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The purpose of this report is to propose an integrated communications strategy for the launch of New Shell petrol in the UK. We will begin by defining integrated marketing communications (IMC) and we will refer to the benefits that can accrue from developing this approach. Shimp (1997) suggests “IMC is the process of developing and implementing various forms of persuasive communications programmes with customers and prospects over time. The goal of IMC is to influence or directly affect the behaviour of the selected communications audience. IMC considers all sources of brand or company contacts which a customer or prospect has with the product or service as potential delivery channels for future messages. Further, IMC makes use of all forms of communication which are relevant to the customer and prospects, and to which they might be receptive.” Building long-term relationships is something that Shell should be very interested in doing. By launching the new product Shell should not just consider the initial impact and awareness but Shell should also try to build long-term relationships with its costumers. With the aim of an intergraded marketing communication programme we can achieve a homogeneous interaction between communication objectives and marketing objective. Integrated marketing communications calls for a "big picture" approach to planning marketing and promotion programs and coordinating the various communication functions. It requires firms to develop a total marketing communications strategy that recognizes all of a firm's marketing activities, not just the promotional variable, communicate with its customers. Consumers' perceptions of a company and/or its various brands is a synthesis of the "bundle" of messages they receive (such as media advertisements, price, direct marketing efforts, publicity, sales promotions, and type of store where a product is sold). For example, a high price may symbolize and communicate quality to customers, as may various other aspects of the marketing program such as the shape or design of a product, its packaging, brand name, or the image of the stores in which it is sold. Like we have mentioned above Shell is about to introduce to the market its "New Improved" petrol. What we have to do, as an advertising agency is to create a message by creating and implementing an integrated communication plan that will make clear to consumers that gasolines are not the same and that they have to choose Shell for the benefits its new petrol offers. Social trends: The major trend in this market is basically to produce petrol that is friendly to the environment. On the other hand we have the car manufacturers that built new engines that require quality fuel and the consumers who expect increased performance and reliability. So the trend asks for petrol that ensures the cleanliness of the engine, maintains optimal performance and reduces harmful emissions. Technology: Due to the complexity of the product and the high technology that is used to be produced technology can play a significant role for Shell. The demand for petrol that will satisfy the markets high needs will make the role of technology very crucial. The costumers in the petrol market are both male and female people between the ages of 17-65, in other words all the people that are eligible to drive a car and use petrol. Both male and female audiences are important as a target audience and this can be clearly seen from the figures released by the Department of Transport and Regions. There are currently 38 million licence holders in the UK of which, 49% are male and 37% are female, the rest being provisional licence holders. The UK petrol market is one of the most competitive in the world. Competition in the sector has led to prices, which, before excise duty and VAT are added, are among the lowest in Europe. For example, the average industry price of unleaded petrol in 2000 was 80.2p/litre. When taxes and the cost of producing the fuel are excluded only around 5p/litre is left for the retailer and the oil company. All petrol retailers, including those without an upstream activity, have to obtain their petrol supplies at international prices. It has been suggested that integrated oil companies could sell petrol at below established retail market prices by offsetting subsequent losses against earnings from their other more profitable business activities. Also all the players in this market try to innovate as much as they can which means that a lot of money must be spent on Research & Development and on New Product Development. The main competitors for Shell are the following: BP: BP, formerly BP Amoco, is the world's #2 integrated oil company, behind Exxon Mobil. The company, which was formed in 1998 from the merger of British Petroleum and Amoco, has grown further by buying Atlantic Richfield Company (ARCO). BP has proved reserves of 15.2 billion barrels of oil equivalent, including large holdings in Alaska and the North Sea. It is the largest US oil and gas producer. Also a top refiner (3.2 million barrels of oil per day capacity) and petrochemicals