De La Salle University – Dasmariñas, Cavite

College of Business Administration

Marketing and Advertising Management

Industrial Marketing Plan

For

International Inc. Motorcycle Oils

In Partial Fulfillment of the Requirements in Industrial Marketing Subject

Submitted By:

Joanne Palad

Roanerie Año

Lorman Maris Discipulo

Ana Mandac

Maristel Role

Joanna Marie Roma

March 4, 2010

1

A. Executive Summary

The oil industry is a major contributor to the whole country’s economy.

Aside from its ability to generate electricity, many enjoy and utilize fully the

different benefits produced by oils. But even though oils are a good source of

income and resources, there are many environmental factors that affect the

production, distribution, and marketing of this product. These issues will be

discussed further on the next pages of this paper.

There are different kinds of oil but the main focus of this paper will be on

synthetic oil. Synthetic oil is a lubricant consisting of chemical compounds

artificially made or synthesized from compounds other than crude oil or

petroleum. Synthetic oil is used as a substitute for lubricant refined from

petroleum, because it generally provides superior mechanical and chemical

properties than those found in traditional mineral oils. This synthetic oil is also

being manufactured by Rainchem International Inc.

Rainchem International Inc. produces synthetic oil and lubricants for

industrial use, consumer use and other purposes. The marketing strategy of

Rainchem International Inc.’s certain product line will be the focus of this

business plan with the hope of effectively reaching the objectives of Rainchem

International Inc. at the end of the analysis and marketing plan.

Improvements will be done in the marketing mix strategy and

implementation after a thorough environmental scanning and SWOT analysis of

Rainchem International Inc.

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B. Company Profile

Rainchem International Inc. was originally named RDLP RAIN

COMMERCIAL and has been producing oils, lubricants and specialty chemical

to various manufacturing and business establishments in the Philippines since

1995. Their headquarters and office facility is located in Sucat Parañaque City,

Philippines and a Sales Office and warehousing facilities in Cebu.

The Company supplies to more than 40 customer nationwaide in the

Philippines with deffirent product offerings. RAINCHEM INTERNATIONAL,

INC.serves major industries such as:

• Automotive • Aircraft • Agriculture

• Appliance • Bearing Manufacturers • Construction

• Compressor/

Air Conditioning• Electronics • Food/Beverage

• General Industry • Heavy Equipment • Marine

• Mining • Paper & Pulp • Specialty

Manufacturers

 • Steel • Transportation/Rail

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RDLP Rain Commercial was renamed to Rainchem International Inc. on

2006 as an oil and chemical manufacturer. The company also buys base oils and

additives. List of product lines Rainchem sells are Die Casting Release Products,

Stamping Oil, Lubricating Oil, Preventive Maintenance, Janitorial Product,

Degreaser, 2T and 4T Oil, Metal Working Fluids, Greases, Water treatment

chemicals, Aerosol, Automotive Oil, Painting Expertise, and other services

related with oils and lubricants.

As an ISO9000 certified company, it is one of the most reliable suppliers

of lubricants and specialty chemicals in the Philippines. The company has the

technical expertise to meet the specific requirements with the research and

development staff that surely can provide customer with first class quality of

lubricants and other chemicals.

Engr. Robert De La Peña is the owner, President and CEO of the oil

manufacturer RDLP Rain Commercial or also known as Rainchem International

Inc. since 1995. The establishment has the following vision and mission

statement, quality policy, code of ethics and safety and health policy:

Mission

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To be known as one of the best manufacturer and distributor of

chemicals and lubricants nationwide, most committed to being the future

for our customers, employees and our country.

Vision

Place the customer first and deliver the best product and services

towards the highest level of customer satisfaction. Respect diversity,

recognize contribution, and reward achievement to bring out the best in

everyone. Use strategy to unify and direct our actions to achieve.

Quality Policy

RAINCHEM is committed towards ensuring customer satisfaction

by providing product and services that meet defined customer

requirements. We shall achieve this by delivering product and services on

time, by implementing and maintaining a Quality Management System

That meets established standards.

Code of Ethics

RAINCHEM employees will not engage in any behavior that is

outside of the normal & acceptable practices of your company. We will

partner with your corporation with the understanding to service &

administrate your chemical program strictly on a professional business

basis

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Safety and Health Policy

People are our most important asset; their safety is our greatest

responsibility. It is the policy of our company that every employee is

entitled to a safe and healthful place to work. When the person enters the

employ of our company, he or she has the right to expect to be provided

with a proper place in which to work, as well as proper machines and tools

with which to do the job, and that the employee will be able to devote his

or her energies to the work without undue danger. It is our basic

responsibility for to make SAFETY of human beings a part of their daily

hourly concern. This responsibility must be accepted by each one who

conducts the affairs of the company, regardless of the capacity in which he

functions.

