Iocl Final Extended

A Project Report On

“Marketing and Promotion of XtraPower Fleet Card Loyalty Program” Submitted to Indian Oil Corporation Limited

By

Rakesh Sharma

IITTM (An

organization of Ministry of Tourism, Govt. of India) Gwalior. 2009

A Project Report 1

On “Marketing and Promotion of XtraPower Fleet Card Loyalty Program” Submitted By Kishor Kunal Enrollment No: 1084019 Session: 2008-2010 Under the guidance of Shri. J.K.Ghosal Senior Manager Regional Coordinator At Indian Oil Corporation Limited. (Barauni Refinery) A Project Undertaken towards the partial fulfillment of the degree “Post-Graduate Diploma in Management” International Business (I.B) 2008-10

IITTM (An organization of Ministry of Tourism, Govt. of India) Gwalior. 2009

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Certificate of Approval

The following Summer Project Report titled “Marketing and Promotion of XtraPower Fleet Card Loyalty Program” is hereby approved as a certified study in management carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite for the award of Post-Graduate Diploma in Management in International Business and Marketing for which it has been submitted. It is understood that by this approval the undersigned do not necessarily endorse or approve any statement made, opinion expressed or conclusion drawn therein but approve the Summer Project Report only for the purpose it is submitted.

Summer Project Report Examination Committee for evaluation of Summer Project Report Name

Signature

1. Faculty Examiner _______________________

___________________

2. PG Summer Project Co-coordinator _______________________

___________________

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Certificate from Summer Project Guides This is to certify that Mr. Kishor Kunal, a student of the Post-Graduate Diploma in Management in International Business and Marketing, has worked under our guidance and supervision. This Summer Project Report has the requisite standard and to the best of our knowledge no part of it has been reproduced from any other summer project, monograph, report or book.

Dr Nimit Chowdhary Course Coordinator I.I.T.TM Gwalior

Shri. J.K.Ghosal Senior Manager (R.C) Marketing Division Indian Oil Corp. Ltd. Barauni Refinery Barauni, Bihar

Date: Date:

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PREFACE In the broader sense training is necessary to make the students of professional institutions familiar with industrial environment .This not only helps professionals to speedily accommodate themselves in industries but also to have better usage of their studies. To be dynamic, strategic and work aggressively they need to know the policies , procedures and trends going in the present industrial environment apart from their studies The training fulfils all these needs . Whether it is the question of demonstrating a modernized procedure, step by step to an old production hand or guiding a new division head through the intricacies of preparing his own budget, the responsible supervisor or manager must make the trainee learn and communicate. The purpose and objective of the study is to analyze the different aspect of financial and marketing position of the organization and list out the suggestions, recommendations based on the studies. The main source of study is primary and secondary data collected from the annual end and other public reports and other information received from Barauni Refinery and Indian Oil Corporation Limited and market survey. The various modern and standard tools to achieve the objectives of the study carry out the analysis of the data.

IOCL BARAUNI REFINERY – THE JEWEL OF BIHAR 5

Barauni Refinery is the second public sector refinery of the Indian Oil Corporation Limited which was set-up under the collaboration of erstwhile USSR and limited participation of Romania. It is located near the northern bank of the river Ganga at Begusarai District town of Bihar state. The refinery is strategically located on the crossroads of two important national highways , NH30 and NH-31 and two important railways, Eastern Railways and North Eastern Railways. The river Ganga flows around 8 km from the refinery. The Barauni Refinery takes its crude oil from foreign countries through Barauni –Haldia Crude Pipeline (BHCPL).Barauni Refinery is one of the biggest size oil refinery owned and managed by IOCL. The refinery is located about 8km from the town Begusarai and is surrounded by villages. The construction activity of the refinery commenced in 1962 and it went on stream in the year 1964 facing insurmountable hurdels, heavy equipment ,men and machinery was moved into a predominantly agrarian district of Begusarai. Barauni Refinery was formally inaugarated by Prof. Humayun Kabir, the then Union Minister of Petroleum and Chemicals, Government of India on January 15, 1965. It started with a refining capacity of processing two 2 Million Metric Tones Per Annum of Assam Crude through the Nahar-Katiya-Barauni pipeline. The capacity was subsequently enhanced to 3 million metric tones per annum. The refinery consists of three crude oil Distillation unit, two Coker unit, CRU, LRU and BXP. The oilmovement and storage section of refinery does the storage and dispatch of all the products. An LPG bottling plants has also been provided which is able to fill 3500 to 4000 cylinders per day.A captive power plant has been provided to meet the steam and power requirements of the refinery. Under the expansion program following process units and facilities are put up:  The Resid Fludised Bed Catalytic Cracking Unit (RFCCU) yielding LPG, Diesel and Petrol.  Diesel Hydro Treater (DHDT) for improving Cetone no. and to meet the euro emmissions norms. Primarily, the refining technology was sourced from eastern countries like Russia. Later as the refinery grew over the years, it drew upon technologies from rest of the world . In February 16, 1999 the 498 km long Haldia-Barauni Crude OilPipeline commenced its crude supply position of the refinery, which was dependent on Assam crude alone. At the begining of the new millennieum , Barauni Refinery is poised to touch stellar heights in mordernizing its refining technology.Barauni refinery is among the few refineries in the world to have scored the coveted ISO 9002 Certification.

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The refinery processess imports the low sulphur and high sulphur crude oil to produce the following: Motor Spirit (MS) Petrol. Liquified Petroleum Gas (LPG). Naptha. Superior Kerosene Oil (SKO). High Speed Diesel (HSD).  Light Diesel Oil.  Carbon Black Feed Stock (CBFS).  Bitumen.  Low sulphur heavy stock.     

