Royal Dutch Shell is operating in a highly competitive business environment. Headquartered in The Hague, this British–Dutch multinational oil and gas company has been keen on expanding and protecting its market share both in Europe and the international market (Kumar, 2019). In an industry where competition is considerably high, customers have the opportunity to choose the company that they believe meets their expectations in the best way possible. As such, the Royal Dutch Shell understands the need to make its products and product delivery approach unique as a way of achieving a competitive edge in the market. The company has embraced holistic marketing as a way of lowering its cost of production while at the same time maintaining the best quality for its products. Holistic marketing organization is a concept that is based on four basic components of internal marketing, integrated marketing, relationship marketing, and performance marketing, as shown in figure 1 below. It is necessary to analyze marketing strategies used by this company, based on Kotler and Keller’s schematic overview of these four components.
Internal Marketing
Internal marketing is one of the most important components of holistic marketing. The marketing department, senior management, and other departments are identified as units that make up this component, as shown in the figure below. Sharma, Pulido-Fernández and Hassan (2020) explain that key activities involve hiring, training, motivating, and inculcating organizational values on employees to enable them serve customers effectively. These functions are always done effectively at Royal Dutch Shell. The company has embraced a system of hiring some of the most talented employees in the job market. Once qualified candidates are hired, they are always taken through rigorous and regular training to equip them with relevant skills needed in the energy sector.
The training is meant to enable them understand values and culture of the organization and expectations of customers in the market. Motivation of employees is also another strategy that the management cherishes a lot in its operations. Kunz (2020) explains that the Royal Dutch Shell uses various strategies to motivate its employees. One such strategy is offering them attractive remuneration to ensure that they are always contented at work. The management has also created an environment that allows employees to communicate with ease among themselves and with their supervisors, making it easy to address problems that may arise in their normal work environment. These initiatives have helped the firm to be effective in its internal marketing activities.
Integrated Marketing
Integrated marketing is another critical component of holistic marketing. According to Kotler et al. (2019), integrated marketing defines how effective a firm synced the 4Ps model of marketing mix elements. At the Royal Dutch Shell, these marketing mix elements of product, price, place, and promotion define its basic operational activities. The company offers oil and gas as its main products in the market. It has been keen on ensuring that its products are free from any form of impurities that may affect the consumer (Vassiliou, 2018). It has won the trust of its customers because of its commitment to offering them products of high quality. Price is another issue that defines the ability of customers to choose a specific brand in the market. This company has opted to charge average price for its products. It has avoided the desire to charge premium prices on its products as a way of making them as affordable as possible to a large market segment.
The place element is also an important mix that the management has to take seriously. The firm has ensured that it has filling stations at strategic locations along major highways and in major cities around the world to meet the need of its customers. The last element of the marketing mix is the promotion. The Royal Dutch has been using various channels to communicate to its customers (Kahungu, 2018). Mass media such as newspapers, television, and radio commercials are still major platforms that the firm uses to reach out to the customers. The company has also invested in social media marketing, especially on platforms such as Facebook, YouTube, Instagram, WhatsApp, SnapChat, and Twitter because of their popularity among the younger generation.
Relationship Marketing
Relationship marketing is the third component of holistic marketing, which has customers, channel, and partners as its main elements, as shown in the figure below. As Adnan (2019) observes, relationship marketing involves developing a lasting and mutually beneficial relationship with key stakeholders such as shareholders, employees, customers, suppliers, partners, and business institutions. Meeting the needs of all of these stakeholders may at times be challenging because of the possible conflicts of interest (Wunder, 2019). For instance, a shareholder may want to ensure that they make as much profit as possible, and that may involve charging high prices, which may hurt customers, and paying low salaries, which will hurt employees.
At Royal Dutch Shell, the management has created a system meant to ensure that interests of all stakeholders are fully taken into consideration (McShane, 2019). There are departments with specific responsibility of protecting the interest of shareholders, employees, customers, suppliers, partners, and the general public. The goal is to ensure that no one feels left out or neglected in the company as it seeks to achieve growth both in the local and international market. The firm’s increasing profits benefits its shareholders while at the same time enabling it to maintain attractive remuneration for its employees.