Employees are expected to use the SAFETY equipment provided.

Rules of conduct and rules of SAFETY shall be observed. SAFETY

equipment must not be destroyed or abused. The joint cooperation of

employees and management in the observance of this policy will provide

safe working conditions and accident-free performance to our mutual

advantage. We consider the SAFETY of our personnel to be of the first

importance, and we ask for your full cooperation in making this policy

effective.

C. Current Marketing Situation

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The current marketing situation of the market will be the detailed

information about the type and size of the oil industry, the company’s growth and

competitiveness, the product’s stage in the life cycle, current strategies employed

and the macro-environment of oil industries as a whole.

1. Market Situation

The oil industry belongs to an already mature market because of stiffer

competition present in the market, great cost and service, product innovation

and new uses of their products are harder to come by, international

competition is present and increasing, industry profitability falls and mergers

and acquisitions reduce number of industry rivals.

Entry Barriers and Cost Structure

There is a present stiff competition in this industry because of the oil

deregulation law, allowing entry of small oil suppliers like Rainchem

International Inc. The oil deregulation law caused barriers for new entrants to

be low. Also, the pricing of different industry players are changing rapidly due

to the absence of the Oil Price Stabilization Fund as an effect of the law

formerly stated. This issue will be further discussed in the issue analysis

portion.

Market Size, Profitability and Growth

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The oil industry leaders are Petron Corporation, Chevron Phils., and

Pilipinas Shell.According to the Department of Energy or DOE, total market

share for petroleum products on fiscal year 2007 has more than eighty-four

percent (84.2%) credited to the combined sales of Petron Corporation,

Chevron Phils., and Pilipinas Shell.

Meanwhile, other industry players which include PTTPC, Total Phils.,

Oilink, Seaoil Corp., TWA/Filpride, Liquigaz, Petronas, Prycegas, Trisolid,

Andan, Mawab and Jetti as well as the end users who directly imported part of

their requirements got the remaining 15.8 percent of the market (Fig. 1).

Rainchem International Inc. belongs to 13.5 percent of other players.

Figure 1

2007 Market Size

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On fiscal year 2008, Petron Corp., Chevron Philippines and Pilipinas

Shell Petroleum Corporation maintained their dominance of the market with a

total of 81.9 percent share of total demand while other industry players which

include PTT Philippine Corp. (PTTPC), Total Phils., Oilink, Seaoil Corp.,

TWA/Filpride, Liquigaz, Petronas, Prycegas, Trisolid, Andan, Mawab and

Jetti as well as the end users who directly imported part of their requirement

got 1.8 percent of the market.

The local refiners (Petron Corp. and Pilipinas Shell) captured 68.2

percent of the total market demand, while 31.8 percent was credited to direct

importers/distributors (Fig. 2). 

Figure 2

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2008 Market Size

But upon reaching the first half of the fiscal year 2009, the major oil

companies’ (Petron Corp., Chevron Phils. and Pilipinas Shell Petroleum

Corp.) dominance of the market was reduced to 78 percent share of total

demand vis-à-vis 2008’s 83 percent. This may be due to the increased market

share of the other players in the LPG business as well as to the entry this year

of new players in the oil industry who are also importers.

Other industry players, on the other hand, of which include PTT

Philippine Corp. (PTTPC), Total Phils., Unioil/Oilink, Seaoil Corp.,

TWA/Filpride, Liquigaz, Petronas, Prycegas, Micro Dragon, Zhenron, Ixion

Corp., Cross Country, Jetti and World Precision as well as the end users who

directly imported part of their requirement has market share that grew from 17

percent of a year ago level to 22 percent this year. Other small players are

18.7 percent of the total market size (Fig. 3).

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Figure 3

2009 (first half) Market Size

Meanwhile, the local refiners (Petron Corp. and Pilipinas Shell)

captured 65 percent of the total market demand, while 35 percent was credited

to direct importers/distributors.

Phoenix Petroleum Philippines Inc., Resource One Corp., and Oracle

Petroleum Corp. are among the new small companies manufacturing and

supplying oils to different end users in markets from Luzon, Visayas and

Mindanao. The sales of Rainchem and other competitors in the industry are

listed below (in thousands) from year 2007 to 2009, as taken from the books

in the office of the Securities and Exchange Commission.

