Pso

Muhammad Usman Sethi – MBA 2k3(B) Strategic Brand Analysis of PSO
Table of Contents
CHAPTER 1......................................................................................................................12
INTRODUCTION.............................................................................................................12
1.0 Industry Overview.................................................................................................13
1.1 PEST Analysis: Downstream Oil Industry............................................................19
1.1.1 Political Factors.............................................................................................19
1.1.2 Economic Factors..........................................................................................21
1.1.3 Social Factors.................................................................................................25
1.1.4 Technological Factors....................................................................................28
1.2 Porters Five Forces Analysis: Downstream Oil Industry.....................................30
1.2.1 Bargaining Power of Suppliers: High............................................................32
1.2.2 Bargaining Power of Buyers: Low................................................................33
1.2.3 Threat of New Entrants: High........................................................................34
1.2.4 Threat of Substitutes: Low to Moderate........................................................34
1.2.5 Rivalry between Existing Firms: High..........................................................35
1.3 Company Analysis: Pakistan State Oil (PSO).......................................................37
1.3.1 Background....................................................................................................37
1.3.2 Mc Kinsey 7S Framework: Pakistan State Oil (PSO)...................................41
1.3.2.1 Structure.........................................................................................................42
1.3.2.2 Strategy..........................................................................................................45
1.3.2.2.1 Market Development Strategy...............................................................46
1.3.2.2.2 Market Penetration Strategy..................................................................46
1.3.2.2.3 Vertical Integration Strategy..................................................................48
1.3.2.2.4 Rationalization Strategy.........................................................................49
1.3.2.3 System............................................................................................................50
1.3.2.3.1 Employee Leadership Team (ELT):......................................................51
1.3.2.3.2 Management Committee (Man-Com):..................................................52
1.3.2.3.3 Executive Committee (Ex-Com):..........................................................52
1.3.2.3.4 Internal Audit Committee:.....................................................................52
1.3.2.3.5 Health, Safety & Environment (HSE) Steering Committee:.................53
1.3.2.3.6 Cross-Functional Teams (CFTs):..........................................................53
1.3.2.4 Staff................................................................................................................54
1.3.2.5 Skills..............................................................................................................58
1.3.2.6 Style...............................................................................................................60
1.3.2.7 Shared Values................................................................................................62
1.3.2.7.1 Excellence..............................................................................................62
1.3.2.7.2 Cohesiveness..........................................................................................62
1.3.2.7.3 Respect...................................................................................................63
1.3.2.7.4 Integrity..................................................................................................63
1.3.2.7.5 Innovation..............................................................................................63
1.3.3 Strategic Group Analysis...............................................................................64
1.3.4 B.C.G Matrix.................................................................................................67
1.3.5 G.E Matrix.....................................................................................................72
1.4 SWOT Analysis: Pakistan State Oil (PSO)...........................................................75
1.4.1 Strengths........................................................................................................75
1.4.1.1 Market Leadership in all key products......................................................75
Assistant Professor Ms. Zeenat Jabbar 1 NUST Institute of Management Sciences

1.4.1.2 Largest Retail Network..............................................................................76

1.4.1.3 Vast Infrastructure of Installations and Oil Depots...................................76
1.4.1.4 Sole Supplier of Independent Power Producers........................................76
1.4.2 Weaknesses....................................................................................................77
1.4.2.1 Lack of professional human resource........................................................77
1.4.2.2 Low Throughput per retail outlet...............................................................77
1.4.2.3 Lack of assured Supply Sources................................................................77
1.4.2.4 Obsolescence of Storage facilities, Plants and Machinery........................78
1.4.3 Opportunities.................................................................................................78
1.4.3.1 Deregulation of the Oil Sector...................................................................78
1.4.3.2 Backward Vertical Integration...................................................................79
1.4.3.3 Renewable Energy Sources.......................................................................79
1.4.3.4 Privatization...............................................................................................80
1.4.4 Threats...........................................................................................................81
1.4.4.1 Increasing Competition..............................................................................81
1.4.4.2 Product Smuggling....................................................................................81
1.4.4.3 Increasing Expenditure on Oil Imports......................................................81
CHAPTER 2......................................................................................................................82
LITERATURE REVIEW..................................................................................................82
2.1 Promotion..............................................................................................................83
2.2 Advertising Concept..............................................................................................84
2.3 Advertising Message.............................................................................................85
2.4 Advertising Appeals..............................................................................................86
2.4.1 Price or Value Appeals..................................................................................86
2.4.2 Quality Appeals.............................................................................................87
2.4.3 Star Appeals and Testimonials......................................................................87
2.4.4 Ego Appeals...................................................................................................87
2.4.5 Fear or Anger Appeal....................................................................................87
2.4.6 Sensory Appeals............................................................................................88
2.5 Ad Execution Styles..............................................................................................89
2.6 F.C.B Grid.............................................................................................................90
2.7 Strategic Brand Management................................................................................91
2.8 Branding................................................................................................................92
2.8.1 Attributes.......................................................................................................93
2.8.2 Benefits..........................................................................................................93
2.8.3 Values............................................................................................................93
2.8.4 Culture...........................................................................................................93
2.8.5 Personality.....................................................................................................93
2.8.6 User................................................................................................................94
2.8.7 Individual branding........................................................................................94
2.8.8 Family branding.............................................................................................95
2.9 Brand Equity..........................................................................................................96
2.10 Brand Awareness...................................................................................................98
2.11 Brand Recognition...............................................................................................100
2.12 Brand Recall........................................................................................................101

2.13 The Graveyard Model..........................................................................................102

2.14 Brand Equity Model............................................................................................103
2.14.1 Leadership....................................................................................................103
2.14.2 Stability........................................................................................................103
2.14.3 Market..........................................................................................................103
2.14.4 International.................................................................................................104
2.14.5 Trend............................................................................................................104
2.14.6 Support.........................................................................................................104
2.14.7 Protection.....................................................................................................104
2.15 Brand Image.........................................................................................................105
2.16 Brand Elements....................................................................................................106
2.16.1 Memorability...............................................................................................106
2.16.2 Meaningfulness............................................................................................106
2.16.3 Transferability..............................................................................................107
2.16.4 Adaptability.................................................................................................107
2.16.5 Protectability................................................................................................107
2.17 Corporate Branding.............................................................................................108
2.18 Co Branding.........................................................................................................109
2.18.1 Promotional/sponsorship co-branding.........................................................109
2.18.2 Ingredient co-branding.................................................................................109
2.18.3 Value chain co-branding..............................................................................109
2.18.4 Product-service co-branding........................................................................110
2.18.5 Supplier-retailer co-branding.......................................................................110
2.18.6 Alliance co-branding...................................................................................110
2.18.7 Innovation-based co-branding.....................................................................110
2.19 Brand Identity Planning Model..........................................................................112
2.19.1 The brand-as-product...................................................................................114
2.19.2 The brand-as-organization...........................................................................114
2.19.3 The brand-as-person....................................................................................115
2.19.4 The brand-as-symbol...................................................................................115
2.20 Market Segmentation...........................................................................................117
2.20.1 Measurability...............................................................................................118
2.20.2 Accessibility................................................................................................118
2.20.3 Durability.....................................................................................................118
2.20.4 Strategies for Target Marketing...................................................................119
2.20.5 Undifferentiated Marketing.........................................................................119
2.20.6 Concentrated Marketing..............................................................................119
2.20.7 Differentiated Marketing.............................................................................120
2.20.8 Custom Marketing.......................................................................................121
2.20.9 Demographic Segmentation.........................................................................121
2.20.10 Socioeconomic Segmentation......................................................................121
2.20.11 Lifestyle and Psychographic Segmentation.................................................121
2.20.12 Geographic Segmentation............................................................................122
2.20.13 Behavior Pattern Segmentation...................................................................122
2.20.14 Consumption Pattern Segmentation............................................................122
2.20.15 Consumer Predisposition Segmentation......................................................122

2.21 Brand Positioning................................................................................................123

2.21.1 Benefit positioning.......................................................................................123
2.21.2 Target positioning........................................................................................123
2.21.3 Price positioning..........................................................................................123
2.21.4 Positioning by distribution...........................................................................124
2.21.5 Relevance.....................................................................................................124
2.21.6 Clarity..........................................................................................................125
2.21.7 Distinctiveness.............................................................................................125
2.21.8 Coherence....................................................................................................125
2.21.9 Commitment................................................................................................125
2.21.10 Patience........................................................................................................126
2.21.11 Courage........................................................................................................126
2.22 Perceptual Mapping.............................................................................................128
2.23 Brand Personality.................................................................................................129
2.23.1 Down-to-earth, family oriented, genuine, old-fashioned (Sincerity)..........129
2.23.2 Spirited, young, up-to-date, outgoing (Excitement)....................................129
2.23.3 Accomplished, influential, competent (Competence).................................130
2.23.4 Pretentious, wealthy, condescending (Sophistication)................................130
2.23.5 Athletic and outdoorsy (Ruggedness)..........................................................130
2.23.6 Upscale brands with a snobbish spin...........................................................131
2.23.7 Performance brands talking down to customers..........................................131
2.23.8 Power brands flexing their muscles.............................................................131
2.23.9 Intimidated brands showing their inferiority...............................................132
2.24 Young & Rubicam’s Brand Asset Valuator (BAV)............................................133
2.24.1 Differentiation..............................................................................................133
2.24.2 Relevance.....................................................................................................134
2.24.3 Esteem..........................................................................................................134
2.24.4 Knowledge...................................................................................................134
2.25 Power Grid: Brand Strength vs. Brand Stature....................................................136
2.25.1 Brand Strength.............................................................................................136
2.25.2 Brand Stature...............................................................................................136
2.25.3 Quadrant I....................................................................................................137
2.25.4 Quadrant II...................................................................................................137
2.25.5 Quadrant III.................................................................................................137
2.25.6 Quadrant IV.................................................................................................137
2.26 Hypothesis...........................................................................................................138
CHAPTER 3....................................................................................................................139
RESEARCH METHODOLOGY....................................................................................139
3.1 Introduction..........................................................................................................140
3.2 Significance of Research.....................................................................................140
3.3 Problem Statement...............................................................................................141
3.4 Research Objectives.............................................................................................141
3.5 Type of Research.................................................................................................142
3.6 Research Methodology........................................................................................142
3.7 Research Limitations...........................................................................................143

3.8 Hypothesis Restated.............................................................................................143
CHAPTER 4....................................................................................................................144
FINDINGS & ANALYSIS..............................................................................................144
4.1 Market Survey Findings......................................................................................145
4.2 AIOD Framework................................................................................................160
4.3 Perceptual Maps...................................................................................................161
4.3.1 Perceptual Map I: Distribution Network Vs Brand Name...........................161
4.3.2 Perceptual Map II: Promotional Effectiveness Vs Level of Innovation......163
4.3.3 Perceptual Map III:Marketing Experience Vs Level of Customer Service. 165
4.3.4 Perceptual Map IV: Market Share Vs HR Competence..............................167
4.3.5 Perceptual Map V: Profitability Vs Overall Reputation..............................169
4.4 Brand Perception Index (BPI).............................................................................171
4.4.1 Brand Perception Index (BPI): SHELL.......................................................171
4.4.2 Brand Perception Index (BPI): PSO............................................................172
4.4.3 Brand Perception Index (BPI): TOTAL......................................................173
4.4.4 Brand Perception Index (BPI): CALTEX....................................................174
4.4.5 Brand Perception Index (BPI): ATTOCK...................................................175
4.4.6 Brand Perception Index (BPI): ADMORE..................................................176
4.5 Brand Personality Dimension Index....................................................................178
4.6 Brand Asset Valuation (BAV).............................................................................180
4.7 Young & Rubicam Power Grid...........................................................................181
4.8 Actual Brand Foot Printing..................................................................................183
4.9 Ideal Brand Foot Printing....................................................................................184
4.10 Gap Analysis........................................................................................................184
4.11 Interbrand’s Brand Equity Model........................................................................185
4.11.1 Leadership....................................................................................................186
4.11.2 Stability........................................................................................................186
4.11.3 Market..........................................................................................................186
4.11.4 International.................................................................................................187
4.11.5 Trend............................................................................................................187
4.11.6 Support.........................................................................................................187
4.11.7 Protection.....................................................................................................187
4.12 Graveyard Model.................................................................................................188
4.13 PSO Brand Name.................................................................................................190
4.14 PSO Logo.............................................................................................................191
4.15 PSO Slogan..........................................................................................................192
4.16 Corporate Branding.............................................................................................193
4.17 Strategic Branding at PSO...................................................................................194
4.18 PSO Co-Branding................................................................................................211
4.19 Electronic Ad Analysis: Forever Sunshine Ad....................................................212
4.20 Electronic Ad Analysis: Castrol GTX Oil...........................................................214
4.21 PSO Transformation............................................................................................216

CHAPTER 5....................................................................................................................221
CONCLUSION & RECOMMENDATIONS..................................................................221
5.1 Conclusion...........................................................................................................222
5.2 Recommendations................................................................................................223
5.2.1 Aggressive Advertising Strategy.................................................................223
5.2.2 Innovative Lubricant Marketing Campaigns...............................................224
5.2.3 Drastic Improvement in Customer Service..................................................225
5.2.4 Greater Focus on CNG Infrastructure..........................................................225
5.2.5 Retail Rationalization Strategy....................................................................225
5.2.6 Excellent Housekeeping/ Cleanliness at Retail Outlets...............................226
5.2.7 Attract and Retain Quality Human Resource..............................................226
5.2.8 Adopt Backward Vertical Integration Strategy...........................................227
5.2.9 Use Pipelines rather than Road Tankers......................................................228
5.2.10 Develop Alternate Energy Infrastructure.....................................................228
5.2.11 Benchmark Best Industry Practices.............................................................229
BIBLIOGRAPHY............................................................................................................230
APPENDIX A..................................................................................................................234
CUSTOMER SURVEY...................................................................................................235

List of Figures
Fig 1.0 Market Share of Oil Marketing Companies 13

Fig 1.1 CNG Market Share (% of OMC’s) 15
Fig 1.2 Primary Energy Supplies by Source 22
Fig 1.3 Michael E. Porter 30
Fig 1.4 Porters Five Forces Model 31
Fig 1.5 PSO Mogas Market Share 38
Fig 1.6 PSO Diesel Market Share 39
Fig 1.7 PSO Lubricants Market Share 40
Fig 1.8 Mc Kinsey 7S Model 41
Fig 1.9 PSO Board of Management 43
Fig 1.10 Grand Strategy Mix Matrix: PSO 45
Fig 1.11 PSO New Vision Retail Outlets – Islands of Excellence 47
Fig 1.12 Brainstorming session in progress 54
Fig 1.13 Employee Recreation Floor at PSO House 57
Fig 1.14 SAP Implementation Session in Progress 58
Fig 1.15 PSO House – Class Apart 60
Fig 1.16 PSO House – Breathtaking View 61
Fig 1.17 Corporate Professional Environment 61
Fig 1.18 Strategic Groups: Oil Marketing Companies 64
Fig 1.19 B.C.G Matrix of Oil Marketing Companies 71
Fig 1.20 GE Matrix applied at PSO 74
Fig 2.1 Foot Cone Belding Grid 90
Fig 2.2 Brand Identity Planning Model 113
Fig 2.3 Young & Rubicam’s BAV 133
Fig 2.4 Power Grid: Brand Strength Vs Brand Stature 136
Fig 4.1 Perceptual Map I 162
Fig 4.2 Perceptual Map II 164
Fig 4.3 Perceptual Map III 166
Fig 4.4 Perceptual Map IV 168

Fig 4.5 Perceptual Map V 170

Fig 4.6 Y & R Power Grid of Oil Marketing Companies 181
Fig 4.7 Graveyard Model of Oil Marketing Companies 188
Fig 4.8 The PSO Logo 191
Fig 4.9 The PSO Slogan 192
Fig 4.10 PSO Corporate Campaign 193
Fig 4.11 PSO Customer Services 194
Fig 4.12 The PSO Headquarters 196
Fig 4.13 PSO Auto Car Wash Plant 197
Fig 4.14 PSO Internet Kiosk 197
Fig 4.15 PSO Cards 198
Fig 4.16 PSO Mega hoarding 199
Fig 4.17 PSO Zoom Tower & Monolith Sign 200
Fig 4.18 PSO Mobile Billboards 200
Fig 4.19 PSO Billboard 201
Fig 4.20 PSO Mega hoarding Karal Chowk 202
Fig 4.21 PSO Road Gantry Islamabad Highway 203
Fig 4.26 PSO Directional Road Signs 208
Fig 4.27 PSO Shop Stop 209
Fig 4.28 Green XL Plus Diesel Campaign 210
Fig 4.29 Forever Sunshine Electronic Ad 212
Fig 4.30 F.C.B Grid Forever Sunshine Ad 213
Fig 4.31 Castrol GTX Lubricants Ad 214
Fig 4.32 F.C.B Grid Castrol GTX Lubricants Ad 215
Fig 4.33 PSO Turnaround 216
Fig 4.34 Innovative Branding Transformation at PSO 217
Fig 4.35 PSO Motor Gasoline Share – Post Implementation 218

Fig 4.36 PSO Diesel Share – Post Implementation 219

Fig 4.37 PSO & Major Competitors Market Share 219

List of Tables
Table 1.0 No. of CNG stations in Pakistan 15

Table 1.1 Long-term Petroleum Demand/ Supply 17
Table 1.2 Pakistan’s Annual Energy Consumption 23
Table 1.3 Consumption of Petroleum Products 23
Table 1.4 Consumption of Natural Gas (Billion cft) 26
Table 1.5 Capacities of Local Refineries 32
Table 1.6 Financial Performance of PSO & Shell 36
Table 1.7 Presentation Topics for PSO Employee Development 59
Table 1.8 Attributes – SHELL 67
Table 1.9 Attributes – PSO 67
Table 1.10 Attributes – TOTAL 68
Table 1.11 Attributes – CALTEX 68
Table 1.12 Attributes – ATTOCK 69
Table 1.13 Attributes – ADMORE 69
Table 1.14 B.C.G Matrix Summary of Oil Marketing Companies 70
Table 1.15 PSO Market Attractiveness Rating 72
Table 1.16 PSO Business Strength Rating 73
Table 4.1 Survey Finding Q1 145
Table 4.12(a) Survey Finding Q12(a) 151

Table 4.12(b) Survey Finding Q12(b) 151

Table 4.23(a) Survey Finding Q23 (a) 158
Table 4.23(b) Survey Finding Q23 (b) 159
Table 4.23(c) Survey Finding Q23 (c) 159
Table 4.24 AIOD framework 160
Table 4.25 BPI Shell Pakistan Ltd 171
Table 4.26 BPI Pakistan State Oil Company Ltd 172
Table 4.27 BPI Total – Parco Pakistan Ltd 173
Table 4.28 BPI Caltex Oil Pakistan Ltd 174
Table 4.29 BPI Attock Petroleum Ltd 175
Table 4.30 BPI Admore Oil Pakistan 176
Table 4.31 BPI Summary Oil Marketing Companies (OMC’s) 177
Table 4.32 Brand Personality Dimension Index of PSO 179
Table 4.33 PSO Brand Foot Printing 183
Table 4.34 PSO Brand Equity Model 185

CHAPTER 1
INTRODUCTION

1.0 Industry Overview
The downstream oil sector of Pakistan consists of six oil marketing companies namely
Pakistan State Oil (PSO), Shell Pakistan Ltd (SPL), Caltex Oil Pakistan Ltd (COPL),
Total-Parco Pakistan Ltd (TPPL), Attock Petroleum Ltd (APL) and most recently
Admore Pakistan.
There are three types of retail outlets run by each of the above Oil Marketing Companies
(OMC’s):
 Those wholly owned by oil marketing companies
 Franchisees to which the oil marketing companies provide the license, land, and
equipment
 Franchisees to which the oil marketing companies provide only the license and
land
The government owns 25 percent of PSO directly and another 74 percent is owned by
government-controlled funds. The Shell affiliate owns 52 percent of Shell while Caltex is
a wholly owned subsidiary. PSO controls the majority of the market and enjoys the
largest market share followed by Shell, Caltex, Total, Attock and Admore.1
Fig 1.0: Market Share of Oil Marketing Companies2
1
Cleaner Fuels, www.worldbank.org/html/fpd/esmap/pdfs/pakistan_cleanfuels.pdf [Accessed 21 July, 05]
2
19th World Energy Congress, Sydney, Sept 2004, http://www.worldenergy.org/wec-geis/congress/papers/
kirimanit0904.pdf [Accessed 22 July, 05]

Pakistan’s economic recovery has gained greater momentum during the fiscal year 2005
whereby real GDP growth of 8.4% has been achieved. With the economy expanding at its
fastest pace in the last two decades, Pakistan has positioned itself as one of the rapidly
growing economies of Asia.
The strong economic growth has been well supported by macroeconomic policies,
growing domestic demand, renewed confidence of private sector, fiscal discipline and
competitive exchange rates.
The pro-market reform agenda for the downstream oil industry in Pakistan, with a focus
on private investment, is well underway. Oil & Gas regulatory Authority (OGRA)
undertook stakeholder consultation towards completion of regulatory framework, with
the objective of establishing a free and competitive downstream oil market.
The consumption of Petroleum products grew by around 10.1% over last year, 2004,
which was mainly due to an increase of 5.5% in White Oil and 21.2% in Black Oil.3
In fiscal year 2005 Mogas grew by around 5.3% over last year, which is significantly
correlated to GNP per capita and transportation increase of 12% and 5.6% respectively.
This robust growth is despite a significant growth of 56% in CNG-converted vehicles, i.e.
from 0.45 million in fiscal year 2004 to 0.7 million in fiscal year 2005.3
The following figures illustrate the growth of CNG stations in Pakistan and the market
share of the respective Oil Marketing Companies.
3
Pakistan State Oil (PSO) Annual Report 2005, Report to Shareholders, Page 34

Period PSO SHELL CALTEX TPPL Pvt. TOTAL

Jun 00 17 6 9 0 72 104
Jun 01 25 16 20 0 137 198
Jun 02 43 41 27 0 161 272
Jun 03 72 52 39 5 234 402
Jun 04 104 72 46 12 298 532
Jul04-Jul05 41 22 4 12 113 192
Total 145 94 50 24 411 724
Table 1.0: No. of CNG stations in Pakistan4
7%
17%
46%
30%
PSO Shell Caltex Total
Fig 1.1 CNG Market Share (% of OMC’s)4
High Speed Diesel (HSD) demand also grew by 5.5% as compared to last year. The
growth is contributed primarily by a significant increase in agriculture of 7.5% and a
broad-based growth in manufacturing of 12.5%.
4
CNG Development, Pakistan State Oil (PSO) Management Committee Presentation, 09 August 2005

Jet Petroleum (JP-1) experienced an un-usual growth of 12.4% over last year which was
mainly due to addition of new airlines, Tsunami relief operations, increased flight
operations and increased upliftment during Hajj season by Pakistan international Airlines
(PIA).5
Industry consumption of Furnace Oil (FO) grew by 23.4%. Main factors contributing to
this growth are the low availability of water for hydroelectric generation during the first
three quarters of fiscal year 2005 and disruption in supply of natural gas.
The situation reversed after March 2005 when water availability increased thus curtailing
Furnace Oil-based thermal power generation resulting in surplus availability of Furnace
Oil from local refineries during fourth quarter of fiscal year 2005.
During fiscal year 2005, local refineries produced 9.2 million tons while the deficit
requirement of around 5.8 million tons was imported. The major chink of demand was
7.7 million tons in High Speed Diesel (HSD) and 4.6 million tons in Furnace Oil (FO),
representing 82% of total POL demand.
The consumption of petroleum products in Pakistan during 2003-2004 was 14.3 million
tones. The drop in consumption compared to previous year is mainly due to lower
demand of Furnace Oil because of conversion of thermal power plants on gas and
availability of additional Hydel power.5
The demand is expected to increase around 17 million tones per annum by the year 2010-
11. Thereafter, it is expected to further increase to around 19 million tones by the year
2017-18. The production of refined products by the local refineries during the year 2003-
04 was 10.27 million tons.
The deficit products import were 5 million tons in 2003-04 while it will remain around 5-
6 million tons per annum up to year 2010-11. Thereafter, it is expected to increase to a
level of around 8.0 million tons per annum by the year 2017-18.
5

The long term petroleum products demand/supply scenario is indicated in the following
Table:-
Table 1.1: Long-term Petroleum Demand/ Supply6
Pakistan’s net oil imports are projected to rise substantially in coming years as demand
growth outpaces increases in production. Demand for refined petroleum products also
greatly exceeds domestic oil refining capacity, so nearly half of Pakistani imports are
refined products. Pakistan’s Pak-Arab Refinery (PARCO) became operational in late
2000, adding to the country’s refining capacity, and alleviating refined product import
dependence.
The PARCO Mid Country Refinery at Mahmood Kot was formally commissioned in
2001 and has capacity of 100,000 bbl/d of throughput (mostly crude oil from Abu Dhabi
and and Light Arabian Crude from Saudi Arabia), supplied to the plant by pipeline from
Karachi.6
6
Ministry of Petroleum & Natural Resources Website, http://www.mpnr.gov.pk/, [Accessed 20 July, 05]

