Financial Mangement Term Paper On Conoco

Marketing Management Term paper on ConocoPhillips
Marketing Management Term Paper on ConocoPhillips

A Term Paper Presented to the Faculty of Business Administration in the partial
fulfillment of the requirements of the Masters in Business Administration (MBA)
Submitted to
Professor M. Madmodul Hasan

Faculty EMBA/ MBA Program,
North South University, Bangladesh
Submitted By
Kochhoper Deem
Group Members
Sabrina Awal
Upoma
Md. Shamsul
Arafin
ID: 151 2874 060
ID: 151 222 3060
Syeda Shotorupa
Zafar
ID: 151 2772 660
MBA- BUS 620: Marketing Management

Section: 4, North South University, Bangladesh
Date of Submission: 22nd August, 2015
Letter of Transmittal:
14 August 2015
Professor Dr. M. Mahmodul Hasan

Faculty EMBA/ MBA Program, North South University
Plot: 15, Block: B, Bashundhara, Dhaka 1229, Bangladesh
Subject: Submission Term Paper on ConocoPhillips
Dear Sir,
This is our sincerely pleasure in submitting term paper on ConocoPhillips as was the
term paper requirement of the Marketing Management course for MBA program this
Summer 2015 in North South University.
We tried utmost to make and let it look like a professional one through some practical
analysis and research. Any shortcomings are expected to have a kind view for our
encouragement. Thank you for your sincere & honest try and help us to make the paper
a successful one.
Our efforts will be valued; if this term paper serves the purpose for what its been
assigned.
Sincerely Yours,
Sabrina Awal Upoma:
________________________
Md. Shamsul Arafin:
________________________
Syeda Shotorupa Zafar:
________________________
Acknowledgement:
At first, we would like to express our gratitude to almighty ALLAH who has given us the
opportunity to go through the total process of Marketing Management and to write a
paper in this regard.
The term paper on ConocoPhillips in light of the course Marketing Management (BUS620) results from considerable intellectual and moral support given by our honorable
course instructor, Professor Dr. M. Mahmodul Hasan, Faculty EMBA/ MBA
Program, North South University. Over the last three months, he has been our guide
from whom we got the inspiration and guidance to learn Marketing Management. We
strongly believe works like this one will surely help us to develop & make us better
adapted as well as capable to cope with the issues & practical exposures in this field as
well as to the whole of the legislative tools that are being extensively exploited in todays
world.
Finally we want to thank each other. As without the team effort the work may not
happen. Each and every member tries to give their best effort to finish the report as per
guidelines.
Executive Summary:
ConocoPhillips Co. is an American multinational energy corporation with its
headquarters located in the Energy Corridor district of Houston, Texas in the United
States. It is the worlds largest independent exploration and production company, based
on proved reserves and production of liquids and natural gas. They explore for, develop,
and produce crude oil and natural gas globally. A commitment to safety, operating
excellence and environmental stewardship guide our operations.
The company strategy, at the core, is based on a diversified approach to the business
one that does not rely or depend on any particular product type, geology or geography.
Their diversified portfolio has helped them continue operating long-term business
without the need to react to short-term market volatility. They run their business under
a set of guiding principles that are called their SPIRIT Values.
ConocoPhillips has big brand name and strong market position, high level marketing,
approximately 17000 employees worldwide, largest Exploration and Production
(Upstream) company. But the cost of environmental hazards, declining oil reserves and
production, pollution and increasing cost and complexities of new exploration and
production projects are the biggest weaknesses of this industry.
Yet immense opportunities of increasing natural gas market, more oil well discoveries,
increasing demand for gas and refined products are on the line.
Perhaps, Government regulations, pollution guidelines, high labor costs and hybrid cars
not using Fuel can be giant threats to this industry.
ConocoPhillips is the simultaneous pursuit of differentiation and low cost. The main
head to head competition is with Chevron. The aim of ConocoPhillips is not to outperform the competition in the existing industry, but to create new market space or a
blue ocean, thereby making the competition irrelevant. Marketing activities are
performed through offices in the United States, Canada, Europe and Asia. They mainly
attempt to minimize flow disruptions, maximize realized prices and manage credit-risk
exposure.
The company has a strong internal environment and in near future it finds attractive to
explore in Senegal, West Africa.
Conoco Philipss recent move of focusing on oil for next five years is well aligned with its
energy outlook and long-term investments in relatively high-growth area of energy. At
the end we can conclude it by saying that their presence in Bangladesh will definitely
advance the national energy industry in Bangladesh and will also add to the growing
base of ConocoPhillipss core operations.
Table of Contents
Chapter 1:..................................................................................................................... 1
1.1.
Definition of Marketing Management:..................................................................2
1.1.1.
Definition of Marketing Management (Theory 2000 2011).............................2
1.1.2.
Definition of Marketing Management (Theory 2012 2016 )...........................2
1.1.3.
Marketing Management and ConocoPhillips:..................................................2
1.2.
Mission-Vision-Business Plan-Corporate Strategy:.................................................3
1.2.1.
Mission of ConocoPhillips:...........................................................................3
1.2.2.
Vision of ConocoPhillips:.............................................................................3
1.2.3.
Business Plan of ConocoPhillips:...................................................................3
1.2.4.
Corporate Strategy:..................................................................................... 6
Chapter 2:.................................................................................................................... 7
2.1. SWOT:................................................................................................................ 8
2.2. PASTLE:............................................................................................................. 9
2.3. Michael Porters Five Forces:................................................................................ 10
Chapter 3:.................................................................................................................. 11
3.1. Marketing Strategy:............................................................................................. 12
3.2. Core Marketing Concept:..................................................................................... 16
Chapter 4:.................................................................................................................. 18
4.1. Value Chain Model:............................................................................................. 19
4.2. TQM- Loyalty-Quality-Control:............................................................................. 20
Chapter 5:................................................................................................................... 23
5.1. Brand and Branding:........................................................................................... 24
5.2. Box Analysis and Brand Elements:........................................................................25
5.3. Brand Dynamic Pyramid:..................................................................................... 26
5.4. The five Ms advertising:...................................................................................... 27
Chapter 6:.................................................................................................................. 28
6.1. Pricing Strategies:............................................................................................... 29
6.2. Breakeven Analysis with Graph:............................................................................29
Chapter 7:................................................................................................................... 32
7.1. Recommendations:.............................................................................................. 33
7.2. Conclusion:........................................................................................................ 34
7.3. References:........................................................................................................ 35
Chapter 1:
Marketing Management Term Paper
1.1. Definition of Marketing Management:

1.1.1.
Definition of Marketing Management (Theory 2000

2011)
Marketing management is the art and science of choosing target markets and
getting,
keeping,
and
growing
customers
through
creating,
delivering,
and
communicating superior customer value.
1.1.2.
Definition of Marketing Management (Theory 2012

2016 )
Marketing management depends on the size of the business and the industry in
which the business operates. Effective marketing management will use a company's
resources to increase its customer base, improve customer opinions of the company's
products and services, and increase the company's perceived value.
1.1.3. Marketing Management and ConocoPhillips:

ConocoPhillips Marketing Strategy both Relate to Theory 2000-2011 and Theory 20122016. No doubt, ConocoPhillips choose its target markets getting, keeping, and
growing customers through creating, delivering, and communicating superior customer
value. Besides, ConocoPhillips is the worlds largest independent exploration and
production company based on reserves and oil production. ConocoPhillips now focuses
on exploration and production. The company explores for produces, transports, and
sells crude oil, bitumen, natural gas and so on. Moreover, Effective marketing
management will use a company's resources to increase its customer base, improve
customer opinions of the company's products and services, and increase the company's
perceived value. Its prove ConocoPhillips relates with Marketing Management strongly.
1.2. Mission-Vision-Business Plan-Corporate Strategy:

ConocoPhillips Co. is an American multinational energy corporation with its
headquarters located in the Energy Corridor district of Houston, Texas in the United
States. It is the world's largest independent pure-play exploration and production
company and is also one of the Fortune 500 companies. ConocoPhillips was created
through the merger of Conoco Inc. and the Phillips Petroleum Co. on August 30, 2002
1.2.1.
Mission of ConocoPhillips:
ConocoPhillipss primary mission is to develop innovative ways to treat and reuse byproduct water from oil and gas production and refining operations.
1.2.2.
Vision of ConocoPhillips:
The vision of the Global Water Sustainability Center (GWSC) is to become the center of
excellence for key water-related technologies particularly those applicable to the
petroleum and municipal sectors.
1.2.3.
Business Plan of ConocoPhillips:
Oil and gas production is serious business. Over the years, ConocoPhillips has
undergone various changes, and now, it has become a much-organized business. It
comprises three sectors:
The upstream sector: The upstream sector entails oil prospecting and
exploration, drilling for oil, and drawing it out of the ground. These activities are
the earliest stages of oil production.
The midstream sector: The midstream sector entails transportation, storage,

and wholesale marketing or crude or refined petroleum products. Activities in
this sector are aimed at moving crude oil from the site where it is drawn to
refineries where it will be processed into the various petroleum products.
The downstream sector: The downstream sector entails storage of petroleum

products as well as transportation, marketing, and everything else that happens
until the products finally get to consumers.
Although several products are made from crude oil, only four of them are in huge
demand. These are:
o Petrol or gas (also called gasoline or PMSpremium motor spirit)
o Diesel (also called AGOautomotive gas oil)
o Kerosene (also called paraffin or DPKdual-purpose kerosene)
o Cooking gas (also called LPGliquefied petroleum gas).
The demand for these four products is high because they are widely used for everyday
activities such as transport, domestic cooking, and so on. With the above in mind, lets
now look at the steps involved in starting an oil and gas company.
For Business Plan, ConocoPhillips usually follows the steps are given in the below:
Figure 1: Steps of Winning Corporate Plan of ConocoPhillips