Barauni Terminal catering to the needs of the customer of 29 districts of Bihar , bridging for Mughalsarai for XtraPremium MS and LDO and other IOC locations as well as various consumers situated in different part of the country and OMC by rail loading at refinery premises and OMC situated at Barauni through dedicated product pipeline. Barauni terminal, Barauni is committed to comply Corporation’s mission to achieve standards of excellence in petroleum marketing and transportation with concerned for customer satisfaction and to adopt sale and environment freindly practices by :  Supplying ONSPEC product in correct quantity at administered prices.  Tendering prompt and courteous service to all customers.  Emphasizing concern for safety.

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1)

ACKNOWLEDGEMENT.

2) INTRODUCTION TO IOC.   

3)

VISION. INDAIN OIL- INDIA’S DOWNSTREAM MAJOR. MISSION.

INDIAN OIL – A NATIONAL BRAND   

IOC PRODUCTS. IOC SERVICES. IOC BRANDS.

4) SWOT ANALYSIS FOR IOCL. 5) LOYALTY PROGRAMME – AN INTRODUCTION 6) LOYALTY PROGRAMS AT IOCL.   7)

XTRAREWARDS LOYALTY PROGRAM. XTRAPOWER FLEET CARD PROGRAM.

HOW IS XTRAPOWER FLEET CARD BETTER THAN OTHER FLEET CARD?  

POINT SYSTEM LIST OF REWARDS.

8) PROJECT SYNOPSIS.  

INTRODUCTION TO THE PROJECT. OBJECTIVES OF THE PROJECTS.

9) RESEARCH METHODOLOGY.   

PROBLEM DEFINITION RESEARCH DESIGN. SAMPLE SIZE AND SAMPLE DESIGN 8



DATA ANALYSIS AND FINDINGS.

10) RETAIL OUTLET SALES   

FINDINGS. CONCLUSION. RECOMMENDATION.

11) PROSPECTIVE ALLIANCE FOR XTRAPOWER FLEET CARD PROGRAM.  

  

12)

ALLIANCE PARTNERS OF IOCL FOR XTRAPOWER FLEET CARD PROG. NEED FOR LOCAL ALLIANCE PARTNERS. OBJECTIVES OF THE PROJECT. FINDINGS. RECOMMENDATIONS.

QUESTIONNAIRE.

13) BIBLIOGRAPHY.

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Acknowledgement

A formal statement of acknowledgement will hardly meet the ends of the justice in the matter of expression of my deeply felt sincere and allegiant gratitude to all those who encouraged me and helped me during my study.

It gives me immense pleasure, to express my unfeigned and sincere thanks and gratitude to my supervisor Shri. J.K.Ghosal, Senior Manager, Regional Coordinator IOCL Barauni Refinery, Barauni for his valuable guidance sustained, encouraged and constructive critic at every stage of work, without which it would have never been accomplished.

I am thankful to the staff members of Indian Oil Corporation Ltd. Marketing Terminal, Barauni Refinery who gave me an opportunity to spend these two months in their organization and enrich my knowledge.

I also extend my heartiest thanks to all the faculty members of Indian Institute of Tourism and Travel management, Gwalior for gracing me with the knowledge that I could use in the completion of this training.

I am also very thankful to all my respondents who took time out of their busy schedules and helped me in carrying out this project.

(KISHOR KUNAL)

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Introduction to IOCL VISION: “A major diversified, transnational, integrated energy company, with national leadership and a strong environment conscience, playing a national role in oil security & public distribution.” INDIAN OIL: INDIA’S DOWNSTREAM MAJOR: Indian Oil Corporation is an Indian public-sector petroleum company. It is India’s largest commercial enterprise, ranking 116th on the Fortune Global 500 listing (2008). It began operation in 1959 as Indian Oil Company Ltd. The Indian Oil Corporation was formed in 1964, with the merger of Indian Refineries Ltd. Indian Oil and its subsidiaries account for a 47% share in the petroleum products market, 40% share in refining capacity and 67% downstream sector pipelines capacity in India. The Indian Oil Group of companies owns and operates 10 of India's 19 refineries with a combined refining capacity of 60.2 million metric tonnes per annum (MMTPA, .i.e. 1.2 million barrels per day). These include two refineries of subsidiary Chennai Petroleum Corporation Ltd. (CPCL) and one of Bongaigaon Refinery and Petrochemicals Limited (BRPL). From a fledgling company with a net worth of just Rs. 45.18 crore and sales of 1.38 million tonnes valued at Rs. 78 crore in the year 1965, Indian Oil has since grown over 3000 times with a sales turnover of Rs. 285,337 crore, the highest– ever for an Indian company, and a net profit of Rs. 2,950 crore for 2008-09.

Set up with the mandate of achieving self-sufficiency in refining and marketing operations for a nascent nation set on the path of economic growth and prosperity, Indian Oil today accounts for nearly half of India’s petroleum 11

consumption, reaching precious petroleum products to millions of people every day through a countrywide network of around 35,000 sales points. They are backed for supplies by 167 bulk storage terminals and depots, 101 aviation fuel stations and 89 Indane LPG bottling plants. For the year 2008-09, Indian Oil sold 62.6 million tonnes of petroleum products, including 1.7 million tonnes of natural gas.

