TABLE OF CONTENTS

 Introduction

 Mission Statement

 Importance Of Company Within Industry

 Functional Departments Of PSO

 Importance of Marketing Department Within Organization

 Marketing Departments Of PSO

 Importance Of Marketing Research

 Segmentation

 Target Market

 Products Of PSO

 Marketing Mix

 Products

 Pricing Strategy Of Petrol & Diesel

 Pricing Strategy Of Castrol GTX

 Current Prices Of These Products

 Placement, Distribution, Channel, Or Intermediary

 South Zone Depots

 North Zone Depots

 Central Zone Depots

 SWOT Analysis

Recommendation

Conclusion
Introduction:

Pakistan State Oil Company Limited, namely PSO was found in 1976, as a result of
amalgamation of the formal three oil marketing companies’ i.e.-e Pakistan National Oils
Limited, Premier Oil Company and Esso Undertakings in Pakistan. There is a chronology of
events leading to the formation of Pakistan State Oil Co. Ltd .On January 1st, 1974, Federal
Government takes over management of PNO (Pakistan National Oil) and DPO (Dawood
Petroleum Limited) and renamed it into POCL (Premier Oil Company Limited) under marketing
of Petroleum Products (Federal Control) Act, 1974.Then on June 3rd, 1974 Government
incorporated Petroleum Storage Development Corporation, PSDC. On August 23rd, 1976 name
of PSDC was changed to State Oil Company Limited, SOCL. On September 15.1976
Government purchased ESSO Undertakings, vested the same in SOCL. And finally on December
30, 1976 Government merged PNO and POCL into SOCL and named it as PSO.
As the largest oil marketing company of Pakistan, PSO is engaged in the storage, import,
distribution and marketing of Petroleum products, petrochemicals, Aviation and Bunker fuels,
LPG and CNG dominates the country’s fuel and energy needs. Since its inception in 1976 the
company has been meeting more than 70% of the country’s fuel needs. PSO’s 3805 outlets all
across the country markets more than 12 million tons of fuel products annually. This network is
supported by PSO’s 28 storage facilities with a capacity of more than 800,000 tons .PSO took a
major step in improving its distribution facilities by acquiring 12% equity in the 800km long
Karachi-Mehmoodkot White Oil Pipeline. As part of PSO’s policy of providing better customer
services, it has embarked upon its New Vision retail development program. Equipped with the
most modern facilities like Electronic dispensing units, auto car wash, convenience stores,
internet facilities and business centers, these sate of the art designed stations provide greater
customer confidence and a friendlier environment. As a manifestation of PSO’s greater customer
focus PSO 24hr customer service has been launched where customers can lodge their queries and
suggestions about various PSO products and services.
Being the largest of the three marketing companies in Pakistan, PSO has consistently maintained
an edge over its competitors Shell and Caltex. With an overall market participation of over 72%
in 1997-98, it sold 6.244 million tones of petroleum products during the half year ended
December 31st, 1999 against 5.633 million tones sold during the corresponding period last year,
showing an increase of 10.8%.
 MISSION STATEMENT

To ensure availability and security of sustainable supply of oil and gas for economic
development and strategic requirements of Pakistan and to coordinate development of natural
resources of energy and minerals.

Strategy to achieve mission:

To adopt an integrated approach for promoting exploration and fast track development of oil, gas
and mineral resources. To deregulate and liberalize and privatize oil, gas and mineral sector
through structured reforms. To attract private investment and to establish credible institutions for
facilitating the development of petroleum and mineral sector. To develop technical professional
human resources. To optimize existing energy delivery infrastructure oil and gas pipelines. To
reduce imported fuel oil consumption with indigenous gas by optimally balancing the gas
availability and supplies from local and imported resources.
 Importance Of Company within Industry:

It would not be wrong to say that ‘PSO’ is having a brand and loyal image in the industry. On the
basis of this brand image we can have an idea about the ranking and positioning of “Pakistan
State Oil Company” in the industrial sector. ‘PSO’ has been serving the entire industrial sector in
Pakistan since 1971. As positioning of company within market is a means to target a customer.
So we can say that ‘Pakistan State Oil’ is no doubt having the useful and simplest tool to the
marketers in the industrial sector. The importance of the ‘PSO’ in industry is due to the fact that
it always launches a product according to specific requirements of a particular industry. So in
this way ‘Pakistan State
Oil ‘is having more loyal customers that they never switch to another company. The important
point is that importance of any organization is related to its perception. The positioning basically
is the perception of products and services in the minds of consumer.
And the perception differs from person to person, what you think about the quality and value, I
may not favor that. For example you may go in favor of usage of ‘CNG’ because your perception
of that product is excellent but I may not favor that, as my experiences of that particular product
are not well and good. The importance of “Pakistan State Oil “in the industry becomes obvious
when we talk about the different industrial products which they are offering in the market. The
most popular products of “Pakistan State Oil” which are used in bulk amounts by the industrial
are: kerosene oil, furnace oil, lubricants and diesel. ‘PSO’ is the largest lubricants marketing
company in Pakistan. The major consuming industries for ‘PSO’ products are: sugar mills, steel
mills, edible oil mills, independent power plants (IPP’s) and paint industry.
 FUNCTIONAL DEPARTMENTS OF PSO

1.            Marketing Department.

2.            Finance Department
3.            Supply & Distribution Department
4.            Operations Department
5.            Information System Department
6.            Human Resources Department
7.            Training & Organizational Development Department

Importance of marketing department within Organization

An advanced organization like “Pakistan State Oil “needs some sort of marketing system to
satisfy the efforts of all the people working in the organization which are required to satisfy the
varied needs of all its consumers. Importance of marketing department within the organization is
due to the fact that “it is both a set of activities performed by organizations and social classes.”
Marketing is also important in an organization as it is directly related to the products and services
offered by the company. Divisional Manager of ‘PSO’ said that:” the marketing department
within our organization serves as front line fighter to their competitors. Without it they can not
project and introduce new products. So it should be proactive and customer focused. You have
product and you are unable to sell it if you do not market it. Therefore, we can say that marketing
department plays a vital role in the profitability of an organization.”
Marketing plans are vital to the success of an organization because they give direction that how
the particular objectives are to be achieved and how we intend to do that.  Therefore whenever
“Pakistan State Oil” is going to introduce a new product or is going to provide a new facility to
its potential customers, the marketing department of “PSO” always serves as a connection bridge
by providing necessary information to its customers either by print media, electronic media or by
internet. So they claim that for “Pakistan State Oil Company Limited”, the customer comes first,
always and every time.
They are committed to providing the best products and services to all their kind patrons. The
main objective and of “PSO” marketing department is to continuously upgrade their products
their presentation to keep the customers fully satisfied. In line with this policy on Oct 1st, 2000
they introduced PSO/CASTROL industrial and automotive lubricants in 210 liter plastic
drums .The new plastic drums are specially designed to withstand tough handling conditions
especially during transportation which is subjected to continuous vibration and high axial force.
Moreover, the single mould design of these drums makes virtually leak proof. All this is
basically PSO’s effort in not only providing efficient service to you but also in making the
environment better and safer.
 Marketing Departments of PSO
Being the largest oil marketing company, PSO has the following marketing departments:

 Retail.
 Industrial consumers.
 Aviation.
 Compressed Natural Gas.
 Liquefied Petroleum Gas.
 Chemicals.
 Marine.
 Lube sales and Agency trade.

