Abu Dhabi Gas Liquefaction Company (ADGAS) was started when the flaring of gas irked the late Sheikh Zayed Bin Sultan Al Nahyan during a visit to an oil production facility. It was the first company in the whole of the Middle East and North Africa (MENA) to sell LNG in 1973 (Kazim 2012). The major market for its LPG, LNG and other products is the Tokyo Electric Power Company (TEPCO). The company also supplies Paraffinic Naphtha and sulfur in addition to LPG and LNG to the Abu Dhabi populace.

Role of strategic marketing

ADGAS has been the sole supplier of gas to TEPCO for nearly four decades. The strategic partnership between these two companies was exemplified in 2011 when the Japanese company was affected by the tsunami with ADGAS helping it overcome the consequent ramifications. The Japanese acknowledged this act and the appreciation undoubtedly reinforced ADGAS’s position as the partner of choice for TEPCO. The company has endeavored to diversify its product range so that it is not solely reliant on LPG and LNG for its market. Presently, it produces and supplies paraffinic naphtha and sulfur to the global market. This diversification has ensured that the company taps into other markets outside of Japan and Abu Dhabi that currently form its core market.

The game theory of marketing strategies assumes that firms are rational in the manner in which they maximize their utilities which means that strategies are developed to realize the best possible outcomes. The theory asserts that firms do this subject to constraints that are also faced by rivals. ADGAS is, therefore, a rational firm that has weathered great adversity to become a leader in the industry. The company has been able to use its competencies to achieve a competitive edge over competitors in the same position. In proving this theory, ADGAS contributes a sizeable amount of gas to the national grid of Abu Dhabi, which is in line with the emirate’s national energy strategy. The position of ADGAS as a partner with the Emirati government ensures that the company has a ready market for its products while ensuring a good standing for easy access to other markets (Palmer, Cockton & Cooper 2007). Apart from Abu Dhabi, ADGAs supplies gas to the other emirates as well. The company’s strategic marketing thus ensures that there is a ready market and a good partnership with relevant authorities. This has also contributed to the company’s reliability in supply of gas promptly and safely to the targeted markets.

Implementing a marketing strategy

Implementing a marketing strategy is a step-by-step process. The first step in the process entails the articulation of a company’s vision. ADGAS’s vision is premised on playing a key role in the LNG and natural gas industry, creating wealth and value, implementing the National Energy Strategy and serving its valued customers and community in a socially responsible manner (Kazim 2012). From here, the company must have a clear mission statement. The company mission statement is that:

We will achieve our vision through the safe and efficient production, marketing, sale and delivery of LNG, LPG and natural gases, Paraffinic Naphtha and Sulfur; building on our ADGAS history, solid partnerships and human capital. We will strive to sustain our recognized international reputation for reliability, integrity and efficiency and to continually improve HSE and business performance. We will attract, develop and retain competent and dedicated staff (Kazim 2012).

The next stage is outlining the aims and objectives which include maximizing revenues, optimizing costs, and development of talent to grow the company. From here, the company must carry out a SWOT analysis to identify its major strengths and weaknesses, identify the opportunities for growth, and evaluate external threats that may impede such growth. The next stage is crafting a strategy that is informed by the desire to maximize strengths, reduce weaknesses, capitalize on opportunities and monitor potential threats. The global strategy for ADGAS is aimed at expanding its current market and its tactics entail relationship marketing and strategic partnerships to grow the company market share and base. After the formulation of the comprehensive strategy, the next step is actualizing it by approaching the potential customers and by aggressive marketing. Every step of the process must be constantly evaluated to ensure that it is in conformity with the overall company goals and objectives.

Strategic marketing and corporate strategy

ADGAS’s corporate strategy seeks to ensure that the company remains profitable both in the short and long term. It specifically strives to reduce flaring and emissions, maintain sustainability in its production facilities, increase returns for shareholders, maintain health, safety and environmental practices, ensure there are no interruptions to operations, develop and retain a large market for its products, enhance communication in the organization and ensure that the welfare of employees is taken care of. On the hand, the marketing strategy is meant to support the corporate strategy in ensuring that the company is efficient and profitable. Additionally, the strategy specifically looks at ensuring there is a ready market for ADGAS’s products by looking into ways in which it can expand the current customer base and diversify its products.