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Table 1

Market Sales 2007 to 2009 (Security and Exchange Commission, 2010)

Company 2006 2007 2008 2009

Petron Corp. 212,825,750.10 212,932,163 213,038,575.90 213,149,888

Caltex-Chevron

Phil.76,774,709.71 77,887,943 79,001,176.29 80,114,409.58

Phoenix

Petroleum Corp.1,493,683 2,364,232 4,615,217 5,945,911.33

Shell Chemical

Phil. Inc.1,161,871.07 1,166,170 1,170,468.92 1,174,767.85

Resource One

Corp.71,483.26 73,013 74,542.74 76,072.48

Rainchem

International Inc.45,484.71 55,707.01 65,929.31 76,151.61

Oracle Petroleum

Corp.50,293.55 54,910 59,526.45 64,142.89

For the whole 2009, Petron was still leading the market having the

most number of market shares in the motor oil industry, with Caltex as

second, then, Phoenix Corp. as third and Shell Corp, fourth. Next are

Resource One Corp., then, Rainchem International Inc and Oracle Petroleum

Corp as small players with minimal share in the industry.

2. Product Situation

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Since motorcycle trend is tremendously arising in the Philippines,

buyers and users of the said vehicle are also increasing. Because of this,

2T and 4T motor oils are now in the growth stage of the product life cycle

since new chemical and technological developments and innovations are

continuously being introduced. Barriers for new entrants in the industry

are not too high that’s why high level of investment in promotion and

distribution is also highly needed.

2T and 4T are under the product category of motor oils except that

2T are fuel oils for two-stroke motorcycles while 4T fuel oils are for four-

stroke motorcycles. The technology platform of the 2T motor oil is its

“Decarbonizer” content while 4T motor oils have their advance and

modern base oil technology, superior high temperature performance and

maintains full engine power that exceeds API SG/JASO MA.

The 2T “Decarbonizer” technology promotes lesser carbon

emission to address the carbon production issue that is nowadays being

talked about by environmentalist in the national government and in other

countries. Low cost production also makes it possible for Rainchem to sell

the 2T and 4T motor oils in a lower price than the competitors.

Competitors of Rainchem 2T and 4T motorcycle oils are those

distributed and manufactured by the leading oil companies, Phoenix,

Resource One, Oracel Corp. and other small players.

3. Competitive Situation

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Rainchem International Inc’s competitive edge over its competitors

can be seen on its current product, price, distribution and promotional

strategy.

a. Product

Rainchem International Inc. is a reliable supplier of

Lubricants and Specialty Chemicals in the Philippines. The

products of Rainchem was made with the technical expertise to

meet their client’s specific requirements in providing first class

quality of lubricants aimed at all levels of industry because of its

Chemical Engineers that are highly trained, well-experienced and

well-compensated. But the product brand and positioning is

weaker as compared to the equity built by the leading market

players and other booming small players.

b. Price

The company offers cheaper price of lubricants and oil to

industrial parks and other oil retailing company as compared to

other players of the same industry. They purchase the cheapest

price of raw chemicals to be able to supply low priced of

hydraulic products in the Philippines.

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Rainchem’s price is 20 percent cheaper than the national

market leaders and 5 percent cheaper than its direct competitors,

namely, Resource One, Oracle Corp and other players.

c. Place

Rainchem International is a supplier of generic lubricants

and oils to few players in the industry even to their competitors.

Rainchem, import raw materials from Korea and Taiwan and

supply products to industrial parks and gasoline companies as

generic oil. Rainchem products are available nationwide

particularly in Cebu, Bacolod and Davao. Other competitor such

as Phoenix Corp. utilize distributorship and franchising to be

able to reach wholesalers, retailers and end users and build trust

for other industrial consumers.

d. Promotion

Rainchem personalize their packaging depending on their

clients’ preference. They are known for their on-time delivery

and good customer relationship. A year ago they had a onetime

promotion offer to their clients which is the free whole body

massage for every order of 10 barrels chemical oils. Competitors,

on the other hand, are engaging in sponsorship, advertisements

endorsed by big time celebrities and sales contest for brand

building.

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4. Distribution Strategy

Raw materials can be imported or locally produced but with right

machineries and technical expertise. Local refineries and newly

discovered oil fields are being utilized mostly by the top three oil

companies, namely, Petron, Caltex and Shell. Other small players buy

their raw materials, such as oils and additives, outside the Philippines

since they don’t have refineries to produce such. Motor oil products are

processed in the black oil pipelines and sent to retail outlets and industrial

or consumer buyers via tank trucks. The industry structure is shown in the

figure below as seen from the webpage of the Department of Energy.

Figure 4

Industry Structure (DOE, 2009)

CrudeImport

Refinery

Tankers/ Barges

Industrial Consumer/ End User Tank Truck LPG RetailRetail Outlet

Tank Truck

Product ImportsProduct Exports

Refinery/ Import/Export Terminal

White Oil Pipeline Black Oil Pipeline

Depot Terminal

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Rainchem International Inc. currently imports raw materials from

Korea and Taiwan and supplies directly to both wholesaler and retailers

via truck and van containers.