The Corporation's cross-country network of crude oil and product pipelines, spanning about 9,300 km and the largest in the country, meets the vital energy needs of the consumers in an efficient, economical and environment-friendly manner. Indian Oil is investing Rs. 43,393 crore (US $10.8 billion) during the period 2007-12 in augmentation of refining and pipeline capacities, expansion of marketing infrastructure and product quality up gradation as well as in integration and diversification projects. As the flagship national oil company in the downstream sector, Indian Oil reaches precious petroleum products to millions of people every day through a countrywide network of about 35,000 sales points. They are backed for supplies by 166 bulk storage terminals and depots, 101 aviation fuel stations and 89 Indane (LPGas) bottling plants. About 7,100 bulk consumer pumps are also in operation for the convenience of large consumers, ensuring products and inventory at their doorstep. Indian Oil operates the largest and the widest network of petrol & diesel stations in the country, numbering over 17,600. It reaches Indane cooking gas to the doorsteps of over 50 million households in nearly 2,700 markets through a network of about 5,000 Indane distributors. Indian Oil’s ISO-9002 certified Aviation Service commands over 62% market share in aviation fuel business, meeting the fuel needs of domestic and international flag carriers, private airlines and the Indian Defence Services. The Corporation also enjoys a dominant share of the bulk consumer business, including that of railways, state transport undertakings, and industrial, agricultural and marine sectors.

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To safeguard the interest of the valuable customers, interventions like retail automation, vehicle tracking and marker systems have been introduced to ensure quality and quantity of petroleum products. Indian Oil has set up subsidiaries in Sri Lanka, Mauritius and the United Arab Emirates (UAE), and is simultaneously scouting for new opportunities in the energy markets of Asia and Africa.

Lanka IOC Ltd. operates about 150 petrol & diesel stations in Sri Lanka, and has a very efficient lube marketing network. Its oil terminal at Trincomalee is also Sri Lanka's largest petroleum storage facility. Lanka IOC commissioned an 18,000 tonnes per annum capacity lubricants blending plant and a state-of-theart fuel and lubricants testing laboratory at Trincomalee during 2007-08 besides commencing bunkering business. Indian Oil (Mauritius) Ltd. has an overall market share of nearly 20% and commands a 32% market share in aviation fuelling business, apart from its bunkering business. It operates a modern petroleum bulk storage terminal at Mer Rouge port, besides 13 petrol & diesel stations. In addition to the ongoing expansion of retail network, IOML has commissioned the first ISO-9001 product-testing laboratory in Mauritius. The Corporation's UAE subsidiary, IOC Middle East FZE, which oversees business expansion in the Middle East, has commenced blending SERVO lubricants and marketing petroleum products and lubricants in the Middle East, Africa and CIS countries.

Performance during financial year 2007-2008 Indian Oil’s Gross Turnover (inclusive of excise duty) for the year 2007-08 reached a new high of Rs. 2,47,479 crore, up by 12.1 % as compared to Rs. 2,20,779 crore in the previous year. The Profit After Tax was Rs. 6,963 crore. The Corporation sold 59.29 million tonnes of petroleum products during the year 2007-08, as compared to 54.84 million tonnes during the previous year. This includes sale of natural gas, which has gone up to 1.74 million tonnes in 2007-08 as compared to 1.48 million tonnes in the previous year. In addition, 13

product exports rose to 3.33 million tonnes from 3.13 million tonnes in the previous year. The Corporation’s seven refineries surpassed 100% capacity utilization and clocked the highest ever throughput of 47.4 million tonnes. Its pipelines network too registered the highest ever operational throughput of 57.12 million tonnes of crude oil and petroleum products. Among new businesses, Natural

Gas Marketing and Petrochemicals together generated revenues of over Rs 4,600 crore during the year 2007-2008. As a leading public sector enterprise of India, Indian Oil has successfully combined its corporate social responsibility agenda with its business offerings, meeting the energy needs of millions of people everyday across the length and breadth of the country, traversing a diversity of cultures, difficult terrains and harsh climatic conditions. The Corporation takes pride in its continuous investments in innovative technologies and solutions for sustainable energy flow and economic growth and in developing techno-economically viable and environment-friendly products & services for the benefit of its consumers.

Mission • To achieve international standards of excellence in all aspects of energy and diversified business with focus on customer delight through value of products and services, and cost reduction. • To maximize creation of wealth, value and satisfaction for the stakeholders. • To attain leadership in developing, adopting and assimilating state-of-the-art technology for competitive advantage. • To provide technology and services through sustained Research and Development. • To foster a culture of participation and innovation for employee growth and contribution. • To cultivate high standards of business ethics and Total Quality Management for a strong corporate identity and brand equity. 14

• To help enrich the quality of life of the community and preserve ecological balance and heritage through a strong environment conscience.

INDIAN OIL - A NATIONAL BRAND

IndianOil has been adjudged India's No. 1 brand by UK-based Brand Finance, an independent consultancy that deals with valuation of brands. It was also listed as India's 'Most Trusted Brand' in the 'Gasoline' category in a Readers' Digest AC Nielsen survey. In addition, IndianOil topped The Hindu Businessline's "India's Most Valuable Brands" list. However, the value of the IndianOil brand is not just limited to its commercial role as an energy provider but straddles the entire value chain of gamut of exploration & production, refining, transportation & marketing, petrochemicals & natural gas and downstream marketing operations abroad. IndianOil is a national brand owned by over a billion Indians and that is a priceless value. Due to innovative initiatives, strong brand communications and sales promotion campaigns conducted during the year, Indian Oil's branded fuels XTRAPREMIUM petrol and XTRAMILE diesel - maintained their firm leadership status, with a market share of 48.6% and 59.6% respectively among branded fuels in the market. XTRAPREMIUM and XTRAMILE are now available at 6,446 and 9,256 retail outlets of Indian Oil respectively. Indian Oil is a heritage and iconic brand at one level and a contemporary, global brand at another level. While quality, reliability and service remains the core benefits to our customers, our stringent checks are built into operating systems, at every level ensuring the trust of over a billion Indians over the last four decades.