The company has done extensive research into the market trends and has identified a ready market for its expanding product range especially paraffinic naphtha and sulfur. Specific initiatives include market segmentation where the company has established formidable relationships, an example of which is with TEPCO. It is targeting such deals and has perfected relationship marketing to keep the contacts it establishes for the long term. The company has done a commendable job in ensuring that it positions itself as the company of choice for customers seeking quality natural gas products. It has also identified a couple of customers to whom it does direct marketing. These efforts, if well implemented, are bound to help the company achieve both its short term and long term goals.

TASK 2

Theoretical models in strategic marketing planning

There are many models that are used in strategic market planning. The most common of these is the use of the Ps of marketing. Presently, the most common combination is the 7Ps of marketing, an improvement from the traditional 4Ps. This model entails the assessment of the product, price, place, promotion, people, process and physical evidence. The latter three encompass the difference in the Ps of marketing. These elements are referred to as the marketing mix and are the most common in the formation of a marketing plan.

Another common model is the PESTLE analysis. This model entails the analysis of factors in the macro-environment that influence a business. They are political, economic, social, technological, legal and environmental forces. An analysis of each individual set of factors and how it uniquely influences the business forms the core of a successful plan.

Porter’s Five Forces is also a model of strategic planning. This model entails the analysis of rivalry, supplier power, threat of substitutes, buyer power, and barriers to entry in order to understand the competitiveness in the industry in which an organization operates and create a plan that addresses the unique forces. .

The other common model is segmentation, targeting and positioning. This three-stage model entails analysis of customer groups according to their unique needs and tailoring a communications strategy that best addresses them. This model is the most viable for marketing products that are unique. For example, products that require specialized distribution systems.

Implementing strategic positioning

ADGAS has been a successful producer and marketer of LPG, LNG and other products for close to four decades. This success has been due to strategic positioning of its products in a competitive environment. The company has successfully applied the 4 Ps of marketing. First, it has ensured that it has diversified its product offerings. The diversification of the products illustrates how strategic positioning can enhance the profitability of a company. Secondly, the company had a successful promotional campaign that identified TEPCO as a potential market from the onset and tailored its production and distribution channels to cater for this market. The strategic relationship between the two companies has seen them mutually grow and even help each other in times of trouble.

ADGAS has positioned itself as a reliable producer and marketer of a number of products. This capacity and proven reliability have endeared the company to the Emirati government allowing it to occupy a special position in contributing a sizeable amount of its products to the Emirati national energy grid. The partnership between the company and the government creates an avenue for positioning of the product to be accessible by other governments. This has also enhanced the place of the ADGAS products in the market. Product positioning and a strategic marketing campaign have enabled the company to enjoy unprecedented patronage in a very competitive market. The company has a well-organized research department that identifies specific need gaps in the market and works towards their satisfaction (Hooley et al 2007). The product diversification initiatives of the company were as a result of this research. Additionally, the company’s competitive product pricing is as a result of the numerous researches that go into the products. The company uses the most effective production methods to reduce costs and also offers its products at competitive prices as there are no middlemen involved.

ADGAS has aligned itself with reputable companies as its suppliers and distributors. ADMA-OPCO (Abu Dhabi Marine Operating Company) provides ADGAS with feed gas, NGSCO (National Gas Shipping Company) provides shipping services whereas GASCO (Abu Dhabi Gas Industries Ltd) is charged with compressing dehydrated gas and sending it to Abu Dhabi (Kazim 2012). These companies are reputable in the UAE and their partnership with ADGAS has positioned it as the company of choice for many consumers as they are guaranteed of reliable supply of quality products.

Relationship marketing

Relationship marketing entails the formation of long-term relationships between a company and its larger customers (Chernev 2009). These relationships are built on trust and in the capacity to deliver quantities of quality products within specified times. In this initiative, the marketer has a comprehensive profile on the customer, which includes its buying power and buying patterns. Usually, the marketer will assign a specific executive to deal directly with the large customer in order to maintain a healthy relationship built on reliability and continuity. ADGAS has ventured into relationship marketing and has identified two of its largest customers. The first is the Japanese TEPCO whereas the other is the Emirati government. The company interacts with the two customers in three distinct ways. First, there are constant visits between both sets of company personnel to appraise the capacity of the other. These visits are also augmented by constant communication between the two parties. The second mode is the creation of liaison offices like the ADGAS office in Tokyo, Japan. Since production and distribution is headquartered in the UAE and most marketing is done in Japan, ADGAS found it prudent to have officials in Japan in order to conveniently deal with TEPCO as well as source new markets. The third avenue is through annual meetings. The government and TEPCO usually have scheduled meetings with the company to discuss past engagements and plot plans for future relationships. These endeavors have elevated the company and cemented it as the choice supplier of raw materials to both institutions.