5. Macro-environmental

The assessment of political, economic, socio-cultural,

technological, environmental and legal factors was used to define and

summarize the general environment and the associated issues that

Rainchem International Inc. operates within. The Oil Industry started off

more than five thousand years back.

The demand for Oil was much higher than what it actually

produced and this brought forward the concept of making oil production

companies. The Oil Industry is a very important industry in the world and

a lot depends on the price of the oil and it has been observed that

whenever the oil prices increase the price of various products also

increases.

Political Factors

The political factors that may have an effect on the operation of

Rainchem in the Philippines are:

1. Unstable political environment

2. Product Stewardship Arrangements for Waste

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3. Oil – Subsidies for different used oil based products

4. PSO Transitional grant scheme – provided collection facilities

5. Oil Deregulation Law

Economic Factors

The economic factors that are present in the Philippine oil industry

which might have an effect on Rainchem and other player’s operations

are the following:

1. Unstable price in the market

2. High unemployment

3. High level of activity in resources sector

4. Increasing cost of transport fuel

Socio-Cultural Factors

Of the social influences, key issues are the relatively small

population base and distance from further markets to either provide

used oil supplies or provide markets for the resulting products. The

volumes of used oil generated are unlikely to increase beyond the

influence of economic cycles, therefore the total volumes are relatively

static and this factor may make some process technologies unviable in

the Philippines due to insufficient volumes to achieve the required

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economies of scale. A further key social influence is the poor

perception of the quality of recycled lubricating oils. Buyers of base

oils typically blend base oils with additive packages to achieve a

consistent product that delivers specified performance attributes. These

buyers are highly sensitive to the risk of using materials that may

cause their own products to fail in use or for their own production

process to be stopped as additive packages fall out of suspension.

Moreover, lubricants offer performance-critical attributes for a

value that is typically insignificant when compared to the equipment

(motor vehicle or industrial equipment) it is protecting. Other issues

arising from socio-cultural issues in the country are:

1. Increasing demand motorcycle ownership

2. DIY oil change and disposal by community

3. Small population base

4. Remote communities / used oil sources

5. Illegal disposal

6. Poor perception of recycled and synthetic oils

Technological Factors

With the increasing complexity of lubricating oils, a wide

variety of additives are added to base oils during the manufacture of

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lubricants. All of these additives provide benefits in terms of

performance but can create difficulties for re-refiners. Technological

externalities can reduce economic efficiency if the benefits (improved

performance) are not as great as the costs (reduced recoverability).

Hence, economic efficiency can be reduced if incentives are

not provided to ensure that the product designer does not take the

downstream costs into account. Some of the most problematic

additives for re-refiners are chlorinated hydrocarbons and

dithiocarbamates (containing lead and used as extreme pressure

agents), polysulphides and several sulphur containing compounds that

can cause emissions. Additives such as styrene butadiene (SBR) and

styrene isoprene (SIP) are used in engine oils to provide shear stability

appear in the waste from re-refining as asphalt or as a substitute for

heavy fuel oils used in cement kilns (OECD, 2005). If the costs

associated with re-refining are not transmitted back up the product

chain, it is possible that sub-optimal specifications for lubricating oil

will be developed.

As noted above, a technological externality results in sub-

optimal design if the performance advantages associated with the

additive are of smaller positive value than the negative values

associated with reduced potential for re-refining. Indeed, it has been

argued that minimum quality standards can be redrafted with a view

toward increasing the potential for re-refining (AATSE, 2004). Other

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technological issues arising with the production and selling of oils are

listed below.

1. Increasing service intervals for lubricating oils

2. Increasingly complex lubricating oils (e.g. synthetics)

Environmental Factors

The most significant environmental impacts associated with

lubricating oils almost certainly arise from illegal disposal. A survey

commissioned by the Government found that one in three households

have motorists who change their own vehicle oil. It was found that

nearly half of those people inappropriately dispose, store or reuse the

oil.

The amount of uncollected waste oil has been estimated to be

in the region of 40-65 million liters. Thus, significant quantities of

used lubricant are deliberately spilled on the ground or in surface

waters.

The Oil Industry also through oil production accounts for a

large amount of the consumption of energy. According to the statistics

the amount of oil consumed by the world every year is as many as 30

billion barrel. The Oil Industry can be parted in two, Upstream and

Downstream. The importance of oil in the world evolved at a slow

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pace but once it was identified, it became one of the most important

things in the lives of human beings.