and specialty chemicals manufacturer, it has expanded by buying motor-oil maker Burmah Castrol. BP operates 29,000 gas stations worldwide. ChevronTexaco: ChevronTexaco has a full tank. The #2 US integrated oil company was formed by Chevron's 2001 acquisition of Texaco. It has proved reserves of 11.5 billion barrels of oil equivalent and daily production of 2.7 million barrels of oil equivalent. ChevronTexaco has a presence in 180 countries, and it owns stakes in chemicals and power production businesses. Its brands include Chevron, Texaco, and Caltex which was formerly a Chevron and Texaco joint venture. Exxon Mobil: It's not necessarily the oil standard, but Exxon Mobil is the world's largest integrated oil company (ahead of BP). Exxon Mobil engages in oil and gas exploration, production, supply, transportation, and marketing around the world. It has proved reserves of just less than 21 billion barrels of oil equivalent. Exxon Mobil's refineries can handle more than 6 million barrels per day, and the company supplies refined products to more than 40,000 service stations in 118 countries that operate under the Exxon, Esso, and Mobil brands (including more than 16,000 in the US). Exxon Mobil also produces and sells petrochemicals, and it has interests in coal mining, minerals, and electric power generation. It is of outmost importance to set a goal for the company and the new additive in particular. Shell is currently 3rd in terms of market share in the UK behind Esso (ExxonTexaco) and BP. The current market share is 7% and the objective should be to increase it by 3% at least to become the second largest retailer of gasoline in the UK. The ultimate objective should be to maximise profits. Profit is defined as (price- cost) x sales, therefore a way to maximise profits is by increasing the price of the new petrol/additive. This is possible due to the higher economy and performance that the customers will be willing to pay in return for a slight premium. Secondly profit maximisation will be achieved through higher sales volumes, which should be of the order of 6%. The time period that the budget will be set for is 1-year which is the most usual period. In that time the selling premium selling price will be justified through adverting and the goal should be to influence the price elasticity of demand. The upside elasticity should increase whereas the downside elasticity should decrease. In other words when Esso or BP along with the other competitors promote their brands our sales should ideally remain stable. Due to the high perceived worth of the new petrol/additive which is facilitated by the communication strategy, sales should easily increase in the case of special promotions such as “money of” campaigns. The 2 primary objectives that must be communicated to the target audience are: o Re-position petrol. In consumers minds petrol is just a commodity which means that no perceived difference exists between Shell’s, BP’s or other company’s petrol. o Continue to build upon Shells environmental sensitivity and change the negative attitudes towards Shell, caused by the criticism for polluting the environment in Nigeria and the North Sea According to Rossiter and Percy there are five communication effects caused by marketing communications. These are: Assuming that the majority of the drivers have been repeatedly exposed to the Shell brand through advertising, event promotions such as the Formula 1 car racing and of course seeing one of Shells 1,100 petrol stations across the UK (The Guardian, Special Report “The petrol war” p.45-47 Friday February 9 2001). This means that brand awareness exists to a large extent and therefore the communication objective should concentrate on changing the brand attitude and strengthen the brand purchase intention. Firstly with respect to the commoditisation of petrol in general, the attitudes have to be modified and the communication objective should be centred on the new petrol capabilities to keep the engine clean and thereby reduce the breakdown rate. It should be made understood by the target audience that not just any petrol is good for the engine. Secondly in the target audience there will be people with negative attitudes towards Shell in general. Past experience from negative media coverage in respect to Shells actions in Nigeria and the North Sea might have shaped those attitudes. These attitudes have to be changed by emphasising the reduced engine emissions by using the new petrol. Shell’s advertising campaign will focus on both male and female people between the ages of 17-65. The reason is that these are the ages that people are legally allowed to drive a car and therefore they will be very likely to visit a petrol station. Both male and female audiences are important as a target audience and this can be clearly seen from the figures released by the Department of Transport and Regions. There are currently 38 million licence holders in the UK of which, 49% are male and 37% are female, the rest being provisional licence holders (fig 1 Appendix). These figures also show that the trips made per year per sex are almost equal (fig 2 Appendix). Now