A small, 30,000 bbl/d refinery operated by private Bosicor Pakistan Limited (BPL) near
Karachi began commercial operation in November 2003. The plant is supplied with
shipments of crude oil from Qatar. The Bosicor plant will allow Pakistan to become a
new supplier of naptha to Far Eastern markets. Naptha makes up approximately 9% of
the plant’s output. The plant produces about 10,800 bbl/d of fuel oil, 6,980 bbl/d of
diesel, and 4,350 bbl/d of kerosene, among other products.
Another major planned project is the “Iran-Pak” refinery, which would have a capacity of
130,000 bbl/d. The refinery will be located near the border with Iran in Baluchistan
province and would be a 50:50 partnership between Pakistan’s Petroleum Refining and
Petrochemical Corporation (PERAC) and the National Iranian Oil Company (NIOC). Oil
processed at the Iran-Pak refinery would come almost exclusively by sea from Iran, and
would be unloaded at a terminal to be built for the refinery. The project has failed to
reach financial closure, however, as NIOC’s demand for a guaranteed rate of return is at
odds with Pakistan’s policy against such guarantees.
As part of its energy sector reform program, the government is committed to privatizing a
15% stake of PPL (see above), the largest gas producer in the country, capable of
producing 770 million cubic feet per day (Mmcfd). The largest currently productive
fields are Sui, by far the largest at 650 Mmcfd, Adhi and Kandkhot (120 Mmcfd), Mari,
and Kandanwari.
Pakistan’s demand for natural gas is expected to rise substantially in the next few years,
with an increase of roughly 50% by 2006, according to Pakistan’s oil and gas ministry.
Pakistan also plans to make gas the “fuel of choice” for future electric power generation
projects, hoping to substitute domestic gas supplies for imported foreign oil. This will
necessitate a sharp rise in production of natural gas, and also has generated interest in
Pakistan in pipelines to facilitate imports from neighboring countries.7
7
Country Analysis Website, http://www.eia.doe.gov/emeu/cabs/pakistan.html, [Accessed 19 July, 05]

1.1 PEST Analysis: Downstream Oil Industry
1.1.1 Political Factors
The political structure of Pakistan has faced many changes in government resulting in
instability and lack of trust building in the global environment. Even today the political
parties are engaged in a dialogue to resume democracy.
Apart from government stability, employment laws, foreign trade regulations, taxation
policy and environmental protection laws are the key political factors that affect the
downstream oil industry of Pakistan.
The Government of Pakistan through the Ministry of Petroleum & Natural resources is
actively involved in the downstream petroleum sector, particularly the office of the
Directorate General of Oil (DG Oil). The DG Oil is responsible for managing the market
and allocating crude and products as well as for regulating the sector.8
Pakistan’s government restated its willingness to permit a natural gas pipeline linking
Iran’s massive reserves to Indian markets across Pakistani territory. Pakistan would earn
transit fees for Iranian gas supplied to India and also would be able to purchase some gas
from the pipeline when and if its own demand was sufficient. While Iran and Pakistan
have shown great interest in the project, India has been reluctant to move forward as long
as political and military tensions with Pakistan over Kashmir persist. Iran is offering
India that it will cover 60% of the construction costs of the pipeline, but India remains
wary of Pakistani access to its energy supply. Indian officials said the plan could be
considered if Pakistan can provide security guarantees for the $3 billion project. Pakistan
could earn about $600 million annually in transit fees from the pipeline.9
8
Ministry of Petroleum & Natural Resources Website, http://www.mpnr.gov.pk/, [Accessed 20 July, 05]
9

Development of new natural gas fields with the help of foreign investors is proceeding,
with Pakistan’s government expecting recently discovered fields to add about 1 billion
cubic feet per day (Bcfd) to Pakistan’s natural gas production. Currently, fields in
production include Sawan at about 366 Mmcfd, Bhit at about 316 Mmcfd, and Zamzama
in Sindh province producing about 248 Mmcfd, but possibly able to produce 380 Mmcfd
following a new gas discovery in January 2004.
Another political factor is the natural gas import possibility, an eventual link with the
Dolphin Project, a scheme to supply gas from Qatar’s North Dome gasfield to the United
Arab Emirates and Oman, via a subsea pipeline from Oman.10
To help industry meet the challenges of the WTO regime, the cost of investment will be
reduced by lowering the custom duty on import of plant and machinery not manufactured
locally to 5 percent. In addition, 15 percent sales tax and 6 percent import duty have been
abolished. To reduce the cost of production and also to make GST a truly value-added
tax, adjustment will be allowed for input tax on almost all items, including diesel used in
generators for producing electric power by registered persons. Electricity tariff for
industrial users has also been reduced.11
Oil product taxation provides the government with a significant amount of its current
revenue. The development surcharges on all petroleum products have amounted to 10–15
percent of total revenue. The ex-refinery price is based on an import parity price. Added
to this are customs duties (unchanged since 1992) together with the margin allowed to the
distributors and the commission allowed to the dealers. All three elements are set directly
by the government and together determine the prescribed price. To the prescribed price is
added the inland freight margin (to equalize delivery costs on a national basis) and finally
the development surcharge.12
10
11
Pakistan Economic Update, June 03-04, http://www.adb.org/Documents, [Accessed 18 July, 05]
12

1.1.2 Economic Factors
It is universally recognized that energy is one of the most important inputs to economic
growth and development. The consumption of energy is one of the critical indicators of
the level of development of any country. Developed countries use more energy per unit
of economic output and far more energy per capita than developing countries.
Energy use per unit of output does seem to decline over time in the more advanced stages
of industrialization, reflecting the adoption of increasingly more efficient technologies for
energy production and utilization as well as changes in the composition of economic
activity. At present, over a billion people in the industrialized countries use some 60
percent of the world’s commercial energy supply, while 5 billion people living in the
developing countries consume the remaining – a large number of them are poor. It is
estimated that about two billion people around the world have access to modern energy
services and as a result, struggle to meet their basic daily needs. Economic growth is the
key to changing this situation, and for economic growth we need energy.
Pakistan’s economy is undergoing significant structural changes since 1999- 2000. The
real GDP growth is accelerating over the last three years – rising from 5.1 percent in
2002-03 to 6.4 percent in 2003- 04 and further to 8.35 percent in 2004-05. Over the next
five years, 7-8 percent growth per annum is targeted to be sustained which will demand a
commensurate rise in the energy use. In order to sustain growth momentum, rise in levels
of income, and increased availability of goods and services Pakistan needs an integrated
National Energy Plan to not only increase the supply but also to conserve energy with
efficient technologies. The per capita energy consumption in Pakistan is currently low at
14 Mbtu as compared to 92 Mbtu for Malaysia and 34 Mbtu for China. The Government
is making concerted efforts to ensure that the development of energy resources continue
to contribute to the nation’s development.13
13
Economic Survey of Pakistan 2004-05, http://www.finance.gov.pk/survey/main_page.htm,
[Accessed 21 July, 05]

Energy sector in Pakistan comprises power, gas, petroleum and coal. The total primary
energy supplies measured in terms of tones of oil equivalent (toe) stood at 50.8 million
toe in 2003-04. The primary energy supplies have been rising steadily over the last
several years. It was 45.2 million toe in 2001-02, increased by 4.4 percent in 2002-03 and
further grew by 8 percent in 2003-04 to stand at 50.8 million toe. Oil, natural gas,
electricity, coal and LPG contribute 29.9 percent, 49.7 percent, 13.5 percent, 6.5 percent
and 0.4 percent, respectively to primary energy supplies in 2003-04.14
Fig 1.2: Primary Energy Supplies by Source15
The government is providing an investment-friendly environment for the energy sector to

attract local and foreign investors and as a result of these financial and structural reforms,
the energy sector has already emerged as one of the most attractive sectors in the country.
During the last fourteen years (1990-91 to 2003-04), the consumption of petroleum
products has increased by an average rate of 2.5 percent per annum. The consumption of
gas, electricity and coal has increased at an average rate of 4.9 percent, 5.1 percent and
5.2 percent per annum. It is important to note that a structural shift is taking place in
energy consumption in Pakistan since 2000-01.15
14
HDIP Economic Survey 2004-05, http://www.finance.gov.pk/survey/chapters/15-Energy.PDF,
[Accessed 24 July 05]
15
Hydrocarbon Development Institute Pakistan Website, http://www.hdip.com.pk, [Accessed 24 July 05]

Table 1.2: Pakistan’s Annual Energy Consumption16
Table 1.3: Consumption of Petroleum Products (‘000 tonnes)16
While consumption of petroleum product is declining the consumption of other

components of energy is rising. Consumption of oil in cement industry as well as in
16

electricity generation has declined substantially as the former has shifted to gas as well as
on coal while gas is increasingly being used to generate electricity. While average
consumption of petroleum products has registered an average decline of 6.5 percent per
annum since 2000-01 consumption of gas, electricity and coal has grown at an average
rates of 10.4 percent, 6.0 percent and 14.6 percent, respectively. The higher consumption
of electricity correlated with higher supply of electricity from Ghazi Barotha hydro power
project. The consumption of petroleum product, gas, electricity and coal during the first
nine months (July-March 2004-05) of the current fiscal year increased by 17 percent,
10.1 percent, 10.7 percent and 15.8 percent respectively over the corresponding period of
last year.
The acceleration in growth of energy consumption during 2004-05 is not surprising when
seen against a 15.4 percent increase in large scale manufacturing and 8.35 percent growth
in real GDP. Higher consumption of energy simply reflected the rising level of economic
activity in the country.17
The product pricing and margins are set by DG Oil and Oil Companies Advisory
Committee (OCAC) at all stages in the supply chain. With the exception of lubricants, oil
products are sold at fixed sales prices. The government maintains a policy of pan-
territorial energy pricing—that is, uniform pricing across the country. The origins of the
policy lie in the past when a key political imperative was to promote the unity of
Pakistan. At a time when most electricity was produced in the north and most oil products
were produced in the south, pan-territorial pricing was seen as a means of balancing
supply and demand. For oil products, pan-territorial pricing is achieved through the
freight pool whose cross-subsidy mechanism allows products sent to distant destinations
to be priced on a common basis with those closer to source.18
17
18

1.1.3 Social Factors
The decline in the use of petroleum products in household and agriculture is mainly on
account of the availability of alternative and relatively cheaper fuels in the form of
natural gas and LPG. The consumption of petroleum products, however, has increased in
industrial, transport, power and other government sectors. During 1990-2004 transport
sector was the largest user of petroleum products accounting for 48.7 percent, followed
by the power sector (31 percent), industry (12.1 percent), households (3.8 percent), other
Govt. (2.5 percent) and agriculture (1.8 percent).19
As a fuel, natural gas has been gaining importance around the world. This is partly due to
the increasing thirst for energy and partly because it is cleaner fuel than coal or oil. In
2003, natural gas accounted for about 24 percent of the world’s primary energy
consumption. Household, commercial, cement, power sector and industrial sectors
registered a sharp rise in the consumption of gas. The consumption of gas in cement
industry increased by 100 percent during July-March 2004-05 while industrial
consumption grew by 15.5 percent followed by the power sector (12.3 percent),
commercial sector (10.5 percent) and household sector (3.5 percent). The Power sector
has emerged as the largest consumer of gas (35.4 percent), followed by fertilizer (23.4
percent), industrial (18.9 percent), households (17.6 percent), commercial (2.8 percent)
and cement (1.5 percent). It may be noted that the share of the power sector in gas
consumption has been rising continuously since 1998-99. The power sector is gradually
reducing its dependency on imported fuel oil because of its ever escalating prices.19
19

Table 1.4: Consumption of Natural Gas (Billion cft)20
Being economical, clean and environmental friendly fuel, Liquefied Petroleum Gas
(LPG) is the most popular domestic fuel in areas where the supply of natural gas is not
available. As a result of government’s investment friendly policies production of LPG
has increased by 50 percent in the first three quarters of the outgoing fiscal year.
Increased availability of LPG to the consumers will bring down the prices of LPG and
thus reducing household fuel bills.21
The government is promoting the use of Compressed Natural Gas (CNG) in a big way to
reduce the pollution level being caused by vehicles using motor gasoline and to improve
the ambient air quality. Presently, some 700 CNG stations are operational in the country
while 200 are under construction. By March 2005, about 700,000 vehicles were
converted to CNG as compare to 450,000 vehicles during the same period last year,
showing an increase of 56 percent.
20
21

With these developments, Pakistan has become the leading country in Asia and the third
largest user of CNG in the world after Argentina and Brazil. Investment of Rs. 17 billion
has already been made in CNG sector and Rs. 2 billion investment is expected in near
future. Moreover, the CNG industry has created 15,000 new jobs.
In view of short supply of indigenous liquid fuels, a great scope exists in the country for
development of alternate fuels, especially natural gas that is locally available at low price,
while at the same time a widespread infrastructure for transmission and distribution of
gas is already in place. There is a strong need for replacing diesel oil to the extent it is
possible with CNG for reducing the level of air pollution.
The techno-economics of converting diesel engines to CNG, however, are not very
attractive due to high conversion cost, little differential in the price of diesel oil and
CNG, and several engineering and management problems related to conversion of bus
fleets. In order to address these problems, the government is working on a program which
will initially start in the federal and the provincial capitals, where dedicated CNG city-
buses will be put on road.22
22

1.1.4 Technological Factors
The spending on research, speed of technology transfer and new alternate sources of
energy are the key technological factors that affect the energy sector of Pakistan.
Nuclear Power is safer mode of electric energy generation with the inherited advantages
of being environmental friendly and cost effective. At present two nuclear power plants
(KANUPP at Karachi and CHASNUPP Unit-1 at Chshma) are in operation, while project
for installation of second unit of CHASNUPP is in progress since July 2004. After partial
refurbishment of KANUPP for extending its life by 15 years, and getting the necessary
approval from the government, KANUPP is operating at a reduced power level of 50
MW. The KANUPP has generated 253.49 million kWh of electricity during the period
July-March 2004-05, raising its lifetime generation to 11.06 billion kWh. CHASNUPP
Unit-1, having a gross capacity of 325 MW, which was connected to the national grid,
has generated 1,806.15 million kWh of electricity during the period July-March 2004-05,
raising its lifetime generation to 8.49 billion kWh.
The coalfield in Sindh province has huge coal resources of 175 billion tons. Due to
import of high cost energy resources, government has decided to enhance the share of
coal in the over all energy mix from 5 percent to 18 percent up to 2018. Almost 80
percent of cement industry has now switched over to indigenous coal from furnace oil
that has saved considerable foreign exchange which was being spent on the import of
furnace oil. The conversion of all cement industry to coal would generate demand for 2.5
million tons of coal per annum by 2010. In view of anticipated shortfall of electricity and
other energy resources during the next 10 years the maximum utilization of the
indigenous coal would be required in power generation and gasification. A Chinese
company has completed mining feasibility study for commissioning of two power plants
of 300 MW each and is finalizing its feasibility study for power generation.23
23

To ascertain techno-economic viability of Thar coal for gasification and extraction of

chemicals, Ministry of Petroleum and Natural Resources has launched another project.
There is sufficient demand in the country for coal briquettes due to existing high prices of
other conventional fuels.
The total national coal production from operational coal mines during 2004-05 remained
at around 5 million and 80 percent of it was consumed by the brick klin industry. Total
coal production during the period from July-March 2004-05 remained around 3 million
tons. Its demand is expected to grow by 4 to 5 percent per annum, which can be met by
the existing mines. Utilization of coal has been considered for the production of town gas
in areas having coal deposits. In pursuance of a Presidential directive, SNGPL is in the
process of preparing a feasibility report for the commissioning of town gas plant at
Bhakkar (Punjab). In view of big shortfall in electricity and other energy sources during
the next 10 years maximum utilization of coal will be most appropriate for power
generation and gasification.
The present share of coal in the overall energy mix is only about 5 percent, which need to
be increased to 25-30 percent by 2020. It may be noted that in India the share of coal was
as high as 54.5 percent in the total energy mix in 2002. Power generation accounts for
about 70 percent of India’s total coal consumption. Despite the fact that Indian coal is of
poorer quality with low in caloric content and high in ash and located far from major
consumption centers its coal consumption is estimated to increase to 510 million short
tons by 2020 from 393 short tons in 2002. China is producing more than half of her
electricity through thermal power stations run by coal.
Pakistan should acquire expertise and technology to eliminate hazards and pollution from
coal fired thermal power stations.24
24

1.2 Porters Five Forces Analysis: Downstream Oil

Industry
The model of the Five Competitive Forces was developed by Michael E. Porter in his
book “Competitive Strategy: Techniques for Analyzing Industries and Competitors” in
1980. Since that time it has become an important tool for analyzing an organizations
industry structure in strategic processes.
Fig 1.3: Michael E. Porter25
Porter has identified five competitive forces that shape every industry and every market.
These forces determine the intensity of competition and hence the profitability and
attractiveness of an industry. The objective of corporate strategy should be to modify
these competitive forces in a way that improves the position of the organization.
Porters model supports analysis of the driving forces in an industry. Based on the
information derived from the Five Forces Analysis, management can decide how to
influence or to exploit particular characteristics of their industry.26
25
Michael E. Porter, http://www.leading-minds.com/biography.cfm, [Accessed July 25, 2005]
26
Porters Five Forces, http://www.valuebasedmanagement.net, [Accessed July 25, 2005]

The Five Competitive Forces in context of the Pakistani Oil Marketing Industry are as
follows:
Fig 1.4: Porters Five Forces Model27
27
Porters Five Forces, http://www.valuebasedmanagement.net, [Accessed July 25, 2005]

1.2.1 Bargaining Power of Suppliers: High
The term ‘suppliers’ comprises of all sources for inputs that are needed in order to
provide goods or services. Thus, refineries are the suppliers of petroleum products to the
Oil Marketing Companies in the downstream sector.
Currently, local refineries are only meeting around 33 per cent of the country’s domestic
requirements while the remaining 67 per cent demand is being met through product
imports.28
The following table depicts the name plate capacities of the few large local refineries of
Pakistan:
Name of Refinery Capacity (million tones)

National Refinery Ltd (NRL) 2.8
Pakistan Refinery Ltd (PRL) 2.3
Attock Refinery Ltd (ARL) 1.1
Pak-Arab Refinery Ltd (PARCO) 4.5
Table 1.5: Capacities of Local Refineries29
The bargaining power of suppliers is high as the market is dominated by a few large
suppliers rather than a fragmented source of supply. The petroleum products are imported
by Kuwait National Petroleum Company and thus the source of supply remains to be
consolidated.
28
Oil Marketing Competition Heats Up, http://www.pakistaneconomist.com/database1/cover/c2001-
25.asp, [Accessed July 25, 2005]
29
Supply Department Presentation, Pakistan State Oil (PSO), January 2004

There is the possibility of the supplier integrating forwards in order to obtain higher
prices and margins. This threat is witnessed to be especially high in Pakistan downstream
oil sector where recently Attock Refinery Ltd (ARL) has launched its own oil marketing
company, namely Attock Petroleum Ltd (APL).
The forward integration has provided economies of scale for the supplier and allowed it
to tap in to the more profitable buyers industry.
The bargaining power of suppliers in the downstream oil industry is also high owing to
the fact that there are no direct substitutes for the particular product input offered from
the suppliers and the switching costs from one supplier to another are reasonably high.
1.2.2 Bargaining Power of Buyers: Low
The bargaining power of buyers determines how much buyers can impose pressure on
margins and volumes. The buyers for the downstream oil sector are the end-users or
customers who purchase and use petroleum products for their daily use.
The bargaining power of buyers in the downstream oil industry is low as the supplying
industry – oil marketing companies – comprises of a small number of large operators and
the buyers are mostly fragmented and the majority does not even buy large volumes.
Also, currently in Pakistan the petroleum products can not be readily replaced by
substitutes and thus switching to an alternative source of energy is virtually impossible
and prone to very high costs. There is very less possibility for the buyers to integrate
backwards and thus the bargaining power of buyers in the downstream oil sector is low.

1.2.3 Threat of New Entrants: High
The threat of new entrants in the oil marketing industry has gradually increased over a
period of time. Few years back PSO, Shell and Caltex were the only three oil marketing
companies operating in Pakistan but now three more companies, Total, Attock and
Admore are also competing for market shares.
Hascombe Storages (Pvt) Ltd and Overseas Oil Trading Company are two new
companies which have obtained the marketing license from Oil & Gas Regulatory
Authority (OGRA) and would be commencing operations in the near future.
There is a also a potential threat of oil refineries coming up with their own oil marketing
companies in Pakistan so as to maximize the economies of scale and exploit the potential
profitability of the oil marketing business.
The threat of new entrants is even higher in the CNG business where many private gas
stations are being set up owing to the exponential growth of CNG converted vehicles in
Pakistan. Even today there are around 411 private CNG stations out of a total of 724
CNG stations spread all over the country.
1.2.4 Threat of Substitutes: Low to Moderate
A threat from substitutes exists if there are alternative products with lower prices of better
performance parameters for the same purpose. They could potentially attract a significant
proportion of market volume and hence reduce the potential sales volume for existing
players.
CNG is the only viable substitute to Petrol and Diesel owing to its availability at cheaper
prices, although the performance of the vehicle engine is almost always compromised
along with the safety hazards and risks associated with the gas storage cylinders.

Other than CNG threat of all other substitutes in the oil marketing industry is low. These
other substitutes to petroleum products include the solar energy, wind energy, nuclear
energy and energy through hydrogen fuel cells. All these sources of alternate energy are
in a very nascent stage in Pakistan owing to the massive amount of investments required
in their research and commercial development. Despite all efforts to tap on to these
alternate energy resources, no significant progress has been made as such.
1.2.5 Rivalry between Existing Firms: High
The intensity of competition in oil market has gradually increased as new players have
started entering the market. Historically, only three oil marketing companies, PSO, Shell
and Caltex have been active in Pakistan but most recently new entrants such as Total –
Parco, Attock Petroleum and Admore Pakistan have started their commercial operations.
The most recent commencement of commercial operation by an additional Oil Marketing

Company Admore and obtaining of oil marketing license of two new companies
Hascombe Storages and Overseas Oil trading Company has greatly intensified
competition in the oil marketing industry.30
A major reason for high competitive rivalry between all players in the oil marketing
industry is the fact that all the players are following more or less similar strategies and
there is not much differentiation in products. Also, the barriers of exit for all major
players are very high as a lot of investment has been made in land and specialized
equipment setups.
30

The following table gives a comparison of the top two Oil marketing Companies of
Pakistan:
PSO (FY 2005) Shell (FY 2005)

Sales Volume (Million Tonnes) 9.7 3.2
Sales Revenue (Rs Billion) 253.777 111.495
Profit Before Tax (Rs Billion) 9.226 3.643
Profit After Tax (Rs Billion) 5.689 2.451
Table 1.6: Financial Performance of PSO & Shell31
31
Shell Pakistan Annual Report 2005, Financial Highlights, Page 28

1.3 Company Analysis: Pakistan State Oil (PSO)
1.3.1 Background
Prior to 1990, the three Oil Marketing Companies – Caltex, Shell (Pakistan Burma Shell)
and PSO were providing a similar level of shabby products and services, which neither
could be distinguished from one another nor offered any quality options to the customers.
All three OMC’s had outlets with dilapidated forecourt areas equipped with equally
worn-out mechanical dispensers.32
The industry was basically supply-driven, i.e. anybody who had more presence and more
access to supplies could sell more leaving customers totally choice-less. Owing to lack of
competition in lubricants as well, the three players were selling lubes in tin cans.
Similarly, product delivery to their outlets was arranged by all of these companies in
rickety cartage tank trucks.32
During the ‘90s things however began to change. In 1990, Caltex started improving its
retail stations by providing electronic dispensers, steam wash facilities, well-illuminated
canopies, uniformed attendants as well as high quality lubricants. Shell also embarked on
its Retail Visual Image (RVI) project in 1994 and started applying its international RVI
concept to its retail network. In 1997, Caltex launched their New Retail Image program to
further enhance its retail modernization on new revised lines and in more vibrant colors.
32
19th World Energy Congress, Sydney, Sept 2004, http://www.worldenergy.org/wec-geis/congress/
papers/kirimanit0904.pdf [Accessed 22 July, 05]

All along PSO did not take any steps to upgrade its retail network and improve its range
of products and services, which obviously resulted in negative customer perception of
PSO as a brand – thus losing ground in the marketplace. PSO, a national company with
the largest infrastructure, was fast losing both image and market share to Shell and
Caltex.
Over a five year period – 1994 to 2000, PSO’s market share in Mogas declined from 47%
to 39% and HSD from 73% to 60% as illustrated below:
Fig 1.5: PSO Mogas Market Share33
33

Fig 1.6: PSO Diesel Market Share34
In lubricants, the story was not much different. During the same period, the lubricant
share also plunged to 38% from 73% with CAGR of over 8%. With new petroleum
policy announced by the government in 1994 in which lubricants were deregulated, PSO
failed to manage the challenges of free market conditions and did not expand its product
lines to cater to the growing consumer needs.
34

Fig 1.7: PSO Lubricants Market Share35
Internally also, PSO had been struggling owing to lack of controls, deteriorated and
obsolete systems, malpractice and declining productivity and efficiency. As a result, the
company lost its immunity against all environmental forces and desperately called for
major overhauling in all business areas.35
35

1.3.2 Mc Kinsey 7S Framework: Pakistan State Oil (PSO)
PSO has successfully developed and implemented a comprehensive and far-reaching

corporate revival program, which has resulted in remarkable accomplishments that have
been widely acknowledged and appreciated at various national and international forums,
by world's leading consulting and financial advisory firms and by leading educational
institutions.36
The radical transformation of corporate architecture and business practices enabled PSO
to offer dynamic and innovative response to actual and potential challenges in all aspects
of business, including product range, prices and service levels. PSO succeeded in
enhancing professionalism in its staff and cultivating customer loyalty through effective
and continual communication, reliable service and superior product support.
The multi-dimensional change process witnessed over the years by PSO can be
understood by the use of Mc Kinsey’s 7S Model to better understand the role of
Structure, Systems, Strategy, Skills, Staff, Style and Shared Values in engineering the
PSO turnaround.
Fig 1.8: Mc Kinsey 7S Model37
36
papers/kirimanit0904.pdf, [Accessed 22 July, 05]
37
The 7S McKinsey Model, http://www.buildingbrands.com/didyouknow/14_7s_mckinsey_model.shtml,

1.3.2.1 Structure
The Structure of a company is all about its basic organization, its departments, reporting
channels, areas of expertise and responsibility.
The Pakistan State Oil (PSO) board of management is a fully autonomous board which
comprises of the Chairman and nine other members, as per the rules of the Companies
Ordinance 1984. The federal Government has constituted the Board of Management to
control, manage and direct affairs of the Company, whereas the direct management is
vested in the Managing Director who exercises and performs all the powers and function
of the Board of Directors of the Company.
The following table summarizes the names and positions of the PSO Board of
Management according to the Ministry of Petroleum & Natural Resources.

