strategic-management

Marketing
Marketing in an energy company is more complex than just selling more gas at the pump.
Chevron focused in large part in its 2008 television campaign on the environmentally
friendly and human side of its world-class operations. This type of reputation marketing is
particularly important in an industry with an image problem.
Chevron’s marketing organization is responsible for the marketing, advertising, sale,
and delivery of products and services to retail, commercial, and industrial customers
worldwide. This includes the 25,000 retail outlets (including affiliate operations), which
are located primarily on the West Coast of North America, the U.S. Gulf Coast, Latin
America, the Caribbean, Asia, South Africa, and the United Kingdom. The three key marketing
strategies include provide clean, safe and reliable operations through operational
excellence; align the marketing portfolio to capture integration value with the refining
system; and leverage brands to grow value in key markets.
The marketing portfolio has become more closely aligned with the company’s refining
system through market exits and divestitures of retail sites in an attempt to focus in areas of
market strength. During 2008, the company sold its heating-oil business in the United
Kingdom and announced the sale of its marketing and other businesses in Nigeria, Kenya,
Uganda, Benin, Cameroon, Republic of the Congo, Côte d’Ivoire, and Togo, and its fuelsmarketing
business in Brazil. Following the close of these sales, the company will have
exited the fuels-marketing business in 22 countries since 2004.
Chevron markets under three main brands: Chevron, Texaco, and Caltex. In 2008, an
independent source ranked Chevron as the most powerful gasoline brand in the United States
for the fifth consecutive year. By the end of 2008, more than 5,000 Chevron retail sites had
been updated as part of a multiyear marketing program to refresh the Chevron brand image.
The company’s convenience store brand, ExtraMile, was ranked as the number-one convenience
store by an independent survey for the second year in a row. Chevron continues its
market thrust in clean premium fuels through the expanded incorporation of patented
additives such as Techron. In 2008, Chevron sold gasoline with Techron in 27 countries,
comprising 90 percent of the branded gasoline sold worldwide.
Industry
Despite OPEC restrictions, civil wars, and hurricanes, the oil industry is alive and well in
2009. This is indeed a volatile industry, as indicated by the 2008 oil price that fell from a peak
of $144 per barrel in early July to as low as $34 per barrel in December. This industry faces
some unique business challenges, including managing a negative image as consumers correlate
high prices at the pump with oil company greed. And of course carbon dioxide emissions
from the continuing use of fossil fuels does not improve the image. This industry is composed
of three categories of players: investor-owned oil companies, national oil companies that
operate as corporate entities, and national oil companies that operate as government agencies.
Investor-owned oil companies, such as Chevron, are primarily concerned with
maximizing shareholder return. These companies, often referred to as multinationals or
international oil companies (IOCs), typically move quickly to develop and produce the oil
resources to which they have obtained access and sell their output in competitive markets.
Within the IOCs, Chevron is identified as a supermajor along with ExxonMobil, Royal
Dutch Shell, BP, and, to some degree, ConocoPhillips.
National oil companies (NOCs) with strategic and operational autonomy that function
as corporate entities, such as Petrobras (Brazil), often balance profit-oriented concerns
and the objectives of their country with their corporate strategy. Although these companies
may support their country’s goals, they are primarily commercially driven entities.
National oil companies that operate as an extension of the government or as a
government agency, such as Pemex (Mexico), support their government’s programs either
financially or strategically. They provide fuels to domestic consumers at prices lower than
world customers pay. These companies often develop their proven reserves at a slower
pace than commercial companies. These national oil companies pursue a diversity
of objectives that are not necessarily market oriented, such as employing their citizens,
generating long-term revenue, and supplying inexpensive domestic energy.
CASE 29 • CHEVRON CORPORATION — 2009 287