(updated)a study of liquified petroleum gas and marketing (1)

7/30/2019 (Updated)a Study of Liquified Petroleum Gas and Marketing (1)

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MARKETING STRATEGIES OF NON DOMESTIC NON EXEMPTED (NDNE)

LIQUIFIED PETROLEUM GAS RETAILERS : A SELECT STUDY ON INDIAN OIL

CORPORATION LTD.

Faculty Guide Presented byProf. DEBJANI BHATTACHARYA KAUSTAV BORDOLOI

Roll No : 2011054


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COMPANY PROFILE

Indian Oil Corporation Ltd. is a public sector undertaking under Government ofIndia and formed on the 1st of September 1964 through the merger of Indian Oil

Company Ltd. (Estd. 1959) and Indian Refineries Ltd. (Estd. 1958).

Indian Oil Corporation Ltd. was born on 1st September 1964 with the merger of

Indian Refineries Ltd. with Indian Oil Company Ltd.

IndianOil is Indias flagship national oil company with business interests straddling

the entire hydrocarbon value chain from refining, pipeline transportation and

marketing of petroleum products to exploration & production of crude oil & gas,

marketing of natural gas and petrochemicals.

IndianOil and its subsidiary (CPCL) account for over 48% petroleum products

market share, 34.8% national refining capacity and 71% downstream sector

pipelines capacity in India.


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OBJECTIVES OF STUDY

The focus of the study was to find out market potential ofNon Domestic Non Exempted (NDNE) LPG in GuwahatiRegion.

The study aims to find out the marketing strategiesadopted by the competitors in NDNE marketing.

The study aimed to find out the existing problems faced byIndian Oil in marketing NDNE LPG.

To study the effect of appointing NDNE LPG Retailers byIndian Oil to maximize volume and profit in NDNE LPG.


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RESEARCH METHODOLOGY

TYPE OF RESEARCH :EXPLORATORY based on the secondary data and primary data collectedthrough personal unstructured probe so as to gather data to prepare the

questionnaire.

DATA COLLECTION METHOD:

Secondary data gathered from periodical Reports, Online data from Indian

Oil web site, Ministry of Petroleum and Natural Gas web site, official

journals, business magazines, annual Reports 2011-12 of various LPG

marketing companies and other online sources.

SAMPLE AREA :

The Sample area in which the research was done is the city GUWAHATI and

adjacent area in Assam.


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SAMPLING METHOD: Convenience Sampling was done as it

contains homogeneity. It is also cost effective and faster

SAMPLE SIZE: The sample size used in this project was 100 of

which 30 were LPG Distributors, 50 were Hotels and

Restaurants and 20 others were Fabrication units. These

targets were given a questionnaire to fill and the research was

done on the basis of that data.


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PHYSICAL PARTICIPATION OF BRANDS

94%

4%

2%

Sales

INDANE BHARAT GAS HP GAS


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SALES OF LPG IN TOTALITY

Sales

DOMESTIC LPG

NDNE LPG95 %

5%


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DATA ANALYSIS

Market Share of NDNE LPG of Leading GasCompanies

91%

6%

3%

Sales

INDANE BHARAT GAS HP GAS


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RESPONSE FROM THE DISTRIBUTORSCATEGORYWISE SALES OF NDNE LPG

Canteens

Tea

Stalls/Sweet

Shops

Fabrication

units

Hotels and

Restaurants

Column1 5 10 2 83

0

10

20

30

40

5060

70

80

90

CATEGORY


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RESPONSE FROM THE HOTELS AND

RESTAURANTS

80%

15%5%

Sales

Indane HP BP


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FINDINGS

All respondents have responded that they use 19.0 Kg cylinders forcommercial purpose.

No discounts are given to the customers of NDNE LPG cylinders.

The price of a 14.2 Kg LPG cylinder meant for domestic use inGuwahati is Rs 393 ( Rs 27.67 per Kg) and that of a 19 Kg NDNE LPGcylinder is Rs 1417.50 (Rs 74.60 per Kg) during the period of study. Thisprice difference of Rs 46.93 per Kg.

There is a huge demand for subsiderized cylinders and thereforerelative demand supply gap always remains.

Due to this mismatch in rates there is a strong inclination by even

commercial users to use domestic LPG cylinders in 14.2 Kgs.Hencestrict vigil has to be maintained by companies,distributors, governmentagencies to ensure that diversion of 14.2 Kg cylinder to commercialusage do not take place. This is required also to ensure availability ofdomestic cylinders to domestic consumers in time without backlog.


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FINDINGS

IndianOil has developed sufficient storage and bottling capacity in the lastyear and LPG availability should not be a problem now in NE India.

LPG distributors get a commission of Rs 21.94 per 14.2 Kgs cylinder andRs 50.00 per cylinder for selling a 19 Kg cylinder. The per Kg difference isnot lucrative enough for the distributor to wholeheartedly erasure sellingof NDNE LPG cylinders.

To sell a 14.2 Kg cylinder no marketing effort is required to be put by thedistributor as only supply has to be made by them.

The share of NDNE in the LPG sales is 5%. The NDNE retailers need tomake more efforts to push the sales.

For the domestic LPG(95% market share) the key focus is- Ensure supplyin time.

For the NDNE LPG(5% market share) the key focus is- Expiration of theMarket.


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SWOT ANALYSIS STRENGTH:

1. The LPG infrastructure of IndianOil in NE India as regards to production,

storage and bottling capacity.

2. IndianOil reach at every nook and corner of NE India through its vast LPG

distributor network.3. Brand image of Indane is acceptable.

WEAKNESS :

1. Monitoring- in terms of usage of domestic LPG.

2. Renewal of NDNE LPG cylinders Booking patterns.

3. Sales target of NDNE LPG is not given to the distributors.


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OPPORTUNITY

1. Boom in hotel and restaurant business in NE India.

2. Fabrication shops potential.

3. Boom is tea stall and sweet shop business.

THREAT

1. All other players like BCPL and HPCL are government firms. Hence

it is expected that they will survive the competition which in term

can create loss in marketing share.

2. Piped gas of Assam Gas Company Limited is a major threat as it is

very cheap and convenient.


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RECOMMENDATIONS AND

CONCLUSIONS NDNE LPG Distributor is to be opened immediately at Guwahati .

The number of NDNE distributors is to be so planned that eachdistributor handles 3000 to 4000 cylinders in month. This willenable the distributor to be viable . Huge working capital will alsonot be required.

The distributors commission is to be changed from flat Rs 50.00 percylinder to 5% of the rate before tax. This will take care of thefluctuation in NDNE LPG prices and protect the distributors interestin case of price rise as they will have to increase investmentaccordingly.

Aggressive customer loyalty program /discount schemes is to belaunched .

All state capitals are to be targeted for opening one NDNE LPGdistributor in each state capital.


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FUTURE SCOPE

Will it be cost effective to create a separate distribution channel for NDNE

LPG.

Requirement of setting a sales target for NDNE LPG distributors.

To create monitoring which is dedicated only to NDNE.


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THANK YOU

(updated)a study of liquified petroleum gas and marketing (1)

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