising of ConocoPhillips


Mission

Combination of growth and returns with a competitive dividend.

Money

The stage where Conocophillips posesses currently is the PEAK of the PLC combined with growth & maturity.The market share and consumer base.

MediaDiversified portfolio operating long-term business without the need to react short-term market volatility.

MeasurementSteady stream of production.Major project startups across the portfolio & extensive inventory exploration prospects, well positioned to deliver organic growth. Formula for a company of a substantial size.

Message

"SET FOR GROWTH"

Chapter 6

6.1. Mass Marketing:


6.1.1. Advertising Budget and Campaign Cost:



6.2. Marketing Budget and Expenditure of ConocoPhillips


6.3. Pricing Strategies of ConocoPhillips:

With oil's and gas build as a high-demand global commodity comes the

possibility that major fluctuations in price can have a significant economic

impact.

The two primary factors that impact the price of oil and gas of

ConocoPhillips are:

Figure 15: Pricing Strategies of ConocoPhillips

The concept of supply and demand is fairly straightforward. As demand

increases (or supply decreases) the price should go up. As demand

decreases (or supply increases) the price should go down. So as like as

other oil and gas companies, ConocoPhillips follows this pricing strategies.


Pricing Strategies of ConocoPhillip

s

Supply and Demand

Market Sentiment

Market sentiment is the feeling through the activity and price movement in

that market. And ConocoPhillips follow that strategy. For example, rising

prices would indicate a bullish market sentiment to ConocoPhillips, while

falling prices would indicate a bearish market sentiment.

6.4. Breakeven Analysis with Graph:

Breakeven Analysis

Breakeven analysis is a useful financial tool that would determine the

minimum number of production that ConocoPhillips would have to produce

to cover its fixed costs and then make a profit. This analysis is particularly

more important for high-tech engineering companies like COP since fixed

costs are a major chunk of the operating costs.

Table: Break Even Analysis

Details (2013) (2012)Per

Barrel

US$

Total (US$

million)

Per

Barrel

US$

Total (US$

million)

Production 1545

MBOED

x 365

1578

MBOED

x 365

Sales 96.49 54,413 100.64 57,967

Purchased Commodities (22,643) (25,232)

Production and Operating

Expenses

(7,238) (6,793)

Total Variable Costs 52.99 (29,881) 55.60 (32,025)

Contribution margin 43.50 24,532 45.04 25942

Selling, General and

Administration

854 1106


Exploration 1232 1500

Depreciation, depletion,

amortization

7434 6580

Impairments 529 680

Total Fixed Costs 10049 9866

Net Income from Operations 14483 16076


Breakeven Quantity= Fixed Costs/contribution margin per barrel

Contribution margin per barrel: Sales Price per unit-variable cost

Breakeven Sales = Breakeven quantity x Sales price per unit

Margin of Safety= Current Production - Breakeven Production

For The year 2013

Breakeven Quantity= $10049million/$43.50=231 million barrels or

632MBOED

Breakeven Sales= 231 million barrels x $96.49= $22,289 million

Margin of safety= 1545 MBOED - 632MBOED= 913 MBOED

For the Year 2012

Breakeven Quantity= $9,866million/$45.04=219 million barrels or

600MBOED

Breakeven Sales= 332 million barrels x $96.49= $32,034 million

Margin of safety= 1578 MBOED - 600 MBOED= 978 MBOED


Breakeven Quantity580

590

600

610

620

630

640

20122013

Breakeven Sales ($ million)0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

20122013


Margin of Safety880

900

920

940

960

980

1000

20122013

For ease of Analysis we have taken into account the consolidated figure

provided in the income statement of ConocoPhillips. The table shows per

barrel figures and the total value in terms of sales, variable costs,

contribution and fixed costs. From the breakeven analysis, we can conclude

that COP enjoys a high margin of safety and that the current level of

production is much higher than the breakeven level which is approximately

900 MBOED and thus even with disruptions in some of the current

extraction locations like Libya; COP continues to enjoy strong financial

stability. Nevertheless it should be noted that the fixed costs have increased

in 2013 in comparison to 2012 which could be attributed to the capital

investments made for future production, which must be accounted for in the

depreciation value.