Fig 1.9: PSO Board of Management38
In order to make the organization more competitive and responsive, PSO management
embarked on a series of initiatives and revamped the entire organizational architecture.
PSO’s corporate structure has evolved into a matrix, which has divided the company’s
major operations into independent activities supported by the financial, legal, information
and other services. These activities are performed in an autonomous and collegial manner
in the form of Strategic Business Units based on the clear and transparent allocation of
responsibility and accountability. This structural change has been reinforced and related
checks and balances have been established by putting in place several corporate
monitoring and control systems.
38
Ministry of Petroleum & Natural Resources Website, http://www.mpnr.gov.pk/, [Accessed 20 July 2005]

In the past, many support services were working under the umbrella of non-core
businesses, which now have been de-linked and merged with marketing operations. For
instance, Logistics, previously known as Distribution used to report to operations and has
now been merged in Marketing to implement the modern and contemporary concept of
value-chain, as logistics has always been considered as an integral part of marketing.
In addition, unnecessary layers in management have been reduced to make PSO more
lean and flexible in line with the best international practices.
One of the top priority areas of PSO's corporate reform is Human Resource
Development. The Company has undertaken several initiatives to ensure induction and
training of professionals with the objective of ensuring high level of professionalism and
productivity at all levels of its employees. Through computer training, various in-house
courses, sponsorship of staff for studies at professional institutions and seminars, the
Company is providing its employees the opportunities for continuous development and
exponential learning.
Effective implementation of corporate reform and business development strategies in line

with best international practices has enabled PSO to maintain its market leadership
position in a highly competitive business environment.

1.3.2.2 Strategy
Rapidly changing business environment, consistently declining market shares of key

products, tarnishing brand image, and low productivity coupled with reduced assets
utilization necessitated multi-dimensional strategies in all spheres of business at Pakistan
State Oil. After scanning all internal and external factors PSO reviewed various strategy
matrices and opted for the Grand Strategy Mix Matrix (GSM) for its corporate revival in
addition to some other strategies applied by the company.39
In the following modified version of the Grand Strategy Mix Matrix, Pakistan State Oil is
placed in the top-middle quadrant indicated in green color based on its competitive
position and industry growth:
Fig 1.10: Grand Strategy Mix Matrix: PSO39
39

1.3.2.2.1 Market Development Strategy
PSO has been operating in an industry that had been growing steadily primarily in retail
area. In order to regain the lost market shares and improve the brand image, PSO
management came up with an aggressive marketing strategy of development to tap
unexplored markets.
PSO expanded its New Vision Network by adding new sites in un-tapped areas. With the
reconstruction of Afghanistan, the company proactively captured major fuel businesses
and exported major chunk of Jet A-1, Gas Oil, Mogas and exported lubricants to all the
major cities of Afghanistan40.
1.3.2.2.2 Market Penetration Strategy
In order to penetrate in the existing market, PSO has started remodeling of existing retail
network and regained some major industrial customers that had been lost in the past.
Following are a few important actions that have been taken in this regard:
 Swift remodeling/ revamping of existing stations in New Vision (850 outlets in

just 4.5 years at a rapid pace of 1.9 days per outlet)
 “Business Partner” concept for dealers, distributors and cartage contractors
 Dealers training & conferences being held regularly
 Sales incentives for top performing business partners
40

 Renewal of BP Castrol agreement for more marketing and technical support
 Introduction of existing lubricants in attractive plastic packaging
 Deployed 19 Mobile Quality Testing Units in major cities of Pakistan to ensure

integrity of products to customers
 Introduced free lube delivery systems thru C-Tracked vehicles
Owing to PSO’s customer-focused approach, the company has been able to converts its
retail outlets into Islands-of-Excellence with superior customer service, all in all
beautifying the landscape of the country.
Fig 1.11: PSO New Vision Retail Outlets – Islands of Excellence41
In order to capture 100% business of Jet A-1 at New Terminal Complex Lahore, the
company successfully commissioned into-plane fuel facility with the state-of-the-art
equipment and machinery at a cost of 9 million US$.41
41

1.3.2.2.3 Vertical Integration Strategy
Keeping in view the impending competitive scenario, PSO has adopted Vertical
Integration Strategy (both forward and backward) to enter into profitable ventures with
assured income streams.
By virtue of the vertical integration strategy, the company has mitigated business risk
arising from the probable substitution of fuel oil into gas thus ensuring adequate returns
to all stakeholders.
Following are a few significant actions that have been taken in this regard:
 Expansion of company-owned fleet under the fleet management plan
 12% equity investment in PAPCO (New White Oil Pipeline Company)
 Working closely with Attock Refinery Limited (ARL) on joint venture around
450 km White Oil pipeline from Machike (Lahore) to Tarujabba (Peshawar)
 Enhancement in Storage facilities, additional Tankage built at Zulfikarabad Oil

Terminal, Karachi for Bosicor Refinery and hospitality arrangements with Pak-
Arab Refinery (PARCO) and Water & Power Development Authority (WAPDA).
 PSO is currently working on setting up an integrated Refinery with 150,000

bbls/day at an estimated cost of 1.5 billion US$. With the completion of this
refinery, Pakistan would not only meet its deficit product needs but would also
enter into the export regime.

1.3.2.2.4 Rationalization Strategy
In the wake of deregulation and stiff competition, PSO has embarked on a rationalization
strategy aimed at weeding out uneconomical outlets and facilities. This has reduced the
fixed level of expenses that had been borne by the company regardless of inadequate
returns. In the past, there had been a mushroom growth of retail network irrespective of
cannibalization effect on vicinity outlets.
Instead of controlled new retail development, there were 900 approved stations for
further development, approvals for which were cancelled. Had these uneconomical
outlets been developed by PSO, the retail network would have expanded to over 4,800
thus further cannibalizing sales from other PSO outlets and wasting shareholder’s money
resulting in further reduction in throughput per outlet.
A comprehensive study was undertaken by PSO to identify negative contributors in retail

segment. Around 900 outlets were initially identified for rationalization. The matter was
taken up to the board of management, which accorded its approval for the
implementation of Retail Rationalization Program. During the last two years, almost 250
outlets have been closed down in line with the legal parameters.
The company also applied rationalization strategy on lubricant business where surplus
capacity existed at 11 blending plants. The company acquired its joint venture lube
blending plants to improve the operating efficiency of company-owned plants, to ensure
the consistency and integrity of products and curb the flow of spurious and counterfeit
products.42
42

1.3.2.3 System
In the pre-good governance period, PSO’s internal systems had been weakened owing to
obsolescence, mismanagement and leakages and as a result the company’s financial
systems and controls were badly affected and a negative public perception took roots – a
fate majority of the state-owned companies suffer.
In order to plug all leakages and to strengthen internal controls, PSO has implemented
SAP, which is an Enterprise Resource Planning (ERP) system. The ERP system has
provided online and real-time information; eliminated financial misreporting and has
improved funds management and strengthened efficiencies further in all aspects of the oil
marketing business. Prior to deciding to go for SAP, the company successfully conducted
‘Business Processes Reengineering’ so as to streamline business processes and
procedures for improved efficiency.
To provide necessary infrastructure for successful implementation of SAP, a major WAN

(Wide Area Network) project was completed for setting up an online integrated
communication system connecting PSO headquarters in Karachi to all Installations,
Depots, Plants and Divisional offices all over the country.
The management also instituted Business Planning & Reporting system so as to monitor
business performance against scientifically planned targets. A comprehensive Business
Plan is developed in advance for every forthcoming year and is presented to the Board for
approval. The plan covers Specific, Measurable, Attainable, Realistic and Time Bound
(SMART) corporate objectives supported by investment opportunities and budgetary
allocations.43
43

The Limits of Authority, Purchasing, and Human Resource Manuals have been updated
after 30 years so as to eliminate ad hoc management practices and empower the
professional managers as well as to ensure accountability at all levels.
To facilitate standardized and structured process flow, Operations and Logistics manuals
have also been developed as part of the Total Quality Management System. With proper
systems in place, any deviation or discrepancy irrespective of nature, position or status is
indicated promptly and handled swiftly according to the clearly spelt out procedures.
Considerable man-hours have gone into making PSO a system-driven company. Various
fully empowered Cross Functional Teams (CFTs) and committees have been formed to
develop operational and tactical plans and chalk out prudent implementation strategies.
The Managing Director has all along performed his cardinal role of providing leadership,
guidance and long-term vision for the business while functional general managers are
responsible for their activities. In order to make all business affairs transparent, smooth
and effective, following committees and teams have been formed which work cohesively
and independently:
1.3.2.3.1 Employee Leadership Team (ELT):
ELT is chaired by the Managing Director with Executive Director (Human Resources &
Services), Executive Director (Finance/ Information Technology), Executive Director
(Customer Services) and General Manager (Operations & Construction) as members.
ELT committee meets on regular basis and reviews all matters pertaining to human
resource including recruitment, transfers, disciplinary actions, promotions, and employee
benefits. The committee also reviews succession plans and organizational
developments.44
44
Pakistan State Oil (PSO) Annual Report 2005, Board Committees, Page 44

1.3.2.3.2 Management Committee (Man-Com):
Management Committee, or Man-Com is the main management control and decision

making body, which meets on a weekly basis primarily to steer and review key projects
from conceptualization to implementation.
Man-Com also reviews the proposed Corporate Plan comprising capital and expense
budgets, objectives and strategies and performance targets. Upon its approval, final
Corporate Plan is prepared and sent for the Board’s approval. It also reviews major
business issues and takes decisions/actions accordingly. Man-Com is also chaired by the
Managing Director.45
1.3.2.3.3 Executive Committee (Ex-Com):
The Executive Committee, or Ex-Com, is another high-level committee comprising all

General Managers and senior positions, which meets on every Tuesday to review day-to-
day company affairs. The Ex-Com members share their problems as well as key
accomplishments with other committee members. The Ex-Com is also chaired by the
Managing Director and comprises around 30 members.45
1.3.2.3.4 Internal Audit Committee:
The Internal Audit Committee is responsiblefor reviewing any deviations from the
approved policies and procedures and suggest modification where necessary. It reviews
periodical financial statements prior to their approval by the Board of Management and
ensures compliance with listing regulations and other statutory requirements. In addition,
amongst other areas, it monitors internal control systems and their effectiveness.45
45

1.3.2.3.5 Health, Safety & Environment (HSE) Steering Committee:
To steer and review HSE compliance, the HSE Steering Committee meets periodically.
The committee ensures that all PSO operations are environment friendly and reviews
major HSE projects that are being undertaken. In addition, the Committee also presents
the status on HSE audits, trainings and incidents analysis.
1.3.2.3.6 Cross-Functional Teams (CFTs):
Various fully empowered Cross-Functional Teams have been formed comprising of

professionals from Finance, Operations, Retail, Audit, Accounts, etc., to expedite the
development of critical projects. CFT (New Vision Retail & CNG) approves and reviews
the New Vision outlets and CNG development, while CFT (Retail Sales) reviews the
daily sales position and removes any operational barrier with consensus.
CFT (Supply Chain) deals with all matters pertaining to product supply and logistics
including tank lorries up gradation, enlistment and fleet management plans all across
Pakistan.46
Pakistan State Oil is currently heading towards its privatization. Since the very initial
stages of the privatization process, the company has been under the scrutiny and
monitoring of JP Morgan Consortium, one of the largest global investment banks,
appointed as financial advisor by the Privatization Commission of Pakistan. JP Morgan
Consortium, supported by renowned local and international firms, has successfully
completed its necessary due diligence study in terms of commercial, legal and human
resource aspects of the company.47
46
47

1.3.2.4 Staff
At Pakistan State Oil, Human Resource is acknowledged as the single most important
factor that can, and does, bring about change. It is a pity that while all other inputs and
assets, from a pin to a skyscraper, have their book value, market value and replacement
value there is no methodology to reflect the human resource in our balance sheets, though
it is only a fully empowered, motivated and satisfied professional workforce that makes
or breaks any venture.
Fig 1.12: Brainstorming session in progress48
Prior to fiscal year 2000, all hiring was done on external pressures, nepotism and
favoritism. As a result, the company experienced the dearth of high quality professionals
resulting in decreased productivity and declining efficiency. In order to rationalize its
human resource, the company launched a Voluntary Separation Scheme (VSS) in April
2001. Around 35% of its total employee population of 2735 i.e. 750 employees opted for
the scheme on their free will. Currently PSO operates within the newly approved
headcount of 2000 employees. 48
48

To bridge the vacant slots in management, the company, during the last few years, hired
around 200 high caliber professionals, mostly MBAs, Qualified Engineers and Chartered
Accountants, purely on merit increasing the professional strength to 47% from 19%.
Owing to congenial working environment and gender balanced approach of the company,
female professional strength has also risen to 55% from a nominal figure of 7% and the
company is proud to be an equal opportunity employer.
One of the top priority areas of PSO’s corporate reforms has been the initiative to align
the compensation structure in line with the oil marketing industry. The management has
revised employees’ remuneration so as to retain quality professionals and improve their
morale and productivity.
Regular two-way communication driven from the top with employees at all levels,
including the union, has been established for the clarity of focus on corporate goals,
business challenges and the need to maintain the tempo of change. As part of candid and
open communication philosophy, the communication meetings with the Managing
Director & CEO are held on regular basis. Periodical marketing and operations
conferences are held which allow all participants to interact candidly and directly with
the top management.
PSO has an established Bell Curve method of appraisal for forced ranking of employees.
All promotions, salary increments and bonuses are strictly performance-based. A change
has been brought about in recruitment with merit being the sole criterion. Human Asset is
considered as the only asset, which appreciates with the passage of time. The
management also believes that all employees are leaders – as leaders create leaders not
followers.
Training sessions, presentations, workshops and seminars for employees are conducted
regularly to keep them abreast of the latest management philosophies and the skills
needed in this dynamic, competitive environment.49
49

An extensive orientation program has been devised to give new inductees a clear
understanding of PSO operations. The internship program at PSO has become a valuable,
on-hand experience for students from various prestigious institutions. In fiscal year 2005
more than 200 students from various institutes have been give summer/ winter
internships.
The recognition of employees is demonstrated through the launching of Reward and

Recognition Program. Two coveted annual awards, besides other forms of recognition are
in place. Managing Director’s Performance Award in January and Shaukat Mirza
Excellence Award in July are given to outstanding employees. In addition, performance
appreciation letters are also awarded to give due recognition to the employees who
surpass the expected performance level or go beyond the call of duty.
In order to blend work with recreation, the company has developed a gymnasium
equipped with modern fitness machines and all indoor games. Traditionally, the company
headquarters, PSO House, Karachi, used to have three separate canteen facilities; one
each for the Managing Director and senior officials, the middle management, and the
non-management employees. Not only has this arrangement been abolished but cafeteria
facilities have also been upgraded at all regional offices, oil depots and installations so as
to bring them up to the level of those at the headquarters.50
Fig 1.13: Employee Recreation Floor at PSO House51

50
51

Before the fiscal year 2001, the company used to have dilapidated office furniture with
shabby look. In order to give workplace a professional ambience and to promote equity
and harmony among employees, the company redesigned the floor arrangement with
modern modular furniture on open seating basis. This interior furnishing implemented at
PSO House is comparable to any global benchmarked company.
Emphasis on strict compliance and adherence to Business Ethics and Code of Conduct
Policies has been the key area of management focus. Swift and stringent actions are taken
against employees found in violation of the stated and prescribed principles as part of
management commitment towards “Zero Tolerance” for any intellectual or financial
impropriety.51

1.3.2.5 Skills
The management of Pakistan State Oil (PSO), being fully cognizant of the training and
development needs of its employees has launched an ongoing training program to equip
its workforce with necessary skills and knowledge.
Over 3,500 forecourt attendants all over Pakistan have been trained on customer services
as part of the WOW experience launched since fiscal year 2002. The company has also
launched ongoing internship program for graduating university students so as so to train
the future professionals by assigning different pragmatic assignments.
Rigorous SAP training has been imparted to all users for Materials Management (MM),
Sales & Distribution (S&D) and Human Resource (HR) Module.
Fig 1.14: SAP Implementation Session in Progress52
52

Around 1,500 employees have been imparted training on the following Technical,
Management and Skills development programs:
General Technical
Customer focused Operations Department Cathodic Protection Systems
How to make Operations activities efficient Preventive/ breakdown Maintenance
Concept of New Vision - Operations Storage Tank Cleaning & Maintenance
Presentation Skills Storage Tank Construction
Communication Skills Tank Lorry Calibration
Brainstorming Metering Systems
Motivation of operational workforce Auto Tank Radar Gauging Systems
Time Management Skills Controller Automation System
Decision Making Skills Pipeline Hydraulics
Public Relation ISO 9001/ 14000
Six Sigma HSE Awareness
Product Management Lighting Equipments
Crisis Management Fire Fighting Equipment
Negotiation Skills Pumps
Brand Management Maintenance Management
Consumer Behavior Production Management
Effective Leadership Construction Management
Value Based Management
Total Quality Management
Changing Organization Culture
Management By Objectives
Boosting Performance
Table 1.7: Presentation Topics for PSO Employee Development53
1.3.2.6 Style
The PSO Style of management adopted revolves around teamwork promoted through
formation of various Cross Functional Teams at PSO House, Karachi to expedite
development and prompt decision making.
53
Training Manual 2005, Pakistan State Oil (PSO)

Fig 1.15: PSO House – Class Apart54

In a clear departure from the bureaucratic style of management, employee empowerment
has been enhanced through delegation of authority and employee participation has been
ensured through open invitation of suggestions. Today, PSO boasts of accountability at
all levels. Swift flow of information has been facilitated through bulletin boards, circulars
and e-mails, video-conferences and highly lively interactive sessions.55
54
55

Fig 1.16: PSO House – Breathtaking View55
Fig 1.17: Corporate Professional Environment55

1.3.2.7 Shared Values
PSO used to have no well-defined shared values before fiscal year 2000. During the
period since, PSO has developed and inculcated Shared Values among all its employees
and takes them very seriously and not as mere words.
Through concerted efforts, PSO has been able to develop and inculcate among employees
the values of ethics and integrity; health, safety and environment; customer satisfaction;
quality and productivity; leadership and teamwork; candid and open communication;
innovation and creativity; diversity; respect of individuals and employee growth and
development.56
The shared values of PSO are illustrated as follows:
1.3.2.7.1 Excellence
We believe that excellence in our core activities emerges from a passion for satisfying
our customers’ needs in terms of total quality management. Our foremost goal is to retain
our corporate leadership.
1.3.2.7.2 Cohesiveness
We endeavor to achieve higher collective and individual goals through teamwork. This is
inculcated in the organization through effective communication.
56
Pakistan State Oil (PSO) Website, http://www.psocl.com/aboutus/mission_statement.asp,
[Accessed July 10, 2005]

1.3.2.7.3 Respect
We are an equal opportunity employer attracting and recruiting the finest people from
around the country. We value contribution of individuals and reams. Individual
contributions are recognized through our reward and recognition program.
1.3.2.7.4 Integrity
We uphold our values and business ethics principles. Professional and personal honesty,
dedication and commitment are the landmarks of our success. Open and transparent
business practices are based on ethical values and respect for employees, communities
and the environment.
1.3.2.7.5 Innovation
We are committed to continuous improvement, both in new products and processes as

well as in those existing already. We encourage creative ideas from all stakeholders.
1.3.2.7.6 Corporate Responsibility
We promote health, safety and environment friendly culture both internally and
externally. We emphasize on community development and aspire to make society a better
place to live in.57
57
Pakistan State Oil (PSO) Website, http://www.psocl.com/aboutus/mission_statement.asp,

1.3.3 Strategic Group Analysis
Strategic Group Analysis is all about analyzing the differences between organizations
which are potential or actual competitors. In the oil marketing industry of Pakistan there
are six players competing against each other. These include Pakistan State Oil (PSO),
Shell Pakistan Ltd (SPL), Caltex Oil Pakistan Ltd (COPL), Total-Parco Pakistan Ltd
(TPPL), Attock Oil and Admore.
“Geographical Coverage” and “Marketing Intensity” are the two segmentation variables
which have been chosen to carry out the strategic group analysis of Pakistan’s Oil
Marketing Industry. The resulting strategic groups A1, A2 and A3 are as shown below.
SHELL, PSO
CALTEX, TOTAL
A1
A2
A3
ATTOCK, ADMORE
Marketing Intensity
Fig 1.18: Strategic Groups: Oil Marketing Companies

1.3.3.1 Strategic Group: A1
The strategic group A1 consists of the two major players Shell Pakistan Ltd (SPL) and
Pakistan State Oil (PSO). These organizations combined are responsible for meeting most
of the country’s demand of petroleum products. Pakistan State Oil (PSO) alone has a
storage capacity of 860,000 tonnes and can meet the country’s oil demand for around
three weeks.
The geographical coverage of these two companies is immense. PSO alone has a retail
network of over 3800 sites followed by Shell Pakistan’s network of around 1250 sites.
The retail outlets spread from Hunza in the North to Karachi in the South. The marketing
intensity as a percentage of total costs is also very high for both the oil marketing
companies as compared to the other players.
Combined Sales volume for the two players for the fiscal year 2005 has been 12.9 million
tonnes out of which PSO had a share of 9.7 million tonnes while Shell had a share of 3.2
million tonnes. Likewise, the combined Sales Revenue for both the companies is Rs
365.272 Billion in which Rs 253.777 Billion accounts for the Sales Revenue of PSO
while Rs 111.495 is the Sales Revenue of Shell Pakistan Ltd.58
The strategic group A2 consists of Caltex Oil Pakistan Ltd (COPL) and Total-Parco
Pakistan Ltd (TPPL). Caltex has been operating in the sub-continent since 1938 and
established its subsidiary Caltex Oil (Pakistan) Limited in 1947. Apart from the main
oil storage facility at Karachi, Caltex has 12 depots throughout the country, which
include three inland terminals in Rawalpindi, Machike and Shikarpur.
58
Shell Pakistan Annual Report 2005, Financial Highlights, Page 28

The Caltex retail network consists of over 500 outlets located in all Headquarter towns
and most strategic locations. Caltex also has a distributor's network, which caters to the
demands of the industrial as well as the agricultural sector.
Total – Parco Pakistan Ltd (TPPL) has been operating in Pakistan since the last four
years and has currently over 100 retail outlets all over the country. The French company
Total Fina Elf in collaboration with Parco Oil Refinery Pakistan has lad launched Total
Parco- Pakistan Ltd (TPPL). The marketing Intensity and geographical coverage of both
Caltex and Total is less than that of Shell and PSO. Thus, both Total and Caltex have
been placed in strategic group A2.
The strategic group A3 comprises of the two national oil companies namely Attock
Petroleum Ltd (APL) and Admore Oil Pakistan. APL is a sister concern of Attock Group
of Companies which comprises of organizations like Pakistan Oilfields Limited (POL),
Attock Refinery ltd (ARL) and now National Refinery Ltd (NRL). Currently there are
around 70 retail outlets of APL in Pakistan with its head office in Islamabad.
Admore is a new player in the oil market of Pakistan and has currently less than 10 retail
outlets, most of which are located in the northern parts of the country. The geographical
coverage and marketing intensity for both APL and Admore is very low as compared to
Shell, PSO, Caltex and Total primarily because they are new national players and thus
they have been placed in the smallest strategic group A3.

1.3.4 B.C.G Matrix
The market analysis of the six oil marketing companies has been based on the five
attributes in the following tables. These include Overall Reputation, Forecourt/ Customer
Services, Website Quality, Marketing intensity and Non-Fuel Services such as Shop Stop,
Car Wash and Business Centers.
Attributes – SHELL Weightage Scale Aggregate

(1 to 5)
Overall Reputation 0.250 4.700 1.1750
Forecourt/ Customer Services 0.200 4.550 0.9100
Website Quality 0.150 4.850 0.7275
Marketing Intensity 0.250 4.600 1.1500
Non-Fuel Services 0.150 4.750 0.7125
1.000 4.6750
Table 1.8: Attributes – SHELL
Attributes – PSO Weightage Scale Aggregate

(1 to 5)
1.000 4.4480
Table 1.9: Attributes – PSO

Attributes – TOTAL Weightage Scale Aggregate

(1 to 5)
1.000 4.2350
Table 1.10: Attributes – TOTAL
Attributes – CALTEX Weightage Scale Aggregate

(1 to 5)
1.000 4.0875
Table 1.11: Attributes – CALTEX

Attributes – ATTOCK Weightage Scale Aggregate

(1 to 5)
1.000 2.8917
Table 1.12: Attributes – ATTOCK
Attributes – ADMORE Weightage Scale Aggregate

(1 to 5)
1.000 2.2200
Table 1.13: Attributes – ADMORE

The industry growth rate according to the PSO annual report is around 8 - 10%. Thus, the
six oil marketing companies would be placed in either the cash cows or the dogs quadrant
in the B.C.G matrix.
In the market share analysis portion of the B.C.G Matrix, a market share of more than
3.50 would be considered high while a market share of less than 3.50 would be
considered as low.
“Cash cows” are low-growth businesses with a relatively high market share. These are
mature, successful businesses with relatively little need for investment. They need to be
managed for continued profit - so that they continue to generate the strong cash flows that
the company needs for its Stars.
“Dogs" refers to businesses that have low relative share in low-growth markets. Dogs
may generate enough cash to break-even, but they are rarely worth investing in.
Sr. No Oil Marketing Company B.C.G Category

1 Shell Pakistan Ltd (SPL) Cash Cow
2 Pakistan State Oil (PSO) Cash Cow
3 Total – Parco Pakistan Ltd (TPPL) Cash Cow
4 Caltex Oil Pakistan Ltd (COPL) Cash Cow
5 Attock Petroleum Ltd (APL) Dog
6 Admore Oil Pakistan (AOP) Dog
Table 1.14: B.C.G Matrix Summary of Oil Marketing Companies
Based on the subsequent analysis of the six oil marketing companies SHELL, PSO,
TOTAL and CALTEX have been placed in the category of Cash Cows while ATTOCK
and ADMORE have been placed in the category of dogs.