IOC- Products 15

Indian Oil is not only the largest commercial enterprise in the country it is the flagship corporate of the Indian Nation. Besides having a dominant market share, Indian Oil is widely recognized as India’s dominant energy brand and customers perceive Indian Oil as a reliable symbol for high quality products and services. Benchmarking Quality, Quantity and Service to world-class standards is a philosophy that Indian Oil adheres to so as to ensure that customers get a truly global experience in India. Our continued emphasis is on providing fuel management solutions to customers who can then benefit from our expertise in efficient sourcing and least cost supplies keeping in mind their usage patterns and inventory management. Indian Oil is a heritage and iconic brand at one level and a contemporary, global brand at another level. While quality, reliability and service remains the core benefits to our customers, our stringent checks are built into operating systems, at every level ensuring the trust of over a billion Indians over the last four decades. The Retail Brand template of IOC consists of XtraCare (Urban), Swagat (Highway) and Kisan Seva Kendra’s (Rural). These brands are widely recognized as pioneering brands in the petroleum retail segment. Indian Oil’s leadership extends to its energy brands - Indane LPG, SERVO Lubricants, Auto gas LPG, XtraPremium Branded Petrol, XtraMile Branded Diesel, XtraPower Fleet Card, Indian Oil Aviation and XtraRewards cash customer loyalty programme.

IOCL PRODUCTS IN THE MARKET SERVO

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Indian Oil's SERVO range of lubricants reigns as the undisputed market leader in the Indian lubricants market. Known for its cutting-edge technology and highquality products, SERVO backed by Indian Oil's pioneering R&D, extensive blending and distribution network, sustained brand enhancement and new generation packaging is a one-stop shop for complete lubrication solutions in the automotive, industrial and marine segments. In the retailing segment, besides Indian Oil petrol stations, SERVO range of lubricants is available through a network of SERVOXpress stations, bazaar outlets and thousands of auto spare parts shops across the country. The SERVO range includes over 500 lubricants and 1200 formulations encompassing literally every lubricant requirement. The SERVOXpress is a one-stop shop for quick, easy and convenient auto care, providing customers with a refreshing experience. The SERVOXpress stations have facilities for oil change, tyre/battery checkups, A/C service, vacuum cleaning, perfuming, and upholstery cleaning, polishing and lamination installation too.

INDANE LPG GAS Indane is today one of the largest packed-LPG brands in the world. Indian Oil pioneered the launch of LPG in India in the 1970s and transformed the lives of millions of people with the introduction of the clean, efficient and safe cooking fuel. LPG also led to a substantial improvement in the health of women in rural areas by replacing smoky and unhealthy chullahs with Indane. It is today a fuel synonymous with safety, reliability and convenience. Indian Oil’s Indane LPG gas is used in 40 million homes as cooking fuel and commands over48% market share in India.

INDIAN OIL AVIATION SERVICES Indian Oil Aviation Service is a leading aviation fuel solution provider in India and the most-preferred supplier of jet fuel to major international and domestic airlines. Between one sunrise and the next, Indian Oil Aviation Service refuels over 1500 flights – from the bustling metros to the remote airports linking the 17

vast Indian landscape, from the icy heights of Leh (the highest airport in the world at 10,682 ft) to the distant islands of Andaman & Nicobar. Indian Oil Aviation services have a market share of 65% with a network of 101 Aviation Fuel Stations (AFS) meets complete aviation fuel requirement of the Defense services.

AUTO GAS AutoGas (LPG) is a clean, high octane, abundant and eco-friendly fuel. It is obtained from natural gas through fractionation and from crude oil through refining. It is a mixture of petroleum gases like propane and butane. The higher energy content in this fuel results in a 10% reduction of CO2 emission as compared to MS.

XTRAPREMIUM PETROL XTRAPREMIUM Petrol is India’s leading branded petrol boosted with new generation multifunctional additives known as friction busters that prevents combustion chamber deposits. XTRAPREMIUM is custom designed to deliver higher mileage, more power, and better pick up, faster acceleration, enhanced engine cleanliness and lower emissions.

XTRAMILE SUPER DIESEL Indian Oil’s XTRAMILE Super Diesel, the leader in the branded diesel segment is blended with world-class ‘Multi Functional Fuel Additives (MFA). Commercial vehicle owners choose XTRAMILE because they see a clear value benefit in terms of superior mileage, lower maintenance costs and improved engine protection. A growing section of customers who own diesel automobiles, both in the ‘lifestyle’ and ‘passenger’ category, prefer XTRAMILE as a fuel for its added and enhanced performance. XTRAMILE has brought in a huge savings in the high mileage commercial vehicle segment. Transport fleets that operate a large number of trucks crisscrossing the country are using XTRAMILE to not only obtain a higher mileage but also for low maintenance costs. 18

XTRAPOWER FLEET CARD The XTRAPOWER Fleet Card program is a complete smart card-based fleet management solution for fleet operators and Corporate for cashless purchase of fuel & lubes from designated retail outlets of Indian Oil through flexible prepaid and credit facilities The fleet card program also offers an exciting rewards program and unique benefits like personal accident insurance cover and vehicle tracking facilities. In just under two years of its launch, Indian Oil’s XTRAPOWER Fleet Card has emerged as the largest fleet card in the country with the widest retail outlet coverage. SUPERIOR KEROSENE OIL Kerosene is distillate fractions of crude oil in the boiling range of 150250°C. They are treated mainly for reducing aromatic content to increase their smoke point (height of a smokeless flame) and hydro fining to reduce sulphur content and to improve odour, colour & burning qualities (char value).