For making a market winning corporate plan ConocoPhillips does market research to
understand the intricacies of the market and pitfalls or challenges that new entrants are
likely to encounter. This research always helps them to make and know goals and
objectives of your business, required startup costs, operation plan and cost, market
analysis and competition, projected income over the first few years, marketing strategy,
unique selling point, exit strategy, and other vital information through which
ConocoPhillips easily make the entry planning in the new market and develop the
existing market by hiring effective employees and Buy and install the necessary
equipment. By following these steps ConocoPhillips turn into a successful industry now.
1.2.3.1.
Environment Analysis of ConocoPhillips:
The company business plan, at the core, is based on a diversified approach to the
business one that does not rely or depend on any particular product type, geology or
geography. Their diversified portfolio has helped them continue operating long-term
business without the need to react to short-term market volatility. With a steady stream
of production from legacy assets, conventional and unconventional opportunities in
development drilling programs, major project startups across the portfolio, and an
extensive inventory of exploration prospects, they are well positioned to deliver organic
growth. They believe this is the right formula for a company of our substantial size.
1.2.3.2.
Goals Formulations:
ConocoPhillips runs their business under a set of guiding principles that are called their
SPIRIT Values. These set the tone for how they behave with all their stakeholders,
internally and externally. ConocoPhillips has both long term and short term goals. To
formulate the long term and short term goals, company strictly follows some steps:
Safety- Company operates everything safely.
People- Company respects one another, recognizing that the success depends upon the
commitment, capabilities and diversity of the employees.
Integrity- ConocoPhillips is ethical and trustworthy in their relationships with
stakeholders.
Responsibility- Company is accountable for the actions.
Innovation- Company anticipates change and respond with creative solutions.
Teamwork: The can do spirit delivers top performance. Company encourages
collaboration, celebrate success, and build and nurture long-standing relationships.
1.2.3.3.
Strategy Formulations:
ConocoPhillips remain committed to our 5 strategic priorities:

Maintain a relentless focus on safety and execution.
Offer a compelling dividend.
Deliver 3 to 5% compound annual production growth.
Deliver 3 to 5% compound annual margin growth.
Achieve ongoing improvements in financial returns.
1.2.3.4.
Program Formulations and Implementation:
To achieve organizational goals ConocoPhillips continue investing and implementing its

goals and strategies in projects and programs that deliver long-term production and
margin growth.
In 2013, the company was funded a $16.3 billion capital program for continuing
operations and prepaid $2.8 billion obligation to our 50% owned FCCL business
venture.
In 2013, budget allocated approximately 10% of this capital toward maintenance

of the legacy base assets, 45% to development drilling programs, 30% for major
growth projects, and 15% for exploration and appraisal programs.
1.2.3.5.
Feedback and Control:
After implementing all goals, strategies and programs ConocoPhillips takes feedback
and control the feedbacks. If the plan is not according to the schedule, then Company
evaluates it and adjusts for the betterment and this continuous process of improvisation
remains present all the year.
1.2.4.
Corporate Strategy:
ConocoPhillips corporate strategies are:

1.2.4.1.
Corporate Mission:
ConocoPhillipss corporate mission is to- develop innovative ways to treat and reuse byproduct water from oil and gas production and refining operations.
1.2.4.2.
Strategic Business Units:
ConocoPhillipss Strategic Business Units are:
Energy Efficiencies Units

Units of Centralized Facilities. Because, Centralizing water collection reduces
truck mileage which is more energy efficient and creates less emissions
Using Green Completions Technology in 2007
1.2.4.3.
Asses Growth Opportunities:
ConocoPhillips is setting a goal to grow up its productions. Because company

believes that, through its asset base, technological capacity and world class
workforce and financial strength company can easily add its value propositions.
Besides companys investments and financial strength indicates its high volume
of productions. For Example, The Company estimates to increase its production
from 1.8 billion barrel of oil to 2.5 billion barrel of oil.
ConocoPhillips wells have the highest oil rates.
Focus on improving financial returns by through Capital Discipline and ongoing

cost efficiencies.
Chapter 2:
2.1. SWOT:
S
TW
O
T
h re a ts
Figure 2: SWOT analysis of ConocoPhillips
10
2.2. PASTEL:
T r a d P
e
o
l i
t
i
c
a
l
l t hS
o
c
i
a
l
R Ee
c
o
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t r
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s i o
t i o
s n
s s
11
P
e
o
l i
t
i
c
a
l
R Ee
c
o
n
o
m
i
c
a
t r
i c
t i o
Supplier Power
Threat of New
Entrants
High barriers to entry

with existing large &
powerful companies
Importance of the
large volume to the
suppliers
Switching costs in the

same industry
Relative cost benefit

judgments &
preference to uphold
Threat of
Substitutes
new energy
conserving
technologies that are
being developed.
Alternative fuel
products are a threat
to the oil and gas
industry in the long
run.
Degree of Rivalry
Intense competition
among the existing
companies, as
Absolute cost
ConocoPhillips is the
advantages
worlds largest
Growth of industry
exploration & production
Marketing
Management
with
access
to inputs Term Paper
Brand identity
12
Price-performance
trade off substitutes.
Buyer Power
Influential bargaining
power in forcing the
price down.
Bargaining Leverage
& price sensitivity due
to
the
prevailing
market conditions of
crude oil.
Amount of product
differentiation.
Figure 4: Michel Porters Five Forces
Chapter 3:
13
3.1. Marketing Strategy of ConocoPhillips:

Marketing Strategy:
As a Successful company ConocoPhillips follows some marketing strategies. 4 Killer
Marketing Strategies that ConocoPhillips are following from many years are given
below:
14
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Figure 5: Marketing Strategy of ConocoPhillips
1. Talk to Those who Matters in the Market:

This is really a tough task for ConocoPhillips to go to the petrol or gas pump and talk
with the industries and customers. But to market its product ConocoPhillips employees
communicate strongly with its target customers regularly to fulfill their demand and to
be updated.
2. Concentrate only one Customer at a Time:
Basically ConocoPhillips is sale its product as station basis. And every day a huge
quantity of Oil or Gas is sold at a time and here every customer and stations are
important for them. So, make a strong and profit making position in the market, it
needs to give full concentration at a single time. Because, this time increase one
customer means increase supply and increase supply means rising of profit.
3. Look at Local Small Group:
15
Not only large Companies, to make a strong position in the market ConocoPhillips also
focus on different specific areas even if local groups of a country, as local station or
pump has small tanks, they need to buy huge oil and gas every day. Through this way
ConocoPhillips emerge its networks.
4. Advertise on Mass Media:
ConocoPhillips widely promotes its any project or News in the Online news paper and
magazine to branding themselves. Its a great marketing strategy ever which makes
them a company with a huge success.
3.2. Core Marketing Concept of ConocoPhillips:

ConocoPhillips is one of 23 Integrated Oil and Gas companies. The Integrated Oil and
Gas Industrys average sales in 2005 were $1.4 trillion. While 23 companies may seems
like a lot of competition, it is in fact relatively small when compared to the size of the
industry. ConocoPhillips average sales over the last 3 years were $142 billion; this
accounts for roughly 10% of the industrys sales in 2005. It is also important to note that
ConocoPhillips sales are on the upturn, so this percentage is likely to increase 6. Its
main integrated oil competitors are Amerada Hess, ChevronTexaco, ExxonMobil,
Marathon, and Occidental.
These companies deal in both up upstream and downstream operations. Upstream
operations involve exploration and production while downstream operations include
refining and marketing. ConocoPhillips has other competitors whose entire business is
focused on either downstream or upstream operations. These competitors included
Anadarko, Dynegy, Valero, and Halliburton just to name a few. ConocoPhillips has a
competitive advantage over these companies because being involved in both
downstream and upstream operations allows the company to remain profitable when
one operation lags. If prices or competition in one operation becomes unfavorable, the
other operation can cover the losses. ConocoPhillips is the third largest integrated
energy company in the United States and second largest refiner in the United States.
16
Worldwide, ConocoPhillips has the fifth largest proved reserves and is the fourth largest
refiner. Because the energy business has very high demand and there are relatively few
competitors in the industry, existing firms do not engage in price wars. Instead, they
compete on non-price dimensions. One of the major non-price dimensions firms
compete on is the size and reach to which they can offer their products.
Figure: Core Marketing Concept of ConocoPhillips

ConocoPhillips has a competitive advantage over most of these companies due to their
size, vertical integration, and scope of operations. Because existing firms do not engage
in price wars, firms focus on increasing the
offer their products and offer other
chemicals.
The
ConocoPhillips
low,
so
are
ready
degree
and
size and reach to which they can

products such as asphalts and
of
differentiation for
its
competitors
their
customers
to
switch from one
competitor to the other
based on price.
This is one of
the most
competitive
markets
involving heavy the art

where both barriers (Entry,
Exit)
competition ranges from public

and the level of competition varies
is
of
technologies
are
high.
The
and state owned enterprises

within
different
geographic
locations like Latin America, Alaska would be much more different than the Middle East
and that in Asia including Bangladesh. Company in the entire industry; however, the
largest publically owned firms and competitor of Conoco Phillips are Exxon Mobil,
Chevron, Royal Dutch Shell PLC, BP PLC and Total SA. With decades of experience as
an organization, COP is without doubt one of the dominating market leaders since they
had the third largest worldwide liquids compare to other competitors include Chevron,
Exxon, Santos, BP, Gazporm, etc. Conoco Phillips competes with private, public and
state-owned companies in all facets of the E&P business. Some of our competitors are
larger and have greater resources. They deliver their production into the worldwide
17
SU1epgntMaidm2r-Dow3
commodity markets. Chevron is the industry leader with a strong global presence in the
energy sector. Gazporm is more aggressive in and regular assesses its strength and
quality benchmarks which COP can take into account.
In Bangladesh the company such as Petro-bangla and BP are state owned public
ventures with strong support and continuous growth and development by government,
which is a disadvantage or drawback for ConocoPhillips in the Asia Pacific region. But
by the help of advance technology and skill, it has a huge alive hope to operate in such
region in near future where just like Chevron Bangladesh is operating, which is very
much successful and operates successfully as a biggest energy provider organization in