Performance Marketing
Performance marketing is the fourth component of a holistic marketing organization. Its elements include sales revenue, brand and customer equity, ethics, environment, legal issues, and the community concerns. As Wysocki (2019) puts it, it involves maintaining profitability in the market by having a strong brand and a good reputation in the market while at the same time taking into consideration how these marketing activities affect the society. It is based on the premise that the ability of a firm to achieve sustainable development depends on its marketing capabilities and the ability to protect the environment.
The Royal Dutch Shell has created one of the strongest brands in the oil and gas sector in the international market (King, 2021). It has also been successful in ensuring that its products are easily available for its customers. The management has also been investing on corporate social responsibility as a way of giving back to the society. It has been supporting environmental activities such as tree planting, elimination of plastic wastes, and supporting the education of children from marginalized communities around the world (Hiriyappa, 2018). The firm values ethical practices in its operations as the best way of attracting and retaining important partners in this industry.
Factors in the Global Environment
The Royal Dutch Shell has registered impressive growth over the past few decades because of its unique marketing strategies. However, the management must understand external forces that may directly affect its ability to achieve sustainable growth and development in this industry. As Wunder (2019) observes, the oil and gas sector is facing numerous challenges that may threaten the existence of individual firms in this industry. However, this analysis identifies a short list of three factors that may have the greatest impact in the global business environment within the next five years.
Stiff Market Competition
The Royal Dutch Shell faces stiff competition in the global market as it seeks to expand and protect its market share. King (2021) explains that the oil and gas industry has been getting increasingly competitive because of the entry of numerous players. Some of the traditional rivals of this company include BP PLC, ExxonMobil Corp, Total, and National Oil Companies (NOCs). New smaller brands also exist, especially in major markets of India, China, South America, and parts of Africa. Dealing with competition is a major challenge that the firm has to overcome. In a highly competitive industry, there is always the temptation to engage in price wars as a way of edging out market rivals (Özman et al., 2017). However, such an initiative tends to be expensive and counterproductive in case it is prolonged. Cases have arisen in the past where this firm has engaged in price wars with some of its major rivals in the market. It is possible that such a challenge may arise within the next five years as each of the major players struggle to achieve an edge in the market. Stiff competition often tend to make firms more creative in their market initiatives, but Lynch (2018) warns that if it is not managed properly, it may have devastating impact on a company. It requires the management to understand how to make its products uniquely appealing to customers to survive the stiff competition.
Environmental Issues
One of the biggest issues in the global market that the Royal Dutch Shell faces is related to the natural environment. Orlando et al. (2016) observe that there has been a growing concern over the impact of excessive usage of fossil fuel on the environment. Climate change and global warming are some of the trending issues among environmentalists who are keen on discouraging the use of oil and gas. They argue that greenhouse gases emitted when burning petroleum fuel are responsible for the changing climatic conditions. Long periods of drought and erratic disastrous rainfalls are as a result of human activities. Extraction, storage, and transportation of these products have also been blamed for environmental pollution. Oil spillage on land and at sea have been witnessed in the past, which led to massive destruction of the ecological system.
Some of the major spillage cases witnessed over the recent past include the Persian Gulf War Oil Spill in 1991, the Kolva River Spill in 1994, and BP’s Deepwater Horizon Oil Spill in 2010 (King, 2021). These accidents have justified the concern that environmentalists have over the usage of petroleum products. It has led to the growing usage of alternative energy as a way of protecting the environment. The domestic and industrial sectors are increasingly turning to solar and wind energy as the alternative source of power that they need to meet their needs. In the automotive industry, hybrid and electric cars are increasingly becoming popular in the market as the concept of green energy continue to gain popularity. These issues may directly affect the ability of this firm to achieve the intended growth in the coming years if it fails to adjust its operations accordingly.
