Background
Strategy refers to the means through which organizational goals and objectives are consciously, continually pursued, and achieved over time (Mittelstaedt, 2020). Therefore, organizational strategy is the patterns of decisions made by a company determining and revealing its objectives, purposes, or goals, producing the principal policies and plans for attaining these goals, defining the range of business to be pursued, the type of firm it is or intends to become, and the nature of contributions it intends to make (Mittelstaedt, 2020). Therefore, strategic planning implies ensuring the company is in harmony with the prevailing market conditions, adopts and adapts existing opportunities, and evaluates existing resources and pursued objectives (Mittelstaedt, 2020). In this sense, strategic marketing planning is a continuous and systematic process involving decision-making related to intended future outcomes, the approach to achieving the outcomes, and the method of measuring and evaluating success (Mittelstaedt, 2020). Therefore, a strategic marketing plan allows the rapid reaction by a firm to market and consumer demand changes and exploits existing opportunities. The oil industry is presently confronted with significant demand and price changes affecting multiple international, regional, and domestic projects and firms within the oil and gas industry. Driven by the COVID pandemic and the Ukraine-Russia war, higher demand, and supply shortages have resulted in record commodity prices experienced globally (United Nations, 2022). In light of this market environment, this report presents a strategic marketing plan for Azzawiya Oil Refining Company (ARC), Libya, to ensure the company survives and thrives amidst the current market changes and challenges in the international market.
Background of the Organization
ARC began its operations in 1974 following its establishment under the Libyan National Oil Corporation (NOC) Decision and registration at the Libyan Commercial Register (registration number 1572) (Tratos, 2023). The company is involved in manufacturing asphalt mix and mobilizing mineral oil. The firm further offers crude oil refining, mineral oils blending and filling, and asphalt production services (Tratos, 2023). Its products include asphalt, jet fuel, gasoline, fuel and gas oils, liquefied petroleum gas (LPG), diesel, untreated naphtha, crude oil, and other oil derivatives (Carmen, 2021). The first processing plant established in 1974 had an output capacity of barrel per day (bpd) of refined oil, and its asphalt plant was opened in Azzawiya later in 1980, followed by another plant in Benghazi in 1984 with an output of 200,000 tons per annum (tpa) (Tratos, 2023). Earlier in 1983, the Lube Oil Plant’s property producing 60,000 tpa of lubricating oil was transferred to the company. The primary objective of the company’s establishment was to meet the increasing demand for oil and its derivatives and surplus export products to the global market (Tratos, 2023). The refinery’s design adhered to international standards and considered safety and individual and environmental protection factors. The company has committed to abiding by international production and safety standards and hence holds a similar position to other local and international refineries (Tratos, 2023). The company strives to engage industry best practices and, at the same time, holistically contribute to the country’s welfare and prosperity. Apart from domestic production and international market exportation, the company also imports oil derivatives for the local market (Tratos, 2023). Its units and units conform to international standards and have all the requisite safety and protection facilities needed to undertake its activities.
Scope of the Report
As aforementioned, the report offers a strategic marketing planning case study based on ARC, Libya. The report offers an internal and external environmental audit through a situational analysis using the Political, Economic, Social, and Technological (PEST) framework, market dynamics using Porter’s Five Forces, and environmental analysis using Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis. In addition, the report highlights the Specific, Measurable, Attainable, Realistic, and Time-Bound (SMART) objectives and outlines the strategies for their attainment. Further, the market segmentation is provided, and a justification of the segment the company intends to attract based on the segmentation criteria, including an explanation of the suitability of the targeting strategy to consumer needs and a positioning map. Finally, recommendations for future marketing activities are provided based on the marketing mix and implementation and control approaches and parameters.
Marketing Audit
Situational Analysis
The current business environment, as indicated above, is dynamic, turbulent, marked by increased discontinuity, and chaotic. Therefore, the environment is continually confronted with multiple changes. However, as highlighted by Straková et al. (2018), not every change is disruptive or revolutionary and requires a strategic response. Therefore, assessing whether these changes distort a businessess’ present competitive advantage within a particular sector becomes essential. A situational analysis offers a robust approach for conducting such an assessment.
A situational analysis is a means of identifying a company’s strengths and weaknesses relating to the external environment’s threats and opportunities (Straková et al., 2018). Therefore, the management can select its position in the marketplace using the facts. In marketing, situational analysis involves engaging in marketing research, including observations for decision-making (Straková et al., 2018). The analysis assists in structuring the marketing plan and determining its effectiveness, including making corrections when the plan is not producing the expected outcomes. The PEST analysis provides an effective approach for conducting a situational analysis. PEST analysis is a management technique involving assessing the primary external factors (PEST) influencing a firm’s operations to promote competitiveness (Blokdyk, 2018). Therefore, the analysis outcomes can be employed to develop the marketing plan. The PEST analysis for ARC related to the oil and gas industry is summarized in Table 1.