1. High pollution potential from ‘illegally dumped’ used oil and

lubricants

2. Used oil and lubricants classified as Hazardous Waste

3. Carbon emission in using oil which has an effect on Global

Warming

Legal Factors

The legal factors generally affecting the operation and

production of oil in the Philippine industry are the following laws and

policies related with the production, distribution and waste

management of oil manufacturing.

1. Hazardous Waste (Regulations of Exports and Imports) Act

1989 (Commonwealth Act) restricts to exporting of ‘waste’

products

2. DENR License for treatment site

3. Controlled Waste Regulations for transport storage by the

Environmental Management Bureau.

4. Dangerous goods licensed for storage by the Environmental

Management Bureau.

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D. Opportunity Issue Analysis

The strengths, weaknesses, opportunities and threats internally seen in

Rainchem International Inc.’s operation are discussed below and will be used to

analyze right positioning and strategy of Rainchem International Inc.

1. Strengths

The strengths of Rainchem are its cheap price, and quality products

that has a technology addressing the issue of carbon in oil usage.

Affordability

Rainchem offers chemicals and lubricants in a much

affordable price as compared to its direct competitors in the in the

industry

High Product Quality

Rainchem manufactures high quality products that will

surely take good care of the vehicle engine.

Good Product Platform

Product technology, especially the “Decarbonizer” of their

2T product addresses the issue of carbon emission of motorcycles

that is polluting the atmosphere and causing worse effect on global

warming.

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2. Weaknesses

Low brand awareness

Rainchem still have low brand popularity. This may be

associated with the company’s few advertising and promotional

activities.

Mediocre distribution strategy

Distribution strategy is not efficient for a nation widest

reach and may be costly because of the lack of an independent

intermediary.

Weak Sales Force

Sales force is not trained and compensated enough for a

better industrial prospecting coverage.

3. Opportunities

Increase connection with other suppliers, retailers and wholesalers

This innovation in value chain will help Rainchem

International Inc. reach its target market easier and better.

Increase sales to current customers through strategic alliances

An increase in sales can happen through right strategic

alliance, advertising and communication mix.

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Supply generic oils to industrial motorcycle manufacturer

Sales force’ effort to reach, support and build rapport with

industrial motorcycle manufacturers will be needed.

4. Threats

Costly Raw Materials

The oil fields are in hard-to-reach that’s why imported raw

materials might increase in price.

Non-polluting vehicles

There are lots of innovations that can minimize the use of

oil since environmental issues like pollution and global warming is

now being addressed in the whole world. These innovations may

lessen the demand for motorcycle oils.

5. Issue Analysis

The issue on low brand awareness can be addressed by a vast

advertisement, promotion and sales strategy. Also, Rainchem’s weak

distribution strategy can be improved by a strong and well-trained sales

force to reach both industrial consumers and end-users.

The threat of price increase in raw materials will always lead to

price increase in oil products. This is inevitable because of the presence of

the oil deregulation law making it impossible for competitors, especially

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the leading companies to increase prices. But raw material price increase

caused by production and importation will heighten Rainchem’s motor oil

price on a rate that is still reasonable.

The issue on hazardous waste produced by the manufacturing of

oils will be addressed by a hazardous waste management where experts

will be paid to study and manage the hazardous wastes of the company.

E. Marketing Objectives

The marketing objectives of Rainchem International Inc. are to increase its

market share in the industry from 0 percent to 1 percent by the year 2014 through

conducting a vast promotion and sales force coverage. Also, reach a growth of

500 percent in it sales and revenues by the year 2014.

Rainchem also aims to create a unique identity for its motorcycle oil

through a recognizable brand name and high technical performance in the

motorcycle market which can be seen by an increased number of retailers and

wholesalers from motorcycle dealers and parts suppliers by 70 percent at the end

of the year 2014.

Promotion and advertisements will be done to increase brand awareness of

motorcycle manufacturers, dealers and suppliers in NCR and CALABARZON

areas by 150 percent on 2012. This will be evident through the growth in sales

and revenues.

F. Marketing Strategies

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Rainchem marketing strategies will be choosing the right market segment,

positioning, product improvement, advertisement, sales force, promotion, contest

and research and development.

1. Target Market

The target market of Rainchem International Inc. would be mainly

from the motorcycle industry in the Philippines. Under this industry are

segments from the motorcycle industrial manufacturers, dealers and

motorcycle parts and accessory suppliers.

Rainchem will target the manufacturers, dealers and accessory or

parts supplier in the National Capital Region (NCR) and Region IV-A

(CALABARZON) since the main industrial manufacturing sites and

offices of motorcycle companies are usually located in these areas. Major

motorcycle manufacturers and dealers are Honda, Toyota, Mitsubishi,

Kawasaki, other high-end motors and new industry players.