TASK 3

Marketing techniques for growth

Growth opportunities are usually present in the global market. In order for ADGAS to capitalize on these opportunities, a PESTLE analysis must be conducted which encompasses political, economic, social, technological, and environmental factors. Environmental factors are exemplified by the research into the energy trends in the world, which has shown that major oil discoveries are set to decline (Peixe 2013). This, coupled with economic factors of anticipated increases in the costs of extracting more oil from already existing wells, set to be much harder, will lead to a major shift in the utilization of natural gas. This means that major oil companies will be forced to use natural gas as an alternative to oil, which will lead to an increase in the market for natural gas products. Political factors have already been in play with government regulation mechanisms being crafted to ensure that the increased extraction of natural gas does not lead to destruction of the environment. Ernst & Young conducted a research in 2013 and published a report – Business Pulse: Oil & Gas report – highlighting the anticipated demand in natural gas (Peixe 2013). The company suggested that the benefits for this anticipated growth will go to MENA natural gas companies. Increased demand is expected in China, the Middle East and Africa and the close proximity of MENA producers to these markets will give them an advantage over producers in other locations. The report gives 2035 as the year by which over a quarter of the entire world’s energy will be sourced from natural gas. Technological factors have ensured that there are more advanced ways of extracting cleaner energy from natural gas like shale gas than other sources like coal. With a combination of these factors, ADGAS can expect to experience an unprecedented growth in the market for its product in the near future.

Marketing strategy for new market capitalization

The most viable marketing strategy for capitalizing on the anticipated growth in natural gas usage is segmentation, targeting and positioning. This model entails use of three comprehensive stages to reach a specified proportion of a given market. The first stage is the segmentation of the market. This stage entails the definition of the unique needs of customer groups (Best 2009). The current ADGAS market is made up of large companies like TEPCO and individual consumers including households supplied by the national energy grid. Therefore, the company already has experience in dealing with the anticipated target customers. The model used for attracting and retaining TEPCO can be applied to understand and attract other companies in China, the Middle East and Africa. The second stage entails the formulation of a communication strategy that appeals to the segmented market. Initiatives may include relationship marketing which ensures the creation of a mutual interaction between the company and customers.

The last stage involves positioning of the products so that they are easily accessible to the clients. Positioning entails placing the product in a market where it achieves maximum visibility. The quality of the product and the initiatives of other partners in achieving this quality are some of the tenets involved in positioning. This three stage marketing strategy is the best fit for capitalizing new markets as it has already been proven and tested by the company in its engagement with TEPCO. Since this model has enjoyed continued success in present engagements, then it should be transposed onto new engagements.

Strategic marketing objective

ADGAS should strive to be a major player in the new markets identified. Thus the objective of the company should be to achieve a 30% market share in the supply of LPG and LNG to Chinese manufacturers in three years by aggressively marketing its products through strategic partnerships with established players in that market. The Chinese market offers more opportunities for growth since it has a more formidable manufacturing sector unlike the Middle East and Africa. Conversely, both the Middle East and North African markets have domestic companies that have the capacity to supply these products thus increasing competition for ADGAS. Since the Chinese market is saturated by use of oil as the major energy source, there will be need for the formation of partnerships with major manufacturers in order to develop capacity for the transition to natural gas. Thus, ADGAS will develop a marketing mix that reflects the target market. The products are already well defined as they primarily consist of LPG and LNG. The price of the products will be informed by the price of feed gas from suppliers as well as the costs of producing the finished products. This price will be subject to fluctuations as there are improvements in technology increasing efficiency of production (Kotler & Keller 2008). There will have to be massive investment in development of infrastructure to transport the gas to new markets. This, however, can be achieved by formation of partnerships with shipping companies. Finally, promotion of the products will be achieved by direct association of potential customers with ADGAS. This will entail correspondences between the companies as well as advertisements in relevant media and the internet.

TASK 4

Changes in the external environment

There have been improvements in production processes evidenced by increased efficiency of ADGAS’ production. These improvements have largely been due to advances in technology that have targeted low hanging fruits like improving the distribution mechanisms to ensure that there is no leakage of gases. Technology has also led to more utilization of shale gas that was unprecedented in the past. These improvements have led to a decrease in the price of feed gas and in turn have lowered the costs associated with the production of LPG and LNG. Reduced prices of natural gas have also led to an increase in demand for the products (Tollin & Carù 2008). The use of LPG and LNG in either industry or production of power was considered an expensive option especially due to existence of cheaper sources of energy. However, improvements in the production and safe use of the natural gas especially shale gas has led to decrease in prices making use of its products a viable option in energy generation for domestic or industrial use.