Kerosene is used as a domestic fuel for heating / lighting and also for manufacture of insecticides/herbicides/fungicides to control pest, weeds and fungi. Since kerosene is less volatile than gasoline, increase in its evaporation rate in domestic burners is achieved by increasing surface area of the oil to be burned and by increasing its temperature. The two types of burners which achieve this fall into two categories namely vaporisers & atomisers.

“SWAGAT” HIGHWAYS FLAGSHIP RETAIL OITLETS There are number of such retail outlets planned across the country out of which many have been commissioned with a complement if fuel and non19

fuel. Non-fueling offering through ‘Best-in-class’ alliance on exclusive basis wherever possible communication, food, rest, healthcare, parking vehicle care etc. XTRA CARE The launch of Xtra Care was the culmination of a series of plans in retail design, product and service up gradation, capability training, automation, loyalty programme, retail site management techniques all benchmark to global standards. While the industry standard is to take samples on a quarterly basis, Indian Oil has moved several steps ahead by introducing fortnightly random sampling with specific importance given to Research Octane Number (RON) sampling which is truly the definitive test for quality and quantity. So far over 400 Xtra care retail outlets have been set up, around 1500 Xtra Care retail outlets will be ready soon.

XTRAREWARDS LOYALTY PROGRAM Indian Oil XTRAREWARDS is India's first on-line rewards program that seeks to inculcate the habit of redeeming points. The loyalty program rewards customers paying by cash, credit and debit cards.

Each transaction is confirmed on-line through a charge slip and customers can earn points on fuel/lube purchases at participating Indian Oil Retail Outlets. Additional points can also be earned outside the Indian Oil network, covering prominent FMCG, Food, Automobile, Travel, Entertainment, Apparel and Hospitality sectors.

IOC Services Indian Oil provides a wide range of marketing services and consultancy in 20

fuel handling, distribution, storage and fuel/lube technical services. With a formidable bank of technical and engineering talent, Indian Oil is fully equipped to handle small to large-scale infrastructural projects in the petroleum downstream sector anywhere in the country. Our project teams have independently or jointly as a consortium, have set up depots, terminals, pipelines, aviation fuel stations, filling plants, LPG bottling plants, amongst others. Indian Oil’s fuel management system to bulk customers offer customized solutions that deliver least cost supplies keeping in mind usage patterns and inventory levels. A wide network of lubricant and fuel testing laboratories are available at major installations which is further backed by sector-wise expertise in the core sectors of power, steel, fertilizer, gas plants, textile mills, etc. Cutting edge systems and processes are designed around one simple belief-to provide valuable customers with an unbeatable edge in their business. Indian Oil’s supply and distribution network is strategically located across the country linked through a customized supply chain system backed by front offices located in conceivably every single town of consequence.

The wide network of services offered by Indian Oil, Marketing Division is well maintained, which includes; commercial/reticulated LPG; total fuel management/ consumer pumps; Indian Oil Aviation Service; LPG Business (non-fuel alliances); loyalty programs; retail business (non-fuel alliances) and SERVO technical services.

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IOC Brands:

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SWOT Analysis for IOCL 22

External environment Opportunity: The IOCL has much opportunity in the present market conditions. This is because the petroleum products have become a need for everyone and still contains a lot of scope for customization. The various opportunities are listed below.

• Since the company has the maximum number of outlets and also the maximum number of refineries in India, it can very easily go for extension at any point of time, and can introduce any new products, which will get support from its huge market network.

• The company can make the buying process easier for the customers, by implying many more schemes in the range of XTRAPOWER Fleet Card AND XTRAREWARD.

• The company can think over the issue to build its own pipelines, so that it will be an independent player and it will also support its aviation fuel supply.

• Company has a great scope in E&P. It is already involved in E&P but only in a very limited scale.

Threats:

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Since the company is the market leader in the field, so have maximum threats from the other players and many other issues. The lists of threats are given below.

• The foreign players with more advanced technology are the biggest threat for the company.

• The crude oil supply is also a big issue in front of the company, because the company cannot fix its price and so, some time had operated in loss also. It is the biggest problem because the maximum part of their crude is been imported.

• In future the market will welcome more private players, which will eat up its market share.

• If the Govt. Policies allow the private players to set their own price, the private player can seriously harm the market share of IOCL.

Internal environment

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Strengths:

• IOC controls 10 refineries, by virtue of which it has a total share of around 40% of India’s overall refining capacity. IOC has also acquired equity stakes in CPCL and BRPL, and in 2001, these refineries became subsidiaries of IOC.

• 58% of IOC’s refining capacity is located in the Northern and Western regions, which are high demand and high growth areas

• Although its refineries are located the interior of the country and not near the major ports IOC has a very strong distribution network by virtue of having a share of 48% in the country’s product pipelines. The total capacity of these product pipelines is 49.79 MMT.

• IOC also acquired management control of the marketing company IBP, thereby strengthening its position in these activities. It also has a dominant share in all segments in terms marketing infrastructure. Its network includes 19830 retail outlets, 8000 LPG distributors, and 6492 kerosene/LDO dealers.

• By virtue of entering into extensive joint venture agreements, and of its own initiative as well, the company has a presence in various other related activities such as petroleum storage, pipelines, lube additives, exploration, petrochemicals, gas, training and consultancy, etc.