20
10
Shell PSO Total Caltex Attock Admore
5.000 3.500 0
Fig 1.19: B.C.G Matrix of Oil Marketing Companies

1.3.5 G.E Matrix
To measure the two dimensions of market attractiveness and business strength for
Pakistan State Oil (PSO) the factors underlying each dimension have been each given a
weight and rated from a scale of 1 to 5, with 1 being the lowest and 5 being the highest.
1.3.5.1 Factors that Affect Market Attractiveness
Whilst any assessment of market attractiveness is necessarily subjective, there are several
factors which can help determine attractiveness. The following table illustrates the
weights that have been assigned to the market attractiveness of the oil marketing industry.
Weight Rating (1 to 5) Value

Overall Market Size 0.20 4.50 0.900
Market Growth Rate 0.20 4.00 0.800
Historical Profit Margin 0.15 4.50 0.675
Competitive Intensity 0.15 3.50 0.525
Technological Requirements 0.15 4.00 0.600
Inflationary Vulnerability 0.05 2.00 0.100
Environmental Impact 0.10 3.00 0.300
1.00 3.900
Table 1.15: PSO Market Attractiveness Rating
1.3.5.2 Factors that Affect Business Strength

The following table illustrates the rated factors that affect the business strength of
Pakistan State Oil (PSO).
Weight Rating (1 to 5) Value

Market Share 0.20 4.50 0.900
Product Quality 0.20 4.00 0.800
Brand Reputation 0.15 3.50 0.525
Distribution Network 0.15 3.50 0.525
Promotional Effectiveness 0.15 3.00 0.450
R&D Performance 0.05 2.00 0.100
Managerial Personnel 0.10 3.00 0.300
1.00 3.600
Table 1.16: PSO Business Strength Rating
The cumulative value for both the factors has been plotted on the G.E Matrix in the
following figure. Pakistan State Oil (PSO) has been placed in the “invest to build”
category as the market attractiveness is high and the business strength is medium.
According to the General Electric Model businesses in the “Invest to Build” category
should build selectively on strengths and reinforce vulnerable areas.

Strong Medium Weak
High
PSO
3.67
Med
2.33
Low
1.00
5.00 3.67 2.33
Business Strength
Fig 1.20: GE Matrix applied at PSO

1.4 SWOT Analysis: Pakistan State Oil (PSO)
1.4.1 Strengths
1.4.1.1 Market Leadership in all key products
In White Oil i.e. Mogas, Diesel, Kerosene and JP -1 despite intense competition PSO is
the market leader with a market share of 58.3% while in Black Oil PSO is the market
leader with a share of 79.2%.
In Aviation trade, PSO is again the market leader controlling 70% of market. PSO is
operating at 8 Airports in Pakistan and has just recently won the tender for the sole
supplier to Pakistan’s first private sector Sialkot International Airport.
In the south zone, PSO is controlling the operations of Quaid-e-Azam International

Airport Karachi, Turbat and Pasni Airports.
In the central zone it is controlling Allama Iqbal International Airport Lahore, Multan and
Faisalabad Airports and in the North Zone it is controlling Islamabad International
Airport and Peshawar International Airport.

1.4.1.2 Largest Retail Network
PSO has the largest retail network compared to any other national or multi-national oil
marketing company in Pakistan. Currently, it has more than 3,800 retail outlets spread all
over Pakistan from Karachi to Karakoram which are responsible for generating 90% of
the company’s revenue through sale of PSO products across the country and building
PSO’s corporate image by providing reliable quality and quantity, unmatched service and
unparalleled customer care. Shell Pakistan Ltd has the second highest number of retail
outlets of 1250 retail outlets while Caltex Oil has around 500 retail outlets and Total –
Parco has around 100 retail outlets. Attock Petroleum has around 70 retail outlets while
Admore has less than 10 retail outlets in Pakistan.
1.4.1.3 Vast Infrastructure of Installations and Oil Depots
PSO has the largest storage and distribution infrastructure of 9 installations and 23 oil
depots spread all across the country. The current storage capacity of 860,000 metric
76axim is more than 82% of the country’s total storage capacity and is sufficient to meet
three weeks country wide demand in case of disruption of any supplies.
1.4.1.4 Sole Supplier of Independent Power Producers
PSO is the sole supplier of High Speed Diesel (HSD) and Furnace Oil (FO) to the
Independent Power producers (IPP’s) of Pakistan. In this regard, Hubco which is the first
and largest IPP of Pakistan has sole fuels supply agreements with PSO. In this regard,
PSO has built 78 km pipeleine exclusively for Hubco Power.
PSO is the only Oil marketing company in Pakistan that is catering to the bunkering
sector. The three major fuels supplied by PSO to marine trade include Bunker Furnace
Oil, Marine Gas Oil and Marine Diesel Oil.

1.4.2 Weaknesses
1.4.2.1 Lack of professional human resource
One of the biggest weaknesses of PSO is the dearth of quality human resource. Although
PSO has been able to attract quality professionals but it has failed to retain them over the
long-term. The primary reason for the high employee turn-over is the poor compensation
system as compared with all other oil marketing companies. This is the sole reason why
majority of employees have used the PSO brand name as a launching pad to secure their
future career paths in other more rewarding and prestigious international oil companies.
1.4.2.2 Low Throughput per retail outlet
Although PSO has the largest retail network of the country, it is important that the
currently low throughput per retail outlet be improved. This can only be achieved by
closing down all uneconomical retail outlets and facilities which are tarnishing company
image and sales revenues.
1.4.2.3 Lack of assured Supply Sources
According to the supply department of PSO, lack of assured product supply sources is a
major disadvantage to the oil marketing giant. The primary reason for lack of any assured
supply sources is the shortfall in supply from local refineries. As a result product needs to
be imported on the basis of tenders. This is a very expensive option which has a
tremendous effect on the import bill of Pakistan too.

1.4.2.4 Obsolescence of Storage facilities, Plants and Machinery
The history of PSO dates back to the year 1974 when Federal Government takes over
management of PNO (Pakistan National Oil) and DPL (Dawood Petroleum Limited),
renamed into POCL (Premier Oil Company Limited) under marketing of Petroleum
Products Act, 1974. Since then a lot of storage tanks, facilities, plant machinery and
specialized equipment including dilapidated tankers have become obsolete and need to be
upgraded accordingly.
1.4.3 Opportunities
1.4.3.1 Deregulation of the Oil Sector
The complete deregulation of the oil sector would play a vital role in enhancing the
market activity in Pakistan, besides increasing the margins. Earlier, for getting permission
for a POL outlet or a gas station, one had to run after the ministry of petroleum and only a
few succeeded in getting the license. Now with the advent of deregulation, the situation is
improving as the oil marketing companies are now being authorized to issue permission
for establishment of petrol pump which has tremendously encouraged the investment in
the sector.

1.4.3.2 Backward Vertical Integration
PSO has a great opportunity of adopting a backward vertical integration strategy and
introducing its own oil refinery in Pakistan. The PSO refinery would aid in increasing the
total refining capacity of the country. It would prove really beneficial for PSO as it would
offer better control over sources of supply, greatly minimize costs and achieve efficiency
in economies of scale.
1.4.3.3 Renewable Energy Sources
PSO realizes the importance of alternate energy sources for the country. The oil
marketing giant can develop its own R&D department focusing on engineering concepts
of alternate energy by Wind, Solar Cells and Hydrogen fuel cells. It can develop a
complete retail outlet which is powered by Solar Energy and make cost savings and
improve productivity in the long run.

1.4.3.4 Privatization
The privatization of PSO offers a great opportunity for the oil marketing giant to further
improve on its record high profits and performance.
With an improving macro economic environment, the Government of Pakistan reiterated

its commitment to privatize PSO by selling 51% equity stake, together with management
control, to a qualified strategic investor, which has received encouraging response from
fifteen quality players, which is a larger group of parties and who are interested to
explore investment opportunities in Pakistan.
The interested parties for PSO’s strategic sale include, Kuwait Petroleum Corporation
(Kuwait), Fauji Foundation (Pakistan), Abraaj Capital Limited (UAE), consortium of
Vitol S.A (Switzerland) and Hasan Associates (Pakistan), Lukoil International Trading
and Supply Company (Russia), Dewan Mushtaq Group (Pakistan), Dawood Hercules
Chemicals Limited (Pakistan), the Attock Oil Group (Pakistan), Abu Dhabi Group
(UAE), PAL Group of Companies (UAE) / ATN Modarba (Pvt.) Ltd (Pakistan), Al-
Jomaih Holding Co. (Saudi Arabia), Chevron Texaco (USA), Al Ghurair Investment LLC
& Associates (UAE), United Bank Limited (Pakistan), and Tysons Oil & Energy (UK)59.
59
PSO-PTCL Bidding Targeted During Current Fiscal Year, http://www.privatisation.gov.pk/Handout,

1.4.4 Threats
1.4.4.1 Increasing Competition
With the entry of Total in the oil marketing industry backed by rich experience of global
oil marketing in over 100 countries and in the presence of two existing conglomerates,
Shell and Caltex, the competition in the oil market has really intensified. PSO, on the
contrary, is a national oil marketing company and despite the prevailing challenges has
managed to attain market leadership in all key product categories. However, with the
recent entry of Admore and Attock Petroleum it would be even more difficult for the oil
marketing giant to maintain long-term market leadership.
1.4.4.2 Product Smuggling
The smuggling of oil from Iran in the bordering province of Baluchistan which is being
sold at a much cheaper price is a cause of great concern for Pakistan State Oil. This
menace has now reached up to Lasbella which is in close vicinity of the industrial city of
Karachi. It is feared that if an effective check is not put on, petroleum products may also
be smuggled into Karachi.60
1.4.4.3 Increasing Expenditure on Oil Imports
PSO is currently importing around 70% of the country’s oil demand and the resulting
expenditure on oil imports is a severe burden on the national economy.
The oil imports during the current financial year have added more than $one billion to the
total bill of $3 billion. An economy like Pakistan obviously cannot afford such high level
of costs on import of a single commodity.60
60
Oil – Growing Role of the Private Sector, http://www.pakistaneconomist.com/database1/cover/c2003-
33.asp, [Accessed July 25, 2005]

CHAPTER 2
LITERATURE REVIEW

2.1 Promotion
Promotion covers the variety of techniques used to communicate with customers and
potential customers – and this is where advertising comes in. Along with personal selling,
public relations, and sales promotion, advertising is one of the key four categories of
promotion. It is the non-personal communication of information about products to
customers.61
61
Bovee, Courtland, Advertising Excellence, Fourth Edition, McGraw Hill, 1995

2.2 Advertising Concept
Advertising is virtually everywhere in daily life, and it forms and roles are both contested
and admired. Some see advertising as both the mirror and maker of culture: its words and
images reflect the present and the past even as they contribute new sounds and symbols
that shape the future.
Advertising is the paid, non-personal communication of information about product or

ideas by an identified sponsor through the mass media in an effort to persuade or
influence behavior. It is non-personal since it’s directed to groups of people rather than to
specific individuals.
Most television commercials, newspaper ads, billboards, and other advertisements are
group efforts representing the work of four distinct players in the advertising process:
advertisers, advertising agencies, the media, and suppliers.
Advertisers are people or organizations that seek to sell products or influence people
through advertising. Advertisers generally hire advertising agencies, independent
organizations that specialize in developing and implementing advertising on behalf of
advertisers.
The advertising agencies in turn select the media, the channels through which advertisers’
messages are carried to their intended audiences; in some cases, advertisers use only one
medium, a single channel. The two largest categories of media are print and electronic,
but wide ranges of other media also carry advertising messages, including yellow pages
directories and direct mail. It is in the process of creating and executing persuasive
messages, advertisers, and advertising agencies also use the services of various suppliers,
individuals or organizations that provide specialized services such as photography,
printing, and video production.62
62

2.3 Advertising Message
Message is a summation of signs or signals attempting to convey one or more ideas. Its
construction depends on the other parts of the communication process, including the
media used and especially the copy platform.
Symbols, in one form or another, are the heartbeat of the message. They can be used to
portray complex emotional situations, as for example in a close-up of grandmother
receiving flowers on a Mother’s Day.
In a more restricted sense, symbols can be thought of as the variety of forms such as
geographic shapes, things, packages, logos, people, scenes, and cartoon characters. Such
symbols as these can create awareness, associations, ands a liking or feelings, which in
turn affect loyalty and perceived quality.
In an effort to keep ads fresh, advertisers have turned to the use of technology to give
their ads new dimensions.63
63

2.4 Advertising Appeals
Every successful ad works because it makes an effective appeal to some need or desire in
the people who view, read, or listen to it. The advertising appeal is an attempt to draw a
connection between the product being advertised and some need or desire that the
audience feels. People are motivated to close the gaps in their lives, the gaps between the
way they perceive things to be and the way they would like things to be.
Appeals fall in to two general categories: logical appeals, also known as rational appeals,
aim for the buyer’s head, and emotional appeals aim for the buyer’s heart. A logical
appeal tries to sell products based on performance, features or the ability to solve
problems. In contrast, an emotional appeal tries to sell products based on satisfaction that
comes from purchasing and then either owning or giving the product as a gift.
Defining appeals as either logical (thinking) or emotional (feeling) is oversimplifying the

situation, however. All ads contain an element of both logic and emotion, and it is
unlikely that any successful ad appeals exclusively to one or the other.
Therefore, advertisers can employ a wide variety of specific appeals, most of which can
be structured as logical, emotional or a combination of the two. The most common types
of appeals are based on price or value, quality, star identification, ego, fear or anger, five
senses, sex, love, social acceptance and novelty.
2.4.1 Price or Value Appeals
Promising to give buyers more for their money is one of the most effective appeals one
can use, particularly in terms of audience recall. A value appeal can be accomplished in
several ways by lowering price and making people aware of the new price, keeping price
the same but offering more, or keeping the price and the product the same and trying to
convince people that the product is worth whatever price you are charging.

2.4.2 Quality Appeals
The flip side of a price appeal is an appeal to quality. It can work only if the product
possesses a right level of quality. However consumer and organizational audiences have
seen the word “quality” in ads so many times that may have grown skeptical of such
claims.
2.4.3 Star Appeals and Testimonials
The public fascination with celebrities, superstars and entertainers is the foundation of
celebrity endorsement ad. They are extremely popular and the presumed pull of the star
appeal is that people like to identify with their favorite stars and will therefore be
positively influenced by a star’s appearance in an ad. A related appeal is the testimonial,
in which real users of the product, celebrities or not, makes the sales pitch by showing the
product in use, discussing the benefits they got from using it, or comparing it to their
experiences with competitive products.
2.4.4 Ego Appeals
Most consumers are open to appeals to their ego, whether the appeal relates to physical
appearance, intellect, sense of humor, or any other real or imagined personal quality. The
ego appeal happens in private so it works without embarrassing the audience.
2.4.5 Fear or Anger Appeal
Extreme cases of emotional appeal are those based on fear or anger. Fear has been used
to sell a variety of products. However, appeals to fear have to be managed carefully.
Extreme appeals to fear can anger the audience or even cause them to block out the
message entirely. On the other hand reducing someone’s level of fear or anxiety, rather
than artificially increasing it, can be effective.

2.4.6 Sensory Appeals
Many ads aim for one or more of the five senses of taste, touch, vision, smell and
hearing. Advertisers often combine an appeal to one of the five senses with a supporting
appeal, such as a price.64
64

2.5 Ad Execution Styles
 Straight sell – straightforward presentation of information, often used with

rational appeal.
 Scientific/Technical – cite technical evidence, lab studies, or endorsements by
scientific bodies.
 Demonstration – illustrate key advantages by showing it in actual use.
 Comparison – used to execute competitive advantage over a competitor
 Testimonial – a person praises the product based on personal experience.
 Slice of Life – portrays a problem commonly faced in daily life with the product
solving the problem.
 Animation – includes the use of animated characters such as cartoons (e.g., Jolly
Green Giant).
 Personality Symbol – a central character is developed who delivers the message
(e.g., Mr. Whipple).
 Fantasy – popular for emotional appeals, the product becomes a central part of
situation.
 Dramatization – a short story with the product as the star.
 Humor – a funny portrayal of the product or service.
 Combination – use of more than one technique.65
65
Ad Execution, http://www.cod.edu/people/faculty/drafke.htm, [Accessed July 09, 2005]

2.6 F.C.B Grid
The FCB Grid was developed to categorize brands and products into high-involvement/
low-involvement and informational/ transformational quadrants.66
It was developed by Richard Vaughn. A Senior Vice President of Foote, Cone and
Belding Advertising. It helps direct both creative strategy and media strategy as it
clarifies how consumers approach the buying process for different products.
Fig 2.1: Foot Cone Belding Grid67
66
How Advertising Works, http://www.ciadvertising.org/studies/student/98_fall/theory/weirtz/how8.htm,
67
Foot Cone Belding Grid, http://www.public.iastate.edu/~geske/FCB.html, [Accessed July 10, 2005]

2.7 Strategic Brand Management
Strategic brand management is one way of achieving a sustainable competitive

advantage. And as the quote on oranges reveals, even a commodity can reap substantial
benefits from superlative brand management. Obviously, there’s an interplay between
decisions made at the brand level and strategy decisions made at the corporate level.
Brand managers face increasing risks as they attempt to deal with fundamental changes in
the marketing environment such as media fragmentation, the rise of private labels, the
increased pressure for short term results, and changing consumer preferences.68
Brand management is the application of marketing techniques to a specific product,

product line, or brand. It seeks to increase the product’s perceived value to the customer
and thereby increase brand franchise and brand equity. Marketers see a brand as an
implied promise that the level of quality people have come to expect from a brand will
continue with present and future purchases of the same product. This may increase sales
by making a comparison with competing products more favorable. It may also enable the
manufacturer to charge more for the product. The value of the brand is determined by the
amount of profit it generates for the manufacturer. This results from a combination of
increased sales and increased price.69
68
The Global Marketplace, http://polaris.umuc.edu/~tgrodsky/admn601/601lect6b.html,
69
Brand Management, http://en.wikipedia.org/wiki/Brand_management, [Accessed July 10, 2005]

2.8 Branding
Branding has been around for centuries as a means to distinguish the goods of one
producer from those of another. In fact, the word brand is derived from the Old Norse
word “brandr” which means to “to burn,” as brands were and still are the means by which
owners of their livestock mark their animals to identify them.
According to the American Marketing Association, a brand is a “name, term, sign,

symbol, or design, or a combination of them intended to identify the goods and services
of one seller or group of sellers and to differentiate them from those of competition.”
The key to branding according to the definition of American Marketing Association is to

choose a name, logo, symbol, package design, or other attribute that identifies a product
and distinguishes it from others.70
Brand is the symbolic embodiment of all the information connected with a product or
service. A brand typically includes a name, logo, and other visual elements such as
images or symbols. It also encompasses the set of expectations associated with a product
or service which typically arise in the minds of people. Such people include employees of
the brand owner, people involved with distribution, sale or supply of the product or
service, and ultimately consumers.71
70
Condensed Volume of Brand Management
71
Brand Identity, http://en.wikipedia.org/wiki/Brand_identity, [Accessed July 11, 2005]

A brand can convey up to six levels of meaning:
2.8.1 Attributes
A brand first brings to mind certain attributes. For Instance, a Mercedes suggests
expensive, well built, well engineered, high prestige.
2.8.2 Benefits
Customers buy benefits, not attributes. Attributes are translated into functional or
emotional benefits. If the product possess the attribute durability, as the consumer the
benefit is that the product would not be replaced frequently
2.8.3 Values
The brand communicates something about the values of the manufacturer For example a
Mercedes as a manufacture values safety, high performance and prestige.
2.8.4 Culture
The brand may also represent a certain culture. Levi’s are a favored brand abroad because
they represent the American culture.
2.8.5 Personality
Brands are said to be able to project a personality as well. For example, Nike projects a
personality of high performance, with an attitude.

2.8.6 User
The brand itself may suggest the type of consumer who would purchase the product.72
According to Philip Kotler, a product is anything that can be offered to a market for
attention, acquisition, use, or consumption that might satisfy a need or want. Thus, a
product may be a physical good, service, retail store, person, organization, or idea. Brand
on the other hand is a product, then, but one that adds other dimensions to differentiate it
in some way from other products designed to satisfy the same need.
Marketing guru Alvin Achenbaum believes that what distinguishes a brand from its
unbranded commodity counterpart and gives it equity is the sum total of consumers’
perceptions and feeling about the products attributes and how they perform, about the
brand name, and what it stands for, and about the company associated with the brand.73
2.8.7 Individual branding
It is the marketing strategy of giving each product in a product portfolio its own unique
brand name. This is contrasted with family branding in which the products in a product
line are given the same brand name. The advantage of individual branding is that each
product has an image and identity that is unique. This facilitates the positioning process.74
72
73
74
Individual Branding, http://en.wikipedia.org/wiki/Individual_branding, [Accessed July 13, 2005]

2.8.8 Family branding
It is a marketing strategy that involves selling several related products under one brand
name. It is contrasted with individual branding in which each product in a portfolio is
given a unique identity and brand name.
There are often economies of scope associated with family branding since several
products can efficiently be promoted with a single advertisement or campaign. Family
branding facilitates new product introductions by providing a ‘foot-in-the-door’ in
potential customers’ evoked set. When considering purchasing a new type of product,
potential customers will tend to evoke in their minds a product with a familiar brand
name.
Family branding imposes on the brand owner a greater burden to maintain consistent
quality and brand equity. If the quality of one product in the brand family is
compromised, it could reduce sales of all the others.75
75
Family Branding, http://en.wikipedia.org/wiki/Family_branding, [Accessed July 13, 2005]

2.9 Brand Equity
According to the Marketing Science Institute, Brand Equity is the set of associations and
behaviors on part of the brand’s customers, channel members, and parent corporation that
permits the brand to earn greater volume or greater margins than it could without the
brand name and that gives the brand a strong, sustainable, and differentiated advantage
over competitors.
In the opinion of Raj Srivastava of University of Texas and Allan Shoker of University of
Minnesota, brand equity subsumes brand strength and brand value. Brand strength is the
set of associations and behaviors on the part of a brands customers, channel members,
and parent corporation that permits the brand to enjoy sustainable and differentiated
competitive advantages. Brand value is the financial outcome of management’s ability to
leverage brand strength via tactical and strategic acquisitions in providing superior
current and future profits and lowered risks.76
Brand equity in fact is a set of assets (and liabilities) linked to a brand’s name and symbol
that adds to (or subtracts from) the value provided by a product or service to a firm and/or
that firm’s customers. The major asset categories are:
 Brand name awareness

 Brand loyalty
 Perceived quality
 Brand associations
Brand equity is a set of assets. Thus, the management of brand equity involves
investment to create and enhance these assets.
76

Each brand equity asset creates value in a variety of very different ways. In order to
manage brand equity effectively and to make informed decisions about brand-building
activities, it is important to be sensitive to the ways in which strong brands create value.
Brand equity creates value for the customer as well as the firm. The word customer refers
to both end users and those at the infrastructure level. For assets or liabilities to underlie
brand equity, they must be linked to the name and symbol of the brand. If the brand’s
name or symbols should change, some or all of the assets or liabilities could be affected
and even lost, although some might be shifted to the new name and symbol.77
Brand Equity can either be positive or negative. Positive brand equity is created by a
history of effective promotion and consistently meeting or exceeding customer
expectations. Negative brand equity is usually the result of bad management.
Positive brand equity can be a significant barrier to entry for prospective competitors.
The greater a company’s brand equity, the greater the probability that the company will
use a family branding strategy rather than an individual branding strategy. This is because
family branding allows them to leverage off the equity accumulated in the core brand.
This makes new product introductions less risky and less expensive.78
77
Strong Brands, http://www.loc.gov/catdir/samples/simon031/95009238.html, [Accessed July 15, 2005]
78
Brand Equity, http://en.wikipedia.org/wiki/Brand_equity, [Accessed July 15, 2005]

2.10 Brand Awareness
Brand awareness refers to the strength of a brand’s presence in the consumer’s mind. If
consumers’ minds were full of mental billboards – each one depicting a single brand –
then a brand’s awareness would be reflected in the size of its billboard. Awareness is
measured according to the different ways in which consumers remember a brand, ranging
from recognition (Have you been exposed to this brand before?) to recall (What brands of
this product class can you recall?) to “top of mind” (the first brand recalled) to dominant
(the only brand recalled).79
Brand knowledge is composed of brand awareness, which is itself a function of

recognition and recall, and brand image which reflects the associations consumers hold
for the brand in memory.
Brand awareness is important because,
 It is a necessary condition for inclusion in the set of brands being considered for
purchase
 In low involvement decision settings it can be a sufficient condition for choice,
 It influences that nature and strength of associations that comprise the brand
image.
Awareness can be heightened by increasing consumer exposure to the brand and by

linking the brand to product category, consumption and usage situations.80
79
80

Research has proved that brand awareness is related to the strength of the resulting brand
node or trace in memory, as reflected by consumers’ ability to identify the brand under
different conditions.
Brand Awareness can be characterized according to depth and breadth. The depth of
brand awareness concerns the likelihood that a brand element will come to mind and ease
with which it does so. For example, a brand that can be easily recalled has a deeper level
of brand awareness than one that only can be recognized. The breadth of brand awareness
concerns the range of purchase and usage situations where the brand element comes to
mind. The breadth of brand awareness depends to a large extent on the organization of
brand and product knowledge in memory.
Creating brand awareness involves giving the product an identity by linking brand
elements to a product category and associated purchase and consumption or usage
situations.81
81