Retail
The basic concern of this department is with petrol pumps. To enhance the sales of petroleum
products in already existing petrol pumps and to install new one are its major objectives .It gives
certain targets to outlets dealers (owners) which they have to achieve in a certain time period.
The 3805 outlets all across the country are supported by storage depots which are being
facilitated by the product movement through tank Lorries, railway tank wagons and pipelines.
The major policy of these departments these days is the new vision program of outlets .It makes
the decision of new vision on the basis of some factors like location of outlets, potential of sales
area, existing sales, competitor’s strong hold etc. There are three ways to bring the outlets in new
vision. These are:
100% contribution by company 
50% contribution by company
100% contribution by dealer
Being the government organization, previously there were restrictions on new visions of outlets
but as Shell International initiated this policy, it became a necessity for PSO to take this step.
So the retail department is actively participating in distribution, storage and in new vision
programs.
Industrial consumers
PSO is playing an equal important role in industrial sector. This department deals with marketing
of products like furnace oil, kerosene oil, high speed diesel, lubricants, petrol etc for Independent
Power Plants (IPPs), Wapda, Army, Railways, Sugar mills etc. From the locomotives of Pakistan
Railways to the giant turbines of power projects, all are fueled by PSO. Being fully alive to the
responsibilities towards the agricultural sector PSO’s 700 strong agency network helps keep the
farm machinery running. Army needs of HSD and lubricants are also under its responsibility.
Further, its kerosene sales are a major source of energy for the rural and lacking gas facilities.
Aviation Department
PSO remains equally strong in Aviation and Bunker Sales. PSO has been constantly upgrading
its facilities to serve a wide range of commercial aircraft. Through a chain of eight Aviation
Service Stations scattered all across the country PSO fuels the aircraft of many local and
international airlines. Acquisition of new Lahore Terminal Complex at the Lahore International
Airport has enabled PSO to serve the busiest corridor of East/West bound flights benefiting the
airlines in shape of time saving and lesser fuel burn off. While it’s bunkering facilities at all the
major ports of country fill up the ocean liners of many nationalities facilitating the nation’s
international trade.
Compressed Natural Gas (CNG) Department
This department is concerned with promoting the use of CNG in vehicles. This use is being
encouraged to reduce the pressure on petroleum imports, to curb pollution to improve the
environment. The existing price differential between CNG tariff and motor gasoline will be
maintained as an incentive for CNG use. This department is making efforts to exempt the import
of CNG machinery, equipment, conversion kits, CNG cylinders etc from duties and sales tax for
a period of five years. Also efforts have been going to eliminate double taxation in the form of
excise duty on CNG.
Liquefied Petroleum Gas Department
LPG is filled in cylinders at high pressures. PSO started marketing of LPG in 1981 in South area
(Karachi). Now all three refineries are producing LPG.
The Government has taken a bold and far-reaching initiative and liberalized integrated
infrastructure projects of LPG, free from government guarantees and permission. Now all
credible LPG companies are free to develop integrated projects of LPG import terminals, storage
facilities, inland transportation, storage depots and retail marketing / distribution without
requiring any guarantees or permission from government except the marketing license which
would be issued without any difficulty. In Pakistan there are different marketing companies of
LPG like Pak Gas (PSO), Fon Gas (Fauji Foundation), Sui Northern Gas, Lube Gas and Sun Gas
etc.  Now this department of PSO is actively dealing with the purchase and supply of LPG
cylinders for household and commercial purposes.
Chemical Department
This department is engaged in the business of chemicals derived from petroleum called
petrochemicals. Most of the chemicals are imported in bulk and some are manufactured in
refineries. These chemicals are imported from Europe, Middle East etc through ships, Local and
imported chemicals are supplied to various industries for their chemical needs. These chemicals
include toluene, methyl, benzene, polyol, hexane used in edible oil mills, solvent oil used in paint
industries etc.
Marine Department
The basic purpose of this department is to fulfill the needs of shipping firms. The refueling of
ships is done through this department. Supply of lubricants to shipping corporations is also done
through this department. For marine department, the government has fixed the prices and owing
to high prices of oil, share of this department is nominal. Supply is made available through
pipelines; tank Lorries and barges (ships).
This department sells furnace oil, LDO and HSD to Karachi port.
Lube sales and Agency trade Department
This department is concerned for making agreements of manufacturing and marketing the lubes.
PSO has maintained International standards of its lubricants. It has a technical collaboration with
Castrol, England. Lubricants are locally manufactured. PSO has 10 blending plants; 3 in Karachi,
1 in Lahore and 5 blending plants are affiliated. Marketing of lube oils is done through agencies
and petrol pumps. Major products being marketed are diesel lube, CR 40 and GTX.
 Importance of marketing research
Market research and marketing research are often confused. 'Market' research is simply research
into a specific market. It is a very narrow concept. 'Marketing' research is much broader. It not
only includes 'market' research, but also areas such as research into new products, or modes of
distribution such as via the Internet. Here are a couple of definitions:
Marketing research is the function that links the consumer, customer, and public to the marketer
through information - information used to identify and define marketing opportunities and
problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and
improve understanding of marketing as a process. Marketing research specifies the information
required to address these issues, designs the methods for collecting information, manages and
implements the data collection process, analyzes, and communicates the findings and their
implications.

