1.1 INDIAN PETROLEUM SECTOR
Management of retail business is the key determining factor in the success of any business. To gain a sustainable competitive advantage, a retailer needs to understand and satisfy the customer’s needs. This principle holds true in petroleum retailing too. All efforts at exploration and production, refining, distribution and marketing finally conclude at the retail point after moving through long complicated supply chain. The downstream business is extremely complicated and of substantial strategic importance to the national economy. Oil products, especially transportation fuels, play a key role in the national economic growth. This is what makes the retail business exiting and challenging. It demands continuous efforts at improvement of product and services as well as higher customer satisfaction.
The business environment in India has undergone many significant changes in the past few years, and nowhere is it as distinct as in the petroleum sector. Increase in refining capacity has transformed India from a net importer to net exporter of petroleum products. Petroleum marketing has been allowed the entry of new domestic and international players into the sectors. Government have provided operational freedom to the government oil companies in a host of areas including determining their own market share, freedom to prepare and implement their market plans, selection of dealers etc. We are also gradually moving towards a market-determined pricing regime in letter and spirit. This liberalized scenario is making the sector intensely competitive, and the oil companies, especially those in the public sector need to adopt a more customer-focused approach to the retail end of their business.
The government is conscious of the need to encourage a disciplined and responsible market, besides providing the basic framework for a liberal, decontrolled petroleum sector. The Petroleum and Natural Gas Regulatory Board Bill is one step in this direction by seeking to set up a regulatory board to regulate refining, distribution and marketing of products with a view to protect the interest of consumers and promote fair competition among the entities. The Ministry of Petroleum and Natural Gas has also issued various control orders and directions to help check adulteration.
Some of the major challenges that need to be immediately and purposefully addressed can be summarized as under: 1) Quality 2) Quantity 3) Price 4) Value added services 5) Building brand identity 6) Generating higher volumes 7) Reaching the subserviced areas
Above all, the oil companies can build a sustainable competitive advantage only if they are driven by a customer-centric approach and seek to continuously improve. While we see modernized, well-illuminated petrol pumps coming along highways and major urban centers, these innovations by themselves may be only cosmetic. The boom in consumerism has given rise to a mature and demanding customer. The companies need to mature equally fast.
Taking up the challenges listed above one by one.
The customer nowadays, has little faith in the quality of product dispensed through the petrol pumps. While his demands are high, his expectations remain low. Left with no choice, he is satisfied as long as he gets an unadulterated product. Oil companies interpret quality to mean “no adulteration”. But as the market evolves and competition grows, 2
quality can be interpreted as the impact of the fuel on efficiency and performance of automobile engines. Similarly, the oil companies are satisfied with an assurance of dispensing the right quality to the customer and are now publicizing it as a unique selling proposition. The recent initiatives such as “Pure for Sure”, “Q&Q”, and “Pure bhi Pura bhi” need to evolve beyond the promise of unadulterated fuel dispensed in the right amount. This narrow and limited perception of a quality product and service may not be...