Rainchem will prioritize the industrial manufacturers of

motorcycles through telemarketing, personal visits and web mails. Dealers

and Suppliers will be reached out via the executive sales team.

Nevertheless, if the NCR and CALABARZON market will be substantial,

expansion to different markets from other regions in Luzon, Visayas and

Mindanao will be considered at the end of the fiscal year 2014.

2. Positioning

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Rainchem International Inc. motorcycle oil offers a carbon engine-

smoke reducing technology formulated by licensed engineers with

expertise focused on chemical mixtures. Its 2T two-stroke and 4T four

stroke motor oils are available for motorcycle industrial manufacturers,

distributors and parts suppliers. This will help minimize the pollution

problem caused by motorcycles and will address one of the environmental

issue motorcycle industry may encounter.

Aside from its decarbonizing platform, Rainchem motor oils have

the same quality that is offered by leading brands but is more affordable

than the competitors. It is 20 percent cheaper than the leading brands and 5

percent cheaper than competitors. With this, Rainchem motor oils will be

positioned as a top of the mind motor oil that has a recognizable name and

reliable technical performance in an affordable price. It will target both

industrial and consumer buyers with the help of advertisements,

promotions and sales contest.

On the other hand, sales team of Rainchem motor oils will always

be present for regular feedback communication, constant support and

timely delivery for a win-win relationship with its small or big customers.

Customer and staff communication will never be a hassle that’s why

solution will always be the answer. The accounting, marketing and

manufacturing department will work hand-in–hand to improve better the

personnel’s performance for a better customer service.

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3. Product/ Product Line

Rainchem International offers motor oils under the product line of

Engine Oils. Rainchem International will position motor oils with a brand

name “RenOil” coming from the word “Rain” and “Oil”. This will be the

recognized identity of Rainchem Motorcycle Oils with trademark licensed

to Rainchem. Licensing budget will be P 540, 000. Logo of RenOilTM

Brand is shown on the figure below.

Figure 5

RenOilTM Brand Logo

This product brand will be shown on all available containers of

Rainchem motorcycle oils. Products under this line are 2T and 4T which

will be described below.

RenOilTM 4T Dash

This product is premium grade engine oil designed

developed to provide excellent lubrication for all four-stroke

engines. It is formulated from high viscosity mineral oils blended

with superior performance additives to provide high oxidation

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resistance, and thermal stability to meet the stringent requirements

of modern four-stroke motorcycle engines. It also protects and

ensures dependable transmission & clutch operation. It is offered

in 200L and 20L for industrial consumers and 1L and 200ml for

retailers and wholesalers.

The packaging for 1 Liter RenOilTM 4T Dash will be a red

container with the brand logo and tagline speed as shown on the

figure below. 200 ml retail container has the same color, style and

sticker.

Figure 6

RenOilTM 4T Dash Packaging

RenOilTM 2T Flash

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This product is premium or high-quality two-stroke motorcycle oil

designed for the lubrication of all two-stroke gasoline engines

fortified with additives to help control engine wear, deposit

formation and exhaust smoking tendencies. It is offered in 200L

and 20L for industrial consumers and 1L and 200ml for retailers

and wholesalers.

As we all know, packaging plays an important role for the

promotion of the product itself. Improved product packaging for

RenOilTM 2T Flash is shown on the figure below.

Figure 7

RenOilTM 2T Flash Packaging

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The packaging design would also showcase handy container

for the 1L and 200ml, made of recycled and reusable plastic material.

In such way we could help lessen waste products. The color of the

container will be red, which will be accentuated by a sticker for its

packaging design.

4. Price

Rainchem will make use of penetration pricing as their strategy to

maximize the quantity demand while upholding the position as a company

that produce cheaper product of lubricants and oils in the industry. The

company will also make use of Discount Pricing for bundle orders as a

part of their promotional strategy.

Table 2

Variable Costs for RenOilTM

RenOil Variable CostDRUM

200

PAIL

20

Carton

(18x1L)

Carton

(24x200ml)

BULK

(1L)

4T Dash 20W40 XP

GEO 20W40 SL16667 1756 2147 2220 81

2T Flash 20W50

XM

GEO 20W50 SL

16667 1756 2147 2220 81

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Rainchem will maintain lower price than competitors. Cross-subsidization

among products may no longer be possible as petroleum product pricing

will now be linked to the prevailing national price levels. This has lead to

expectations of improved price realizations for lubricant companies as

there could be no undercutting. The fact is that the public sector oil

companies can still afford to compete on price if they choose to do so give

their bigger balance-sheets and larger resources. This is the reason why

Rainchem still manage to maintain affordable price for buyers.