Changing Legal/Political Environment
The political and legal environment in the global community is another major concern that the management of the Royal Dutch Shell has to take into consideration. China is one of the most lucrative markets for this and other companies in the oil and gas industry. However, the growing political tension between the west and China is raising a major concern. The ban Huawei 5G kit in the United Kingdom soon after the outbreak of Covid-19 is a testament of this growing tension between these major economic blocks. It is possible that China may retaliate by introducing laws that would make it difficult for European firms, especially those from the United Kingdom, such as the Royal Dutch Shell, to operate in the country.
Such a move would deny this firm a perfect growth opportunity in this highly competitive business environment (Hiriyappa, 2018). Some countries in the west, especially Germany, the United Kingdom, and the United States are strengthening their environmental laws to limit greenhouse emissions among large companies. These firma are given quotas of greenhouse gases emissions that they should not exceed per given period, especially a year (Kann and Biersteker, 2018). Such tough laws meant to protect the environment is a major threat to oil and gas companies as their major clients are forced to use alternative products.
Strategic Marketing at Product Level
The introduction of Motogreen, a new type of environmentally friendly engine oil, is an indication of the firm’s commitment towards the protection of the environment. The new product, which is meant to appeal to environmentally conscious motorists, needs to be promoted in the United Kingdom to enable it achieve market penetration. As Lasserre (2017) advises, when targeting a specific segment of the market, positioning is a critical tool that should define the strategy that a firm uses. The message that a firm passes to its customers about the product should reflect specific needs and expectations of the niche that has been taken. The marketing team can use various models and theories to help promote the new product in the market. It is necessary to look at some of the theories that can help the management of the Royal Dutch Shell to promote Motogreen engine oil in this national market.
Maslow’s Hierarchy of Needs
This is one of the theoretical models that have been highly effective in explaining the purchasing pattern of customers in the market. This model classify needs of people based on their social status in the society. At the bottom of the pyramid are physiological needs of food, water, rest, and warmth (Helinski, 2017). Those at this level are the poorest in the society who only need the very basic needs of survival. When these needs have been met, safety needs emerge. Such individuals would desire to have a sense of safety and security in every activity in which they are involved.
Once the physiological and safety needs are addressed, the third level in the pyramid include the need for belongingness and love (Ginter, Duncan and Swayne, 2018). At this stage, one is concerned about friendship and intimacy that comes with it. They want to be close to their loved ones and value the idea that others care about them. The next stage include esteem needs of prestige and feeling of accomplishment. Such individuals often feel that they have achieved what many are yet to realize, and as such, they deserve the respect of their community. The last stage at the apex of the pyramid is self-actualization. One feels that they have achieved their full potential and are fully contented with their current status (Henry, 2018). Figure 2 below identifies the level of needs as identified in this model.
This theory will help the management of the Royal Dutch Shell to select customers that should be targeted when prompting the Motogreen engine oil. Customers falling in the first three classes often prefer going for the cheapest product in the market because of financial constraints. They are less likely to be the primary target when promoting this new product. Instead, the company should focus on the last two classes of customers because of their financial power and constant desire to do the right thing to the environment and society in general. They are likely to purchase this new engine oil because of their desire to ensure that their activities do not pose any danger to the environment.
Targeting and Segmentation Theory
When introducing a new product in the market, it is always important to define the niche that will be targeted. Motogreen is a new engine oil product that seeks to specifically target motorist who are keen on protecting the environment. As such, one of the most effective models that the firm should use in promoting this product is targeting and segmentation theory. This theory requires classifying customers based on specific demographical factors and then selecting the most attractive segment that should be targeted. Instead of focusing on the entire market, this theory emphasizes the need to be specific in targeting a specific segment. Once the segment is identified, the firm will then develop promotional campaigns and product positioning strategies based on the needs and expectations of the targeted customers (Dhir, 2019). The strategy helps in ensuring that the promotional message and product positioning strategy develop are the most appropriate for the targeted customers.