| Political | Economical | Social | Technological |
| i. Significantly influenced by geopolitics and political tensions and instabilities.
ii. Governments significantly influence the industry and companies due to the profits generated by companies in the industry. iii. Governments can introduce new environmental and tax policies. iv. Governments can provide funding for exploration and other initiatives in the industry. |
i. There is a strong connection between the industry and the local and global economy.
ii. The industry is susceptible to global economic crises. iii. An increase in oil prices results in a shift in oil supplies where top producers feed top consumers. iv. Companies have high debts to repay. |
i. Increased focus and push for the use of sustainable fuels.
ii. Increased global oil and gas consumption due to a population increase. iii. Cultural shift towards purchasing electric vehicles. iv. Changes in buying trends as customers seek more energy-efficient products. |
i. High cost of introducing new technology.
ii. Slow response to technological advancements. iii. Increased use of robotics in the industry for safety and efficiency. iv. Shortage of skills to use new technology. v. Insufficient funds for technological adoption. v. Strict regulations for introducing technology. |
Table 1: PEST analysis outcomes for ARC.
Market Dynamics
Market dynamics are known as the forces that will affect prices and the actions of producers and consumers (Brondoni, 2018). Pricing signals are created by these forces in a market when supply and demand for a product or service change. Any sector or government policy can be impacted by market dynamics. The forces inherent in such dynamics impact players’ competitiveness within an industry; hence a comprehensive analysis of the forces is needed to establish appropriate strategies, including in marketing, for a firm to gain and maintain a competitive edge (Brondoni, 2018). Porter’s Five Forces provide a broadly used framework for analyzing an industry’s competitive structure and identifying its competitive dynamics and profitability, including attractiveness for potential entrants (Porter, 2017). A summary of the Five Forces analysis within the oil and gas industry for ARC is provided in Table 2.
| New Entrants Threat | Suppliers Bargaining Power | Buyers Bargaining Power | Substitute Products’ Threat | Competitive Rivalry |
| Low threat of new entrants due to multiple barriers to entry, including:
i. Technology, innovations, and product patents. ii. Economies of scale. iii. High capital investments. iv. Products differentiation. v. Government and trade regulations. vi. Cartels’ predatory behaviors. |
High bargaining power.
Big suppliers are fully integrated into the industry and are active in the entire value chain hence holding enormous bargaining power. Oil-rich nations have significant bargaining power. Large companies control the volumes of supplies and prices. |
Relatively low bargaining power.
Buyers focus on a product’s price and quality, but the global oil benchmarks, including Brent Blend, West Texas Intermediate (WTI), and Dubai/Oman, determine prices. Bargaining power is on the quality of a product. |
A moderate threat.
Other companies provide similar products. Alternative energy sources include solar, electricity, coal, biofuels, hydrogen, biofuels, and other renewable energy. |
High rivalry in the upstream sector.
Multiple players in the sector, including Integrated Oil and Gas Companies (IOCs), National Oil Companies (NOCs), and private firms. |
Table 2: Summary of Five Forces analysis in the oil and gas industry for ARC.
Environmental Analysis
Environmental analysis is a business technique employed to identify the internal and external factors affecting or with the potential to affect a firm’s success (Grimsgaard, 2022). The analysis is done on the internal and external environment of the firm, with the internal component highlighting the company’s strengths and weaknesses. In contrast, external components comprise the current opportunities and threats. In this light, a SWOT analysis offers an effective environmental analysis tool. A SWOT analysis is a strategic tool considered to be a firm’s balance sheet examing its SWOT (Grimsgaard, 2022). A summary of ARC’s SWOT is provided in Table 3.
| THREATS | OPPORTUNITIES | WEAKNESSES | STRENGTHS |
| • Periodic absence of products in the market.
• High competition from European and Gulf companies. • Production stoppages due to obsolete equipment and machinery. • Outdated technical specifications for products produced. • Products imitation. • Domestic and global political and economic instabilities. • High-cost structure. |
• Promising regional and global markets.
• Few oil manufacturing plants in Libya. • Increased demand for products globally. • Increased import of oils from the General Electricity Company (transformers and turbines). |
• Reduced sales in the last decade.
• Lack of product marketing map and plans. • Same product packing. • Production policy. • Ascending cost structure • Product pricing policy (cost + profit margin). · Obsolete machines and technology. |
· Industry experience in the domestic and international markets.
· Product quality. · Company reputation and brand loyalty and trust domestically. · Competitive prices · Deals with international firms. · Has expertise in oil manufacturing. · Financial capacity and solvency |
Table 3: Summary of the ARC’s SWOT analysis.
Marketing Objectives and Strategies for Attaining Objectives
The marketing objectives for ARC include the following:
- Build market ARC’s market share in the industry by 2% share by the end of the fiscal year.
