MARKETING PLAN FOR MICHAEL SMITH

BP Oil: Marketing to Repair the Damage

Mary Scapino

American Public University

October 21, 2012

Abstract

This marketing plan focuses on the repair of BP’s brand image that was negatively impacted by the Deepwater Horizon oil spill in the Gulf of Mexico. The main focus is to market via: television, billboards, magazine, and social media to consumers. The company’s message is to go over its increased safety and risk management efforts and also the research to ensure that spills do not happen in the future. Additionally, the company will place Electric Vehicle Charging Ports at all of their gasoline stations and will also have a new low carbon fuel that will be available at their stations in 2014. This will draw new and old consumers as they switch to lower emission and more fuel efficient vehicles. BP is at the top of their market in alternative fuel and energy technology and consumers will appreciate that BP is changing with them and continuing to provide quality products that meet their needs.

BP Oil: Marketing to Repair the Damage

British Petroleum’s (commonly known as BP) discovery of oil in the Gulf of Mexico in 2009 brought them to the top three of oil producers in the United States, reaching a goal of 300,000 barrels of oil per day (Reed, 2009). This discovery, although very profitable to BP, also lead to the Deepwater Horizon Catastrophe on April 20, 2010 where a drilling rig exploded off of the coast of Louisiana. It took BP three months to be able to seal the pipeline while excessive amounts of oil were gushing into the Gulf’s water. Luc Bardin, BP’s Chief Marketing Officer conceded that the company would have a difficult road ahead to repair the damage done by the spill in the Golf; for the first time the company is not at the top of its market (Durrani, 2010).

BP is a company that has marketed green initiative and positive environmental impact; the company had “flooded the media with advertisements showing solar panels, windmills and waving fields of grass without a drop of oil in sight” for nearly ten year prior to the spill (Daley, 2010). Green marketing for BP pulled blinders onto consumer’s eyes, shielding them from the image of it being one of the largest oil producers in the United States. The green marketing initiative for BP Oil was very successful – I am not sure many other oil companies could have the population believing that they were a green company. BP’s white gloves were oil soaked as soon as some of the consequences of the oil spill began to emerge in the media and this significantly damaged their brand image with consumers.

This environmental disaster brought a lot of negative publicity to BP and the company faced heavy criticism from both consumers and the government (Harlow, 2011). BP’s social responsibility and ethics have even come into question, many debating whether it is ethical for a company to market themselves green if in fact they are not (Balmer, 2011). Green marketing is no longer going to be enough for BP to sustain and to regain the public’s trust. BP needs a new marketing plan that will focus on gaining back some of what was lost in the tragic Deepwater Horizon Catastrophe. BP needs a plan that will not hide behind green marketing or ignore past mistakes. The focus of this marketing plan is to repair BP’s brand image, regain the trust of consumers, and to provide some innovation to keep pace with changing technology.

Situational Analysis

BP Oil is still working on recovering from the Deepwater Horizon oil spill in 2010. Consumers still have a bad taste in their mouth from the spill and the brand image needs to be revamped with new positive associations. BP Oil has been in the public eye a great deal since the oil spill. Although the image portrayed has not made BP look like a shining star, the publicity has kept their name in consumer’s minds. Luckily the company is still strong, but marketing needs to take the spotlight away from the actual spill (and its negative effects) and find a different positive focus for the company to aid in complete revival within the market. BP will distinguish itself from other oil companies by showing that it is not going to hide from past mistakes; BP will continue research on long term effects of the spill and by focusing on ways to improve safety and risk out on the oil rigs and taking action to do so. BP Oil will continue to be committed to giving aid to help restore the environment and economy of the Gulf. The company no longer needs to hang their head in shame over what happened, they need to show consumers that they are taking action to ensure that something like this does not happen again. Additionally, BP will also be moving forward with innovative technology to find cleaner fuel options and to provide consumers with energy alternatives.

Market Summary

BP Oil knows a lot of information about their target markets. The company knows what types of consumer or company attributes make a good customer. BP will use this information to find out what consumers are looking for in an oil company and also discover what needs to be done to regain trust. BP focuses on a global target market who utilizes fuel and energy.

Market Demographics

The profile for the typical consumer is anyone who uses fuel or energy.

Geographics. BP oil is a global company that ideally would like to target people of every geographic location. The company is already present on every continent with the exception of Antarctica (BP).

