Marketing – Segmantation Analysis of Shell

1. Segmentation
Oil station market consists of buyers who differ in one or more ways, so Shell need first segment its potential consumer market. There are several major variables that can be used in segmenting consumer markets, including geographic, demographic, psychographic, and behavioral variables. In this case, SOPC used the latter two variables to segment its market. It chose “personality” and “benefit” as its segmentation criteria, of which the former belongs to psychographic segmentation and the latter belongs to behavioral segmentation. * Why to choose these two criteria?

According to the requirements for effective segmentation, SOPC has to make sure that its market segments are measurable, accessible, substantial, differentiable, and actionable. The requirement of differentiable market segments means that the segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. Neither geographic segmentation nor demographic segmentation can be effective, because those criteria do not affect Shell’s customers’ attitude of stopping their automobiles at gasoline stations. That’s why SOPC aimed at customer needs and chose personality and benefit as segmentation criteria. We can find that Figure1.1 gives a very clear market segmentation: 10 market segments are determined according to two criteria – personality and benefits.

2. Targeting
After segmenting its consumer markets, Shell has to evaluate the various segements and decide how many and which segments it can serve best. 1) Evaluating Market Segments
Shell need first find a market segment where the industry wasn’t meeting customer needs and then find a market where the competitor didn’t fit with. a. Potential customer market segment. To better understand each segment, Shell’s research team conducted focus group sessions and half-day interviews. They find each customer segment prefers benefits such as quick and easy, friendly service, bargain prices, safety and product performance,as Figure 1.2 shows. b. Competitors’ adept market segment.

After evaluation and analysis, Shell find consumers who value low prices fit best with the independent retail companies.That means, independent retail competitors are good at appealing this market segments, just as Segment 4 in Figure 1.2 shows.

2) Select target market segments
After identifying the property of every market segments, Shell must now decide which and how many segments it will target. Since customers have different needs in different market segments,and also competitors do well in appealing some segments, Shell need to select some instead of targeting all the segments. * Which segments it should target?

A targeting market consists of a set of buyers who share common needs or characteristics that the company decides to serve. According to Shell’s marketing research, premium speedsters(PS), simplicity seekers(SS),and safety firsters(SF) have some need and requirements for oil station in common: easy and quick (Figure2.1).

So, Shell could choose these three segments as its target market. * Why won’t shell choose more segments?
Concentrated Marketing Strategy
“Quick and Easy”
Concentrated Marketing Strategy
“Quick and Easy”
If Shell target more segments, it will face more competition and may partially meet the needs of may different consumers. It’s more wise of Shell to align its efforts in a common direction to own a smaller set of consumers.So, Shell had better choose Concentrated Marketing Strategy, with focus on PS,SS,SF market segments. Figure 2.2 marketing strategy

3. Position
After targeting proper consumers, Shell need to decide what positions it wants to occupy in those segments. The positioning task consists of three steps, as the following shows. 1) Identify possible competitive advantages

a. Services differentiation: The Shell need to pick a strategy that would be hard for competitors to copy. As a brand identity, “Quick and Easy” fit the bill because it focuses on customer experience. According to the rigidity of gasoline price, providing better service is the most effective and efficient way to gain the market share and win the game among his competitors. b. Personnel differentiation: Retailers work with Shell to develop retail employees recruiting and retention training programs, thus the marketing mission can be successful achieved by these immediate actions. c. Channel differentiations: Shell’s first class services are based on superior channels. Namely, called Shell retailers; to some extent, they are also entrepreneurs and innovators who are full of initiativeness, creativeness and implementation capacity. 2) Consolidate and promote its advantage.

After identifying the advantages of the company, marketers should do something to promote them and make them clearer. As to the Shell, they find they can consolidate at least 4 factors: First, they should arouse more capital investment. “we must continually try new things and measure how they work.” says the leader of Shell. It must be a cost of money. They also need to measure the consumer’s responses accurately with some high-impact innovations that would require a lot of money. Second, they must built strong relationships with their retailers. It will help a lot that retailers are responsible for developing and implementing basic retail practices as well as innovations that support the concept of quick ,easy transaction in all facets of their service station business.

Furthermore, retailers can even do some actively participate in developing ways to implement the strategy. So marketers need to maintain good communication systems to get the information through. Third, the marketers should have efficient stuff in place. When they decide to make some change in the service station, there must be enough employees that have been well trained to do the service. They would better to be creative, it is important to share their ideas when face some new situation. Forth, which is the most important thing, is to find a way that can service the 3 segmentation discussed in targeting best – easy and quick service. All the factors above this are the preparation for it. Marketers should find a measure to find what customers want and what would they like. This may be a time consuming process. Some innovations must be used as tools.

Figure 3.1 competitive advantages
3) Selecting an overall positioning strategy.
Shell must position its brands on the key benefits that it offers relative to competing brands.
According to the above analysis, Shell positions its brand identity as Quick and Easy. Then, it need decide its brand’s value proposition.
Because the oil retail market is aggresively competitive, it’s hard for Shell to increase its service price. So, in order to increase its sales volume, Shell have to advance its service quality instead of changing its price. Therefore, Shell should adopt More for the same strategy.

In a word, Shell’s overall positionging strategy is to promote “Quick and Easy” service with a competitive price.

4. Implemention of its strategy.
1) Ask retailers to actively participate in developing ways to implement the strategy and introduce them to the “Quick and Easy” brand identity. 2) Develop retail employee recruiting and retention training programs. 3) Advertising that conveys the message of “Quick and Easy” will be directed at three targeted customer.