Sunday, March 11, 2012

Research Paper on Exxon Mobil

Research Paper on Exxon Mobil

Company’s Product Strategies
Exxon Mobil Corporation, the parent of Esso, Mobil and ExxonMobil companies, offers a wide range of products and services. The corporation boasts a full product cycle, starting with geological exploration and ending with delivering oil-related products to corporate and individual consumers. The three principal markets Exxon Mobil Corporation serves are fuels, lubricants and specialties, and petrochemicals. With regard to the corporation’s fuel products and services, it delivers them using the business-to-business model across three key segments, namely Industrial and Wholesale (1 million customers), Aviation (630 airports), and Marine (180 ports). With regard to lubricants and specialties, the corporation is the world’s leading supplier of lube basestocks, finished lubricants, asphalt, and specialty products, the leading brand being Mobil 1. It operated 12 lube basestock refineries, and its lube basestock market share is 18 percent. Its finished lubricant market share is 12 percent. With regard to petrochemicals, the corporation is one of the world’s largest producers of olefins, polyolefins, polypropylene, paraxylene and benzene that are further used to produce a variety of derivative products. The corporation’s specialty products market includes butyl polymers, specialty elastomers, synthetic lubricant basestocks, petroleum additives, oriented polypropylene films, plasticizers, oxo alcohols, hydrocarbon and oxygenated fluids, and adhesive polymers.

Company’s pricing strategies
Since the company has such a diverse portfolio of businesses, its pricing strategies for different products vary a lot. However, it is important to keep in mind that the single most important determinant of Exxon Mobil’s pricing decisions is dynamics of oil prices on the global market. As the company itself reports, fuel prices are determined by ‘changes in the price of crude oil, supply and demand, fuel specifications, government regulations, taxes, and transportation costs’ (ExxonMobil, 2008, ‘Factors in fuel pricing’, para. 1). At the moment, the price of crude oil is 67 percent of the retail price of regular gasoline, the prices of refining, transportation and marketing are 22 percent, and taxes are approximately 11 percent.

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As for the actual pricing strategies, for most of its products Exxon Mobil uses Economy Pricing, keeping in mind that most of its sales are business-to-business. Since large businesses are sensitive to fluctuations in oil price, manufacturers try to keep prices to the minimum. If production and advertisement costs are not kept at the lowest level possible, businesses might switch to Exxon Mobil’s competitors, such as BP or Chevron.

For Exxon Mobil’s products that are marketed directly to individuals a different pricing strategy is used. Since the company enjoys a nearly-monopolistic position on the market, it can set higher prices for individuals than for businesses. However, price check against major competitors still plays an important role. At the same time, Premium Pricing can be employed for the strongest brands such as Mobil 1.

Company’s placement and distribution strategies
Since most of Exxon Mobil products are delivered through the business-to-business model, direct contracts with major customers are the primary means of sales. This model has several advantages and several disadvantages. The advantage is that the corporation can be certain about steady volumes of sales, while the disadvantage is that customers of Exxon Mobil have a degree of power over the company, according to Porter’s five forces model.

Exxon Mobil uses multiple channels for distribution. It uses both direct and indirect channels, and cumulative length of channels varies, dependant on the number of intermediaries. It partners with car dealers, lubricants distributors, parts shop operators, service station operators, repair garages, convenience stores operators, truck dealers, truck shops, fuel wholesalers, independent operators, and franchisees to ensure the distribution of their products. In return for becoming Exxon Mobil’s channel partner, the corporation offers such benefits as high-impact marketing programs, including research and promotion opportunities. It offers demographic reports, national promotions, and extended product lines. As to the company’s own retail fuel operations, Exxon Mobil has 32,000 service stations globally.

Company’s promotion strategies
First and foremost, the company relies on the strength of its brand as the primary element of its marketing communications mix. Generating brand awareness among both major business partners and individual consumers is the key to the corporation’s success.

Another focus area is public relations. Aggressive campaigns are necessary to counter negative publicity associated with Exxon Mobil’s contribution to pollution and climate change. It requires ‘masterful PR, lobbying, strategic funding of NGOs and the leadership of its senior management’ (Ritson, 2006, para. 5).

Corporate social responsibility policies of Exxon Mobil are widely publicized. It claims its commitment to minimizing the impact of its business activity on the environment, especially in the context of global warming. It pledges to consider priorities of developing world and maximize transparency. It aims at reducing emissions from energy production and improving consumer use of energy. It supports biodiversity conservation and donates to major environmental organizations such as Save The Tiger Fund and Leuser Ecosystem.

Exxon Mobil also engages in charity and community-related projects. It supports a wide range of educational initiatives, fights the spread of malaria, promotes human rights, and facilitates community development. It also endorses gender equality through initiatives like Most Powerful Women Summit or education for girls.

The fact that Exxon Mobil is the largest publicly traded company in the world by revenue and market capitalization serves the purpose of improving its image in business circles, yet also harms its image in communities, as Exxon Mobil is an easy target for attacks by anti-globalization activist and radical environmentalists. Therefore, strategic public relations are of paramount importance.

The company also employs sales promotions and advertisement to enhance its brand value. There have been certain controversies related to Exxon Mobil’s advertising strategy. One of its recent ads has been banned by the Advertising Standards Authority, since it advocated that liquefied natural gas was one of the world’s cleanest fuels. The ad was banned on the graound that it ‘misleadingly implied that liquefied natural gas was environmentally friendly when in fact it caused significant carbon emissions’ (Plunkett, 2008, para. 2).

Exxon Mobil has a challenging task promoting its brand. However, it uses a variety of marketing communication techniques to ensure its dominant position.
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