2.11 Brand Recognition
Brand recognition reflects familiarity gained from past exposure. Recognition does not
necessarily involve remembering where the brand was encountered before, why it differs
from other brands, or even what the brand’s product class is. It is simply remembering
that there was a past exposure to the brand.
Research in psychology has shown that recognition alone can result in more positive
feelings toward nearly anything, whether it be music, people, words, or brands. Studies
have demonstrated that, even with nonsense words consumers instinctively prefer an item
they have previously seen to one that is new to them. Thus, when a brand choice is made
– even when the decision involves products like computers or advertising agencies – the
familiar brand will have an edge.
Economists tell us that consumer affinity for the familiar brand is not just an instinctive
response. When consumers see a brand and remember that they have seen it before
(perhaps even several times), they realize that the company is spending money to support
the brand. Since it is generally believed that companies will not spend money on bad
products, consumers take their recognition as a “signal” that the brand is good.
The familiarity factor can be especially important to the brand that has a familiarity
handicap with respect to more visible and established competitors. In such a case,
awareness-building may be necessary to reduce this liability.82
82
2.12 Brand Recall
A brand is said to have recall if it comes to consumers’ minds when its product class is
mentioned. It in fact relates to consumers’ ability to retrieve the brand from memory
when given the product category, the needs fulfilled by the category, or a purchase or
usage situation as a cue.
In other words, brand recall requires that consumers correctly generate the brand from
memory when given a relevant probe. Research has shown that as is the case with most
information in memory, it is generally easier to recognize a brand than it is to recall from
memory. The relative importance of brand recall and recognition will depend on the
extent to which consumers make product related decisions with the brand present or not.
Different measures of brand recall are possible depending on the type of cues provided to
consumers. Unaided recall on the basis of “all brands” provided a s a cue is likely to
identify only the very strongest brands. Aided recall uses various types of cues to help
consumer recall.83
83
2.13 The Graveyard Model
The relative power of Brand Recall versus Brand Recognition depicts the “Graveyard
Model” developed by Young and Rubicam Europe under the guidance of Jim Williams.
In this model, brands in a product class are plotted on recognition versus recall graph. For
example, the recall and recognition of each of twenty automobile brands could be
measured, and these measurements could be used to position each brand on the graph.
One finding consistent across dozens of product classes is that brands tend to follow the
curved line. There are two exceptions, each of which reveals the importance of Brand
Recall.
One exception is healthy niche brands, which fall below the line because they are not
known to a substantial group of consumers, and therefore have relatively low overall
recognition. But because they do have high recall among their respective loyal customer
groups, their low recognition is not necessarily an indication of poor performance. And
healthy niche players sometimes have the potential to expand recognition and thus the
scope of their customer base.
The second exception is the graveyard, an area in the upper-left-hand corner populated by
brands with high recognition but low recall. Being in the graveyard can be deadly:
Customers know about the brand, but it will not come to mind when considering a
purchase. Breaking out of the graveyard can actually be hindered by high recognition,
because there is little reason for people to listen to a story (however new) about a familiar
brand.
The dynamics of brands located in the upper-middle or upper-right part of the figure can
be important predictors of future brand health. Movement toward the graveyard is
associated with sliding sales and market share. If, however, the brand is moving away
from the graveyard, sales and market share can be expected to increase.84
84
2.14 Brand Equity Model
As an asset, a brand is a symbol of the expected future profits of a company; the problem
is how to determine the earning power of a brand. Interbrand, a UK-based branding
consultancy, has led the way in defining an appropriate method for brand strength
assessment and publishes a yearly chart of the top performers. Its set of criteria, chosen
subjectively, includes the business prospects of the brand and the brand’s market
environment, as well as consumer perceptions. Interbrand’s seven core criteria consist of
the following.85
2.14.1 Leadership
A brand that leads its market sector is more stable and powerful than other market
entrants. This criterion reflects economies of scale for the first-place brand in
communication and distribution, as well as the problems also-rans have in maintaining
distribution and avoiding price erosion.
2.14.2 Stability
Long-lived brands with identities that have become part of the fabric of the market—and
even of the culture—are particularly powerful and valuable.
2.14.3 Market
Brands are more valuable when they are in markets with growing or stable sales levels
and a price structure in which successful firms can be profitable. Some markets, such as
consumer electronics, are so rife with debilitating price competition that the prospects of
any brand being profitable are dim.
85
Interbrand’s Brand Strength Model, http://www.themanagementor.com/kuniverse/kmailers_universe/
mktg_kmailers/TheStrength.htm, [Accessed July 17, 2005]
2.14.4 International
Brands that are international are more valuable than national or regional brands, in part
because of economies of scale. More generally, the broader the scope of a brand, the
more valuable it is.
2.14.5 Trend
The overall long-term trend of the brand in terms of sales can be expected to reflect
future prospects. A healthy, growing brand indicates that it remains contemporary and
relevant to consumers.
2.14.6 Support
Brands that have received consistent investment and focused support are regarded as
stronger than those that haven’t; however, the quality of the support should be considered
along with the level of support.
2.14.7 Protection
The strength and breadth of a brand’s legal trademark protection is critical to the brand’s
strength.
As evinced by these criteria, Interbrand takes a business-oriented rather than consumer-

oriented view of brand. This approach is useful, part, because it’s a step closer to putting
a financial value on the brand—in fact, Interbrand uses its brand ratings to determine a
multiplier to apply to earnings. The subjectivity of both the criteria and assessment of the
brands, however, makes the dimensions difficult to defend and affects the reliability of
the resulting measures.86
86
2.15 Brand Image
A brand’s image reflects all the associations consumers have for a brand in memory. The
strength, favorability, uniqueness of the associations affect the response consumers will
have to the brand and to its supporting marketing activities. Association can be about
attributes and benefits of the brand, or attitudes toward it. Attributes, which are
descriptive features of a brand, can relate to the actual physical components and
ingredients of a brand (product-related) or to such things as the price, imagery, feelings
and experiences, and personality associated with the brand (non-product related).
Benefits derived from a brand may relate to the functional advantages it provides, the
symbolic information it conveys, or the experiential feelings it produces. Attitudes, which
represent the highest level of brand associations, reflect consumer’s overall evaluations of
a brand and, consequently, often determine their behavior toward it.
The strength of associations depends upon the relevance of information consumers’

encounter about the brand and the consistency with which the information is presented
over time. Favorability is a function of the desirability or value of the associations in
attitude formation and decision making and of their deliverability or performance
probability.87
87
2.16 Brand Elements
Brand elements are used to identify and differentiate a brand. Names, logos, symbols,
characters, slogans, jingles, and packages all constitute brand elements. Brand elements
have a direct impact on the degree of positive brand equity that can be established.88
In general, there are five choice criteria in choosing brand elements:
2.16.1 Memorability
A necessary condition for building brand equity is achieving a high level of brand
awareness. Towards that goal, brand elements can be chosen that are inherently
memorable and therefore facilitate recall and/or recognition in purchase and/or
consumption settings. In other words, the intrinsic nature of certain names, symbols,
logos, and the like – their semantic content, visual look, and so on – may make them
more memorable and therefore contribute to brand equity.
2.16.2 Meaningfulness
Besides choosing brand elements to build brand awareness, brand elements can also be
chosen whose inherent meaning enhances the formation of brand associations. Brand
elements s may take on all kinds of meaning, varying in descriptive, as well as persuasive
content. The associations suggested by a brand element may not always be related to the
product: Brand elements can be chosen that are rich in visual and verbal imagery and
inherently fun and interesting.89
88
89
2.16.3 Transferability
The third general criterion concerns the transferability of the brand element, both in a
product category and geographic sense. To a large extent this depends on the cultural;
content and linguistic qualities of the brand element. For example one of the main
advantages of non-meaningful names is that they translate well in to other languages
since they have no inherent meaning.
2.16.4 Adaptability
The fourth consideration concerns the adaptability of brand over time. Because of
changes in consumer values and opinions , or just because of a need to remain up-to-date
or contemporary, brand elements often must be adapted over time. The more adaptable
and flexible the brand element, the easier it is to update it.
2.16.5 Protectability
The fifth and general consideration concerns the extent to which the brand element is
protectable – both in a legal and competitive sense. In terms of legal considerations, it is
important to choose brand elements that can be legally protectable on international basis,
formally register them with the appropriate legal bodies, and vigorously defend
trademarks from unauthorized competitive infringement.90
90
2.17 Corporate Branding
Corporate branding refers to the practice of using a company’s name as a product brand
name. It is an attempt to leverage corporate brand equity to create product brand
recognition. It is a type of family branding. Disney, for example, includes the word
“Disney” in the name of many of its products; among many other examples are IBM,
Pepsi, and Coca-Cola.
Corporate branding can result in significant economies of scope since one advertising
campaign can be used for several products. It also facilitates new product acceptance
because potential buyers are already familiar with the name. A corporate branding
strategy is generally only useful when the company is already well known with a very
positive image in the target market.
One potential disadvantage of corporate branding is that the corporate name can become
synonymous with a product category. Examples of this phenomenon are Kleenex and
Tampax. Even purchasers of Charmin, a competitor to Kleenex, sometimes refer to the
product as Kleenex. This is a drawback to corporate branding because the products may
not be treated individually, which reduces the focus on the products’ unique
characteristics.91
91
Corporate Branding, http://www.bambooweb.com/articles/c/o/Corporate_branding.html,
2.18 Co Branding
Co-branding is an increasingly important tool for generating value. It can be an asset in

nearly all aspects of marketing, from creating initial awareness to building loyalty. There
are four main approaches to co-branding that companies should consider.92
2.18.1 Promotional/sponsorship co-branding
Co-branding began with endorsements. This approach can be a good beginning point for
organizations; the relationship is simple (fees and marketing activities), but it can result
in significant brand enhancement and sometimes even an unplanned opportunity.
2.18.2 Ingredient co-branding
Partners in ingredient co-branding are usually the company’s current suppliers or largest
buyers. Easy access to offerings and a well-established relationship translates into a lower
level of investment required than in other forms of co-branding. An ingredient brand’s
success relies on being distinct, either through patent protection or by being a dominant
brand.
2.18.3 Value chain co-branding
Other players in the value chain can create new experiences for the consumer, which, in
turn, can create a level of customer value and differentiation not possible with
promotional or ingredient co-branding.
92
When two Brands are better than one, http://www.accenture.com/xd/xd.aspit=enweb&xd=ideas
\outlook\1.2003\outlook_summary_crm.xml, [Accessed July 19, 2005]
There are three types of value-chain co-branding:
2.18.4 Product-service co-branding
This approach allows partners to share industry-specific competencies while at the same
time opening previously unavailable customer bases.
2.18.5 Supplier-retailer co-branding
These relationships can range from the natural to the less obvious—even to traditional
rivals, which can help both partners become better positioned against well-entrenched
competitors.
2.18.6 Alliance co-branding
Globalization and better, broader offerings through cooperation aside, forming alliances
with similar companies may be crucial for rapidly consolidating industries.
2.18.7 Innovation-based co-branding
In this approach, partners create entirely new offerings to provide substantial increases in
customer and corporate value. It offers the potential to grow existing markets and create
entirely new ones. Because both partners are seeking a high level of value creation, the
rewards and risks are often an order of magnitude larger than those created by other co-
branding approaches.93
93
Although upfront investments are often small, the associated risks of co-branding can be
much greater. A celebrity endorser could behave poorly while promoting the brand;
dilution could make the brand lose its meaning to consumers; devaluation is always a
risk, and it can happen overnight. Partner companies must work well together along with
their brands to avoid an operational threat. And companies must remember that no
partner brand is omnipotent, especially when taking on entrenched competitors. The best
protection against these risks is choosing a flexible partner.
Many co-branding benefits are difficult to quantify, such as the increase in brand equity
created in the consumer’s mind when one brand is associated with another. Other benefits
are seen immediately in top- and bottom-line improvements.94
94
2.19 Brand Identity Planning Model
David A. Aaker, a marketing professor at the University of California at Berkeley and

author of the popular Building Strong Brands (1996), has developed a comprehensive
brand identity planning model.
At the heart of this model is a four-fold perspective on the concept of a brand. To help
ensure that a firm’s brand identity has texture and depth, Aaker advises brand strategists
to consider the brand as a product, an organization, a person, and a symbol. Each
perspective is distinct. The purpose of this system is to help brand strategists consider
different brand elements and patterns that can help clarify, enrich and differentiate an
identity. A more detailed identity will also help guide implementation decisions.95
95
Aaker’s Brand Planning Identity Model, http://www.zanthus.com/databank/strategy/
marketing_strategy.asp, [Accessed July 18, 2005]
Fig 2.2: Brand Identity Planning Model96
96
Aaker cautions that not every brand identity needs to employ all or even several of these
perspectives. For some brands, only one will be viable and appropriate. Each
organization should, however, consider all of the perspectives and use those deemed
helpful in articulating what the brand should stand for in the customer’s mind.
The following briefly characterizes each of the four perspectives Aaker recommends
firms take into account in formulating their brand strategy.97
2.19.1 The brand-as-product
A core element of a brand’s identity is usually its product thrust, which will affect the
type of associations that are desirable and feasible. Attributes directly related to the
purchase or use of a product can provide functional benefits and sometimes emotional
benefits for customers. A product-related attribute can create a value proposition by
offering something extra like features or services, or by offering something better. Aaker
argues, however, that the goal of linking a brand with a product class is not to gain recall
of a product class when a brand is mentioned. It’s more important, he posits, for
customers to remember the brand when there’s a need relevant to the product class.
2.19.2 The brand-as-organization
This perspective focuses on attributes of the organization rather than on those of the
product or service. Such organizational attributes as innovation, a drive for quality and
concern for the environment are created by the people, culture, values and programs of
the company. (Some brand aspects can be described as product attributes in some
contexts and organizational attributes in others.) Aaker notes that organizational
attributes are more enduring and resistant to competitive claims than product attributes.
97
2.19.3 The brand-as-person
Like a person, a brand can be perceived as having a unique personality. The brand-as-
person perspective suggests a brand identity that is richer and more interesting than one
based on product attributes. Aaker cites three ways a brand personality can create a
stronger brand:
 create a self-expressive benefit that becomes a vehicle for customers to express

their own personalities
 form the basis of a relationship between customers and the brand (in the same
way human personalities affect relationships between people)
 help communicate a product attribute and thus, contribute to a functional benefit.
2.19.4 The brand-as-symbol
A strong symbol can provide cohesion and structure to an identity and make it much
easier to gain recognition and recall. Its presence can be a key ingredient of brand
development and its absence can be a substantial handicap. Elevating symbols to the
status of being part of the identity reflects their potential power.98
According to aaker there are three types of symbols:
 visual imagery
 metaphors
 brand heritage
98
As suggested by Aaker’s elaborate brand taxonomy, brand identity consists of a core

identity and an extended identity. The former represents the timeless essence of the
brand.
It’s central to both the meaning and success of the brand, and contains the associations
that are most likely to remain constant as the brand encompasses new products and
travels to new markets. The extended identity, on the other hand, includes elements that
provide texture and completeness. It fills in the picture, adding details that help portray
what the brand stands for. A reasonable hypothesis, Aaker states, is that within a product
class, a larger extended identity means a stronger brand—one that is more memorable,
interesting and connected to customers’ lives.99
99
2.20 Market Segmentation
Market segmentation is the process of grouping a market into smaller subgroups. This is
not something that is arbitrarily imposed on society: it is derived from the recognition
that the total market is often made up of submarkets (called segments).
These segments are homogeneous within (i.e. people in the segment are similar to each
other in their attitudes about certain variables). Because of this intra-group similarity,
they are likely to respond somewhat similarly to a given marketing strategy. That is, they
are likely to have similar feelings about a marketing mix comprised of a given product,
sold at a given price, distributed in a certain way, and promoted in a certain way.100
Market segmentation consists of dividing a heterogeneous market into a number of

smaller, more homogeneous submarkets; assuming:
 Not all buyers are alike
 Subgroups of people with similar behavior, values, and/or backgrounds may be

identified.
 The subgroups will be smaller and more homogeneous than the market as a
whole.
 It should be easier to satisfy smaller groups of similar customers than a large

group of dissimilar customers.
100
Market Segmentation, http://en.wikipedia.org/wiki/Market_segment, [Accessed July 21, 2005]
Market segmentation strategy is affected by the product attributes, competition,

organization’s resources, and the customer characteristics. The criteria for segmenting a
market include the following: measurability, accessibility, substantialness, durability, and
differential responsiveness.
2.20.1 Measurability
It is a reference to the degree to which the size and purchasing power of segments can be
assessed.
2.20.2 Accessibility
It is a reference to the degree to which a firm can reach intended target segments
efficiently. Substantialness is a reference to the degree to which identified target
segments are large enough or have sufficient sales and profit potential to warrant unique
or separate marketing programs.
2.20.3 Durability
It is a reference to the stability of segments (whether distinctions between segments will

diminish or disappear as the product category or the markets themselves mature).
Differential responsiveness is a reference to the degree to which market segments exhibit
varying responses to different marketing mix combinations.
Segment accessibility refers to the extent that market segments can be reached, while
differential responsiveness refers to the extent these segments, once reached, respond
differently.101
101
Segmentation, http://www.drkayfmu.com/topics/segmentation.htm, [Accessed July 21, 2005]
2.20.4 Strategies for Target Marketing
Segmenting and target marketing has been compared to using a rifle to aim at a specific
target rather than a shotgun that has a far wider dispersion of effort.
2.20.5 Undifferentiated Marketing
When everyone is a Customer. Sometimes the “shotgun” approach is appropriate if the

segmenting approach is not worth the effort. Marketers of hacksaw blades or garbage
cans may face such a situation. An undifferentiated strategy is unique among the various
strategies in that there is no real segmentation of the market. Instead, one promotional
mix for one product is used for the entire market.
An undifferentiated strategy is appropriate under the following conditions:
 When consumers are not very sensitive to product differences.
 When or if the firm is attempting to develop primary demand.
2.20.6 Concentrated Marketing
A concentrated strategy attempts to capture a large share one or of a few profitable

segments.
If a market is seen to contain a number of segments and the marketer chooses to
concentrate on one of them, it is concentrated marketing. This strategy is appropriate
when a company believes it has a competitive advantage.102
A concentrated strategy is appropriate under the following conditions:

102
 If the firm is selling to a market with several different segments.
 If the product is in the later stages of the product life cycle.
 If it’s major competitors are following a differentiated strategy.
2.20.7 Differentiated Marketing
When organizations target efforts toward more than one market segment by preparing
different marketing mixes for each segment, it is called differentiated marketing or
multiple market segmentation.
A differentiated strategy is used when a firm markets multiple product variations, each
with its own promotional theme.
A differentiated strategy is appropriate under the following conditions:
 If the firm is selling to a market with several different segments.
 If the product is in the later stages of the product life cycle.
 If its major competitors are following an undifferentiated strategy.
2.20.8 Custom Marketing
When a market is so diverse that no meaningful segments can be identified, the unique
needs of each customer must be met with a custom product or service. Architects,
physicians, tailors, lawyers, and makers of specialized equipment are likely practitioners
of custom marketing.103
Marketing is a creative activity and many of its successes rest on creative identification of
market segments with unfulfilled needs. Typical bases for segmentation of consumer
markets include demographics, socioeconomic, lifestyle, geographic, behavioral,
consumption, and pre-dispositional characteristics.
2.20.9 Demographic Segmentation
Demographic information—age, sex, race, family size—has obvious use, for example as
families with children buy more toys than families without children. Infants, toddlers,
young children, teenagers, adults, and senior citizens are typical age-based segments.
2.20.10 Socioeconomic Segmentation
As a special category of demographic variables, socio-economics emphasizes an

individual’s social position or economic standing in society.
2.20.11 Lifestyle and Psychographic Segmentation
A lifestyle is a pattern in an individual’s pursuit of life’s goals, indicating how a person

spends his or her time and money. Quantitative measures of lifestyles are known as
psychographics—magazines, such as New England Living or Travel and Leisure, are
based on lifestyles (or wished-for lifestyles).
103
2.20.12 Geographic Segmentation
Simple geography can be an important basis for market segmentation—sun tan lotion,
snowmobiles, grits, or lobsters.
2.20.13 Behavior Pattern Segmentation
Consumers demonstrate behavior patterns worthy of the marketer’s attention. Some buy
merchandise online while others will buy only in retail stores.
2.20.14Consumption Pattern Segmentation
Basically, consumption patterns are the focus of marketing. Marketers want people who
consume their products to continue to do so and those who do not consume the products
are the focus of efforts to get them to change their consumption patterns. Cross-selling
refers to marketing activities designed to sell new, “extra” services to customers who
already buy an existing service.
2.20.15 Consumer Predisposition Segmentation
Consumers vary widely with respect to knowledge, beliefs, reasoning, attitudes, etc., and
these variables affect their purchasing behavior.104
104
2.21 Brand Positioning
The object of positioning a brand is to cause people to feel that there is no completely
satisfactory substitute for the brand.
2.21.1 Benefit positioning
It can be used if the brand perceivably differs in its ability to deliver a specific benefit.
The power of a benefit position will depend on how many people care about the benefit
and how different the brand is in delivering it.
2.21.2 Target positioning
It requires that all a brand’s marketing be focused on a specific segment. The target may
be defined demographically, economically, geographically, ethnically or attitudinally. To
work, a target position should cause the people in the target to perceive the brand as
superior in meeting their particular needs.
2.21.3 Price positioning
It puts the brand either at the top or bottom of the category. By being the most or least
expensive brand in the category the brand takes on a specific identity. Obviously the size
of the customer franchise, brand image and profit margins will be affected by this
strategy. It is difficult to defend a price position.105
105
Brand positioning, http://www.brandoctors.com/f2.html, [Accessed July 21, 2005]
2.21.4 Positioning by distribution
It is an often overlooked, but effective strategy. Placing a brand in a channel that is not
used by competitors can effectively differentiate it and establish a unique identity. Being
the first product of its kind sold in a channel of distribution can cause people to perceive
it differently.
The importance of a strong brand position is not to be underestimated. It can last for
years, even, as in the case of Ivory, for over a century. It may sound like heresy but I
believe that neither innovation or quality are, by themselves, sufficient to guarantee that a
brand will achieve all that it is capable of in the market place. What makes a position
right is difficult to define.
There are seven qualities that help to make a successful position.106
2.21.5 Relevance
Positions that do not focus on benefits that are important to people or reflect the character
of the product will fail. Often in their search for differentiation, marketers seize upon
some attribute in their product which is different but in reality is of little concern to
customers. This is a waste of time and money. The lonely Maytag repairman, who
symbolizes reliability, is an example of a powerful position based on the quality built into
the appliances.
106
Brand Positioning Benefits, http://www.onpoint-marketing.com/brand-positioning.htm,
2.21.6 Clarity
A position should be easy to communicate and quick to comprehend. Difficulty in either

suggest that a position is to fuzzy to be of value to the brand. “We try harder because we
are No. 2” established Avis as a major league competitor quickly and simply.
2.21.7 Distinctiveness
People have few needs that are unfulfilled, and they have many choices to fill the needs
they have. If a brand’s position lacks distinctiveness it will be forced to compete on the
bases of price or promotion; expensive strategies that will not build brand equity in the
long term.
2.21.8 Coherence
Speak with one voice through all the elements of the marketing mix if you wish to create
a strong position. If, for example, a brand that is positioned as premium quality and price
appears in an end-aisle “sale” display, its quality image will suffer.
2.21.9 Commitment
Often people will get nervous when a strong position threatens to ignore or even alienate
some segment of the population as a price of clearly communicating to the desired target.
Once a position is adopted, it takes commitment to see it through, in the face of criticism
and pot shots.
2.21.10 Patience
Crest has dominated its market for over thirty years. When it was first introduced
positioned as a cavity fighter its share never rose above 13% for three years. The ADA
approval was the key to launching the brand to over 40% of the market. Had P&G lost
patience after two or three years, someone else would be enjoying the profits of this
powerful brand position.
2.21.11 Courage
It goes without saying that adopting a strong brand position requires bravery. It is much
easier to defend an appeal to everyone with a rather generic sales pitch. You must believe
that the position makes strategic sense for the brand and then stick to your guns.
Adopting a strong position is not a passive act; rather it is a deliberate attempt to

influence events. It requires ignoring certain business targets in favor of others, and if
successful, will yield growth in sales and profits and a consumer franchise who believe
that your brand has no adequate substitute, even if it costs more.
To achieve the benefits of brand positioning, it is necessary to research in-depth the

market position (or lack thereof) of the brand. Brand maps and forms are created to
profile the brand positioning, comparing the results with competitive brands.
In realizing the benefits of brand positioning, it is important to understand that not all
brands are competitors. A consumer may be presented with six brands of one product and
only consider three out of the six as a purchasing choice. The consumer may have
encountered a negative experience with a specific brand and may never consider
purchasing it again, or there may be a brand that simply does not stand out to the
consumer and it is passed up.
The Brand Positioning component involves identifying perceptions that a brand should
own in the minds of its target market.
The process recommended for developing a compelling brand positioning involves

establishing consensus on key brand attributes with internal client stakeholders
incorporating a variety of sensory elements to identify critical brand attributes.107
The positioning strategy a marketer adopts for a brand will influence the knowledge
structures consumers develop. Positioning involves establishing a frame of reference for
the brand, which depends upon the target market and the competitive set, and defining
points-of difference and points-of parity associations.108
107
Brand Positioning, http://www.sonorusbrand.com/process/brandposition.html, [Accessed July 21, 2005]
108
2.22 Perceptual Mapping
Perceptual mapping is a graphics technique used by marketers that attempts to visually