• The company has already entered overseas markets such as Sri Lanka, Maldives, and Oman and is presently considering entering Turkey through a JV. The company is in talks with Caliak of Turkey to set up a 10 million TPA grass root refinery with an investment of $2 billion and establish retail business. IOC is also weighing the possibility of entering Indonesia.IOC has also started exploring the overseas markets for increasing its scope of operations. Its interests include downstream activities in Sri Lanka, Maldives, Oman, and 25

Nepal; interest in the lubes business in Maldives, Dubai, Bangladesh, Sri Lanka, etc; among others.

Weakness: The company is the market leader in the industry, but still it had many weaknesses. The list is given below.

• The major weakness for the company is the R&D. The company starts working on it.

• The petrochemical product development technology is another weakness for the company.

• The technological drawback, as compared to some major foreign player is another weakness for the company

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LOYALTY PROGRAMS- AN INTRODUCTION:

Loyalty programs are structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially of benefit to the firm. Earning customer loyalty goes beyond gaining customer satisfaction. Loyal customers evangelize the brand by sharing their satisfactory experience with their friends and colleagues. A great product or service is the starting point for customer loyalty. Great marketers architect loyalty programs from day one. Loyalty programs are initiated by businesses with two main goals. The primary goal for most loyalty programs is the acquisition of information relating to their customers' spending habits, while the secondary goal is to actively cultivate loyalty amongst customers to ensure they continue patronizing the business. While some companies do reverse these priorities, the above hierarchy holds true for most. Loyalty programs may offer benefits in a number of different ways. Many loyalty programs offer a sustained discount (such as 10%) for a period of time perhaps a year, perhaps for the life of the business. Others offer a discount once certain criteria have been met — for example, a 20% discount on a single purchase once a customer has spent Rs 2000 at the business. Still others offer points which may then be redeemed for products which may or may not be directly related to the business. Loyalty cards are the most common form of loyalty programs found throughout the world today. Some of the first loyalty programs were instituted by airlines in the 1970s in the form of frequent flyer miles. In these loyalty programs, one accrues points by flying on the airline and then 'cashes in' the points in exchange for tickets, upgrades, or even third-party benefits. In the past decade, many nonairline businesses have combined their own loyalty programs with those of the airlines, offering frequent flyer miles in exchange for everything from telephone usage to purchasing gasoline.

Loyalty programs have gained in popularity immensely in the past fifteen years, in no small part due to the development of a culture of entitlement, in which 27

consumers feel that they deserve special treatment. Businesses have capitalized on this when designing their loyalty programs, often offering benefits that cost little, but carry with them an assumed prestige, such as access to faster-moving lines or special parking spaces.

Ultimately, the success of loyalty programs depends on how well the business uses the data it gathers to further refine its policies and loyalty programs. Many businesses find little profit in the use of loyalty programs, while others, such as eBay, attribute much of their financial success to a well-executed use of such programs.

Loyalty programs an integral part The immense competition will make loyalty programs an integral program of the day-to-day functioning of petro-retailing. Of course, right now many such loyalty programs are being run by the petro-retailers like Smart Fleet (BPCL), XtraPower (IOCL), Drivetrack (HPCL), Transconnect (Reliance), Petrocard (BPCL) and others. However, these programs are mainly focused at the bulk consumers and the small consumers are left unnoticed more or less. But in future, there won’t be such differentiation and loyalty programs will be there for every segment of consumers.

Customer Relationship Management and Loyalty program 28

Customer Relationship Management (CRM) can be widely defined as company activities related to developing and retaining customers. It is a blend of internal business processes: sales, marketing and customer support with technology and data capturing techniques. Customer Relationship Management is all about building long-term business relationships with customers. Most CRM initiatives begin with a strategic need to manage the process of handling customer related information more effectively. For beginners it could simply mean better lead management capabilities or sales pipeline visibility. However, as organizations mature in their CRM initiatives, they begin to look at CRM as tool to acquire strategic differentiators. Despite the immense benefits that the CRM solutions can deliver, they are not entirely without their share of problems. Loyal customers are more profitable. Any company will like its mindshare status to improve from being a suspect to being an advocate. Company has to invest in terms of its product and service offerings to its customers. It has to innovate and meet the very needs of its clients/ customers so that they remain as advocates on the loyalty curve An important facet of CRM is “customer selectivity”. As several research studies have shown not all customers are equally profitable (In fact in some cases 80% of the sales come through 20% of the customers). The company must therefore be selective and tailor its program and marketing efforts by segmenting and selecting appropriate customers for individual marketing programs. In some cases, it could even lead to “outsourcing of some customers” so that a company better utilize its resources on those customers it can serve better and create mutual value With growing competition in the petro-retailing sector, today’s consumer is becoming more and more demanding. The emergence of new psychographic segments in petro retail market bears the testimony to this fact. A closer look at these segments tells us what exactly a consumer is looking for whenever he goes to a fuel station to purchase fuel. He looks for-

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 Quality & Quantity assurance  Quick filling and efficient forecourt service  Rewarding loyalty  Premium fuels  Cashless transactions  Non-fuel services The immense competition will make loyalty programs an integral program of the day-to-day functioning of petro-retailing. Of course, right now many such loyalty programs are being run by the petro-retailers like Smart Fleet (BPCL), XtraPower (IOCL), Drivetrack (HPCL), Transconnect (Reliance), Petrocard (BPCL) and others. However, these programs are mainly focused at the bulk consumers and the small consumers are left unnoticed more or less. But in future, there won’t be such differentiation and loyalty programs will be there for every segment of consumers

Loyalty programs at Indian Oil Indian Oil’s loyalty programs are designed exclusively to benefit customers who have been patronizing the brand for over four decades. 30

XTRAREWARDS Loyalty Program

Indian Oil XTRAREWARDS is India's first on-line rewards program that seeks to inculcate the habit of redeeming points. The loyalty program rewards customers paying by cash, credit and debit cards.