Bangladesh.
3.3. Market Segment:
ConocoPhillips is broadly classified into three segments in the market. The upstream
segment comprises exploration and production (E&P), while the downstream segment
includes refining and marketing (R&M). In between, the midstream segment includes
the transportation, storage, and trading.
18
Figure: 5- Market Segments of ConocoPhillips
The exploration and production segment is capital intensive, soaking up 70 percent of

total investment of ConocoPhillips. The activity is also riddled with uncertainty with the
number of failures outstripping the number of successful finds. The downstream
segment, meanwhile, is a relatively safer business with operating efficiency and energy
consumption governing profitability.
19
3.4. Marketing Mix (7p& 4c):
Proc
ess
Peop
le
Phys
ical
Evid
ence
7P'
s
Prod
of
uct
Plac
e
Prom
otion
Price
Figure: 7p of ConocoPhillipss
7P in Details of ConocoPhillips
20
Natural Gas:
Their
natural
gas
production,
along
with
third-party
purchased gas, is primarily marketed in the United States,

Canada, Europe and Asia. Their natural gas is sold to a diverse
Product
client portfolio which includes local distribution companies;

gas and power utilities; large industrials; independent,
integrated or state-owned oil and gas companies; as well as
marketing companies.
Crude Oil, Bitumen and Natural Gas Liquids
Their crude oil, bitumen and natural gas liquids revenues are
derived from production in the United States, Canada,
Australia, Asia, Africa and Europe. These commodities are
primarily sold under contracts with prices based on market
indices, adjusted for location, quality and transportation.
Barring a successful addition to ConocoPhillipss proved

reserves, its future crude oil, bitumen and natural gas
Place
production will decline, resulting in an adverse impact to the

business. This is typical of energy companies. The rate of
production from upstream fields generally declines as reserves
are depleted. This depends on the extent that ConocoPhillips
conducts successful exploration and development activities,
or, through engineering studies, identifies additional or
secondary recovery reserves. Its proved reserves will decline
materially as it produces crude oil and natural gas.
21
Marketing activities are performed through offices in the

United States, Canada, Europe and Asia. They mainly attempt
to minimize flow disruptions, maximize realized prices and
manage credit-risk exposure. Commodity sales are generally
Promotion
made at prevailing market prices at the time of sale. In

addition they purchase third-party volumes to better position
the Company to fully utilize transportation and storage
capacity and satisfy customer demand.
A point of note is that since they have separated from their
downstream business since 2012, they have focused on the
production and thus there was a very limited scope for
promotion. However, since COP is still engaged in marketing
their technologies and products, they utilize exclusive
promotional activities like Advertisements, documentaries,
stakeholder meeting to promote the organization.
The effects of changing commodity prices and refining

margins. The revenues, operating results and future rate of
growth are highly dependent on the prices that the Company
Price
receives for the crude oil, bitumen, natural gas, natural gas
liquids, LNG and refined products. The factors influencing
these prices are beyond the Companys control.
Any material change in the factors and assumptions
underlying ConocoPhillipss estimates of crude oil, bitumen
and natural gas reserves could impair the quantity and value
of those reserves. Reserve estimation is a process that involves
estimating volumes to be recovered from underground
accumulations of crude oil, bitumen and natural gas that
Physical Evidence
cannot be directly measured.

When as ConocoPhillips is an Oil and Gas Company, its
22
Process
products evidence is its smell.

The total value delivery process can be termed as its process as
ConocoPhillips explores the site, collect raw material (crude
oil, gas, etc), process or refine then transport the ready
People
products to users.
Mainly there are two types of people get highest preferences in
ConocoPhillips
The people who works there

Its customers
23
4Cs of ConocoPhillips:
Figure: 4Cs of ConocoPhillips
24
Chapter 4:
25
4.1. Value Chain Model:

The value chain is a tool for identifying ways to create more customer value because
every firm is a synthesis of primary and support activities performed to design,
produce, market, deliver, and support its product. For ConocoPhillips, we can develop
their value chain model analyzing their value delivery system as-
Figure: Porters
Generic Value Chain
ConocoPhillips Value Chain:
26
Exploration: Using technologies to find new oil resources. ConocoPhillips

performs seismic surveys to get info about possibility of oil underwater or
underground.
Collection: Production of oil is the operation that brings hydrocarbons to the