display the perceptions of customers or potential customers. Typically the position of a
product, product line, brand, or company is displayed relative to their competition.
Perceptual maps can have any number of dimensions but the most common is two
dimensions. Any more is a challenge to draw and confusing to interpret.
When detailed marketing research studies are done methodological problems can arise,
but at least the information is coming directly from the consumer. There is an assortment
of statistical procedures that can be used to convert the raw data collected in a survey into
a perceptual map. Preference regression will produce ideal vectors. Multi dimensional
scaling will produce either ideal points or competitor positions. Factor analysis,
discriminate analysis, cluster analysis, and logic analysis can also be used. Some
techniques are constructed from perceived differences between products; others are
constructed from perceived similarities. Still others are constructed from cross price
elasticity of demand data from electronic scanners.109
109
Perceptual Mapping, http://www.bambooweb.com/articles/p/e/Perceptual_mapping.html,
2.23 Brand Personality
Some people may never aspire to have the personality of a competent leader but would
like to have a relationship with one, especially if they need a banker or a lawyer. A
trustworthy, dependable, conservative personality might be boring but might nonetheless
reflect characteristics valued in a financial advisor, a lawn service, or even a car–consider
the Volvo brand personality. The concept of a relationship between a brand and a person
(analogous to that between two people) provides a different perspective on how brand
personality might work.
To see how the relationship basis model works, consider the personality types of people
with whom you have relationships and the nature of those relationships. Some of the
types might be as follows.110
2.23.1 Down-to-earth, family oriented, genuine, old-fashioned (Sincerity)
This might describe brands like Hallmark, Kodak, and even Coke. The relationship might
be similar to one that exists with a well-liked and respected member of the family.
2.23.2 Spirited, young, up-to-date, outgoing (Excitement)
In the soft drink category, Pepsi fits this mold more than Coke. Especially on a weekend
evening, it might be enjoyable to have a friend who has these personality characteristics.
110
Brand Personality – The Relationship Basis Model, http://groups.haas.berkeley.edu/marketing/
PAPERS/AAKER/BOOKS/BUILDING/brand_personality.html, [Accessed July 21, 2005]
2.23.3 Accomplished, influential, competent (Competence)
Perhaps Hewlett-Packard and the Wall Street Journal might fit this profile. Think of a
relationship with a person whom you respect for their accomplishments, such as a
teacher, minister or business leader; perhaps that is what a relationship between a
business computer and its customer should be like.
2.23.4 Pretentious, wealthy, condescending (Sophistication)
For some, this would be BMW, Mercedes, or Lexus (with gold trim) as opposed to the
Mazda Miata or the VW Golf. The relationship could be similar to one with a powerful
boss or a rich relative.
2.23.5 Athletic and outdoorsy (Ruggedness)
Nike (versus LA Gear), Marlboro (versus Virginia Slims), and Wells Fargo (versus Bank
of America) are examples. When planning an outing, a friend with outdoorsy interests
would be welcome.
Two elements thus affect an individual’s relationship with a brand. First, there is the
relationship between the brand-as-person and the customer, which is analogous to the
relationship between two people. Second, there is the brand personality–that is, the type
of person the brand represents.
The brand personality provides depth, feelings and liking to the relationship. Of course, a
brand-customer relationship can also be based on a functional benefit, just as two people
can have a strictly business relationship.111
111
Contexts in which it is often worthwhile to consider what a brand might say to a customer
include those listed below.112
2.23.6 Upscale brands with a snobbish spin
Nearly any prestige or badge brand risks appearing snobbish to some in the target market.
This risk is often much greater for those on the fringe of or just beyond the target market.
In part, this perceived attitude restricted the market for Grey Poupon, advertised as the
mustard of limousine riders. The brand has since tried to soften this message in order to
expand its market and the usage rate.
2.23.7 Performance brands talking down to customers
Talking down to customers is a common danger for performance brands. Consider the
VW Fahrvergnugen campaign. The use of the German word provided some nice
associations (especially if one knew German) but risked implying that the brand looked
down on those who did not “get” the clever symbol and campaign. A discarded campaign
for Martel–“I assume you drink Martel”–ran the risk of talking down to all customers
who were drinking a competitor’s brand.
2.23.8 Power brands flexing their muscles
A brand that has power over the marketplace, like Microsoft and Intel in the 1990s or
IBM in the past, has a real advantage as a result of being the industry standard. The risk is
that by promoting this advantage, the brand may be perceived as being arrogant and
willing to smother small, defenseless competitors.
2.23.9 Intimidated brands showing their inferiority
112
A brand might risk appearing inferior if it tries too hard to be accepted into a more
prestigious competitive grouping. Thus Sears could attempt to associate itself with
trendier retailers and simply come off as being pathetic. The humorous thrust of the Sears
campaign from Young & Rubicam, in which a woman goes there for a Die Hard battery
but ends up buying great clothes, helps avoid this pitfall.113
113
2.24 Young & Rubicam’s Brand Asset Valuator (BAV)
The premier advertising agency Young & Rubicam (Y&R) has developed a multiple
criteria method to assess brand equity growth. The company used its Brand Asset
Valuator to assess the brand equity of 450 global brands and more than 8,000 local
brands in 24 countries. Each brand was examined using a 32-item survey that included, in
addition to a set of brand personality scales, four distinct measures.114
Fig 2.3: Young & Rubicam’s BAV114
2.24.1 Differentiation
How distinct is your brand? Brand health is built and maintained by offering a set of
differentiating promises to consumers and delivering those promises to leverage value.
Rolls-Royce and Disney stand out from other cars and theme parks.
114
How Strong is your Brand – Brand Asset Valuator, http://www.themanagementor.com/kuniverse/
kmailers_universe/mktg_kmailers/HowStrong.htm, [Accessed July 21, 2005]
2.24.2 Relevance
Relevance gauges the personal appropriateness of a brand to consumers and is strongly

tied to household penetration (the percentage of households that purchase the brand).
Band-Aid, Maggi, Reynolds, Kissan Ketchup are all strong examples of relevance to the
entire household.
2.24.3 Esteem
The consumer’s response to a marketer’s brand-building activity is driven by his

perception of two factors: quality and popularity, both of which vary by country and
culture. Brands such as Kodak, Maruti, Pepsi, Amul and Raymonds are esteemed in the
consumer’s mind, based on popularity more than quality.
2.24.4 Knowledge
The awareness levels about the brand and what it stands for shows the intimacy that
consumers share with the brand. True knowledge of the brand comes through brand-
building.
According to this approach to brand equity, brand differentiation is the core of a

successful brand proposition with a distinctive position in the marketplace that will
promote long-term growth. Y&R defines it as the power of a brand to express its
uniqueness and reach top-of-mind status with target consumers.115
Once consumers are aware of the brand, it needs to be relevant to their needs, satisfying
and exceeding their expectations. The way that the brand manager is able to express that
relevancy in a language consumers appreciate will determine its success.
115
Once consumers understand what the brand can do for them, they need to aspire to own
it, or have esteem for it. Finally, when the brand has communicated its unique, relevant
and inspirational message, it will be able to achieve familiarity through repurchase and
re-use.
These four measures form the basis of two equations:
 Differentiation x Relevance = Brand Strength
 Esteem x Familiarity = Brand Stature
The equations represent an attempt to overcome issues with other methods that assess
brands solely in terms of present earning power. They suggest that scores relating to
brand differentiation and relevance indicate the potential for growth, while those relating
to brand esteem and familiarity indicate its present stature.
The results, however, are dependent on subjective analyses of the four criteria in relation
to the market, the consumer and the company; although there are market research
techniques that can better ensure the necessary analyses accurate reflect the competitive
milieu.116
116
2.25 Power Grid: Brand Strength vs. Brand Stature
2.25.1 Brand Strength
Brands must possess both Differentiation and Relevance to be strong (Disney, Britannia,
Hallmark).117
2.25.2 Brand Stature
This strategic indicator is a combination of Esteem and Knowledge and reflects current
brand performance (BPL, Pepsi). Esteem increases before Knowledge for chocolates, soft
drinks and other impulse-purchase products.
Fig 2.4: Power Grid: Brand Strength Vs Brand Stature117
The Power Grid sets the strategic process by identifying the strength or weakness of a
brand. On the vertical axis we plot the brand strength – its relevance and differentiation,
while on the horizontal axis, the brand stature –esteem and knowledge.
117
2.25.3 Quadrant I
Weak brands that could not leverage their strengths.
2.25.4 Quadrant II
Here the brand managers have not been able to realize the true potential of the brand. The
strategy should be to build the stature of the brand.
2.25.5 Quadrant III
The challenge for the brand here would be to continue being a leader.
2.25.6 Quadrant IV
The last quadrant spells “Danger” for the brand, an indicator of eroding potential. These
brands have failed to maintain their Relevant Differentiation (their core strength). If
unattended, their Stature will also begin to fall. Unless steps are taken to stimulate the
differentiation and relevance, these brands will lose Esteem and could eventually fade
from consumers’ consciousness.
The value of a brand depreciates if there is no continuous value addition. This is critical
for the brand to be a source of competitive advantage. The task of a marketer is to go
beyond measuring and leveraging the value of the brand and add perceptible value
continuously.118
118
2.26 Hypothesis
Based on the literature review, the researcher has developed the following hypothesis:
H1: Electronic media is the most effective type of advertising in oil marketing
H2: In the wake of intense competition, strong brand elements are necessary to create
a strong brand image in the hearts and minds of target consumers
H3: A brand with a high level of innovation leads to greater market share

CHAPTER 3
RESEARCH METHODOLOGY
3.1 Introduction
According to Dr. Uma Sekaran, research can be defined as an organized, systematic,

data-based, critical, objective, scientific inquiry or investigation in to a specific problem,
undertaken with the purpose of finding answers or solutions to it.
In essence, research provides the needed information that guides managers to make
informed decisions to successfully deal with problems. The information provided could
be the result of a careful analysis of data gathered firsthand or of data that are already
available in the company, industry or archives.
Data can be quantitative, as generally gathered through structured questions or

qualitative, as generated from broad answers to specific questions in interviews, or from
responses to open-ended questions in a questionnaire, or through observation, or from
readily available information gathered from various sources.119
3.2 Significance of Research
The research work would be of immense importance for all existing and upcoming
players in Pakistan’s Oil Marketing Industry. The research work will play a pivotal role
for any individual or organization interested in undertaking oil marketing brand analysis.
The research work would facilitate all Oil Marketing Companies (OMC’s) to sustain
long–term customer loyalty and enhanced corporate brand image in the hearts and mind
of it’s target customers.
119
Uma Sekaran, Research Methods for Businesses, Fourth Edition, 2000
3.3 Problem Statement
A problem does not necessarily mean that something is seriously wrong with a current
situation that needs to be rectified immediately. A “problem” could simply indicate an
interest in an issue where finding the right answers might help to improve an existing
situation. Thus, it is fruitful to define a problem as any situation where a gap exists
between the actual and desired ideal states.120
The problem statement identified for analyzing the PSO brand is as follows: “To what
extent, PSO as a brand has been successful in creating a high-quality, customer-centered
corporate image?”
3.4 Research Objectives
The key research objectives for the thesis are as follows:
 Analysis of PSO as a brand from the customers perspective

 Identification of the most effective type of advertising in oil marketing industry
 Analysis of the impact of PSO brand elements amongst target consumers
 Analysis of innovation level of PSO on market leadership
 Analysis of all key brand related attributes of PSO in relation with its competitors
120
Uma Sekaran, Research Methods for Businesses, Fourth Edition, 2000
3.5 Type of Research
Case Study type of research has been chosen for carrying out a detailed brand analysis of
Pakistan State Oil (PSO). A case study type of research is the most appropriate type of
research for an in-depth, contextual analysis of any organization as a brand. As in any
exploratory or descriptive type of research, hypothesis would be formulated and tested in
this case study type of thesis research.
3.6 Research Methodology
The research methodology chosen for carrying out the detailed brand analysis of Pakistan
State Oil (PSO) includes both research and gathering of data from the primary and
secondary sources.
3.6.1 Primary Sources
The primary sources of data gathering include the following:

 Questionnaires to be distributed amongst the customers at Pakistan State Oil
(PSO) retail outlets
 Direct Interviews with dealers of Pakistan State Oil (PSO) retail outlets
 Direct Interviews with employees of Pakistan State Oil (PSO) retail outlets
 Oil Companies Advisory Committee (OCAC)
3.6.2 Secondary Sources
The secondary sources of data gathering include the following:

 Annual Reports
 Company Documents, Brochures, Newsletters
 Internet Search Engines, Websites
 Books & Publications
3.7 Research Limitations
The scope of the market research is limited to the twin cities of Rawalpindi and
Islamabad.
Limitation of the research lies in obtaining first hand data due to the sensitive nature of
the business and geographical constraints involved, since the company, Pakistan State Oil
(PSO) and its major competitors Shell Pakistan Ltd (SPL) and Caltex Oil Pakistan Ltd
(COPL) are headquartered in Karachi, while Total Parco-Pakistan Ltd (TPPL) is based in
Lahore.
3.8 Hypothesis Restated
Based on the comprehensive literature review covered in chapter two, the researcher has
formulated the following research hypothesis:
H3: A brand with a high level of innovation leads to greater market share
CHAPTER 4
FINDINGS & ANALYSIS
4.1 Market Survey Findings
A comprehensive Market Survey (Appendix A) was conducted at six key retail outlets of
Pakistan State Oil (PSO) in the twin cities of Islamabad and Rawalpindi. A sample size of
10 customers was taken per outlet resulting in a total sample size of 60.
The following tables illustrate the results gathered from the market survey which later
forms a part of the brand analysis.
1. Age:
a) 18 – 25
b) 26 – 35
c) 36 – 50
d) Above 50
a b c d
9 26 14 11
Table 4.1 Survey Finding Q1
2. Gender:
a) Male
b) Female
a b
52 8
3. Occupation:
a) Driver
b) Student
c) Private Sector
d) Public Sector
e) Business
f) Other
a b c d e f
9 10 15 6 14 6
4. Monthly Income:
a) None
b) Less than 20,000
c) 20,000 – 45,000
d) 45,000 – 70,000
e) Above 70,000
a b c d e
16 15 12 11 6
5. How long have you been refueling through this PSO outlet:
a) Less than 1 year
b) 1 year – 3 years
c) 3 years – 5 years
d) More than 5 years
a b c d
20 22 12 6
6. What is your frequency of

purchase from this PSO
outlet:
a) 1 – 3 times per week
b) 3 – 5 times per week

c) 5 – 7 times per week
d) Daily
a b c d
35 13 9 3
7. On majority of the occasions from where have you been refueling previously:
a) Total
b) Caltex
c) Shell
d) PSO
a b c d
3 7 29 21
8. You prefer this retail outlets because of it(s):

a) Excellent Customer Service
b) Strategic location (it comes in my way)
c) Size and cleanliness (lots of free space
available)
d) I trust the quality & quantity of fuel dispensed from this outlet
e) Non-fuel facilities such as Shop Stop, Car Wash, Business Center, Tyre Shop
f) Other, Please identify ____________________________________________
a b c d e f
11 20 4 15 10 0

9. Which Non-fuel retail facilities have you tried at
any of the PSO outlet(s):
a) Shop Stop
b) Business Center (Internet Kiosk, P.C.O, Fax,
Photocopy)
c) Auto Car Wash Plant
d) Manual Car Wash Plant
e) Speedy Oil Change Machine
f) Tyre Shop
g) Other, please identify_____________________________________________
a b c d e f g
50 15 20 40 30 43 0
10. Which PSO Card do you use for the purpose of fueling:
a) Corporate Card
b) Fleet Card
c) Loyalty Card
d) Prepaid Card
e) I don’t use any PSO card
a b c d e
6 5 21 6 22
11. What are the benefits of using the above PSO Card:
a) Flexibility and convenience
b) No cash handling risk
c) No fuel-slip hassle
d) Reduced transaction time
e) Personalized credit card with pre-approved limit
f) Consolidated computerized billing
g) Controls pilferage and misuse
h) World of rewards through loyalty points
a b c d e f g h
38 35 15 30 6 15 5 21
12. Are you aware of the launch of the following Oil Marketing Companies:
Admore
a) Yes
b) No
a b
8 52
Table 4.12(a) Survey Finding

Q12(a)
Attock
a) Yes
b) No
a b
39 21
Table 4.12(b) Survey Finding Q12(b)
13. In your opinion, which is the largest oil marketing company in Pakistan:
a) Caltex
b) Shell
c) PSO
d) Total
e) Attock
f) Admore
a b c d e f
6 34 18 2 0 0
14. In your opinion, which company has introduced “Green XL Plus Diesel”:
a) Caltex
b) Shell
c) PSO
d) Total
e) Attock
f) Admore
a b c d e f
4 17 28 10 1 0
15. In your opinion, which company has introduced Pakistan’s first hanging
dispensing units in Karachi and Lahore:
a) Caltex
b) Shell
c) PSO
d) Total
e) Attock
f) Admore
a b c d e f
2 36 19 3 0 0
16. In your opinion, which company has introduced Pakistan’s first Auto-Car
Wash Plant in Islamabad, Lahore and Karachi:
a) Caltex
b) Shell
c) PSO
d) Total
e) Attock
f) Admore
a b c d e f
1 30 25 4 0 0
17. In your opinion, has PSO improved its overall image in the last five years:
a) Yes
b) No
a b
53 7
18.What are the areas in which you believe PSO has improved it’s retail outlets:
a) More educated and friendly staff
b) Better forecourt services
c) Guaranteed Quality & Quantity of fuels offered
d) Improved housekeeping/ cleanliness of outlets
e) Better construction/ layouts/ design of retail outlets

f) More innovative products/ campaigns
g) Attractive Signage/ branding at retail outlet
h) Better non-fuel services offered including Shop Stop, Car Wash, Tyre Shop, I
I) Business Center, Internet, P.C.O, Fax, Oil Change Facility
j) PSO Cards (Corporate card, Fleet card, Loyalty cards, Prepaid cards)
k) I don’t think PSO has improved itself over the last few years
l) Other, please identify ____________________________________________
a 37
b 30
c 31
d 45
e 50
f 49
g 45
h 51
i 38
j 7
k 0
19. Are you aware of the launch of PSO’s “Forever Sunshine” campaign:
a) Yes
b) No
a b
31 29
20. How did you come to know about this campaign:

a) Word of Mouth
b) Witnessed at the outlet
c) Print Media
d) Not aware of this campaign
e) TV Advertisements
a b c d e
2 24 4 1 1
21.In your opinion, Ads of which oil marketing company are the most attractive:
a) Caltex
b) Shell
c) Total
d) Attock
e) Admore
f) PSO
a b c d e f
1 41 7 0 0 11
22. In your opinion, in the last five years the standard of the following oil
marketing companies has (Tick the relevant choices):
Deteriorated Stagnant Slight Drastic

Improvement Improvement
CALTEX 41 10 9 0
TOTAL 3 20 15 19
SHELL 5 27 17 11
PSO 2 13 24 21
23. How would you rank the oil marketing companies on the following attributes
Branding Activities
(Including Billboards, Mega hoardings, Road Signs, Road Gantries, Company Signage)
The majority of the responses were as follows:
CALTEX 1 2 3 4 5 6
TOTAL 1 2 3 4 5 6
SHELL 1 2 3 4 5 6
ADMORE 1 2 3 4 5 6
PSO 1 2 3 4 5 6
ATTOCK 1 2 3 4 5 6
Table 4.23(a) Survey Finding Q23(a)
Assistant Professor Ms. Zeenat Jabbar - 157 - NUST Institute of Management Sciences
Level of Customer Service

CALTEX 1 2 3 4 5 6
TOTAL 1 2 3 4 5 6
SHELL 1 2 3 4 5 6
ADMORE 1 2 3 4 5 6
PSO 1 2 3 4 5 6
ATTOCK 1 2 3 4 5 6
Table 4.23(b) Survey Finding Q23(b)
Overall Most Preferred Brand

CALTEX 1 2 3 4 5 6
TOTAL 1 2 3 4 5 6
SHELL 1 2 3 4 5 6
ADMORE 1 2 3 4 5 6
PSO 1 2 3 4 5 6
ATTOCK 1 2 3 4 5 6
Table 4.23(c) Survey Finding Q23(c)
4.2 AIOD Framework
Need Segment Activities Interests Opinions Demographics

Drivers Cars, Politics 18-55 yrs,
To refuel Fuel Students Books Pakistani Educated and
Vehicles Seekers Businessman Radio Culture non educated,
Professionals Television mostly men
Children Books Family 7-55 yrs,
To shop from Shoppers Teenagers Concerts Children Middle class,
the Parents Sports Entertainment Upper class,
convenience Working Junk Food Fashion Mostly
store Women Educated,
Both genders
Drivers Cricket Traditional 19-48yrs
To have car Car Wash Professionals Television Politics Middle class
washed Seekers Media Mainly Men and
young boys.
Working Men Hiking, Science 23-45 yrs
To have an Speedy Drivers News News Mostly men
oil change Oil Students Traveling, Music Educated
Change Business men Radio Urban Dwelling
Seekers
Drivers Cars Savings Both Low and
To have car Tyre Working Books Pakistani High Income
tyre service Shop Professionals Radio Culture Class
Seekers Jogging Mostly men
Table 4.24: AIOD framework
4.3 Perceptual Maps
4.3.1 Perceptual Map I: Distribution Network Vs Brand Name
The attributes that have been chosen for the first perceptual map are “Distribution
Network” and “Brand Name”.
PSO has the largest distribution network of over 3800 retail outlets throughout the
country followed by Shell with its 1250 retail outlets, Caltex with 500 retail outlets, Total
with 110 retail outlets, Attock with around 70 outlets and Admore with around 10 retail
outlets all over Pakistan.
However, the brand name of Shell according to the market survey and in the opinion of
the researcher is stronger than that of any other competing brand followed by that of
PSO, Caltex, Total, Attock and Admore.
Caltex as a brand has a stronger brand name than Total although Total has been able to
quickly make its place in the oil market of Pakistan. However, Caltex has been operating
in Pakistan since 1947 and has comparatively higher brand recognition than Total.
Attock owes its brand name to the Attock Group of Companies which consists of Attock
refinery Ltd (ARL), Pakistan Oilfields Limited (POL) and National Refinery Ltd (NRL).
Admore is a new brand in the Oil Market of Pakistan and has a long way to go before it
builds a strong brand name.
Distribution Network
(Large)
PSO
Shell
Caltex Brand Name

Brand Name (Strong)
(Weak)
Total
Attock
Admore
Distribution Network
(Small)
Fig 4.1: Perceptual Map I
4.3.2 Perceptual Map II:
Promotional Effectiveness Vs Level of Innovation
The attributes that have been chosen for the second perceptual map are “Promotional
Effectiveness” and “Level of Innovation”. In accordance with the B.C.G matrix and the
market survey conducted, the promotional effectiveness of Shell is much better as
compared to all other Oil Marketing Companies (OMC’s) of Pakistan.
The brands department of Shell Pakistan, based at headquarters in Karachi, has launched
excellent marketing initiatives especially in the area of lubricants. Most of the promotions
introduced have been in continuation of the promotions already implemented and
practiced at Shell Malaysia and other Asian Countries.
The promotions of PSO have also been good but comparatively less effective as
compared with Shell as most of them were short lived and lacked any substantial market
research.
However, the level of innovation at PSO is comparatively higher than that of Shell
Pakistan. PSO has been the most innovative Oil Marketing Company (OMC) based on its
trend of coming up with latest technologies including the Plastic Cards Technology, state
of the art SAP System, Data Visualization Center at headquarters and installation of Real-
time Digital Pump Controllers at retail outlets to digitally record and monitor nozzle sales
throughout the country.
Total although began its operations much later than Caltex, it has managed to introduce
more innovative solutions especially in the area of retail outlet design and layouts. Also,
the promotions being introduced by total are much better perceived by the public than
that of Caltex which overall has deteriorated as a brand over the last two decades.
Promotional
Effectiveness
(Strong)
Shell
PSO
Total Level of
Level of Innovation
Innovation (Low)
(High)
Caltex
Attock
Admore
Promotional
Effectiveness
(Poor)
Fig 4.2: Perceptual Map II
4.3.3 Perceptual Map III:
Marketing Experience Vs Level of Customer Service
The attributes that have been chosen for the third perceptual map are “Marketing
Experience” and “Level of Customer Service”
In the opinion of the researcher and the market survey conducted, Shell Pakistan Ltd has
the most experience of working in the Indian Sub-continent.
Shell has been working since 1928 followed by Caltex in 1947, PSO in 1974, Total in
2001, Attock in 2002 and Admore in 2004.
Based on the subsequent market survey and in the opinion of the researcher, Shell is the
only company with the highest level of customer services followed by Total, Caltex,
PSO, Attock and then Admore.
According to the market survey conducted, Customer Service is one important area
where PSO as a brand seriously needs to improve itself over the coming years as the
competition between all the players would get more intensified.
Marketing Experience
(Less)
Admore
Attock
Total
Customer
Customer Service (Good)
Service (Poor)
PSO
Caltex
Shell
Marketing Experience
(More)
Fig 4.3: Perceptual Map III
4.3.4 Perceptual Map IV: Market Share Vs HR Competence
The attributes that have been chosen for the fourth perceptual map are “Market Share”
and “HR Competence”
In accordance with the B.C.G matrix section 1.3.4, Shell has the highest market share of
4.6750 amongst all Oil Marketing Companies (OMC’s) followed by PSO 4.4480, Total
4.2350, Caltex 4.0875, Attock 2.8917 and Admore 2.2200.
According to the market survey conducted and in the opinion of the researcher, Shell has
the most competent Human Resource as compared to all other Oil Marketing Companies
(OMC’s). The reason being that Shell is a true multinational which has invested a lot in
its human resource and is renowned world over for compensating its employees very
well.
Caltex has a comparatively better Human resource than both PSO and Total. Caltex,
being an American Oil Marketing Company (OMC) and a subsidiary of Chevron Texaco,
U.S.A has managed to both attract and retain quality professionals, despite its falling
sales and deteriorating brand performance in Pakistan.
Attock and Admore have failed to attract true professionals in the Oil Marketing industry
and would need to offer better career opportunities and compensation policies in order to
build on its human resource in the long-term if they wish to compete in the presence of
other oil marketing giants such as PSO, Shell, Caltex and Total.
Market Share
(High)
Shell
PSO
Total HR
HR Competence
Competence (More)
(Less)
Caltex
Attock
Admore
Market Share
(Low)
Fig 4.4: Perceptual Map IV
4.3.5 Perceptual Map V: Profitability Vs Overall Reputation
The attributes that have been chosen for the fifth perceptual map are “Profitability” and
“Overall Reputation”.
In the opinion of the researcher and the market survey conducted, the overall repute of
Shell is highest than any other Oil Marketing company followed by Total, PSO, Caltex,
Attock and Admore.
It is interesting to note that according to the market survey conducted the overall repute
of Total is believed to be better than that of PSO owing to its unique style and positioning
in the hearts and minds of its customers.
However, as far as the attribute of profitability is concerned PSO clearly stand out from
the rest being the most profitable Oil marketing Company of Pakistan with profit after tax
amounting to Rs 5.7 Billion followed by Shell Pakistan with a profit after tax of Rs 2.4
billion followed by Total, Caltex, Attock and Admore respectively.
Profitability
(Low)
Admore
Attock
Caltex
Overall
Overall Reputation
Reputation (Low)
(High)
Total
Shell
PSO
Profitability
(High)
Fig 4.5: Perceptual Map V
4.4 Brand Perception Index (BPI)
4.4.1 Brand Perception Index (BPI): SHELL
Attributes - Visual Weightage Scale Aggregate