Each transaction is confirmed on-line through a charge slip and customers can earn points on fuel/lube purchases at participating Indian Oil Retail Outlets. Additional points can also be earned outside the Indian Oil network, covering prominent FMCG, Food, Automobile, Travel, Entertainment, Apparel and Hospitality sectors.

XTRAREWARDS is currently active in Mumbai, Ahmedabad, Bangalore, Mysore, Coimbatore and Chennai. It will be shortly available in other markets like Delhi. Apart from redeeming the accumulated points instantly on fuel / SERVO Lubes at participating Retail Outlets, the card holder can also redeem the points to get some exciting gift items from a catalogue.

The redemption on gifts can be registered either from the participating Retail Outlets or from the comfortable confines of one's home through the 24x7 IVRS Help Line (022-2880 9030).

The program continuously provides the cardholder with privileges, benefits and offers from alliance partners like Domino's Pizza, Subhiksha, Rediff Shopping, Kumaran Silks, Dhabba Express, Chennai Corporate Club and Archana Sweets.

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XTRAPOWER Fleet Card program: Welcome to the World of XTRAPOWER!

Conclusion

The XTRAPOWER Fleet Card program is a complete smart card-based fleet management solution for fleet operators and Corporate for cashless purchase of fuel & lubes from designated retail outlets of Indian Oil through flexible pre-paid and credit facilities.

The fleet card program also offers an exciting rewards program and unique benefits like personal accident insurance cover and vehicle tracking facilities. In just under two years of its launch, Indian Oil’s XTRAPOWER Fleet Card has emerged as the largest fleet card in the country with the widest retail outlet coverage.

Any business entity owning or operating a vehicle fleet can become a member of the XTRAPOWER fleet card program at a nominal annual charge. Each fleet owner is issued a Fleet Control Card and vehicle-specific Fleet Cards for every vehicle enrolled under the program.

For enhanced security, the fleet card transactions are authorized through unique Personal Identification Number (PIN). Moreover, the card can help track each vehicle's movement across remote corners of the country leading to an improvement in vehicle utilization and route compliance. XTRAPOWER is also backed by Indian Oil’s vast infrastructure network and web-based support services. XTRAPOWER is one-of-a-kind fleet card program of Indian Oil, which gives you XTRA convenience, XTRA security and XTRA opportunity to earn truckloads of rewards. It is a tailor-made program for Fleet Owners, Operators & Corporates as well. 32

With XTRAPOWER Fleet Card you now have an easy, convenient and rewarding

XtraPower Fleet Card program is a step of IOC towards building loyalty among the existing customers. Loyalty program works only when the customer is emotionally attached to the brand. Positioning of the loyalty program is very critical so that these benefits do not appear to be a just discount under the garb of loyalty this greatly affects the customer retailer relationship and greatly reducing the program to a pure commercial transaction where the customer constantly looks for deals. We need to enroll the right customers. We can recognize the highest value customers to recognize and reward their value to our organization, we can cultivate high potential customers who currently split their purchases between us and our competitors or reach out to those most at risk of churning. Knowing which customer groups are most important to us allows crafting recognition and rewarding strategy that piques their interest. Customers should be involved in the program by constant communication to make them understand what is in for them. Comprehensive surveys should be conducted to find out what should be the ideal way to reward the loyal customers and retain them for the life time. Activities like checking point balances online, responding to targeted offers, using kiosks, bidding on auction items, entering sweepstakes and so on. Such participation is a sure sign of increasing value to the customers.

Recommendations 33

Ideas to increase & retain customer base 

Target new vehicle/fleet owner by tie up with the vehicles companies and give XTRAPOWER FLEET CARD with every new vehicle/truck.



If any card is not used for more than 30 days by the customer then automatic message should be generated to remind the user.

 Try to know actual reasons for not using the card for longer period of time by the customer as retaining one customer is better than acquiring 6 new customers.  Bring awareness about the card through media advertising.



XTRAPOWER FLEET CARD program website should be updated time to time with details of the new as well as upcoming offers.

At Retail outlets

 Put a digital display on retail outlets (i) To communicate with the customers about IOC program & brands and (ii) for advertisement of alliance partners & earning revenue out of it.  Motivate pump attendants by giving price to “attendant of the month” which will be the highest card seller of that month. 

XTRAPOWER Fleet Card Banners should be put at proper location in the pump

 Stock replenishment of the cards should be taken care off. 

XTRAREWARDS program should be started at all other locations as soon as possible.



Pump attendants should get training frequently and as most of the staff at the pump is not educated, a comprehensive training has to be provided to the pump attendants about XTRAPOWER FLEET CARD program. 34

 The objective of the loyalty program should be made transparent to the attendants. They should be taught to use the swiping machine carefully and accurately using different options and also various messages of error in the machine

For Welcome kit 

Application Form as well as information booklet should be in Hindi and Urdu.

 Pamphlets should be distributed to all pumps & renewal of pamphlets should be done as & when new offers from alliance partners come.

Prospective Alliances for XtraPower Fleet Card Loyalty Program 35

Alliance Partners of IOCL for XtraPower fleet card program Indian Oil Corporation Ltd has tied with many branded companies to give variety of benefits to their customers through Xtra Power Fleet card program. Alliance partner such as Essel World, Water Kingdom, Yoko sizzlers, Subhiksha, Pizza Hut, Vishal Mega Mart, PVR, are giving Different discounted offers to the card holders. These alliances are beneficial for both Indian Oil and the alliance partner. Indian Oil can increase their customer base through these alliance and these alliance partners can market their brand at Indian Oil petrol Pumps.

