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  Getting more out of Indian oil & gas retail sector Dhanish Ahsen, Sebin K. Joseph, Vaisakh K. V. Students, MBA, Oil & Gas Management University of Petroleum & Energy Studies Abstract Petroleum retail sector is one of the largest segments of the industry. Petroleum retailing industry in India faces significant challenges and is forced to adopt new and innovative strategies. Today‟s consumers are demanding, but tomorrow‟s consumers will be armed and dangerous. So focus is on quality & quantity assurance, re warding loyalty,  premium fuels, cashless transactions, on-fuel services, quick filling and efficient fore court service. The new look  petrol pumps, apart from dispensing fuels; now offer the best of retail chains providing a value added service to busy consumers. Empowered by technology for unprecedented choice, they will demand products and services that meet a constantly shifting kaleidoscope of expectations, from convenience and affordability to a customized experience and sustainable sourcing. GOI on April 1, 2002, opened up retail marketing to private and foreign companies. Indian retail sector gets flooded with innovations of various forms those customers to buy more and spend more. One of the more visible transformations in the retail business of auto fuels is the recognition by the oil companies that non-fuel activities could be an important source of revenue at their retail outlets. The retail outlets have the potential to  become a one-stop shop for meeting innumerable needs of the customers on the one hand, and increasing the revenues of the outlet on the other. Strong brands drive revenue growth and to drive revenue growth, petroleum retailers may have to either attract new consumers or increase their share of the existing consumer‟s wallet.  Enabling Oil companies to refine its product offering , improve its brand and enhance customer relationships with targeted promotions. AS companies expand into nontraditional markets, the barriers between retailers are blurring, creating and exploiting new market dynamics The expectations of customers have been changing as customer belonging to the trucker community is now demanding higher levels of product & service delivery. Businesses are putting intense pressure on entire logistics cost optimization: travel times under scrutiny. Also the urban customer has become more vocal in demanding services like one Stop Shop, rest & recreation for highway travel, automatic car wash, alliance with automobile manufacturers to provide service at pumps, allied facilities like ATMs, Cyber cafes, courier services etc. This paper deals about the innovative marketing strategies used by the National Oil Companies and private players to attract consumers and build a brand affinity.  Introduction The convergence of several market and consumer trends is fundamentally changing the fuels retail industry in the world and placing additional pressure on volume and profitability. The growing appeal of alternative fuel sand more stringent Corporate Average Fuel Economy (CAFÉ) standards are expected to continue for the foreseeable future. This continuation means that sluggish demand for petroleum will likely be the “new normal” for the industry in the forthcoming years. Today, more than a dozen alternative fuels are in production and use or are under development, including compressed natural gas (CNG) ethanol, electricity and hydrogen. As these fuels gain widespread adoption, they will present a significant competitive threat to traditional motor fuels. This threat is reflected in the anticipated sales of nontraditional vehicles in the coming years. A number of trends beyond high oil prices and weak demand are poised to change the downstream competitive landscape. At one end of the spectrum are structural changes in the refinery business, reflected not only in the above-average number of spin offs, sales and closures seen but also in the number of recently announced refinery upgrade projects, which will allow refiners to accommodate new sources and types of crude oil and potentially increase their capacity. While the effect of these changes on the fuels retail industry is not fully known, it is anticipated that refinery owners and shareholders will be looking to recoup their upgrade investments and lower their cost to serve as they try to capture a greater share of a sluggish retail market. Retailers recognize the crucial role of innovation for the performance of any retail business, but attribute a real range of meanings to the term. Shortages are seen in relation to technical, leadership as well as project management skills. The majority of retailers claim to know their markets well and to have little concern that lack of knowledge about technological possibilities works to prevent innovation. In relation to regulation, the majority of retail firms report no experience of barriers preventing innovation, although a number of specific issues do emerge. These include: the availability of allowances for mitigating some of the risks of innovation, as well as a lack of a common agenda across Government to stimulate investment in sustainable innovation, which often results in conflicting outcomes on the ground for firms.   