(1 to 5)
Logo Attractiveness 0.200 4.50 0.900
Retail Outlet Color Schemes 0.300 4.00 1.200
Signage Aesthetics 0.300 4.00 1.200
Packaging Quality of Lubricants 0.200 4.00 0.800
1.000 4.100
Attributes - Verbal Weightage Scale Aggregate

(1 to 5)
Advertisement Message 0.300 4.50 1.350
Ad Appeals 0.200 4.00 0.800
Background Music 0.200 3.75 0.750
Word of Mouth 0.300 4.50 1.350
1.000 4.250
Attributes - Experiential Weightage Scale Aggregate

(1 to 5)
Forecourt Services 0.300 4.00 1.200
Housekeeping/ Cleanliness 0.200 3.75 0.750
Non-fuel facilities 0.250 4.00 1.000
1.000 3.950
BPI = Visual + Verbal + Experiential 12.300
Table 4.25: BPI Shell Pakistan Ltd
4.4.2 Brand Perception Index (BPI): PSO

(1 to 5)
1.000 3.850

(1 to 5)
Ad Appeals 0.200 3.50 0.700
Word of Mouth 0.300 4.00 1.200
1.000 3.725

(1 to 5)
1.000 3.735
Table 4.26: BPI Pakistan State Oil (PSO)
4.4.3 Brand Perception Index (BPI): TOTAL

(1 to 5)
1.000 3.745

(1 to 5)
Ad Appeals 0.200 3.40 0.680
Word of Mouth 0.300 3.90 1.170
1.000 3.630

(1 to 5)
1.000 3.525
Table 4.27: BPI Total – Parco Pakistan Ltd (TPPL)
4.4.4 Brand Perception Index (BPI): CALTEX

(1 to 5)
1.000 3.680

(1 to 5)
Ad Appeals 0.200 3.40 0.680
Word of Mouth 0.300 3.75 1.125
1.000 3.575

(1 to 5)
1.000 3.445
Table 4.28: BPI Caltex Oil Pakistan Ltd (COPL)
4.4.5 Brand Perception Index (BPI): ATTOCK

(1 to 5)
1.000 3.380

(1 to 5)
Ad Appeals 0.200 3.20 0.640
Word of Mouth 0.300 3.55 1.065
1.000 3.375

(1 to 5)
1.000 3.295
Table 4.29: BPI Attock Petroleum Ltd (APL)
4.4.6 Brand Perception Index (BPI): ADMORE

(1 to 5)
1.000 3.490

(1 to 5)
Ad Appeals 0.200 3.10 0.620
Word of Mouth 0.300 2.55 0.765
1.000 3.005

(1 to 5)
1.000 3.170
Table 4.30: BPI Admore Oil Pakistan (AOP)
Brand Perception Index (BPI): Summary of Oil Marketing Companies
Sr. No Oil Marketing Companies BPI

Index
1 Shell Pakistan Ltd (SPL) 12.300
2 Pakistan State Oil (PSO) 11.310
3 Total – Parco Pakistan Ltd (TPPL) 10.900
4 Caltex Oil Pakistan Ltd (COPL) 10.700
5 Attock Petroleum Ltd (APL) 10.050
6 Admore Oil Pakistan (AOP) 9.665
Table 4.31: BPI Summary Oil Marketing Companies (OMC’s)
4.5 Brand Personality Dimension Index
Brand personality dimension index quantitatively analyses the personality of a brand on

the following five major product attributes:
o Sincerity
o Excitement
o Competence
o Sophistication
o Ruggedness
The brand personality dimension index of Pakistan State Oil (PSO) has been developed
by rating the sub-attributes of the five major product attributes.
Sincerity Weight Scale (1-5) Value

Down-to-Earth 0.250 4.500 1.125
Honest 0.350 4.500 1.575
Wholesome 0.100 3.000 0.300
Cheerful 0.300 3.500 1.050
Total 1.000 4.050
Excitement Weight Scale (1-5) Value
Daring 0.250 4.000 1.000
Spirited 0.250 3.500 0.875
Imaginative 0.150 3.500 0.525
Up-to-Date 0.350 3.500 1.225
Total 1.000 3.625
Competence Weight Scale (1-5) Value
Reliable 0.350 4.500 1.575
Intelligent 0.300 4.000 1.200
Successful 0.350 4.500 1.575
Total 1.000 4.350
Sophistication Weight Scale (1-5) Value

Upper Class 0.400 3.500 1.400
Charming 0.600 3.500 2.100
Total 1.000 3.500
Ruggedness Weight Scale (1-5) Value
Outdoorsy 0.300 3.750 1.125
Tough 0.700 3.750 2.625
Total 1.000 3.750
Table 4.32: Brand Personality Dimension Index of PSO
Based on the brand personality dimension index, PSO emerges out to be a competent and
sincere brand. The brand is clearly masculine. His personality is formal and professional.
He is amongst the most successful lot in his class and he’s very hard working and
efficient. No wonder he’s an admired business acquaintance. The look of his advertising
is somewhat conservative; however most recently the more innovative approach has
given it a look of its own tailored to the target market.
4.6 Brand Asset Valuation (BAV)
Brand asset valuation allows identifying how a brand can create value for its
organization.
The principal means of creating superior brand value for Pakistan State Oil (PSO) is to
gain both high Brand Strength and high Brand Stature. This can only be achieved by
maximizing efforts to build superior Differentiation and Relevance (Brand Strength) and
Knowledge and Esteem (Brand Stature).
Brand Strength is calculated by multiplication of Differentiation by Relevance, while

Brand Stature is calculated by multiplication of Esteem and Knowledge.
Pakistan State Oil (PSO) as a brand has developed strong brand stature by focusing on
building knowledge and esteem meaning that as a brand it stands for something
worthwhile amongst the oil marketing companies of Pakistan.
However, Pakistan State Oil (PSO) would have to leave no stone unturned in order to
differentiate itself and thus create a strong brand strength like that of Shell. Shell with its
strong presence in over 180 countries and with 46,000 retail outlets is indeed a
benchmark for the global downstream oil marketing industry.
4.7 Young & Rubicam Power Grid
The six oil marketing companies of Pakistan have been categorically placed in the
following four quadrants of the Y & R Power Grid.
Brand Stature (Knowledge & Esteem)
Low High
Shell High
Brand
Strength
Attock , Admore PSO, Caltex, Total
Low
Fig 4.6: Y & R Power Grid of Oil Marketing Companies
4.7.1 High Brand Stature & High Brand Strength
Shell is the only brand that truly deserves to be placed in the first quadrant of the Y & R
Power Grid. Shell as a brand is popular in over 180 countries and has developed very
high knowledge and esteem especially in the downstream oil and gas sector.
4.7.2 High Brand Stature & Low Brand Strength
Pakistan State Oil (PSO), Caltex oil Pakistan Ltd (COPL) and Total – Parco Pakistan Ltd
(TPPL) are brands that have gained both high Knowledge and Esteem and thus have a
high brand stature.
However, all three oil marketing companies need to pursue successful differentiation
strategies in order to gain substantial brand strength.
4.7.3 Low Brand Stature & Low Brand Strength
Attock Petroleum Ltd (APL) and Admore are brands that can best be placed in this
quadrant of the Y & R Power Grid. Both have recently entered in the oil marketing arena
of Pakistan and need to build up their core competencies in the completive Pakistani oil
market.
4.8 Actual Brand Foot Printing
Brand Foot Printing identifies the impact the brand has left on the hearts and minds of its
consumers. Brand Foot printing for PSO has been developed based on the following
attributes:
Attributes Weightage Scale (1 - 5) Value

Brand Awareness 0.250 4.000 1.0000
Positive Feeling towards Brand 0.250 3.500 0.8750
Uniqueness of Brand 0.250 3.750 0.9375
Relevance to Customer 0.250 3.500 0.8750
1.000 3.6875
Table 4.33: PSO Brand Foot Printing
4.9 Ideal Brand Foot Printing
The ideal brand foot printing score should be “5” on all the key attributes of Brand
Awareness, Positive feeling Towards the Brand, Uniqueness of the Brand and its
relevance to the customers.
4.10 Gap Analysis
Currently, the brand foot printing of Pakistan State Oil (PSO) a gap of 1.3125 [Gap =
5.000 – 3.6875 = 1.3125]. Thus, Pakistan State Oil (PSO) as a brand would need to come
up with innovative differentiation strategies and smart selling techniques in order to win
the long-term customer loyalty of its target customers. In the presence of other oil
marketing multi-nationals Pakistan State Oil (PSO) has a tremendous task ahead of it and
would need to position itself accordingly.
4.11 Interbrand’s Brand Equity Model
As an asset, a brand is a symbol of the expected future profits of a company. Interbrand, a

UK-based branding consultancy, has led the way in defining an appropriate method for
brand strength assessment.
Interbrand’s brand equity model has been used to assess the brand equity of Pakistan
State Oil (PSO) based on the following seven attributes which include the business
prospects of the brand, the brand’s market environment and as well as consumer
perceptions.
Weightage Scale (1 to 5) Value

Leadership 0.200 4.500 0.900
Stability 0.150 4.000 0.600
Market 0.200 4.500 0.900
International 0.100 2.000 0.200
Trend 0.150 4.000 0.600
Support 0.100 3.750 0.375
Protection 0.100 4.000 0.400
1.000 3.975
Table 4.34: PSO Brand Equity Model
Brand equity occurs when the consumer has a high level of awareness and familiarity
with the brand and holds some strong, favorable, and unique brand associations in the
memory121
4.11.1 Leadership
PSO is a brand that leads its market sector and is thus stable and powerful than other
market entrants. This criterion reflects the economies of scale that Pakistan State Oil
(PSO) has been able to achieve in effective communication and distribution.
4.11.2 Stability
Pakistan State Oil (PSO) is a long-lived brand with an identity that has become part of the
fabric of the market—and even of the culture— of the oil marketing industry.
4.11.3 Market
Pakistan State Oil (PSO) is a brand that is valuable owing to the fact that it operates in a
market with growing sales levels and a price structure in which successful firms can be
very profitable. This can also be ascertained from the fact that the current profitability of
Pakistan State Oil (PSO) for the fiscal year 2005 is more than Rs 5.7 billion.122
121
122
4.11.4 International
Pakistan State Oil (PSO) is a brand that is not an international brand. However, it has to
be appreciated that being a national company it has set international standards whilst
competing with three of the world’s top multi-nationals. Thus, brands such as Shell and
Caltex that are international are more valuable than national or regional brands as
generally, the broader the scope of a brand is, the more valuable it is.
4.11.5 Trend
The overall long-term trend of Pakistan State Oil (PSO) as a brand can be expected to
reflect future prospects. Pakistan State Oil (PSO) as a healthy, growing brand indicates
that it remains contemporary and relevant to consumers.
4.11.6 Support
Pakistan State Oil (PSO) is a brand that has received consistent investment and focused
support both from its top management and the Ministry of Petroleum and Natural
Resources. The company has invested in state-of-the art SAP system which is an
integrated Enterprise Resource Planning (ERP) system functional in only 30 prestigious
companies of Pakistan and 26,000 world renowned organizations.
4.11.7 Protection
The strength and breadth of a brand’s legal trademark protection is critical to the brand’s
strength and Pakistan State Oil (PSO) is no exception in this regard.
4.12 Graveyard Model
The relative power of Brand Recall versus Brand Recognition depicts the "Graveyard
Model" developed by Young and Rubicam.
The six oil marketing companies have been categorically placed in the following figure.
High
CALTEX PSO SHELL
ATTOCK
Brand ADMORE
Recognition
TOTAL
Low
Low Brand Recall High
Fig 4.7: Oil Marketing Companies Graveyard Model
The Graveyard model identifies the brands that are dying and the ones that are
prospering. From the above figure it is evident that Shell and PSO are prospering as the
most recognized and recalled oil market brands.
Total is a brand that has a relatively lesser recognition owing to its presence in the form
of 100 retail outlets, however, its recall is higher owing to its huge petrol pumps with
innovative canopy style and unique layouts.
Total is in fact a niche brand with a high recall among its respective loyal customer
groups and its currently low recognition is not necessarily an indication of poor
performance. Like all healthy niche players Total has the potential to expand recognition
and thus the scope of its customer base.
Caltex is a brand that is heading towards the graveyard as it is losing its recall amongst
the target consumers. Prior to 1990 Caltex had been the most innovative oil marketing
company but with PSO establishing itself and Shell pursuing its Retail Visual Image
(RVI) projects in the late 90’, Caltex was the brand that had suffered the most.
Attock and Admore are brands that have both very low recognition and recall owing to
the fact that they are new entrants in the Pakistani oil market and still need to go a long
way in order to win sustained and long–term customer loyalty which would result in both
high brand recognition and recall.
4.13 PSO Brand Name
The history of the brand name dates back to the year 1974 when Federal Government
took over management of PNO (Pakistan National Oil) and DPL (Dawood Petroleum
Limited) and renamed it into POCL (Premier Oil Company Limited). However, in 1976
government merged PNO (Pakistan National Oil) and POCL (Premier Oil Company
Limited) into SOCL (State Oil Company Limited) and names it as Pakistan State Oil
Company Limited (PSO).
The name ‘Pakistan State Oil’ and in particular the more common abbreviation “PSO” is
a brand name that is easily recognized, easily remembered and easily pronounced.
The brand name PSO has a very high awareness amongst all Pakistani consumers and the
public is readily able to relate the fact that PSO stands for Pakistan State Oil.
There is no denying the fact that the acronym PSO raises patriotism amongst Pakistani
nationals and aids the company in positioning itself as a prestigious national brand with
international standards.
In the wake of highly intense competition, Pakistan State Oil (PSO) has focused on
building strong band elements including the PSO Brand Name, PSO Logo and PSO
Slogan so as to create strong brand awareness amongst the target consumers.
4.14 PSO Logo
Fig 4.8: The PSO Logo123
The logo of Pakistan State Oil (PSO) is basically a circle with the sun in one corner, the
moon in the other with the letters P, S and O in the center.
The blue circle basically depicts the entire universe and the concept of the logo is that
PSO is brand which is available to serve its customers 24 hours i.e. both during the
sunlight hours (the yellow sun in the right corner) and also during the dark (the green
moon in the left corner). The yellow sun depicts vision beyond imagination and is
considered as a sign of excellence and true dedication.
The color of the moon and the letters P, S and O is in green so as to correlate with the
national flag of Pakistan, which is also green in color. The reason for using blue color for
the universe is that it blue color represents success and competence and the reason fro
showing the universe is that the long term vision of PSO is to expand in to global
operations with due course in time.
123
Pakistan State Oil (PSO) Website, http://www.psocl.com, [Accessed July 10, 2005]
4.15 PSO Slogan
Fig 4.9: The PSO Slogan124
The slogan of Pakistan State Oil (PSO) is:
“A National Company, with International Standards”

“A New Vision, A New Spirit”
The slogan clearly depicts the fact that the company although is a national one but since it
is successfully competing with the world’s biggest oil marketing giants it has maintained
international standards the reason for it’s continued market leadership and higher
profitability.
The company introduced its New Vision strategy in the year 2001 and since then it has
boasted of its corporate turnaround which is clearly highlighted by its slogan restating the
fact that now the company has a new vision and a new spirit to compete in the fierce oil
marketing industry of Pakistan.
124
4.16 Corporate Branding

Pakistan State Oil (PSO) has been pursuing a corporate branding campaign known as the
“Forever Sunshine” campaign. The following figure illustrates the corporate branding
campaign of Pakistan State Oil (PSO).
Fig 4.10: PSO Corporate Campaign125
The wordings of the PSO’s forever Sunshine corporate branding is as follows:
At PSO, our commitment to serve you goes far beyond providing fuel. We have a number
of services ranging from automated filling to a 24-hr business center. Our Internet
facility, the Shop Stop & our Fuel Management Solution all aim at making the PSO
experience memorable for our customers. We also consider it our responsibility to
contribute to society & constantly strive to innovate products that are
environment-friendly. We also support schools and training centers in rural areas &
provide scholarships & internship to students of reputed professional educational
institutions. PSO brings you sunshine day after day, night after night because at PSO we
never let the sun go down on your needs.126
125
Pakistan State Oil (PSO) Website, http://www.psocl.com, [Accessed July 10, 2005]
126
Pakistan State Oil (PSO) Annual Report 2005, Forever Sunshine, Page 3
4.17 Strategic Branding at PSO
The management of Pakistan State Oil (PSO) strongly believes that all efforts should be
directed towards customer delight. In order to improve the brand equity and to restore
customer confidence, the following actions have been taken by PSO:
o 24-Hour Customer Care department established with Toll Free number
o Advertising and sales promotion campaigns backed by strong media support
o Introduced Plastic Card Technology in Oil Marketing
Fig 4.11: PSO Customer Services127
127
The company has been striving to launch innovative products and services and is now
recognized as the Leader with Innovativeness. Following are the few glimpses of
innovative services launched by Pakistan State Oil (PSO):
o First Oil Company to introduce Plastic Cards namely Loyalty, Fleet, Corporate
and Prepaid Cards
o Internet Kiosks to increase Internet awareness throughout the nation
o Mobile Quick Testing Units to ensure the best quality and right quantity products
o Oil change facility at customer’s doorstep
o Country’s first-ever Auto Car wash plant at Karachi, Islamabad & Lahore
o Monolith price displays at all retail outlets
o Pioneer in installing Tallest Signs / Largest Hoarding in Pakistan
o Business Centers at retail outlets with facility of Fax, P.C.O and Photocopy
o First Oil Company to install “Easy Payment Centers” at Retail Outlets in

collaboration with Citibank
Fig 4.12: The PSO Headquarters128
128
Fig 4.13: PSO Auto Car Wash Plant129
Fig 4.14: PSO Internet Kiosk129
129
The launch of Plastic Card Technology by PSO has offered customers a wide array of
convenience in terms of loyalty points, secured transactions free of hash handling and
lucrative discounts.
Fig 4.15: PSO Cards130
In order to reinforce the brand image and to further create brand awareness among
customers, PSO has been making considerable efforts by using permanent tools like
billboards and hoardings at strategic locations.
130
Fig 4.16: PSO Mega Hoarding131
The company has been utilizing the best available resources but in cost-effective
manners. Hoardings, Tall Signs are being installed at retail outlets to further curtail the
investment cost.
131
Fig 4.17: PSO Zoom Tower & Monolith Sign132
The company is capitalizing on its delivery vans/ trucks by painting them beautifully and
attractively in corporate colors and brand messages.
Fig 4.18: PSO Mobile Billboards132
132
PSO has been the pioneer in installing Price Display Units at its monoliths to inform
customers about the prevailing petroleum prices thus making their decision-making
swifter and more prompt.
The World Bank Mission for ‘Public Sector Review’ had appreciated this initiative by
PSO and recommended that the Government of Pakistan to implement the same at other
Oil Marketing Companies.
Fig 4.19: PSO Billboard133
133
The researcher has taken snapshots of the branding activities followed by Pakistan State
Oil (PSO) at the twin cities of Islamabad and Rawalpindi.
Fig 4.20: PSO Mega hoarding Karal Chowk134
134
[July 28, 2005]
Fig 4.21: PSO Road Gantry Islamabad Highway135
135
[July 28, 2005]
136
[July 28, 2005]
137
[July 28, 2005]
138
[July 28, 2005]
139
[July 28, 2005]
The professionals at Pakistan State Oil (PSO) strive to provide unmatched and diverse
services in line with best inter national practices.
PSO`s state of the art New Vision Retail Outlets are equipped with the most modern
facilities including auto car wash, electronic dispensing units, Convenience stores,
business centers and Internet facilities to name a few.
Fig 4.26: PSO Directional Road Signs140
140
[July 28, 2005]
Pakistan State Oil (PSO) has a network of over 100 Shop Stops throughout the country.
Also as part of Retail Automation Program, PSO has installed Pump Controllers at the
New Vision Retail Outlets for instant flow of transaction data from fuel dispensing units
to the point of scale terminal.
Fig 4.27: PSO Shop Stop141
PSO is the first to utilize the space at its stations to construct double-sided mega
hoardings. This gives the dual advantage of not only building huge hoardings cost
effectively at the premises that belong to PSO, but also allows it the flexibility of
standardization.
PSO has pioneered the revolutionary concept of erecting as high as 110 feet “Zoom
Signs” at its stations, which not only mark its business presence spectacularly but also act
as a beacon for passing vehicles.
141
Pakistan State Oil (PSO) believes in environment friendliness as a priority like quality
and safety. This is the reason why PSO has once again taken the lead in launching for the
for time in Pakistan an environment friendly diesel – Green XL Plus Diesel – which
contains Green burn Combination Technology. It helps in keeping the engine clean and
the environment green. It provides benefits like 27 % less smoke, particulate reduction,
less noise, less carbon deposit, less foam, more power, less maintenance, longer engine
life, fuel economy, efficiency and cleaner environment.
Fig 4.28: Green XL Plus Diesel Campaign142
Pakistan State Oil (PSO) is also the first to launch pre-addition gasoline – premier XL-
which provides benefits like more mileage, longer engine life, lesser maintenance cost
and cleans the engine while driving, to deliver high value to customers at no additional
cost in terms of improved engine performance, fuel economy and reduced noise and air
pollution.
142
Pakistan State Oil (PSO) Website, http://www.psocl.com/, [Accessed 10 July, 2005]
4.18 PSO Co-Branding
Pakistan State Oil (PSO) has launched a series of joint promotions to benefit its
customers including PSO-Lipton campaign on prepaid cards; with UBL on PSO road
miles; with TCS to provide all PSO customers with discounts on courier services; with
Pizza Hut on loyalty and corporate cards and with Mobilink allowing all Mobilink Jazz
customers to electronically recharge their accounts at PSO stations while Mobilink
outlets would sell PSO Prepaid Cards.
Pakistan State Oil (PSO) has pioneered collaborative arrangements with various banks in
addition to the Loyalty Cards, Corporate Cards, Fleet Cards and Prepaid Cards, offering
0% service charge on Visa and Master Cards and Union Bank’s AMEX Cards for fueling
at PSO retail outlets. In, addition 72% of all credit card transactions carried out in
purchasing fuel takes place at PSO stations nationwide; a result of the greater degree of
convenience offered by PSO.
In 2004–05, PSO sponsored the Expo Pakistan 2005. Pakistan State Oil (PSO) was one of
the leading sponsors and was also responsible for the hospitality of foreign visitors
coming to attend this forum from all over the globe. Spectacular city branding was done
at famous locations within the city, including the Expo center, where the event was held.
Beautiful PSO branded arches and impressive butterfly lights illuminated prominent
locations and round about of the Karachi City. Visitors from the countries like Iran,
Malaysia, China, Sri Lanka and Saudi Arabia showed keen interest in the wide range of
PSO - BP Castrol Lubricants and Engine oils, while a number of local visitors displayed
their interests in Pakistan State Oil (PSO) hi-tech cards.
PSO has also sponsored a number of important events such as IDEAS 2004, Polo Season,
Sindh Sea Festival, Lahore Marathon, and PSO 1st Asian Junior Boxing Championship,
Azlan Shah Hockey Tournament and Pakistan - India Football Series during the fiscal
year 2005.143
143
Pakistan State Oil (PSO) Annual Report 2005, Forever Caring, Page 14
4.19 Electronic Ad Analysis: Forever Sunshine Ad
The electronic copy of the 30 sec Forever Sunshine Ad is enclosed in the attached CD.
Fig 4.29: Forever Sunshine Electronic Ad144
The FCB Grid allows categorizing brands and products into high-involvement/ low-
involvement and informational/ transformational quadrants. It helps direct both creative
strategy and media strategy as it clarifies how consumers approach the buying process for
different products.
The PSO Forever Sunshine Ad has been placed in the low involvement and feeling
quadrant. This is because fuels generally are a low involvement product. The Electronic
Ad basically focuses on the feeling aspect rather than the thinking aspect of the advert.
Slice of Life ad appeal has been used in the advertisement. The background music is an
Urdu jingle in a male voice. A couple has been shown with their two young kids
refueling from a PSO station which is well lit in the evening. The man uses a corporate
card to refuel his vehicle rather than cash and the family is also shown enjoying their time
at the PSO Light Visual Park near Serena Hotel, Islamabad.
The forever sunshine ad is actually a series of the PSO corporate campaign.
144
Pakistan State Oil (PSO) Website, http://www.psocl.com/, [Accessed 10 July, 2005]
The exact wordings of the forever sunshine ad as illustrated in a print media advert are as
follows:
At PSO, our commitment to serve you goes far beyond providing fuel. We have a number
of services ranging from automated filling to a 24-hr business center. Our Internet
facility, the Shop Stop & our Fuel Management Solution all aim at making the PSO
experience memorable for our customers. We also consider it our responsibility to
contribute to society & constantly strive to innovate products that are
environment-friendly. We also support schools and training centers in rural areas &
provide scholarships & internship to students of reputed professional educational
institutions. PSO brings you sunshine day after day, night after night because at PSO we
never let the sun go down on your needs.145
Fig 4.30: F.C.B Grid Forever Sunshine Ad146
145
Pakistan State Oil (PSO) Annual Report 2005, Forever Sunshine, Page 3
146
FCB Grid, http://www.public.iastate.edu/~geske/FCB.html, [Accessed July 10, 2005]
4.20 Electronic Ad Analysis: Castrol GTX Oil
The electronic copy of the 30 sec Castrol GTX advertisement is enclosed in the attached
CD.
Fig 4.31: Castrol GTX Lubricants Ad147
The FCB Grid allows categorizing brands and products into high-involvement/ low-
involvement and informational/ transformational quadrants. It helps direct both creative
strategy and media strategy as it clarifies how consumers approach the buying process for
different products.
The PSO Castrol GTX Oil Ad has been placed in the low involvement and thinking
quadrant. This is because fuels generally are a low involvement product but the brand
involvement is high as Castrol GTX has been rated as World’s No 1 Motor Oil.
The Electronic Ad basically focuses on the thinking aspect rather than the feeling aspect
of the advert. This is because the narrator clearly identifies the benefits of using Castrol
GTX as it generates more heat and power than any other engine oil and it offers
continuous protection against thermal breakdown and engine viscosity.
147
Search for Adventure ad appeal has been used in the advertisement. The background
music is very strong and the narration is in English. A person is shown starting a car and
then the Ad focuses on the tribology of engine design and in the later part of the Advert
shows the Castrol GTX lubricants.
The target audience for this advert is primarily young and affluent male working
professionals who are concerned about which brand of motor oil they would prefer for
their car.
Fig 4.32: F.C.B Grid Castrol GTX Oil Ad148
148
FCB Grid, http://www.public.iastate.edu/~geske/FCB.html, [Accessed July 10, 2005]
4.21 PSO Transformation
With the successful implementation of well-perceived and calculated strategies during the
last five years, PSO has emerged with new outlook in terms of its innovation, image,
sales and financial performance.
Indeed it is now the market leader with a vision that has been translated into long-term
strategic plans. The corporate turnaround has been widely acknowledged and appreciated
by local as well as international firms, academia and prestigious institutions and can be
summarized below:
Fig 4.33: PSO Turnaround149
149
The following figures illustrate how over the last five years, PSO has been able to gain
phenomenal success and has managed to create a high-quality, corporate image in the
hearts and minds of its target customers.
Fig 4.34: Innovative Branding Transformation150
150
The company has not only been able to arrest the chronic decline in market share of
Mogas, which had been declining consistently at a cumulative average growth rate of
3.5% p.a. during the last several years, but was also able to gain almost 4% share during
the last 3.5 years, whereas Shell’s share plunged to 36% from 43%.151
Had PSO not embarked on strategic initiatives, the company would have not only lost
significant volumes but also its market participation as indicated by the dashed line in the
following graphical illustration.
Fig 4.35: PSO Motor Gasoline Share – Post Implementation151
In diesel, the story is not much different. PSO not only managed to contain the decline in
market share which had also been registering sharp downturn at a a cumulative average
growth rate of 3% till FY00 but also elevated its market participation to 61% and Shell
came down from 31% to 26% during the same period.
151
It is obvious from the following illustration that PSO would have touched 48% share
during fiscal year 2004 if the company had not undertaken its strategic reform process.
Fig 4.36: PSO Diesel Share – Post Implementation152
PSO has thus emerged as the only public sector entity in Pakistan that has been
competing effectively with three multinationals companies, which are supported
technically by their parent organizations. Owing to its radical turnaround, the company
has been a popular topic of case studies in Pakistan and abroad, and has recently become
a member of the World Economic Forum.
Fig 4.37: PSO & Major Competitors Market Share152
152
In a mere span of approximately 5 years, PSO has miraculously transformed from a