that the target audience has been identified in terms of age the next step is to determine which prospective buyers have the best sales potential. The favourable-brand switchers (FBSs) along with the other-brand switchers (OBSs) are the ones that will help Shell increase its sales volume and ideally its market share as well. According to Percy and Rossiter in “Advertising Communications and Promotional Management” the FBSs are the customers that buy our petrol, but on certain occasions buy petrol from other petrol stations as well. The OBSs buy petrol from the competitors petrol stations, but not from ours, not due to lack of awareness but because they have negative attitudes towards our brand. It is advisable that the advertising campaign has as a primary target audience the FBSs and as a secondary audience the OBSs. Customers which are loyal to Shell and never buy petrol from other petrol stations such as BP and Esso or Supermarkets such as Tesco and Sainsbury’s except in cases of emergency, should also be targeted. In terms of leverage level, that is the expected increase in our petrol sales divided by the advertising and promotion expenditure, the Brand loyals have the highest leverage, followed by the FBSs and OBSs (Rossiter and Percy). Shell must position its brand in a way that will differentiate itself from the other brands. Taking into to mind the market needs and the consumers' expectations we decided that Shell's positioning should be based on the economic advantage that the new petrol offers as well as on the image of an organisation that cares about not polluting the environment. Since we are trying to reposition petrol and provide consumers with a choice we decided that from all the advantages that the new petrol is offering those two are the most important. Advantages like the advantage for making car engine to perform faster are not important for all of the target audience. Media are the means of delivering the creative message to the target audience and thereby achieve the campaign’s communication objectives. The basic criterion for media selection is capacity, which means that the media strategy must fit the brand’s communication objectives. The company must use the following media mix: -TV(National Coverage):The new petrol should be advertised in weekdays evening hours and also at weekends where most of the target audience is at home watching TV. Also the new petrol should be advertised on programmes concerning cars such as the F1 Grand Prix live coverage and motor sports programmes. Radio: Radio can be very influential in our case because radio ads can be listened by customers while their driving which is mainly where the need to buy petrol or visit a petrol station is generated. Therefore advertising on the radio should mainly take place on morning hours where most of the target audience are going to their jobs with their cars and also at early evening hours where potential customers are returning from their jobs. Motor magazines: These magazines are an important medium for communicating with a more sensitive audience because readers of such magazines are more likely to search for more information about the new petrol in order to be convinced that is the right one for their vehicles. Posters: Posters could be used at large motorways such as the M1 and M25 because these motorways are used by a large amount of motorists daily. Furthermore, these motorways are popular for their traffic jams at peak hours, where there is an opportunity for motorists to pay give attention to the company's posters since their car won't be moving. Newspapers: Daily newspapers such as The Sun or The Times are important mediums for Shell's media strategy and also important for the target audience to be informed about the new fuel because these papers have the highest readership rates throughout the U.K. Direct Mail: Direct mail can be used for existing and loyal customers in order to be informed about the new fuel and also this is an opportunity for the company to build awareness. Sponsorship: Shell can provide sponsorship opportunities to major events that include cars or racing events. A good source for sponsorship could be that the company can sponsor the new fuel on F1 Grand Prix where a car's efficiency and performance is all that matters. The message that would be most appropriate for Shell's campaign is " Not just any petrol, Shell Petrol". This message will communicate to the consumers the uniqueness of the new petrol and will enable Shell to differentiate from other brands. This message will also enable us to promote petrol of not being a commodity product but a product where decision-buying process will be necessary when selecting between brands. Furthermore, this message will emphasize the advantages that the new petrol will have for car engines and will relate it with the start of a new era in the petrol industry. Moreover, it would relate the new petrol with the more advanced development of fuels by Shell that constitutes to a better performance for the car and for protecting the environment. The budget for Shell’s communication and promotional campaign activities will be estimated