surface and prepares them for processing. In ConocoPhillips, production begins after
the well is drilled. The mixture of oil, gas and water from the well is separated on the
surface. The water is disposed of and the oil and gas are treated, measured, and
tested. Production operations include bringing the oil and gas to the surface,
maintaining production, and purifying, measuring, and testing. Artificial lifting
methods are used when the pressure from natural reservoir drive decreases to the
point where the well stops producing. Artificial lift uses pumps and gas injection.
Transportation: Crude oil must be moved from the production site to refineries
and from refineries to consumers. These movements are made using a number of
different modes of transportation. Crude oil and refined products are transported
across the water in barges and tankers. On land crude oil and products are moved
using pipelines, trucks, and trains.
Refining (For Crude Oil): Crude oil is processed or refined to produce useable
products such as gasoline. The process is very complex and involves both chemical
reactions and physical separations. Crude oil is composed of thousands of different
molecules. It would be nearly impossible to isolate every molecule and make finished
products from each molecule.
Processing (For Gas): Natural gas produced from underground reservoirs must
be processed to remove water, impurities, and heavier hydrocarbons. The impurities
are usually hydrogen sulfide and carbon dioxide. The heavier hydrocarbons or
natural gas liquids (NGLs) are ethane (C2H6), propane (C3H8), butane (C4H10), and
natural gasoline. Natural gas liquids are removed from the natural gas feed to
recover the heavier hydrocarbons and to allow the treated gas to move through the
pipeline network. The liquids are removed from the stream because they are more
valuable (have higher prices) as raw materials to produce chemicals and gasoline
27
than they are as fuel. In addition the heavier liquids can condense out of the natural
gas stream and cause problems in transporting the gas through pipelines. After
several processing, final usable gas is ready to transport.
Marketing & Sales: After crude oil is converted into refined products or gas ready
to transport, these must be transported and sold to end-users. ConocoPhillips uses
its own marketing channels and mixed distributors to sell the final oil to users. So
far, ConocoPhillips has not been using commercial advertisement for this marketing
purpose.
After Sales Service: For this product lineup, after sales service is not applicable.
4.2. TQM- Loyalty-Quality-Control:

28
ConocoPhillipss are using Total quality management (TQM) system which is an organizationwide approach to continuously improve the quality of all the organizations processes, products,
and services. Product and service quality, customer satisfaction, and company profitability are
intimately connected. TQM ran into implementation problems as firms became overly focused
on how they were doing business and not the why they were in business.
Figure: Total Quality Management Process of ConocoPhillips

From the Diagram of TQM, we can say that, ConocoPhillips is very concerned about the
customers expectations. & thats why they follow different types of strategies Technical
29
development, Risk Management, Organizational Planning. After that, they also monitor the
whole process and analyze it. For Maintaining total quality management ConocoPhillips
identifies the customers need, Customers order review. More Over the organization provide
advanced quality products of Oil and Gas by using different types of production planning and
production processes.
Figure: Increase Loyalty of ConocoPhillips Consumers
30
ConocoPhillips now a global company and it is very much concern about consumer
loyalty and retention of its consumers. Some Loyalty programs of ConocoPhillips are:
1. Rolling out Kick Backs Loyalty Program: Its a program about branded marketers
through road shows. Those who join in this program ConocoPhillips will provide
them a special pricing consideration.
2. The Kickback Points Coalition Loyalty Program will deliver state-of-the-art
customer relationship management tools, highly personalized rewards, and realtime program reporting. The programs flexibility allows participating retailers to
identify their most loyal customers and engage them through customized
offerings.
3. This companys Gas and oil Stations would issue membership card to
(Individual/Corporate) customers to build the customer's loyalty through
encouragement of continuous expense, sticking to the company forever. When a
member fills gasoline, buy goods in the chain stores of the gas stations, loyalty
points can be calculated and accumulated into the membership point account.
Later to some tier level, the member may get some special discount or get some
reward.
31
Chapter 5:
32
5.1. Brand and Branding:

A brand is a name, term, sign, symbol or design, or a combination of them, intended to identify
the goods or services of one seller or group of sellers and to differentiate them from those of
competitors.
Branding is one of the most important aspects of any business, large or small, retail or
B2B. Branding is endowing products and services with the power of the brand.
The process involved
in
creating
unique
name
and image for
a product in
the consumers' mind, mainly through advertising campaigns with a consistent theme.
Branding aims to establish a significant and differentiated presence in the market that
attracts.
ConocoPhillips individual name, its logo and symbol, identity, products and services are
differentiate them from those of competitors. That is called brand of ConocoPhillips Company.
Basically this brand:
Identify the maker.
Simplify product handling
Organize accounting
Offer legal protection
Signify quality
Create barriers to entry
33
Serve as a competitive advantage
Secure price premium
And using this name, sign, symbols, branding process ConocoPhillips basically take huge
advantages like:
Improved perceptions of product performance
Greater loyalty
Less vulnerability to competitive marketing actions
Less vulnerability to crises
Larger margins
More inelastic consumer response
Greater trade cooperation
Increased marketing communications effectiveness
Possible licensing opportunities
5.2. Box Analysis and Brand Elements:

The energy sector is intensely focused on increasing ROI and improving customer
relationships, but branding strategy usually takes a backseat. However, ConocoPhillips
is now realizing that a brand identity can help survive the existing competitive market.
Memorable
Meaningful
Likeability
Transferable
Adaptable
Protectable
Brand Elements Box