SEGMENTATION
MARKET SEGMENTATION
Diesel
Basis for the market segmentation for hi-speed diesel are:
Engine Power
Motor Vehicles above 1300 cc
Geography
Market is divided into Rural & Urban areas, where placement and promotion policies differ. On
rural areas selling is through oil agencies and in Urban areas placement is through petrol pumps.
Income
The other base of market segmentation is income a:
Vehicles and machines which consumes Hi-speed diesel are usually involved in commercial
activities. So, people involved in such kind of business belong to middle-middle class and above.
Market segmentation for petrol
Market for petrol is segmented on the basis of following.
Engine Power
Vehicles or machinery having engine power below 1000 cc.
Income
On income basis, there are basically three groups:
1.            Lower Middle
2.            Middle Middle
3.            above Middle
Lower Middle
In this social close people who are having vehicles/machinery from (49 cc to 100 cc) which
includes. Vespa- motor- cycles.
 Middle Middle Class
Includes those people who are having small cares like (Suzuki, Charade, Santro etc) means, they
are used to travel by these vehicles mostly within the city. Those people have income group
which can be classified as middle class.
Above Middle Class
Then those people who are having vehicle that can be classified a luxury vehicle.
(Pajero, Jeeps, Limousine, Mercedes)
Toyota (Latest Models),          Honda (etc).
Market segmentation for GTX Mobil oil.

TARGET MARKET

PSO, as a public oil company, which has a Govt. support also. Its target market for selected three
products is as follows:
HI-SPEED DIESEL
Target market for hi-speed diesel can be divided into:
1. Agriculture Sector
Agriculture sector includes. The landlords, who have their own irrigation units and they use
diesel in their operations. Diesel is also used in tractors, cultivating machines and in harvesters.
2. Govt. Sector
PSO also has a very good market in Govt. sector, which include WAPDA and
3. PAK Forces
Pakistan Army, Air Force, Navy, all these are the target market of PSO-particularly for hi-speed
diesel. Moreover, transports that are involved in loading, cargo activities i.e. public transport,
private transport Co. trucking (Goods transport stations).
Hi-speed diesel is also consumed by the diesel general motors, which include vehicles that are
above 1300 CC. (1C – 2C engines to heavy power engines).
PETROL
Target market for the petrol car below 1300 Coca-Cola. Light user like people who have
motorcycles. Taxis and rickshaws and generator.
Castrol GTX MOBIL OIL
Target market for GTX mobil oil is large vehicle, in Govt. sector, highway authority. Who used
their machinery to develop the infrastructure? FWO (Army) services stations and workshops.

PRODUCTS OF PSO
 PSO Automotive Oils

PSO AUTOMOTIVE OILS

 Engine Oils
  Super Engine Oil
 Premier Motor Oil
 PSO CNG Oil
 Turbo Engine Lube X
 Turbo Engine Lube (SAE 15W/40)
 Turbo Engine Lube LD
 Turbo Engine Lube (SAE 10W-30 & 20W-50)
 Diesel UBE LD/MLD
 Diesel Lube D-3
 Diesel lube HD
 Tractor Oil
 Engine Lube
 Gas Engine Oil
 Two-Stroke / Flushing Oil
 Gear / Transmission Fluids
 Gear Oil EP (GL-5)
 Gear Oil EP
 ATF
 Brake Fluids
 Hydraulic Break Fluid HD
 Automotive Greases
 MP Grease

Marketing Mix

The 'marketing mix' is probably the most famous phrase in marketing. The elements are the
marketing 'tactics', also known as the 'four Ps'. The marketing mix elements are product, price,
placement and promotion.
Some commentators will increase the mix to the 'five Ps', to include people. Others will increase
the mix to 'Seven Ps', to include physical evidence (such as uniforms, facilities, or livery) and
process (i.e. the whole customer experience e.g. a visit the Disney World). Neil H. Borden
coined the term in his article 'The Concept of the Marketing Mix' in 1965. The concept is simple.
Think about another common mix - a cake mix. All cakes contain eggs, milk, flour, and sugar.
However, you can alter the final cake by altering the amounts of mix elements contained in it. So
for a sweet cake add more sugar! It is the same with the marketing mix. Varying the mix
elements can alter the offer you make to your customer. So for a high profile brand increase the
focus on promotion and desensitize the weight given to price.