Demographics. According to a Rasmussen poll, demographics that favored BP the most were white males, those over the age of 65, conservatives, and republicans (See Figure 1) (Nelson, 2010). Marketing will continue to strengthen the bond with these demographics, but it will also focus on building a relationship with other demographics that do not currently support BP Oil. The company would like to strengthen support from a wider variety of races, liberals, and those in the age group of 16 - 26. By expanding the favor of additional demographics the change in consumer’s opinions will increase positive brand recognition and generate additional sales and revenue for the company.

Market Needs

BP Oil is providing the market with petroleum products at competitive prices that will help consumers get where they are going (BP). Additionally, BP Oil is working on the forefront of creating new sustainable energy technology to bring consumers with the newest energy resources on the market. The company is responding to consumer’s needs by its efforts to: enhancing safety and risk management, supporting long-term oil spill research, providing consumers a competitive priced quality product, and using innovative technology to find a sustainable energy for years to come.

Market Trends

BP will continue to push innovation and will keep up with the current market trends by adding Electric Vehicle Charging Ports at all of their gasoline stations. Additionally, BP plans to have a low carbon fuel available at their stations as early as 2014 (BP). One of the big marketing pushes will be towards those with electric cars and desire for low carbon fuels – the potential for growth through this is quite large, especially if BP is the only company with these things available to consumers on the market.

Market Growth

There will not be an increase in demand for petroleum products; oil, especially gasoline has been heavily used for a long time. There is however, potential for market share growth because BP Oil has the capability to win back consumers that have strayed away from the brand. Additionally, as consumers purchase more alternative fuel vehicles, there will be strong market growth in the products that make those cars run (low-carbon fuel, electric, etc) and BP will be there to provide these products to consumers.

SWOT Analysis

The following SWOT analysis pinpoints the Strengths and Weaknesses of the company as well as the Opportunities and Threats the BP may have to face.

Strengths. One of the biggest strengths of BP oil is that it is one of the top three largest oil producers globally (BP). The company is also very involved in innovation, providing new products with changing times and demands. BP has also survived the Deepwater Horizon oil spill, this could have easily destroyed any other company; BP’s immediate action and corporate strategy helped keep the company on its feet during that challenge. Lastly, BP has excellent brand recognition with consumers.

Weaknesses. The negative associations with the brand image are a serious weakness for the company right now, mostly due to the Deepwater Horizon Oil spill. This was not the first incident for the company where proper precautions had not taken place; however, the company is stepping up its safety and risk management to ensure that things like this do not happen again (BP). Hopefully, BP can turn this weakness into a strength by setting new safety standards in their workplace.

Opportunities. BP has a lot of opportunities. Their investment in new and innovative technologies could prove to be the next big thing in sustainable energy. The company also has a lot of consumers that they have the opportunity to win back with the right strategic plan and marketing initiatives. Additionally, BP has special technology to enable them to find new oil reservoirs under Earth’s surface to help them increase the amount of oil produced and this will help them move closer to the top spot in oil production (BP).

Threats. The main threats for BP are competitors stealing their market share and also another catastrophic oil spill. If BP has another major incident they may lose consumers that have no already strayed to another company. Additionally, with the increased risk the government has been increasing fines and penalties for the company.

Competition

BP Oil has many competitors in their market. Some of the other top oil producers are: Exxon Mobil, Shell, PetroChina, and Petroleo Brasileiro (BP). There will always be competition in this market. First, there is competition between all of the oil companies to find the next oil reserve to drill and then they are competing for government, companies, and consumers to buy their products. BP has very advanced technology to ensure that they continue to find quality reserves in a scientific efficient manner. By sheer volume of oil produced they have been a quality product and are well established with governments, companies, and consumers around the world. There is no cause for concern over any one company absorbing BP’s market share.

Product Offering

BP Oil offers several products to consumers: natural gas, biofuels, oil, liquid petroleum (for homes), chemicals (for making clothing, plastic, detergent, etc), and energy (BP). The company’s diverse portfolios help keep the company strong and enables them find ways to meet almost every consumer’s needs.

Keys to Success

BP’s has several keys to success. First, BP is ahead of other oil/energy producers in creating new technology to create a cost-effective, sustainable bio fuel and energy source. This will offer consumers something that the competition cannot provide them with. BP needs to ensure that a major spill does not happen again in the future and also repair the brand image with consumers.