ARC is presently primarily focused on the domestic market in Libya. Therefore, to achieve this internationally focused objective, the company should assess popular brands in the market and adjust its production standards and technologies to ensure its products meet the needs of the international market. In addition, the company should shift focus from the domestic market and increase the exportation of its most trusted brands. Further, adjusting product pricing and establishing a robust advertising campaign on the international market.
- Enter into an exportation partnership with China and two industry influencers by the end of the fiscal year.
The company should identify one of the large, oil-consuming nations, such as China, and enter into an agreement to supply its products at discounted rates. In addition, the company should adjust its production standards to meet the nation’s demands to promote retention. Moreover, the company should identify individuals or firms with significant influence to market its products internationally.
- Increase media impressions in the Chinese market by 30% by the end of the fiscal year.
The company should implement a robust and aggressive marketing campaign throughout the year in China to promote brand awareness.
Market Segmentation and Justification of Company’s Segment
Market segmentation involves breaking down a firm’s potential customers into different sections to allow it to allocate appropriate resources to each segment for accurate targeting across its various marketing campaigns and undertakings (Armstrong et al., 2017). The oil and gas industry has three market segments. These segments include upstream, comprising firms involved in the exploration and production of oil and gas; midstream, comprising firms engaging in transportation and storage; and downstream, involved in refining and marketing (McClay, 2022). Tratos (2023) highlighted that ARC is an oil refinery involved in manufacturing asphalt mix and mobilizing mineral oil. The company also offers services, including crude oil refining, mineral oils blending and filling, and asphalt production (Tratos, 2023). In addition, ARC is engaged in international market exportation and importation of oil derivatives for the local market (Tratos, 2023). Effective and profitable engagement in these activities, especially the last two activities, demands robust marketing campaigns. Therefore, the company is in the downstream segment.
Suitability of the Targeting Strategy to Consumer Needs
The targeting strategy involves evaluating the attractiveness of each market segment and selecting the segment to enter and the targeting approach (Armstrong et al., 2017). ARC is presently in the downstream segment; however, its primary customers have been the local market. However, while it intends to stay in the same segment, the goal is to expand into the international downstream market by targeting consumers within this segment. Given the abovementioned marketing objectives, the target is not broad; hence an individual marketing (mass customization) approach is suitable to meet consumer needs (Armstrong et al., 2017). The strategy will ensure the company customizes its products and services to meet target consumers’ needs. Effective strategy implementation will demand an appropriate marketing mix, a customized combination of product, promotion, place, and price to suit these markets and consumers (in China). Therefore, the company will ensure it establishes production standards and products meet consumer needs within these markets. In addition, establish appropriate price determination mechanisms to ensure they provide affordable products and engage in aggressive marketing campaigns to promote them.
Positioning Map
Recommendations for Future Marketing Activities
The recommendations for future marketing activities include the following:
- Engage in product marketing in European nations to take advantage of the oil crisis being experienced and enter the European market.
- Increase social media marketing to promote greater brand awareness.
- Provide free samples in the Chinese market to promote product testing by customers to attract new customers and build brand trust and loyalty.
Implementation and Control Approaches and Parameters
Implementation and control of marketing plans is a process ensuring the attainment of the company’s strategic objectives. Therefore, implementation will involve a step-wise process involving defining the marketing goals, documenting the approach to strategy execution, approach to goal attainment, workflow design, monitoring, and reporting. For control, key performance indicators (KPIs) will be established, which will be used as parameters for measuring the success of the marketing undertaking. The indicators will include increased consumer awareness, sales, demand for products, and higher return customers, increased brand trust.
References
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Blokdyk, G. (2018). PEST analysis: Standard requirements. Scotts Valley, CA: CreateSpace Independent Publishing Platform.
Brondoni, S. M. (Ed.). (2018). Competitive business management: A global perspective. Oxfordshire: Taylor & Francis.
Carmen. (2021, October 27). Azzawiya Refinery, Libya. Offshore-technology.com. https://www.offshore-technology.com/marketdata/azzawiya-refinery-libya/
Grimsgaard, W. (2022). Design and strategy: A step-by-step guide. Oxfordshire: Taylor & Francis.
McClay, R. (2022, September 24). How the oil and gas industry works. Investopedia. https://www.investopedia.com/investing/oil-gas-industry-overview/
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Straková, J., Pártlová, P., Dobrovič, J., & Váchal, J. (2018). Situational analysis and its role in the process. Polish Journal of Management Studies, 18(1), 353-364. doi:10.17512/pjms.2018.18.1.26
Tratos. (2023). Azzawiya Oil Refining Company Inc. Tratosgroup.com. https://tratosgroup.com/case-study/azzawiya-oil-refining-company-inc/
United Nations. (2022). Global impact of war in Ukraine: Energy crisis. Geneva: United Nations. unsdg.un.org. https://unsdg.un.org/sites/default/files/2022-08/GCRG_3rd-Brief_Aug3_2022_.pdf
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