Products:

 Single Grade Petrol (Premier Plus)

 High Speed Diesel (HSD)
 Castrol GTX
Single Grade petrol:
Compatible with mineral and synthetic oils and most hydraulic oils. Blends with most greases,
pastes, 2-stroke fuel oil, cutting oil, chain oil, compressor oil, axle oil, drilling lubrication,
tapping fluids, hydraulic oil, mining fluids, petrol, diesel, marine fuel oil, scour able oils,
coolants, anti freeze, soluble cutting fluids, penetrating oils, flushing oils, general purpose lube
oils.
                                                                                       
SGP does not:
Flake, Melt, Crack, Expand, Creep, Scuff, Drag out, Contract, Migrate, Wash off
SGP helps to prevent:
Seizure, Galling, Vibration, Noise, Frictional heat, Weight Loss.
SGP improves:
Loading on bearings, cutting tool versatility, product finishing

Castrol GTX

 Multigrade super high performance oil for use viscosity range of SAE       20W-50, gives the
rapid circulation and adds protection during start up from cold, where 80% engine wear may
occur, with extra protection for engines operating in hot and dusty climates.
Benefits
 Longer engine life and power retention.
 Improves oil pressure and consumption.
 Protects against soot, varnish, black sludge formation, acid and corrosion

Performance
 SAE 20W-50
 MIL-L-46152D
 API SG/CD
  MIL-L-2104E
Because of all these description it is also considered as one of the fast moving product.
Independent power plants, Wapda and etc mostly demand it.  It is used as lubricant in the petrol
consumption cars.

High Speed Diesel

High speed diesel is one of the fastest moving products among other products of PSO. It is most
commonly used by heavy engine vehicles and automobiles. It is used in these areas:
 Agriculture
 Industry
 General Public
It is used in large, slow speed marine engines and automotive engines as well.

Pricing Strategy of Petrol & Diesel

Both petrol and diesel are placed under the head of fuel oil, so that the pricing strategy of both of
these products is same. And well discuss it in the context of pricing strategy of full oil.
Fuel oil prices are set by a committee for all oil marketing companies. And to this fact all oil-
marketing companies are having same. Petrol and diesel prices. There is almost no difference
between the fuel oil prices of PSO and Shell, or any other competitor.
Fuel oil pricing strategy its standard. Set by OCAC (Oil Companies advisory committee). Up to
every fortnight the fuel oil prices are revised.

Pricing strategy of Castrol GTX

There is no hard and fast rule for the pricing strategy of castor GTX. But still there is a defined
strategy of prices. In case of Castrol GTX, that is a lubricant, all oil companies set their own
prices which means prices of lubes vary from PSO, Shell and Caltex. These prices are based
upon.

 Cost
 Handling charges
 Storage charges
Because some companies have to bear less cost handling charges as well as storage charges
that’s why; this product of PSO has greater demand in the market. Being a government company
PSO has to bear less cost and handling and storage charges. Lubricant prices are revised after
ever 4-6 months. They have defined their pricing strategy as competitive prices. They have said
that we have competitive prices. Two factors are considered while setting the prices
i.e.           Profit
ii           Services
In case of lubricants, they set their prices lower than their competitors.

Current prices of these products

Single grade petrol                  Rs. 32.26

High speed diesel                    Rs. 15.70
Castrol GTX                            Rs. 590.00 (1 Tin/ 4 liters pack)

Placement, distribution, channel, or intermediary

A channel of distribution comprises a set of institutions, which perform all of the activities
utilized to move a product and its title from production to consumption.

Place is also a channel of distribution or intermediary. It is the mechanism through which goods
and/or services are moved from the manufacturer/ service provider to the user or consumer.
There are many types of intermediaries such as wholesalers, agents, retailers, the Internet,
overseas distributors, direct marketing (from manufacturer to user without an intermediary), and
many others.