Critical Issues

BP Oil is well established as a company, however, they need to repair their brand image due to the impact that the Deepwater Horizon oil had on it. This is the biggest issue the company will face in the next year. Additionally, the company needs to take appropriate steps to ensure that another catastrophic spill does not happen again.

Marketing Strategy

The key to the marketing strategy is to engage BP’s target audience in an effort to reshape the brand image and regain trust. BP has a very large volume of oil produced each year and could cover the majority of the market if there were no competition. Additionally, BP has products that are useful to every market segment. Marketing efforts will be widespread throughout each possible segment.

Mission

BP Oil’s mission is “to contribute to providing sustainable energy solutions and fuels, chemical products and services to improve the quality of people's lives in the 21st century and beyond” (BP). By making new sustainable energy and fuel products available to consumers, continuing to maintain an incident free record, and by doing some strong marketing, BP will create a network of consumers loyal to the brand.

Marketing Objectives

The main marketing objectives are: bringing back consumers that strayed after the Deepwater Horizon Oil Spill, maintain growth each quarter, and increase positive brand image for the company.

Financial Objectives

The company’s financial objectives are: to increase cash flow by 50% by the end of 2014 (only half of this increase should be from an end in the Deepwater Horizon payments), continue investing in alternative energy research, and continue to be committed to the Gulf restoration projects.

Target Markets

An increase in population (as estimated in BP’s 2030 Outlook) is directly correlated to an increase in the amount on energy required to sustain the population. This means that the need for oil and energy products is not going to decrease; in fact there will be a significant increase. BP is going to target typical consumers that utilize gasoline in their vehicles as well as those who have moved onto alternative fuel vehicles. They are going to do this by adding an Electric Vehicle Charging Ports at all of their gasoline stations. This will create a niche in the market that BP can only fill for consumers – there are not any other fuel companies that are providing this to consumers on a wide basis. With the increased costs of gasoline and the stricter regulations on emissions standards there will be more consumers purchasing fuel alternative cars and if BP is one of the only places that consumers can charge their electric vehicles or fill up with alternative fuels they will see an increase of up to 85% of the market (an estimate).

Positioning

BP will position itself as the oil company that is championing the cause of alternative fuels and providing them within reach to consumers, giving them the possibility of switching up to an alternative fuel vehicle to save on fuel costs. This will be achieved by strong research in alternative fuels, having BP’s low carbon fuel be ready for the market in 2014, and by strong brand imaging.

Strategies

The main focus on strategy is to restore the brand image of BP. The best way to go about this is to show the changes that BP has made to its risk management and safety programs – consumers need to be aware of all of the extra efforts the company has made to ensure that another catastrophic oil spill does not take place. Additionally, it will be beneficial to showcase the continued support of the economic and environmental restoration of the Gulf and also the continued research on how to prevent and/or repair something like the Deepwater Horizon spill again. Once consumers are again associating BP with positive things, the company will be able to regain the consumers that they have lost. Then BP can then position itself as the frontrunner in alternative energy and fuels. When consumers go to make the change BP is the company that they will automatically rely on to fulfill those needs. This will secure the consumers now and in the future.

Marketing Program

BP Oil’s marketing program will use the following approaches to: pricing, distribution, advertising, and customer service.

· Pricing. The pricing will be based on competitive market value of barrel price. Additionally, for innovative energy options and alternative fuel, BP is going to price them so that they are economical for the average user to enable more consumers to be able to purchase the new technology.

· Distribution. The gasoline and alternative fuels at BP stations will be direct to consumers, however, other products like home fuels or solar panels will distributed through other retailers.

· Advertising and Promotion. Several different methods will be used for the advertising efforts. BP will utilize television, social media, magazines and their website for the promotion of their products.

· Customer Service. BP will have an excellent customer service team; the goal will be for low wait time and very knowledgeable staff providing a quick response to any questions or issues.

Marketing Research

BP has a very well recognized brand. This will be a good advantage because the company does not have to start from scratch with its marketing – the consumer already knows the company and the message in the advertising will stick more clearly in their mind. This will enable the consumer to create new positive brand associations at a more rapid pace.

The other really positive thing that BP has going for them is that there is a great need within the market for alternative energy options. There are a couple out there currently that are either too pricy or they don’t go far enough without a charge. With BP being at the forefront of alternative energy research with a low carbon fuel option in 2014 they are going to be at the top of their market.