Mark-up pricing wil alsol also be applied to compensate the

strategies that will be implemented by Rainchem for the fiscal years 2010

to 2013. The margin applied is 30 percent which is still 10 percent lower

than the market leader’s pricing. For 1L, bulk orders would be 10 percent

lower than its retail price. The list of product price is shown on table 3.

Table 3

Pricing of RenOilTM

RenOil with 30 %

Mark-up

DRUM

200L

PAIL

20L

Carton

(18x1L)

Carton

(24x200ml)BULK

FLASH 4T 20W40

XPremium

GEO 20W40 SL

21667 2283 2791 2886 105

Speed 2T 20W50

XM

GEO 20W50 SL

21667 2283 2791 2886 105

33

5. Distribution Outlet

One of the firm’s objectives is to increase its sell and product

awareness of people, because of this Rainchem will make use of intensive

distribution as their strategy. 4T and 2T products will be distributed to

authorized merchant wholesalers and retailers who will be the main

channel to deliver the products directly to customers. Building partnership

to motorcycle manufacturers and distributors will benefit Rainchem in

many ways.

34

Figure 8

Rainchem Distribution Strategy

RenOilTM products are sold through its network of retail service

stations in Manila, Makati, Laguna, Batangas, Cavite and Quezon.

Lubricants and oils are delivered to the client's area of operations via vans

or tank trucks. For high-volume accounts, the company uses its truck for

delivery of drums and pails

The location of retail centers will be near motorcycle

manufacturers designed to select capable business partners for town in

NCR and Region IVA.

Contract carriers will remain a major part of the distribution

program, but changes are underway. Moving to a dedicated carrier

approach to be done in most of areas of region IVA and NCR where

Rainchem operates. Rainchem will select well-established tank truck

carriers with managers who have vision and a willingness to grow with

Rainchem through strategic partnerships. Rainchem is offering these

35

carriers five- to seven-year contracts. Carrier partners will also be

expected to run as branded RenOilTM trailers with the spec and dedicate

drivers and tractors to do the business. Partners will be expected to

achieve a base safety goal of less than one accident per million miles.

6. Sales Force

As part of its ongoing activities to develop Rainchem Brand awareness

and visibility, Rainchem Philippines must conduct a ‘Direct retailer contact

program’ all over the Philippines. Here, teams of Rainchem personnel visited

various lubricant outlets “en masse” in their respective areas to raise

awareness of the brand and promote the use of RenOilTM products. The

program received overwhelming response wherever it went. As a further

element of its regular activities, Rainchem Oil Philippines is also conducting a

similar program but this time aimed directly at the end-user. Commission will

be implemented upon reaching monthly quota of sales executives in peso.

Commission is 5 percent of their monthly quota of 100,000 pesos.

Part of the sales force strategy is to have a sales representative on the

target locations. Rainchem will be assigning one managing sales

representative on each city in Region IVA and NCR which most likely would

be on each major branch of motorcycle distributor or dealers. Materials such

as pamphlets and brochures will assist the sales team in their responsibility.

7. Advertising

36

Rainchem will sponsor a Moto-Cross for Motor-Cycle Drivers and

enthusiasts in every region, in alliance with the Motor-Cycle People. More

than 50 participants should take part in the event for tremendous public

response. More such events will be organized for the company to be active in

its Corporate Social Responsibilities and to develop awareness and promote

the brand.

Joining business convention meetings and trade shows would still be

part of the advertising strategies of Rainchem. These activities would create

new industrial partnership; create new potential target market and increase

sales and demand on our product. Poster stands, flyers and brochures are the

materials distributed and displayed during conventions and trade shows.

Sample of this is on the figure below.

37

38

Figure 9

RenOilTM 4”x8” back-to-back leaflet

Another trade show is Philconstruct trade exhibits that will be held this

November 2010 at SMX Exhibition and Convention Center, Pasay City. Since

other product lines sold by Rainchem will be displayed there, RenOilTM will

also have leaflets distributed there. Promotional campaigns and trade shows

offering gifts to their customers are methods of driving sales of automotive

lubricants.

Sponsorships on noontime shows with the two big networks in the

country, the ABS-CBN and GMA7 will be one of the strategies of RenOilTM..

This TV ad campaign will run for twelve months.

8. Sales Promotion

39

Gift certificates will be given to end users through a cap pa-

premyo. A poster showing the promo guidelines and period will be

distributed to gas stations, motor cycle dealers and accesory suppliers.

Sample of the promotion is shown below.

Figure 10

RenOilTM Cap Sales Promo

Through this promo, end-users will look for the RenOilTM product,

and retailers and wholesalers will continue to order RenOilTM. Aside from

this, calendar freebie will be given to distributors for customers who will

use RenOilTM 2T and 4T products.