Overall the breakeven analysis shows that COP is in a strong financial

position in terms of its direct operations and that production could drop by

600 MBOED and COP could still be profitable.

Overall View on Breakeven Point for the year 2013 & 2012

(combined):

Average Fixed Cost= (10049+9866)/2 = $9957.5 mill

Selling Price per Barrel= (43.50+52.99) = $96.49

Average number of barrel for 2012 & 2013= (231+219) = 225


Graph 1: Breakeven Point Analysis

Here, also from the graph we can see that the number of barrel at

breakeven point of 225million where breakeven sales is $21710.5million.

Fixed cost is included in total cost calculation. The intersect point between

sales line & total cost (where total cost = Total Sale) show the breakeven

point. ConocoPhillips has to sell 225million barrels to cover total cost

incurred in 2012 & 2013 combined. But, for each yearly breakeven point

can be calculated for more precise estimation.


Chapter 7


7.1. Recommendations:

1. ConocoPhillips should better financial control to tackle commodity

price and high variable costs.

2. Company should ensure re-emphasis on safety in non-conventional

exploration and small scale programs.

3. Company should take steps for a global marketing campaign to

counter the negative publicity with regard to safety and

environmental standards.

4. ConocoPhillips should maintain a consistent Focus on Core Business

Strengths.

5. It may look toward diversifying into renewable sources of energy

projects.

6. Company should formulate a technological roadmap which would

mark the life cycles of the technologies where major investments are

channeled.

7. As a Successful global company, ConocoPhillips should focus on

online advertisement strongly.

8. As competitors of this company are increased day by day they need to

follow some unique marketing strategies, advertising methods as well

as pricing methods.


9. To increase the number of loyal customer globally, ConocoPhillips’s

can use some strategies like: Provide Monthly discount and so on.

10. Provide products and service quick and flexible so that

customer’s repetition occurs.

7.2. Conclusion:

ConocoPhillips is a high tech industry leader in the field of exploration and

production of fuel. It has a venerable status as the industry leader with a

long-term orientation; disciplined management, a globally well-integrated

value chain, and operational excellence. An outstanding multinational

organization, their values and mode of operations display the

characteristics of an organization which maintains high standards of

excellence in innovation, sustainability and safety. As the industry leader,

Conoco Philips has balanced to take on the challenges of the world energy

needs for decades to come. The magnitude of its reserves, strong

technology orientation, and its financial strength gives it a commanding

position in the industry. Conoco Philips’s recent move of focusing on oil for

next five years is well aligned with its energy outlook and long-term

investments in relatively high-growth area of energy. At the end we can

conclude it by saying that their presence in Bangladesh will definitely

advance the national energy industry in Bangladesh and will also add to the

growing base of ConocoPhillips’s core operations.


Chapter 8


8.1. References:

8.1.1. Reference from Book:

David Fred R., Strategic Management Cases and

Concepts, (12th ed.), Prentice Hall, Inc. (2009).

8.1.2. Reference from Online Report:

ConocoPhillips Annual Report 2013

Proxy Statement

8.1.3. Reference from Internet:

http://www.hoovers.com/company-information/cs/company

profile.Conocophillips.c354965d3fd53845.html

https://www.env.nm.gov/aqb/4C/Documents/

COP_EmissionsReductionsv4_082008.pdf

http://www.conocophillips.com/who-we-are/Spirit%20Magazine/

1qtr13_spiritmag.pdf

http://www.mba-tutorials.com/strategy/mission-vision/1702-

conocophillips-vision-mission-statement.html

http://www.conocophillips.com/newsroom/Pages/2014/ConocoPhillips-

Outlines-Plans-for-Growth-and-Returns-at-Analyst-Meeting.aspx


http://www.conocophillips.com/newsroom/Pages/2014/ConocoPhillips-Outlines-Plans-for-Growth-and-Returns-at-Analyst-Meeting.aspx

http://www.conocophillips.com/newsroom/Pages/2014/ConocoPhillips-Outlines-Plans-for-Growth-and-Returns-at-Analyst-Meeting.aspx

http://www.mba-tutorials.com/strategy/mission-vision/1702-conocophillips-vision-mission-statement.html