The Pricing Mechanism Under the Administered Pricing Mechanism (APM), product prices were directly administered by the GoI. The APM was abolished in April 2002. Now the OMCs would be free to set retail product prices  based on an import parity pricing formula. The opening up of domestic refining and retail sector to  private-sector firms, has led to the advent of small private-sector retailing presence in India such as RIL, ESSAR etc. Per unit subsidies funded from the government‟s budget were maintained on LPG and on a fixed proportion of supplied kerosene to safeguard the low income population. Now the retail prices for  petroleum products (including prices for domestic kerosene and LPG) are also expected to fluctuate with changes in the price of India‟s crude basket. The GoI  increasingly looked to restrict the ability of OMCs to increase retail prices in order to protect Indian consumers as the crude prices begin to rise in 2004. Soon the GoI once again centrally controlling upward price revisions and the post APM model was dismantled. The lower product retail prices than crude input prices has been the increasing accumulation of “under  - recoveries” by OMCs. However, the rationalization of petroleum product taxes and duties has been considerably disturbed and uneven across various levels of administration. Current policies within India‟s downstream petroleum sector clearly have implications for investment decisions within this sector, which in turn will determine the way the sector evolves in the medium-term. As of now, the petroleum product pricing policy seems to be in a situation of inertia. OMCs & GoI    The uniqueness of the relationship of OMC‟s with the GoI has dramatically enhanced the investing  potential of these companies and therefore the dynamic growth of India‟s do wnstream petroleum sector. The OMCs will be kept solvent and profitable over time lends was guaranteed by the government  provides OMCs huge advantages when raising capital for investment in financial markets. With OMCs‟ assistance, the Indian government has been able to pursue its official policy of providing affordable energy for India‟s developmental needs and its significant poor population. At the same time, by absorbing OMCs losses under this system and explicitly guaranteeing their operations, capital financing and investments, the government has created an investment climate for OMCs which has resulted in robust capacity expansion and growth sector wise. The GoI aims to establish India as a global refined  product exporting hub, instructing OMCs to take a more outward-oriented operating posture, and on the other hand encouraging private-sector refiners to invest in export-oriented refining capacity. The measure of India‟s refined product export capacity over time will be the build -up of excess refinery capacity over domestic demand. India‟s actual refined product export volumes are bound to surpass the aggregate of excess capacity. OMCs look to first supply the Indian market, and then to export the balance of refined product produced. Private-sector refiners have no operational directive to first supply domestic markets so they will tend to produce a product schedule which optimizes total refining margins from  period-to-period, and will sell to customers, irrespective of location, to allow this. There is thus the  possibility of a situation in India of large exports of refined products in parallel with product imports to satisfy domestic demand. Need for a transition Over the past several years, many of the Oil Marketing Companies have announced an exit from company owned and operated businesses. Several forces are driving this shift. First, oil companies have recognized that they generate far less profit from retail operations than they do from their upstream operations. Moreover, oil companies have proven less effective as retail-site operators than as fuel suppliers, and their overhead costs are typically not competitive with those of standalone, non-oil company retailers. In addition, there is growing pressure for oil companies to improve returns on invested capital  —  which have  proved more attractive in the upstream sector. The most common point of contact of customers with Oil Industry is the Petrol Pump. In Oil Industry vernacular, Petrol Pumps are referred to as Retail Outlets (ROs). As per the existing Government policy, Petrol Pumps can be set up by Public Sector Oil Companies as well as Private Sector oil Companies dealing in storage and distribution of petroleum  products as per published guidelines. Presently the Oil Companies engaged in retail business of automotive fuels are IOC, HPC, BPC, NRL, MRPL, ONGC, RIL, Essar and SHELL. These companies are referred as Oil Marketing Companies (OMCs). Emergence of new age consumer in the fuel retailing sector A pivotal area for fuels retailers to consider is product/service innovation or offering something entirely new that will help attract and retain customers and, at the same time, capture