Analysis: From these six brand elements, ConocoPhillips has basically three criteria:
34
1. Memorable: An oil and energy company logo symbolizes what your business
represents the quality of service, your promise to the customer, your companys
unique selling features. So, ConocoPhillips has a brand identity through its Logo
and this logo and symbol of this oil and energy company becomes a unique
identity with which customers recognize your existence and have a lasting
memory of the trademark its carry. ConocoPhillips used its name in its logo with
its own symbol through which a customer can easily understand this indicates
ConocoPhillips or can easily recognize when they again see the logo. So, logo is
very important for any Oil and Gas companies like ConocoPhillips. Moreover,
ConocoPhillips is a globally organized company. So people can easily memories
the name and its logo.
2. Adaptable: It is widely adapted and accepted by the consumers.
3. Protectable: This brand name is very much protected. As its is a market leader
and exists in the market from a very long time.
In Conclusion its clear that, ConocoPhillipss branding through its logo, symbol and
name
Catch interest and intrigue people to know more about the brand
Create strong memory about ConocoPhillips
Inspire brand loyalty among customers
35
5.3. Brand Dynamic Pyramid:

Brand Dynamic Pyramid of ConocoPhillips
Strong Relationship
Bonding
Advantage
ConocoPhillips
Performance
Relevance
Presence
Weak Relationship
Figure: Brand Dynamics Pyramid of ConocoPhillips

ConocoPhillips exist to power civilization. It explores to produce explore for, produce,
transport and market crude oil, natural gas, natural gas liquids, liquefied natural gas
and bitumen on a worldwide basis - the energy that plays a foundational role in enabling
global economic development and human progress. Its key focus areas include safely
operating producing assets, executing existing major projects and exploring for new
energy resources in promising areas. Besides its portfolio is included legacy assets in
North America, Europe, Asia and Australia; growing North American shale and oil
sands businesses; a number of major international development projects; and a global
exploration program.
Moreover ConocoPhillips is active in a wide range of geologic and geographic settings,
including some of the worlds most challenging areas. From the frozen Arctic to the arid
36
desert, it has a proven track record of responsibly and efficiently finding and producing
oil and natural gas.
Through this discussion it is clear that, ConocoPhillips is now in the Advantage Position,
where it is deliver something better than others. There is lot of competitors in the
market. Competitors of Conoco Phillips are Exxon Mobil, Chevron, Royal Dutch Shell
PLC, BP PLC and Total SA. And ConocoPhillips still tries to deliver its consumers better
products.
37
5.4. The five Ms advertising:
Figure: The Five Ms of Advertising of ConocoPhillips

38
Chapter 6:
39
6.1. Pricing Strategies:

Commodity sales are generally made at prevailing market prices at the time of sale. They
mainly attempt to minimize flow disruptions, maximize realized prices and manage
credit-risk exposure.
6.2. Breakeven Analysis with Graph:

Breakeven analysis is a useful financial tool that would determine the minimum number of
production that ConocoPhillips would have to produce to cover its fixed costs and then make a
profit. This analysis is particularly more important for high-tech engineering companies like
COP since fixed costs are a major chunk of the operating costs.
Table: Break Even Analysis
40
Details
(2013)
Per
Production
Sales
Barrel
US$
1545
US$ (2012)
Total
(US$
million)
Per
Barrel
US$
1578
MBOED x
MBOED x
365
96.49
365
100.64
54,413
Total
(US$
million)
57,967
Purchased Commodities
(22,643)
(25,232)
Production and Operating Expenses
(7,238)
(6,793)
Total Variable Costs
52.99
(29,881)
55.60
(32,025)
Contribution margin
43.50
24,532
45.04
25942
Selling, General and Administration
854
1106
Exploration
1232
1500
Depreciation, depletion, amortization
7434
6580
Impairments
529
680
Total Fixed Costs
10049
9866
Net Income from Operations
14483
16076
Breakeven Quantity= Fixed Costs/contribution margin per barrel

Contribution margin per barrel: Sales Price per unit-variable cost
Breakeven Sales = Breakeven quantity x Sales price per unit
Margin of Safety= Current Production - Breakeven Production
For The year 2013