http://www.conocophillips.com/who-we-are/Spirit%20Magazine/1qtr13_spiritmag.pdf

http://www.conocophillips.com/who-we-are/Spirit%20Magazine/1qtr13_spiritmag.pdf

https://www.env.nm.gov/aqb/4C/Documents/COP_EmissionsReductionsv4_082008.pdf

https://www.env.nm.gov/aqb/4C/Documents/COP_EmissionsReductionsv4_082008.pdf

http://www.hoovers.com/company-information/cs/company

http://www.cstoredecisions.com/2011/08/10/conocophillips-begins-

rolling-out-kickback-loyalty-program/

http://www.businessdictionary.com/definition/branding.html

http://www.sba.pdx.edu/faculty/johns/jsaccess/0web/573/Sectors/

Energy/COP/COP_ConocoPhillips_Buy_MBonfield_Winter2011.pdf

http://www.freeswotanalysis.com/oil-gas-swot/33-conoco-phillips-swot-

analysis.html

http://en.wikipedia.org/wiki/ConocoPhillips

http://www.mba-tutorials.com/strategy/mission-vision/1702-

conocophillips-vision-mission-statement.html

http://csimarket.com/stocks/growthrates.php?code=COP

http://www.conocophillips.com/sustainable-development/Documents/

2013.11.7%201200%20SD%20Final.pdf

http://www.researchandmarkets.com/reports/612871/

conocophillips_analysis_across_the_oil_and_gas

http://www.conocophillips.com/investor-relations/Company

%20Reports/2013_Annual_Report_CR.pdf

http://investing.businessweek.com/research/stocks/financials/

financials.asp?

ticker=COP&dataset=cashFlow&period=A&currency=native

http://www.conocophillips.com/investor-relations/company-reports/

Pages/annual-report-archive.aspx

http://www.conocophillips.com/investor-relations/Company

%20Reports/2012_Annual_Report_CR.pdf

http://mmoore.ba.ttu.edu/ValuationReports/Fall2006/

ConocoPhillips.pdf


http://mmoore.ba.ttu.edu/ValuationReports/Fall2006/ConocoPhillips.pdf

http://mmoore.ba.ttu.edu/ValuationReports/Fall2006/ConocoPhillips.pdf

http://www.conocophillips.com/investor-relations/Company%20Reports/2012_Annual_Report_CR.pdf


http://www.conocophillips.com/investor-relations/company-reports/Pages/annual-report-archive.aspx

http://www.conocophillips.com/investor-relations/company-reports/Pages/annual-report-archive.aspx

http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=COP&dataset=cashFlow&period=A&currency=native





http://www.researchandmarkets.com/reports/612871/conocophillips_analysis_across_the_oil_and_gas

http://www.researchandmarkets.com/reports/612871/conocophillips_analysis_across_the_oil_and_gas

http://www.conocophillips.com/sustainable-development/Documents/2013.11.7%201200%20SD%20Final.pdf

http://www.conocophillips.com/sustainable-development/Documents/2013.11.7%201200%20SD%20Final.pdf

http://csimarket.com/stocks/growthrates.php?code=COP



http://en.wikipedia.org/wiki/ConocoPhillips

http://www.freeswotanalysis.com/oil-gas-swot/33-conoco-phillips-swot-analysis.html

http://www.freeswotanalysis.com/oil-gas-swot/33-conoco-phillips-swot-analysis.html

http://www.sba.pdx.edu/faculty/johns/jsaccess/0web/573/Sectors/Energy/COP/COP_ConocoPhillips_Buy_MBonfield_Winter2011.pdf

http://www.sba.pdx.edu/faculty/johns/jsaccess/0web/573/Sectors/Energy/COP/COP_ConocoPhillips_Buy_MBonfield_Winter2011.pdf

http://www.businessdictionary.com/definition/branding.html

http://www.cstoredecisions.com/2011/08/10/conocophillips-begins-rolling-out-kickback-loyalty-program/

http://www.cstoredecisions.com/2011/08/10/conocophillips-begins-rolling-out-kickback-loyalty-program/

http://www.petrostrategies.org/Learning_Center/

ExxonMobil_CapstonePaper_FINAL.pdf


http://www.petrostrategies.org/Learning_Center/ExxonMobil_CapstonePaper_FINAL.pdf

http://www.petrostrategies.org/Learning_Center/ExxonMobil_CapstonePaper_FINAL.pdf

Appendices

Marketing Management Term Paper i

Appendix 1: Annual Report of ConocoPhillips:

Marketing Management Term Paper ii

Appendix 2: Blog Spot

Marketing Management Term Paper iii

Appendix 3: Academia 1-

Marketing Management Term Paper iv


Marketing Management Term Paper v


Marketing Management Term Paper vi

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