Government regulation has also become stricter due to increased presence of pollutants in natural gas. As a result, producers have been forced to increase their investments in safer methods of production. This has led to an increase in the cost of production. Governments have also instituted heftier penalties for companies polluting the environment. Therefore, the need for compliance to new sets of regulations has led to better technologies and higher costs.

Current marketing strategy

ADGAS has enjoyed market patronage for a long time. The fact that the company is an established producer and marketer of natural gas products is a strength. Many customers seeking to purchase its products are attracted by the success it has had in the many years of existence. Another strength is that the company has a reputation for producing high quality products. All customers are attracted to companies that have products that can readily satisfy their needs. As such, ADGAS is at a unique position since its products and strategic partnerships ensure quality products. ADGAS is ISO 14001 certified for its Environment management System (Kazim 2012). This certification is awarded to producers whose efforts towards the conservation of the environment including reduction of pollution are commendable which enhances the position of the company. There are numerous other awards that AGDAS has received including several HSE (Health Safety and Environment) awards over the years. The company’s commitment to the environment places it in an advantageous position as it enables it to strike a rapport with customers who are conscious of their environment and are also wary of the activities of big companies to achieve their bottomlines (Kotler & Armstrong 2008).

The major weakness of ADGAS is its limited product range. Up until recently, the company only dealt with LPG and LNG which limited its portfolio. Although it has expanded its product range to include Paraffinic Naphtha and sulfur, there still remains a lot that the company can do in order to target a wider customer base. The other weakness is the company’s weak presence in emerging markets. Apart from the partnership with Japanese TEPCO, the company has not expanded into other markets. This leads to it missing out on the numerous opportunities that exist in having a diverse market.

Emerging themes in organizational marketing strategy

One of the major emergent themes is the decrease in the costs of production due to improved technology. The world has witnessed unprecedented growth in the production methods which has put natural gas on a pedestal as one of the cleanest sources of energy. Competition is bound to increase as a direct result of having cheap raw materials in the market (Hastings & Saperstein 2007). However, this will be offset by an increase in demand as many manufacturers move to substitute their current energy sources with natural gas.

The use of natural gas, which is a contributor of processed greenhouse gases, is bound to give rise to stricter regulations to cap global warming and its negative effects. Here, the emergent theme is the need for compliance to ensure that the company is aligned with the new regulations.

ADGAS can respond to decrease in the prices of feed gas by ensuring that it taps into new markets in order to gain more from its operations. One of the major weaknesses of the company is its reliance on a single market. The fact that there have been major technological improvements increasing efficiency and reducing costs should serve as a wake up call for ADGAS to venture into new markets.

The company has done commendably well in ensuring that its operations are tightened to reduce pollution. To continue with this trend, it should continue its cooperation with relevant authorities to ensure that its operations stay above board.

References

Best, R.J. 2009, Market-based Management: strategies for growing customer value and profitability, 5th edn, Prentice Hall, Upper Saddle River, NJ.

Chernev, A. 2009, Strategic marketing management, 5th Edn. Brightstar Media

Hastings, H. and Saperstein, J. 2007, Improve your marketing to grow your business. Wharton School Publishing

Hooley, G, et al, 2007, Marketing strategy and competitive positioning, 4th Edn. Financial Times/Prentice Hall, Upper Saddle River, NJ.

Kazim, F. 2012, ADGAS sustainability report 2012. Abu Dhabi, United Arab Emirates, Abu Dhabi Gas Liquefaction Company Ltd. (ADGAS)

Kotler, P. and Armstrong, G. 2008, Principles of marketing, 13th edn, Prentice Hall, Upper Saddle River, NJ.

Kotler, P. and Keller, K.L. 2008. Framework for marketing management. Pearson Education, Upper Saddle River, NJ.

Palmer, R., Cockton, J. and Cooper, G. 2007, Managing marketing: Marketing success through good management practice. Butterworth-Heinemann

Peixe, J. 2013, Ernst & Young expect huge growth in MENA natural gas market. viewed 3 March 2014 <http://oilprice.com/Latest-Energy-News/World-News/Ernst-Young-Expect-Huge-Growth-in-MENA-Natural-Gas-Market.html>

Tollin, K. and Carù, A. (Eds) 2008. Strategic market creation: A new perspective on marketing and innovation management. John Wiley and Sons,

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