Financials

This section will offer a financial overview of BP related to company health. BP will address marketing costs, cash flow forecast, and its financials year end 2011.

Year end 2011

The year end of 2011 ended much better than 2010 due to the oil spill. Although the company had not fully recovered from the Deepwater Horizon oil spill it showed signs of improvement since a lot of the payments and costs that were associated with the spill had ended. See Figure 3.

Marketing Costs

The marketing costs for BP immediately after the oil spill soared to nearly $100 Million per year (BP). BP plans to reduce this to $75 Million for 2013 and then down to $40 Million for 2014. There was an increased need to marketing and public relations after the spill. Currently the company needs to continue an aggressive marketing campaign to re-build a positive brand image. After re-established the company will taper the marketing funds back to normal.

Cash Flow Forecast

BP forecasts that its cash flow will increase up to 50% by 2014 (BP). This is because both the trust payments to the Deepwater Horizon spill will be complete and because the company expects its sales to increase by 25% (See Figure 4). We will plan to use half of this for growth and the other half for research.

Controls

The purpose for BP’s marketing plan is to serve as a guide for the company to keep them on track with their goals. The company will frequently monitor: positive brand recognition with consumers, company revenue both quarterly and annually, company expenses both quarterly and annually, progress towards the new low carbon fuel being market ready in 2014, use of Electric Vehicle Charging Ports at stations, and research and design in new technology.

Implementation

The marketing plan discusses many important elements to help the company reach their goals. All of them need to be implemented in a timely and efficient manner, beginning with marketing to consumers and installing the Electric Charging Ports at all stations.

Marketing Organization

Luc Bardin is BP’s Chief Marketing Officer and will be overseeing the marketing team through the implementation of this plan.

Contingency Planning

Difficulties and Risks. One of the biggest difficulties that the company will need to overcome is the negative brand image that they received from the oil spill. Additionally, the other risks are that consumers will not be interested in their low carbon gasoline or other alternative fuels/energy supplies after BP has invested millions into them.

Worst-Case Risks. Worst case the company may not be able to fully repair its brand image and will not re-gain all of its consumers back and that its alternative energy research was a waste.

References

Balmer, J., Powell, S., & Greyser, S. (2011). Explicating Ethical Corporate Marketing. Insights from the BP Deepwater Horizon Catastrophe: The Ethical Brand that Exploded and then Imploded. Journal of Business Ethics, 102(1), 1-14.

BP. (n.d.). BP Homepage. Retrieved from: <www.bp.com/>

Daley, J. (2010). GREEN FALLOUT. Entrepreneur, 38(8), 72-75.

Durrani, A. (2010). BP faces up to brand damage. Marketing (00253650), 1.

Harlow, W., Brantley, B. C., & Harlow, R. (2011). BP initial image repair strategies after the Deepwater Horizon spill. Public Relations Review, 37(1), 80-83.

Morrissey, B. (2010). BP Gets Aggressive. Adweek, 51(25), 4.

Nelson, J. (2010). Who are the 22% of Americans who view BP favorably? Retrieved from: <http://grist.org/article/who-are-the-22-of-americans-who-view-bp-favorably/>

Reed, S. (2009). BP KEEPS ROLLING THE DICE. Businessweek, (4146), 46-49.

Why BP's brand can now move on. (2011). Marketing (00253650), 27.

Figure 1

Note. This was data from Rasmussen’s poll on how many people in the United States still favor BP after the Deepwater Horizon oil spill. Nelson (2010) reviewed the information to generate what demographics were associated with the continued support of BP. Graph was retrieved from: <http://grist.org/article/who-are-the-22-of-americans-who-view-bp-favorably/>.

Figure 2

The figure shows an estimate for the world’s population increase in the year 2030 and how much of an increase in the amount of energy required to sustain the additional people. Graph was retrieved from: <http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/cocomm_assets/bpin2011/downloads/BP_Annual_Report_and_Form_20F_2011.pdf>

Figure 3

This shows the 2011 yearend financial performance for BP. Retrieved from: <http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/bpin2011/downloads/BP_Annual_Report_and_Form_20F_2011.pdf>

Figure 4

This is the estimate for the operating cash flow for 2014. Retrieved from:

<http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/bpin2011/downloads/BP_Annual_Report_and_Form_20F_2011.pdf>