new revenue streams. Partnerships can potentially help retailers take advantage of such new revenue opportunities. This is especially true if retailers are able to share and leverage customer information. In fact, at least one major auto manufacturer leverages customer and telematics system data to generate unique leads and email marketing campaigns to support the growth of local dealer businesses. Customer relevance is an increasingly important concept to retailers striving for high performance, especially given co nsumers‟ desire for highly personalized offerings and experiences. By developing a  better understanding of the consumer and the marketplace than their peers, fuel retailers can deliver more  appealing products and services to their customers across multiple categories. The key to improving the revenue potential of each customer lies in understanding as much as possible about buyer‟s needs  preferences and purchasing behaviors. Building customer analytics capabilities can pay off in a number of ways and allow fuel retailers to truly engage with their consumers at the local level. Incorporating integrated telematics systems The customers can now locate the nearest gas station from sophisticated integrated telematics systems or via a smartphone app which are quite common which also helps to compare prices at nearby stations. The regional players could notify customers about fuel price changes and allow them to purchase fuel in advance or monitor prices via their smartphones. Smartphone app can help customers to prepare their shopping lists, download coupons and check their fuel rewards balance. As the demand for fuel declines, incorporating innovative use of technology to attract, retain and engage customers will become a determining factor in achieving competitive advantage. At the other end of the downstream spectrum is the continued expansion of hypermarkets and other nontraditional fuels retailers. With their combination of forecourt and backcourt offerings, hypermarkets offer attractive retail alternatives for fuel consumers and will likely continue to build more brand loyalty and market share. Addressing the challenges and opportunities that will accompany these changes requires players in the fuels retail space to reexamine and adapt their existing business models, technologies and business practices. Those players that fail to do so risk losing market share and the competitive advantage that will reinforce high performance in the years to come. Partnership with auto manufacturers . The companies could partner with auto manufacturers to transform existing pricing models. In a potential  partnership scenario, automakers could include the price of the supplier‟s fuel for one, two or three years into the purchase or lease price of the car. Offering a purchase incentive that significantly reduces the cost of gasoline at select stations for a period of time. In either case, auto buyers would then be able to fill up at any of the suppliers‟ stations d uring the offering period without paying for fuel, or doing so at a steeply discounted rate. As such the days of searching for the best gasoline prices would be over. Automakers have already indicated their willingness to use such pricing schemes as a way to attract customers. Locking in of fuel rates . For producers and suppliers, volume commitments might help ensure a secure foothold in a market where overall demand is falling and improve brand loyalty. For wholesalers, the value of pricing transformation lies in potentially saving money by locking in favorable fuel prices. For retailers, lock-in rates or  partnership agreements might require more flexible onsite payment processing and/or accounting applications to accommodate the new pricing structures. Costs associated with implementing new systems and point of sale terminals would likely be offset by the benefits of the new pricing programs, including increased foot traffic and, presumably, additional sales of other products sold at their locations. Similar online programs are emerging for individual drivers too., for example, allows US consumers to buy gasoline at current prices and use gallons from their fuel reserve when prices rise. Fuel credits are stored on prepaid gas cards, which can be redeemed at a number of filling stations across the country. Near field communication technologies (NFC) . Consumers today are starved for time. They want to carry out their purchase transactions as quickly and easily as possible. In this context, mobile applications that enable multiple transactions via a single device could simplify the customer experience. NFC or near field communication technologies will be  particularly prominent in the mobile phone market in future which facilitates data exchange and wireless connections are bound to take customer convenience to a brand new level.. According to market research,  NFC enabled mobile phones will make up more than 53 percent of the mobile market by 2015. At that time, NFC is expected to also be the most-used solution for mobile payment. What is more, NFC is
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