Need for Local alliance partners For a loyalty program to succeed, it is essential that it should have tie-ups with many alliance partners. This helps members of all socio-economic groups to access the benefits of a loyalty card program. More specifically, if the outlets situated nearby to an Indian Oil petrol pump are tapped, then it would help Indian Oil’s loyal customers to a great extent. Hence we decided to tap the nearby outlets to convince them to participate in the XtraPower Fleet Card Loyalty Program. Objectives of the project: There are four major objectives for which we need to tie-up with various local clients. •

To tap local alliance partners for XtraPower Fleet Card program.

• To promote the loyalty between the local customers and the company. • To provide benefit to the local customers. •

To promote the loyalty program in Barauni and Begusarai region.

Following are some of the potential local alliance partners who were approached for Tie-ups:

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Sl.No

Potential Alliance Partners

Location

1.

New Oasis Restaurant

Kapasiya

2.

Celebrations Restaurant

Kapasiya

3.

Khadims

Main Market

4.

Reebok Store

Main Market

5.

Madhuban

Karkuria Sthan Chowk

6.

The Raymond shop

Main Market

7.

Koutons

Near Bishnu Cinema Hall

8.

Hotel Blue Diamond

Kapasia

9.

Charlie Outlaw

Near Bishnu Cinema Hall

10 Sahara Retail Outlet .

Karkria Sthan Chowk

11 Allen Cooper outlet .

Mirgunj

In order to access the benefit to the local consumer through the loyalty program it was essential to tap the nearby outlets / store and convince them to be a part of the XtraPower Fleet Card Loyalty Program. The result was overwhelming and encouraging as the dealers showed a great interest and appreciated the offer provided and wanted to be a part of the program.

Findings: • Prospective alliances were very supporting and welcoming .They had goodwill for IOC.

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•

Dealers who showed interest appreciated the offer provided and were eager to continue talks with IOC.They were also ready for a tie up of their branches with IOC.

•

Some of the prospective alliance partners were not aware of India Oil XtraPower Fleet Card Loyalty Program. Hence they were not interested. Also due to the increase in the oil prices they were apprehensive of getting into an alliance with Indian Oil.

Recommendations •

More IOC retail outlets should be covered under the XtraPower Fleet Card loyalty program so that prospective alliance partners are interested in joining the program.

•

Get in more food, apparel stores as partners. Alliances with shoe stores, cloth outlets etc would also be beneficial.

• Products for both the genders is needed, there are very less gifts to attract women.

•

Advertise the Loyalty Card more, so the alliances would be willing to join IOC program.

•

Organized follow-up to convert a prospective alliance into an active alliance.

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Questionnaire for Retailers

Personal details Name…………………………………………… Organization…………………………………… Address………………………………………… Date of visit…………………………………….

Instructions: Take your time to fill this questionnaire. Please read carefully, before answering questions.

1. How many liters of fuel do you sell in a week through Xtra Power fleet card? (a) 1000-20000 lts (b) 20000-40000 lts. (c) 40000-60000 lts. (d) More than 60000 lts.

2. What is the average sale of following brands at your outlet in a week? Brands

XtraMile XtraPremium Super diesel

Petrol

Servo lubricants

Unleade d petrol

Unleaded diesel

Maximum Minimum

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3. What price do you get the following brands at? Brands XtraMile XtraPremium Super diesel

Petrol

Servo lubricants

Unleade d petrol

Unleaded

Unleade d petrol

Unleaded

diesel

Price

4. What is your margin for the following brands? Brands XtraMile XtraPremium Super diesel

Petrol

Servo lubricants

diesel

Price

6. What is the average sale of fuel/lubricants through Xtra Power Fleet card from your outlet? ………………………………………………………………………

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7. Do you tell the customer/fleet owner/driver about the Xtra Power fleet card loyalty program of IOCL? a) YES. b) NO. C) SOMETIMES.

8. Do the staff/attendants know how to operate the machine of Xtra Power fleet card? a) YES b) NO 9. What is the usual mode of payment made by the customer? a) Cash. b) Credit/Debit Cards. c) Xtra power fleet card. 10. Is the outlet well equipped with machines of Xtra Power fleet card? a) YES. b) NO.

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Questionnaire for the Customers

Personal details Name…………………………………………… Address………………………………………… Date of visit…………………………… Customer I.D. ………………………………………..

1. Do you visit the IOCL fuel station regularly? a) YES. b) NO. c) Sometimes. 2. What is the usual mode of payment? a) Cash. b) Credit/Debit Card. c) XTRAPOWER fleet card.

3. Do you know about the XtraPower fleet card? a) YES b) NO. 42

4. From where did you come to know about the fleet card program? a) Advertisement. b) Newspapers. c) Journal/Magazines. d) IOCL Retail Outlets. e) Others………………. 5. How many vehicles/trucks do you have? ……………………. 6. Are you satisfied with the service of fleet card? a) YES. b) NO. c) Partly satisfied. 7. Do you use your fleet card regularly? a) YES. b) NO. c) Sometimes. 8. What improvements do you want in the fleet card loyalty program? a) Better services to the card holders. b) More attractive offers. c) Others…………………………… 9. Do you redeem your Xtra points regularly? a) YES. b) NO. 43

c) Sometimes.

10. Any suggestions about the Xtra Power Fleet Card program?

…………………………………………………………….. BIBLIOGRAPHY

WEBSITE: WWW.IOCL.COM WWW.GOOGLE.COM  ANNUAL REPORT OF IOCL.  S.P.GUPTA, STATISTICAL METHODS 

C.R.KOTHARI, RESEARCH METHODOLOGY.

 MARKETING MANAGEMENT. KOTLER.

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