lackluster, bureaucratic company, into role model for government/semi government
organizations in Pakistan, an inspiration for public and private companies, an object of
admiration by the international corporate community and a major concern for
multinational companies operating within the country.
PSO's New Vision Retail Outlets (NVRO) are a tangible representation of its
transformation and a visible proof of PSO's brand new vision and dynamic new spirit.
PSO as a company has played a major role in elevating the quality of life of millions of
consumers by bringing innovative and novel products and services to them. It has
touched the life of millions of people in Pakistan, whether they are part of its supply
chain being suppliers or using its products and service as customers or working with it as
employees.153
153
CHAPTER 5
CONCLUSION &
RECOMMENDATIONS
5.1 Conclusion
The hypothesis based on the literature review and introduced in chapter three would now
be either approved or rejected based on the findings and analysis in chapter four.
Refer to section 4.17 and section 4.18.
Based on the analysis it can be concluded that Below The Line (BTL) activities such as
the use of Billboards, Mega hoardings, Road Gantries, Road Signs and Banners displayed
at retail outlets are the most effective type of advertising in the Oil Marketing Industry.
Hence, hypothesis H1 stands rejected.
Refer to section 4.13, 4.14 and 4.15.
Based on the subsequent analysis the researcher has clearly highlighted the correlation
between building superior brand elements and creation of a strong brand image. Thus,
hypothesis H2 stands proven.
H3: A brand with a high level of innovation leads to greater market shares
Refer to section 4.3.2 and section 4.21.
Based on the preceding analysis it can best be concluded that it is only an innovative
brand, which results in greater mind and market share. Thus, hypothesis H3 stands
proven.
5.2 Recommendations
The researcher would be giving the following recommendations based on the results of
market survey conducted, in the twin cities of Islamabad & Rawalpindi, and the in depth
brand analysis of Pakistan State Oil (PSO).
5.2.1 Aggressive Advertising Strategy
Pakistan State Oil (PSO) has focused its primary efforts in below the line marketing
activities such as billboards, road signs and mega hoardings. However, PSO has not
pursued an aggressive advertising strategy along with its other marketing activities.
The few adverts that have been developed lack professional insight and fail to arouse
consumer interest in the wake of other oil marketing companies with more aggressive
advertising strategy.
The researcher has analyzed through the detailed market survey that majority of the
consumers are unaware of the major industry level innovations undertaken by PSO. For
instance, consumers were unaware of the launch of Green XL plus Diesel environment
friendly fuel, Pakistan’s first Auto-Car wash plants, Hanging Electronic Dispensing Units
to name a few.
This clearly indicates the fact that although PSO has been coming up with innovative
products, it has not been able to communicate the message to its targeted audience
successfully owing to its poor advertising strategy both on TV channels and Radio
channels such as FM 89, FM 100 and Power 99 which have gained immense popularity
over the last few years.
5.2.2 Innovative Lubricant Marketing Campaigns
Pakistan State Oil (PSO) has been unable to introduce innovative marketing campaigns
especially in the lubricants technology. Competitors such as Shell and Caltex have been
able to position their brands Helix and Havoline at a much higher rank than PSO’s
Castrol GTX.
Although, PSO is the sole distributor of Castrol GTX lubricant which has been acquired
by British petroleum globally, and is considered as worlds No 1 Motor Oil, PSO in
Pakistan has failed to launch and market it successfully amongst the Pakistani consumers.
Despite the fact that PSO is making above average profits as compared to any other Oil
Marketing Company it has not increased its marketing budget accordingly. Thus, PSO
must undertake efforts to increase its marketing budget for long-terms success.
5.2.3 Drastic Improvement in Customer Service
Customer services in one key area where consumers have a lot of complaints from
Pakistan State Oil (PSO). The researcher has analyzed that pump attendants and
associated staff at PSO outlets is not as friendly and caring as that at either, Shell
Pakistan Ltd, Caltex Oil Pakistan Ltd and Total Parco Pakistan Ltd.
The researcher has analyzed the fact that staff at PSO retail outlet is not being trained and
compensated to the same extent as that at all other retail outlets. This negligence on part
of PSO can cost it seriously in the long–term as customers are becoming more and more
demanding day by day.
5.2.4 Greater Focus on CNG Infrastructure
The research report discusses the strong impact of CNG in the Pakistani consumer
society. In the wake of the current situation, Pakistan State Oil (PSO) must not neglect
this upcoming opportunity and exploit it to its full potential by ensuring that all PSO
retail outlets should also be capable of providing CNG to the masses.
5.2.5 Retail Rationalization Strategy
Pakistan State Oil (PSO) has a company wide network of over 3800 retail outlets.
However, there are a score of sites which have below average sales performance and are
yielding very low return on invested capital. PSO must identify such sites and either
revamp them completely or close their operations. This strategy would allow the
company to re-focus on its existing retail outlets and improve sales through them
accordingly.
5.2.6 Excellent Housekeeping/ Cleanliness at Retail Outlets
The retail outlets of Pakistan State Oil (PSO) are not as clean and properly maintained as
that of any other Oil Marketing Company. The researcher has analyzed that majority of
the retail outlets badly need to be painted and no serious attention is given to proper
housekeeping and outlet maintenance.
The researcher has analyzed the fact that since the company has been making high sales
from majority of its outlets it has somehow under-estimated the importance of proper
maintenance and housekeeping of retail outlets. Lack of cleanliness outlets including
worn out company signage and equipment does not go unnoticed from the eyes of the
consumers and deteriorates the overall image of any brand.
5.2.7 Attract and Retain Quality Human Resource
Pakistan State Oil (PSO) has been unable to retain quality human resource from the very
beginning. Young university graduates are attracted initially by the prestigious brand
name associated but fail to work for longer periods of time. Many employees have used
PSO as a launching pad for their careers.
The researcher has analyzed that the major reason for high employee turnover is the lack
of proper systems, somewhat bureaucratic and VIP culture and most importantly overall
employees are being underpaid.
Thus, PSO must understand the importance of Human resource as the most important
asset and it should improve its reward and compensation systems in accordance with the
prevailing oil marketing standards both locally an globally.
5.2.8 Adopt Backward Vertical Integration Strategy
Pakistan State Oil (PSO) is currently dependent on Attock Refinery Ltd (ARL), National
Refinery Ltd (NRL), Pakistan Refinery Ltd (PRL) and Parco Refinery Ltd for its sources
of fuel supply.
The researcher has analyzed that the Attock Oil Group which owns Pakistan oilfields Ltd
(POL) and Attock Refinery Ltd (ARL) have now got the ownership and management
control of National Refinery Ltd (NRL).
The group has also introduced its own Oil Marketing Company, Attock Petroleum Ltd
(APL) just few years back. Attock Petroleum Ltd (APL) has the distinct advantage of
having assured and cost-effective source of fuel supply from both Attock Refinery Ltd
(ARL) and now National Refinery Ltd (NRL).
Total–Parco Pakistan Ltd (TPPL) also has a long term agreement and joint-venture
between Total Fina Elf and Parco Oil Refinery for cost-effective and assured source of
fuel supply.
Thus, it is hereby recommended that with the amount of financial resources and expertise
available at Pakistan State Oil (PSO) and in the wake of industry trends as initiated by
Total - Parco Pakistan Ltd (TPPL) and now Attock Petroleum Ltd (APL) Pakistan State
Oil (PSO) must introduce its own Refinery within the next few years in order to gain a
sustained and cost-effective source of fuel supply.
5.2.9 Use Pipelines rather than Road Tankers
Pakistan State Oil (PSO) should concentrate on extensive use of Pipelines for sources of
fuel supply rather than Road tankers and railway Wagons. Pipelines are the most cost-
effective and most environment friendly means of fuel transportation from Refineries to
Installations and Depots.
5.2.10 Develop Alternate Energy Infrastructure
Pakistan State Oil (PSO) is one of those few Oil marketing Companies, which have failed
to develop their own R&D infrastructure. In the wake of rising fuel prices, Pakistan State
Oil (PSO) must realize the crucial importance of alternate energy sources of Solar, Wind
and Hydrogen Fuel Cells Energy.
Multinational Oil Marketing Companies such as Shell, Chevron and Total already have
well established alternate energy R&D departments focusing on building their core
competencies in this field.
The oil marketing giant can develop its own R&D department focusing on the detailed
engineering concepts involved.
Pakistan State Oil (PSO) can also develop a complete retail outlet powered by Solar
Energy as a pilot project, thereby making drastic cost savings and improving long-term
efficiency and productivity.
5.2.11 Benchmark Best Industry Practices
Pakistan State Oil (PSO) needs to benchmark the best industry practices globally and
tailor them according to the needs and requirements of the Pakistani consumer society.
PSO must understand that being a national company it must understand the local market
conditions better and exploit them to its use in order to maintain long-term customer
loyalty and sustained profitability.
The ideal companies to benchmark internationally are Shell, Chevron Texaco, Exxon
Mobil, British Petroleum, Total Fina Elf and OMV. All these oil marketing giants have
established themselves globally and have played a dominant role in over more than 180
countries and historically have been giving all national and regional players of these 180
countries a very intense competition.
Pakistan State Oil (PSO) is no exception to the rule. It is already facing some very tough
competition in the presence of three multinationals who have already established
themselves well in the country. Although Pakistan State Oil (PSO) has been performing
well despite the prevailing competition, chances are it can become complacent at any
point in time, which would result in subsequent loss of market share and brand equity.
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98_fall/theory/weirtz/how8.htm, [Accessed July 10, 2005]
23. How Strong is your Brand – Brand Asset Valuator,

http://www.themanagementor .com
/kuniverse/kmailers_universe/mktg_kmailers/HowStrong.htm, [Accessed
July 21, 2005]
24. Hydrocarbon Development Institute Pakistan Website, http://www.hdip.com.pk,

25. Individual Branding, http://en.wikipedia.org/wiki/Individual_branding,

26. Interbrand’s Brand Strength Model, http://www.themanagementor.com/

k/universe/kmailers_universe/ mktg_kmailers/TheStrength.htm,
27. Market Segmentation, http://en.wikipedia.org/wiki/Market_segment,

28. Michael E. Porter, http://www.leading-minds.com/biography.cfm,

29. Ministry of Petroleum & Natural Resources Website, http://www.mpnr.gov.pk/,

30. Oil – Growing Role of the Private Sector, http://www.pakistaneconomist.com

/database1/cover/c2003-33.asp, [Accessed July 25, 2005]
31. Oil Marketing Competition Heats Up, http://www.pakistaneconomist.com

/database1/cover/c2001-25.asp,[Accessed July 25, 2005]
32. Pakistan Economic Update, June 03-04, http://www.adb.org/Documents,

33. Pakistan State Oil (PSO) Annual Report 2005, Board Committees, Page 44
34. Pakistan State Oil (PSO) Annual Report 2005, Board Committees, Page 45
35. Pakistan State Oil (PSO) Annual Report 2005, Forever Caring, Page 14
36. Pakistan State Oil (PSO) Annual Report 2005, Forever Sunshine, Page 3
37. Pakistan State Oil (PSO) Annual Report 2005, Report to Shareholders, Page 34
40. Pakistan State Oil (PSO) Website, http://www.psocl.com,

41. Pakistan State Oil (PSO) Website, http://www.psocl.com/aboutus/

mission_statement.asp,[Accessed July 10, 2005]
42. Perceptual Mapping, http://www.bambooweb.com/articles/p/e/

Perceptual_mapping.html,[Accessed July 21, 2005]
43. Porters Five Forces, http://www.valuebasedmanagement.net,

44. PSO-PTCL Bidding Targeted During Current Fiscal Year,

http://www.privatisation. gov.pk/Handout, [Accessed July 24, 2005]
45. Segmentation, http://www.drkayfmu.com/topics/segmentation.htm,

46. Shell Pakistan Annual Report 2005, Financial Highlights, Page 28
47. Strong Brands, http://www.loc.gov/catdir/samples/simon031/95009238.html,

48. Supply Department Presentation, Pakistan State Oil (PSO), January 2004
49. The 7S McKinsey Model, http://www.buildingbrands.com/didyouknow

/14_7s_mckinsey_model.shtml,[Accessed 25 July 2005]
50. The Global Marketplace, http://polaris.umuc.edu/~tgrodsky/admn601

/601lect6b.html,[Accessed July 10, 2005]
51. Training Manual 2005, Pakistan State Oil (PSO)
52. Uma Sekaran, Research Methods for Businesses, Fourth Edition, 2000
53. When two Brands are better than one, http://www.accenture.com/xd/xd.

aspit=enweb&xd=ideas \outlook\1.2003\outlook_summary_crm.xml,
____________________________________________
APPENDIX A
CUSTOMER SURVEY
Customer Survey
You have a copy of the Questionnaire for conducting a survey on different oil marketing
companies by a student of NUST Institute of Management Sciences (NIMS) in lieu of
MBA research thesis. The information you give in this section will be used to analyze the
survey results only and no attempt shall be made to identify any individual respondents.
1. Age:
 18 – 25  36 – 50
 26 – 35  Above 50
2. Gender:
 Male  Female
9. Occupation:
 Driver  Public Sector
 Student  Business
 Private Sector  Other
10. Monthly Income:

 None  Less than 20,000
 20,000 – 45,000  45,000 – 70,000
 Above 70,000
11. How long have you been refueling through this PSO outlet:
 Less than 1 year  1 year – 3 years
 3 years – 5 years  More than 5 years
12. What is your frequency of purchase from this PSO outlet:

 1 – 3 times per week  3 – 5 times per week
 5 – 7 times per week  Daily
13. On majority of the occasions from where have you been refueling previously:
 Total  Caltex
 Shell  PSO
14. You prefer this retail outlets because of it(s):

 Excellent Customer Service
 Strategic location (it comes in my way)
 Size and cleanliness (lots of free space available)
 I trust the quality & quantity of fuel dispensed from this outlet
 Non-fuel facilities such as Shop Stop, Car Wash, Business Center, Tyre Shop
 Other, Please identify ____________________________________________
9. Which Non-fuel retail facilities have you tried at any of the PSO outlet(s):
 Shop Stop
 Business Center (Internet Kiosk, P.C.O, Fax, Photocopy)
 Auto Car Wash Plant
 Manual Car Wash Plant
 Speedy Oil Change Machine
 Tyre Shop
 Other, please identify_____________________________________________
10. Which PSO Card do you use for the purpose of fueling:
 Corporate Card  Fleet Card
 Loyalty Card  Prepaid Card
 I don’t use any PSO card
11. What are the benefits of using the above PSO Card:
 Flexibility and convenience
 No cash handling risk
 No fuel-slip hassle
 Reduced transaction time
 Personalized credit-card with pre-approved limit
 Consolidated computerized billing
 Controls pilferage and misuse
 World of rewards through loyalty points
12. Are you aware of the launch of the following Oil Marketing Companies:
Admore  Yes  No
Attock  Yes  No
13. In your opinion, which is the largest oil marketing company in Pakistan:
 Caltex  Shell  PSO
 Total  Attock  Admore
14. In your opinion, which company has introduced “Green XL Plus Diesel”:
15. In your opinion, which company has introduced Pakistan’s first hanging
dispensing units in Karachi and Lahore:
16. In your opinion, which company has introduced Pakistan’s first Auto-Car
Wash Plant in Islamabad, Lahore and Karachi:

17. In your opinion, has PSO improved its overall image in the last five years:
 Yes  No
18. What are the areas in which you believe PSO has improved it’s retail outlets:
 More educated and friendly staff
 Better forecourt services
 Guaranteed Quality & Quantity of fuels offered
 Improved housekeeping/ cleanliness of outlets
 Better construction/ layouts/ design of retail outlets
 More innovative products/ campaigns
 Attractive Signage/ branding at retail outlet
 Better non-fuel services offered including Shop Stop, Car Wash, Tyre Shop,
Business Center, Internet, P.C.O, Fax, Oil Change Facility
 PSO Cards (Corporate card , Fleet card, Loyalty cards, Prepaid cards)
 I don’t think PSO has improved itself over the last few years
 Other, please identify ____________________________________________
20. Are you aware of the launch of PSO’s “Forever Sunshine” campaign:
 Yes  No
20. How did you come to know about this campaign:

 Word of Mouth  Witnessed at the outlet
 Print Media  TV Advertisements
 Not aware of this campaign
21. In your opinion, Ads of which oil marketing company are the most
attractive:
 Caltex  Shell  Total
 Attock  Admore  PSO
22. In your opinion, in the last five years the standard of the following oil
marketing companies has (Tick the relevant choices):
Deteriorated Stagnant Slight Drastic

Improvement Improvement
CALTEX
TOTAL
SHELL
PSO
ADMORE
ATTOCK
23. How would you rank the oil marketing companies on the following attributes
Branding Activities
(Including Billboards, Mega hoardings, Road Signs, Road Gantries, Company Signage)
(Rank from No 1 being best to No 6 being lowest)
CALTEX 1 2 3 4 5 6
TOTAL 1 2 3 4 5 6
SHELL 1 2 3 4 5 6
ADMORE 1 2 3 4 5 6
PSO 1 2 3 4 5 6
ATTOCK 1 2 3 4 5 6
Level of Customer Service

CALTEX 1 2 3 4 5 6
TOTAL 1 2 3 4 5 6
SHELL 1 2 3 4 5 6
ADMORE 1 2 3 4 5 6
PSO 1 2 3 4 5 6
ATTOCK 1 2 3 4 5 6
Overall Most Preferred Brand
CALTEX 1 2 3 4 5 6
TOTAL 1 2 3 4 5 6
SHELL 1 2 3 4 5 6
ADMORE 1 2 3 4 5 6
PSO 1 2 3 4 5 6
ATTOCK 1 2 3 4 5 6
24. In your opinion, what are the biggest weaknesses of PSO as a brand:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
25. In your opinion, how can PSO improve as a brand:
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
Thanks for being a vital part of the analysis!!!
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Muhammad Usman Sethi – MBA 2k3(B) Strategic Brand Analysis of PSO

Assistant Professor Ms. Zeenat Jabbar 1 NUST Institute of Management Sciences

1.4.1.2 Largest Retail Network..............................................................................76

Assistant Professor Ms. Zeenat Jabbar 2 NUST Institute of Management Sciences

2.13 The Graveyard Model..........................................................................................102

Assistant Professor Ms. Zeenat Jabbar 3 NUST Institute of Management Sciences

2.21 Brand Positioning................................................................................................123

Assistant Professor Ms. Zeenat Jabbar 4 NUST Institute of Management Sciences

3.8 Hypothesis Restated.............................................................................................143

Assistant Professor Ms. Zeenat Jabbar 5 NUST Institute of Management Sciences

Assistant Professor Ms. Zeenat Jabbar 6 NUST Institute of Management Sciences

Fig 1.0 Market Share of Oil Marketing Companies 13

Assistant Professor Ms. Zeenat Jabbar 7 NUST Institute of Management Sciences

Fig 4.5 Perceptual Map V 170

Assistant Professor Ms. Zeenat Jabbar 8 NUST Institute of Management Sciences

Fig 4.36 PSO Diesel Share – Post Implementation 219

Assistant Professor Ms. Zeenat Jabbar 9 NUST Institute of Management Sciences

Table 1.0 No. of CNG stations in Pakistan 15

Assistant Professor Ms. Zeenat Jabbar 10 NUST Institute of Management Sciences

Table 4.12(b) Survey Finding Q12(b) 151

Assistant Professor Ms. Zeenat Jabbar 11 NUST Institute of Management Sciences

Assistant Professor Ms. Zeenat Jabbar 12 NUST Institute of Management Sciences

1.0 Industry Overview

Fig 1.0: Market Share of Oil Marketing Companies2

Assistant Professor Ms. Zeenat Jabbar 13 NUST Institute of Management Sciences

Assistant Professor Ms. Zeenat Jabbar 14 NUST Institute of Management Sciences

Period PSO SHELL CALTEX TPPL Pvt. TOTAL

Table 1.0: No. of CNG stations in Pakistan4

Fig 1.1 CNG Market Share (% of OMC’s)4

Assistant Professor Ms. Zeenat Jabbar 15 NUST Institute of Management Sciences

Assistant Professor Ms. Zeenat Jabbar 16 NUST Institute of Management Sciences

Table 1.1: Long-term Petroleum Demand/ Supply6

Assistant Professor Ms. Zeenat Jabbar 17 NUST Institute of Management Sciences

Assistant Professor Ms. Zeenat Jabbar 18 NUST Institute of Management Sciences

1.1 PEST Analysis: Downstream Oil Industry

1.1.1 Political Factors

Assistant Professor Ms. Zeenat Jabbar 19 NUST Institute of Management Sciences

Assistant Professor Ms. Zeenat Jabbar 20 NUST Institute of Management Sciences

1.1.2 Economic Factors

Assistant Professor Ms. Zeenat Jabbar 21 NUST Institute of Management Sciences

Fig 1.2: Primary Energy Supplies by Source15

The government is providing an investment-friendly environment for the energy sector to

Assistant Professor Ms. Zeenat Jabbar 22 NUST Institute of Management Sciences

Table 1.2: Pakistan’s Annual Energy Consumption16

Table 1.3: Consumption of Petroleum Products (‘000 tonnes)16

While consumption of petroleum product is declining the consumption of other

Assistant Professor Ms. Zeenat Jabbar 23 NUST Institute of Management Sciences

Assistant Professor Ms. Zeenat Jabbar 24 NUST Institute of Management Sciences

1.1.3 Social Factors

Assistant Professor Ms. Zeenat Jabbar 25 NUST Institute of Management Sciences

Table 1.4: Consumption of Natural Gas (Billion cft)20

Assistant Professor Ms. Zeenat Jabbar 26 NUST Institute of Management Sciences

Assistant Professor Ms. Zeenat Jabbar 27 NUST Institute of Management Sciences

1.1.4 Technological Factors

Assistant Professor Ms. Zeenat Jabbar 28 NUST Institute of Management Sciences

To ascertain techno-economic viability of Thar coal for gasification and extraction of

Assistant Professor Ms. Zeenat Jabbar 29 NUST Institute of Management Sciences

1.2 Porters Five Forces Analysis: Downstream Oil

Fig 1.3: Michael E. Porter25

Assistant Professor Ms. Zeenat Jabbar 30 NUST Institute of Management Sciences

Fig 1.4: Porters Five Forces Model27

Assistant Professor Ms. Zeenat Jabbar 31 NUST Institute of Management Sciences