For Single Grade Petrol (SGP) and High Speed Diesel (HSD), the most viable placement channel
is the products movement from wholesalers to retailer’s .For general retail outlets; this facility is
available in the form of tank Lorries. For industrial needs, railway tank wagons are the most
appropriate source. Previously Government of Pakistan had been paying the freight charges of
their placement but now for the product movement, retailers have to pay themselves the freight
charges. As far as the placement of Castrol GTX is concerned, different lube vans are available
which take the lubes from manufacturers to dealers of petrol pumps to be available on lube
shops. Also there are different agencies for lubricants, which take them from dealers on their
own expenses and sell to general public.

These days the enhancement of existing facilities and development of new infrastructure -
especially pipelines, which are the safest, efficient & most environment friendly mode of
transportation, is being looked up carefully. Pakistan Railway is also gearing for moving more
products upcountry. This is very important to reduce the pressure on road movement

For product movement network, PSO all over the Pakistan has,

Tank Lorries                                              13400

Railway Tank wagons                              1120

Pipelines                                                    13
PSO has storage depots all over Pakistan. These include:

South Zone Depots

Hyderabad, Daulatpur, Sukkhur,        Sanghi, Quetta ‘C,’ Khuzdar and Pasni.

NORTH ZONE DEPOTS

Chakpiran, Faqirabad, Taru Jabba, Serai Naurang, Kundian, Juglot, Chitral and Kohat.

CENTRAL ZONE DEPOTS

Vehari, Shershah -2 (B&C), Lalpir, Sahiwal, Habibabad, Faisalabad ‘A’, Faisalabad 'B',

Badami Bagh, Kala Shah Kaku, Gujranwala, Sargodha and Kotla Jam.

SWOT ANALYSIS

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of
planning and helps marketers to focus on key issues.
Once key issues have been identified, they feed into marketing objectives. It can be used in
conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-
Force analysis. It is a very popular tool with marketing students because it is quick and easy to
learn.
SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses
are internal factors. For example, strength could be your specialist marketing expertise. A
weakness could be the lack of a new product. Opportunities and threats are external factors. For
example, an opportunity could be a developing market such as the Internet. A threat could be a
new competitor in your home market.

STRENGTHS

 PSO is having good competitive skills.

 It has adequate financial resources as it is a public sector organization and is having
support of the government.
 It is a well-recognized market leader as it has top oil market in Pakistan.
  PSO petrol pumps are computerized
 PSO is having product innovation as it frequently introduces new products according to
the requirements of its consumer.
 It has well conceived functional area strategies.

WEAKNESSES

 The organization is falling behind in research and development.

 Sometimes the organization is unable to implement strategies in front of its competitors.
 Although the services of PSO are quite well but it has weak market image as compared to
Shell.

OPPORTUNITIES

 Diversity into the related products i.e. creating some unique features in the products to
attract their consumer.
 Add some complementary products in the future.
 It is likely in the future that the organization is going to expand the business and enter
into the new market.
 Ability to move with the better strategies i.e. applying some new ways to cover the
losses, increase the financial resources or increase the market share.
 Introducing the new product having the features that are very first in the market i.e. not in
any other product offered by any competitor.

THREATS

 Likely entry of the new competitors that are having new technology and are going to
provide better services.
 Rising sales of the substitute products offered by the competitors.
 Adverse government policies i.e. government may increase the taxation rate on the
products offered to the customers.
 Growing competitor pressures can be proved as threat to the survival of the organization
 Buyer’s needs and tendencies may change and they are not fully satisfied by the existing
products and may switch to the other products offered by the competitors.
 Adverse demographic changes.

Recommendation
  This is needed for the organization to improve the services.
 PSO is lagging behind in the field of marketing research. So they should pay attention to
make the research and development department efficient and active.
 Management should work in depth to know that which petrol pumps are more profitable
and which are generating low sales so they can adopt new policies in order to increase
sales.

Conclusion

Term report on marketing department enabled me to have practical experience. Since it was my
first experience to make a report on work analyzing of marketing department. This provided me
the opportunity to have close might into the business activities. The main source of data
collection was interviewing the employees of “Pakistan State Oil Company Limited”. So it
becomes a source of sharpening my communicator and interpersonal skills. By face to face
interviews with Divisional Manager (Industrial consumer) and Divisional Manager (Retail) I
come to know that how to communicate with personnel’s. It gave me confidence to move in
professional field.