by using a cost-plus system. This system includes: the agency’s cost of work (such as employee cost as well as out-of-pocket expenses) plus a certain percentage of this amount to cover agency overhead profit. The actual budget will be calculated in accordance with the following costs: corporate management plans, account service, creative department, (advertising, collateral material) media time marketing research, administrative services, supplier communications, and of course the profit. Therefore, an approximate estimation could be £50 million. Measuring communication effectiveness The evaluation of the communication plan’s effectiveness depends on what extent the communication objectives will be achieved, related with the campaign cost. The effectiveness of Shell’s campaign will be measured before, during and after the campaign. Before the campaign, pre-testing (or copy testing) will take place where an evaluative research will be conducted in order to evaluate the advertising campaign. We will see if the message is getting through or if any adjustments are needed to take place. During the campaign, the TV audience will be measured as well as the effectiveness of all of our advertising media and we will examine if there are any changes in consumers behaviour when it comes to buy petrol. After the campaign a post-testing will take place in order to measure its sales, volume as well as Shell's market share in the petrol market. This will provide quantitative results, where we will be able to clarify whether our marketing objectives have been accomplished. During the next stage, a marketing research will be conducted to measure: * Response to the advertisement (recall and awareness) This will provide both qualitative and quantitative results. We will examine whether our advertising campaign created any response and if the consumers can easily recall our ads and if they relate them directly to our new product. We will also examine whether we managed to reposition petrol as a product where purchase decision takes place. Finally we will examine whether consumers intent to buy Shell's petrol and if so for what reason do they actually buy it. The above application of Integrated Marketing Communications can result in a set of recommendations, regarding how Nike can promote its four P’s (integrated marketing mix). Our recommendations will be based on the four elements of the marketing mix. Product: Since innovation and product development are so important for this market Shell should continue spending on R&D and on new technology to provide a product that will satisfy consumer needs an that will match and overcome market requirements. Price: Like we have seen the petrol market in the UK is a very competitive market and a very price sensitive one. At the time being and since we are concentrating on the economic benefits that the new Shell petrol is providing the price should be kept in the market standards and even below the standards in order to penetrate the market. After the consumers will be convinced about the superiority of the new product and will also be convinced for the overall economic benefits (for example cleaner engine, less visits to a garage will be required) then we can charge a premium price for our product. Place: It is very important that all of Shells petrol stations in the UK will be provided with the new petrol at the same time in order to sell the same product everywhere and to avoid confusion between the consumers. Promotion: It is important for Shell to participate in events that will enable the organisation to clear its name from negative attitudes towards Shell, caused by the criticism for polluting the environment in Nigeria and the North Sea. They can also do that by sponsoring events that have to do with the protection of the environment like for example concerts that are given for the protection of the Amazons forests. They can also sponsor events that will relate to the superiority of the new petrol such as the F1 grand prix. In order to build long-term relations with their customers they can use a character, something like a cartoon character that drives a car that will be used for all future promotional activities. Fig 1 showing number of trips per year per sex Table 1.6: Trips per person per year: by age, sex and main mode: 1997/99. Car Non-car Car Non-car Car Non-car Contact point for further information: +44 (0)20 7944-3097 Fig 2 showing number of licence holders in the UK Bibliography: BIBLIOGRAPHY - REFERENCES • Batra R., Myers J., Aaker D., “Advertising Management”, 5th edition, 1996. • Lynch Richard, “Corporate Strategy”, 2nd edition, 2000 • Percy, l, Rossiter, J.R, Elliott, R, (2001), "Strategic Advertising Management", Oxford University Press. • Terence A Shimp, " Advertising Promotion: Aspects of Integrated Marketing Communications", 2000, The Dryden Press. • Wells, Burnett, Moriarty, "Advertising:Principles and Practice", 5th Edition, 2000, Prentice Hall • www.shell.com (visited April 2002) • www.brandchannel.com (visited April 2002_ Research  BMRB / Mintel survey, June 2001 Word Count: 3459
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