Breakeven Quantity= $10049million/$43.50=231 million barrels or 632MBOED
Breakeven Sales= 231 million barrels x $96.49= $22,289 million
Margin of safety= 1545 MBOED - 632MBOED= 913 MBOED
For the Year 2012
Breakeven Quantity= $9,866million/$45.04=219 million barrels or 600MBOED
Breakeven Sales= 332 million barrels x $96.49= $32,034 million
Margin of safety= 1578 MBOED - 600 MBOED= 978 MBOED
41
1000
980
960
940
2012
920
2013
900
880
Margin of Safety
35,000
30,000
25,000
20,000
2012
15,000
2013
10,000
5,000
0
Breakeven Sales ($ million)
640
630
620
2012
610
2013
600
590
580
Breakeven Quantity
42
For ease of Analysis we have taken into account the consolidated figure provided in the income
statement of ConocoPhillips. The table shows per barrel figures and the total value in terms of
sales, variable costs, contribution and fixed costs. From the breakeven analysis, we can conclude
that COP enjoys a high margin of safety and that the current level of production is much higher
than the breakeven level which is approximately 900 MBOED and thus even with disruptions in
some of the current extraction locations like Libya, COP continues to enjoy strong financial
stability. Nevertheless it should be noted that the fixed costs have increased in 2013 in
comparison to 2012 which could be attributed to the capital investments made for future
production, which must be accounted for in the depreciation value.
Overall the breakeven analysis shows that COP is in a strong financial position in terms of its
direct operations and that production could drop by 600 MBOED and COP could still be
profitable.
43
Chapter 7:
7.1. Recommendations:
44
1. Better financial control to tackle commodity price shocks and high variable costs.
2. Ensure re-emphasis on safety in non-conventional exploration and small scale
programs.
3. Take steps for a global marketing campaign to counter the negative publicity with
regard to safety and environmental standards.
4. Maintain a consistent Focus on Core Business Strengths.
5. May look toward diversifying into renewable sources of energy projects.
6. Formulate a technological roadmap which would mark the life cycles of the
technologies where major investments are channeled.
7.2. Conclusion:
ConocoPhillips is a high tech industry leader in the field of exploration and production
of fuel. It has a venerable status as the industry leader with a long-term orientation;
disciplined management, a globally well-integrated value chain, and operational
45
excellence. An outstanding multinational organization, their values and mode of

operations display the characteristics of an organization which maintains high
standards of excellence in innovation, sustainability and safety. As the industry leader,
Conoco Philips has balanced to take on the challenges of the world energy needs for
decades to come. The magnitude of its reserves, strong technology orientation, and its
financial strength gives it a commanding position in the industry. Conoco Philipss
recent move of focusing on oil for next five years is well aligned with its energy outlook
and long-term investments in relatively high-growth area of energy. At the end we can
conclude it by saying that their presence in Bangladesh will definitely advance the
national energy industry in Bangladesh and will also add to the growing base of
ConocoPhillipss core operations.
7.3. References:
1. http://www.hoovers.com/company-information/cs/company
profile.Conocophillips.c354965d3fd53845.html
2. https://www.env.nm.gov/aqb/4C/Documents/COP_EmissionsReductionsv4_08
2008.pdf
46
3. http://www.conocophillips.com/who-we-are/Spirit
%20Magazine/1qtr13_spiritmag.pdf
4. http://www.mba-tutorials.com/strategy/mission-vision/1702-conocophillipsvision-mission-statement.html
5. http://www.conocophillips.com/newsroom/Pages/2014/ConocoPhillipsOutlines-Plans-for-Growth-and-Returns-at-Analyst-Meeting.aspx
6. http://www.cstoredecisions.com/2011/08/10/conocophillips-begins-rolling-outkickback-loyalty-program/
7. http://www.businessdictionary.com/definition/branding.html
47

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Marketing Management Term paper on ConocoPhillips

Marketing Management Term Paper on ConocoPhillips

Professor M. Madmodul Hasan

ID: 151 2874 060

ID: 151 222 3060

MBA- BUS 620: Marketing Management

Date of Submission: 22nd August, 2015

Professor Dr. M. Mahmodul Hasan

Subject: Submission Term Paper on ConocoPhillips

Md. Shamsul Arafin:

Syeda Shotorupa Zafar:

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

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

Definition of Marketing Management (Theory 2012 2016 )...........................2

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

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

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

Marketing Management Term Paper

1.1. Definition of Marketing Management:

Definition of Marketing Management (Theory 2000

communicating superior customer value.

Definition of Marketing Management (Theory 2012

1.1.3. Marketing Management and ConocoPhillips:

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

Business Plan of ConocoPhillips:

The midstream sector: The midstream sector entails transportation, storage,

Marketing Management Term Paper

The downstream sector: The downstream sector entails storage of petroleum

Figure 1: Steps of Winning Corporate Plan of ConocoPhillips

Environment Analysis of ConocoPhillips:

Marketing Management Term Paper

ConocoPhillips remain committed to our 5 strategic priorities:

Program Formulations and Implementation:

To achieve organizational goals ConocoPhillips continue investing and implementing its

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

Feedback and Control:

ConocoPhillips corporate strategies are:

Strategic Business Units:

ConocoPhillipss Strategic Business Units are:

Energy Efficiencies Units

Asses Growth Opportunities:

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

ConocoPhillips wells have the highest oil rates.

Focus on improving financial returns by through Capital Discipline and ongoing

Marketing Management Term Paper

Marketing Management Term Paper

Marketing Management Term Paper

Marketing Management Term Paper

Marketing Management Term Paper

High barriers to entry

Switching costs in the

Relative cost benefit

Figure 4: Michel Porters Five Forces

Marketing Management Term Paper

3.1. Marketing Strategy of ConocoPhillips:

Marketing Management Term Paper

TCAL aod lon v k c te o n

Figure 5: Marketing Strategy of ConocoPhillips

1. Talk to Those who Matters in the Market:

Marketing Management Term Paper

3.2. Core Marketing Concept of ConocoPhillips:

Figure: Core Marketing Concept of ConocoPhillips

size and reach to which they can