Consistency Theory
The management of the marketing department of this company may also want to embrace consistency theory when promoting Motogreen to a section of customers in the market. This theory holds that people often strive for a balanced state of cognitions. Whenever there are contradictions in cognitions, there will be a state of imbalance (Coyne et al., 2018). Such an imbalance may cause dissonance in an individual. In the marketing realm, it will be critical for the management of the Royal Dutch Shell to ensure that there is consistency between what they promise their customers and what they actually offer. The new engine oil promises to offer the same superior services to the customers, with the only major difference being that it is environmentally friendly. When it emerges that the engine oil is not as environmentally friendly as the firm had promised, customers will be dissatisfied. Similarly, if it emerges that the new product is not protecting the engine as clients expected, dissonance will occur (Cooke, 2018). As such, careful measures should be taken to ensure that the actual value of the new product matches what was promised.
Recommendations at Organizational Level
The analysis conducted above has revealed that Royal Dutch Shell faces various challenges that it has to overcome to achieve sustainable development. The external forces identified may not be avoided by this or any other firm operating in this industry. However, it is possible to develop strategies at organizational level, to help manage their impact. The following recommendations will help the management to address each of the problems identified above.
Addressing Stiff Market Competition
The competition in this industry is likely to get even stiffer within the next five years, especially in the United Kingdom. The management of this company needs to develop effective ways of managing this challenge. One of the recommended ways of managing competition is to improve the availability of its products in the local market. As Ashour (2018) notes, one of the factors that define the choice of filling stations for motorists is the convenience of the location. The company should ensure that it increases its filling stations, especially along major highways across the country. This should be done in a way that ensures that the cost of running an additional filling station is less than the expected net return. It is recommended that Royal Dutch Shell should invest more in promotional campaigns. In a market where products offered by different companies are basically the same, it is advisable for a firm to ensure that it capitalizes on the strength of its brand. The company should strive at elevating its brand in the local market so that it can create a pool of loyal customers. It should convince them that this firm offers superior quality in the market.
It is also advisable for the firm to consider strategies such as mergers and acquisition in the local market as a way of expanding its operations and reducing the level of competition in the market. When competition becomes unhealthy to the level where players are considering price wars, one of the best ways of avoiding such a problem is to merge with the competitor and operate as one large company. Such a merger will give this company a better capacity to outrival its competitors because of increased market coverage and financial capacity. It is also recommended that the human resource unit should invest in recruiting and retaining some of the talented employees who can help in developing innovative ways of overcoming challenges relating to competition in the local market.
Addressing Environmental Issues
Environmental concerns identified in the section above may pose a serious threat to the firm’s ability to achieve sustainable growth. The management of Royal Dutch Shell must find a way of addressing this problem in the most effective way possible. It is recommended that this firm should expand its product portfolio to include some of the green energy products which are gaining massive popularity in the United Kingdom. The firm should invest in solar and wind energy through partnerships and joint ventures with some of the companies in this industry. Broadening product portfolio will offer this company the security that it needs in ensuring that its revenue stream is not threatened.
Innovation is another way through which this company can address environmental challenges (Ansoff, 2019). The company should find ways of making its products less harmful to the environment. The introduction of Motogreen, an environmentally friendly engine oil, is the first step towards this goal. The company should develop similar products to target customers who are keen on protecting the environment. It is also recommended that this company should invest in environmental conservations in its corporate social responsibilities. It should gain the image of a company that is keen on fighting environmental degradation in the country.
Managing Changing Legal/Political Environment
The changing legal and political environment can be a major problem for the sustainable growth of Royal Dutch Shell, as discussed above. The Brexit of the United Kingdom is expected to have political and legal consequences that the business community had not anticipated. The management has the responsibility of addressing these issues to ensure that operations of this firm is not affected. One of the ways of managing such volatile external environmental issues is to remain dynamic. The company should be flexible enough to change its operations based on the changing legal environment.
In case the United Kingdom enact new laws that may directly affect its operations, it should be flexible enough to adjust its strategies in the local market. It is also recommended that this firm should join other players in the industry and lobby for laws that are favorable to their operations (Alam, 2018). It is possible for industry players to influence policies made by the government. Such steps will help in avoiding cases where undesirable legislations enacted. It is also advisable for the firm to remain innovative in its product offerings, especially when it becomes apparent that the government may create laws that may ban some products.
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