9. Sales Contest

"Moto-paint". This event will be sponsored by Rainchem

International Inc. wherein the focus is to look for individual who has a

unique talent to set-up his motorcycle with his unique concept in a given

time period. Winner will get one year supply of either 2T or 4T RenOilTM

as prizes. The objective of this will basically to create wider brand

40

awareness, obtain new customers, secure larger orders of 2T and 4T 200

ml, get higher rates, sell special inventory, sell a higher percentage of

retail and lastly to improve customer satisfaction. Posters of this contest

will be distributed to retailers from motorcycle dealers and accessory

suppliers.

10. Research and Development

Research and development will be included in the strategy since to

attain customers’ best expectation is one of the visions of the company.

Customer survey questionnaire will be yearly distributed to measure and

evaluate the efficiency of each strategy. Also, sales representatives will do

census research on competitors’ market sales and clients’ current demand

since the sales force are usually in the field.

G. Action Program

Schedule of the implementation of product, promotion and other strategies

are shown in order on the table below. The strategy implementation will start

from trademark licensing of RenOil on June 2010. Together with this, packaging,

distribution and sales force will also start its implementation. Other promotional

activities will commence at the start of different fiscal years.

Action Plan Period

Agencies/

Department/

Individual Involved

Time Frame Budget

41

1. Trademark

Licensing

18 months Administration

Department

June 2010 to

December 2011

P 540,000

2. New Product

Packaging

3 months Marketing

Department

June 2010 to

August 2010

P 30,000

3. Carriers

Rental

Monthly Logistics

Department

June 2010

onwards

P 30,000

4. Retail outlet

construction

3 months Administration

Department

June 2011to

August 2011

P 2,160,000

5. Sales

Commission

Monthly Sales Executives Continuous P 65, 000

6. Brochures,

Leaflets and

Displays

Once a year Marketing

Department

September

every year

P 50,000

7. TV show

sponsorship

12 months Marketing

Department

Dec 2010 to

Dec 2011

P 500,000

8. Sales Promo 3 months Marketing

Department

January 2012 P 30,000

9. Sales Contest 3 months Marketing

Department

January 2013 P 25,000

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10. Research and

Development

Once a year Marketing

Department

December every

year

P 30,000

TOTAL P 3,460,000

Hence, total budget for the implementation of the strategies will be

P 3,460,000 to be budgeted for the operation and marketing of RenOilTM

starting the fiscal year 2010, 2011, 2012, and 2013.

Appendix 1

Name of Person Completing: ___________________________________________

Title: ______________________________________________________________

Tel. Nos.: _________________________ Email: ___________________________

1. How would you rate our performance as a supplier to your organization?

Order accuracy: ___Poor ___Fair ___Good ___Excellent * 

Order filled completely: ___Poor ___Fair ___Good ___Excellent * 

Timeliness of deliveries: ___Poor ___Fair ___Good ___Excellent * 

Helpfulness of delivery personnel: ___Poor ___Fair ___Good ___Excellent * 

Prompt pick-up of returns: ___Poor ___Fair ___Good ___Excellent  

43

Accurate billing: ___Poor ___Fair ___Good ___Excellent * 

Ease of understanding invoice & statements: ___Poor ___Fair ___Good ___Excellent * 

Prompt issuance of credits: ___Poor ___Fair ___Good ___Excellent  

Customer Service support: ___Poor ___Fair ___Good ___Excellent  

Ease of placing orders: ___Poor ___Fair ___Good ___Excellent * 

Phone responsiveness, courtesy & listening skills: ___Poor ___Fair ___Good ___Excellent * 

Helpfulness of Accounting Department: ___Poor ___Fair ___Good ___Excellent  

Communication: ___Poor ___Fair ___Good ___Excellent * 

Your overall satisfaction level: ___Poor ___Fair ___Good ___Excellent * 

Is Rainchem the only lubricant/ oil supply company with whom you deal? *  

In the past 6 months, how have you ordered from Rainchem?

   

Which method do you prefer and why?

________________________________________________________________________

 

2. Level that Account Representative or Sales Rep meets your expectations.

Is friendly, courteous, and professional: ___Poor ___Fair ___Good ___Excellent * 

Is knowledgeable about our products and services: ___Poor ___Fair ___Good ___Excellent * 

Is organized regarding my account: ___Poor ___Fair ___Good ___Excellent * 

___Yes ___No

___Phone ___Fax ___Acct Mgr ___Online ___In-Store

44

Provides clear answers to my questions regarding my account: ___Poor ___Fair ___Good ___Excellent * 

Calls on me enough to meet my needs ___Poor ___Fair ___Good ___Excellent * 

Shows genuine interest in providing solutions to my needs ___Poor ___Fair ___Good ___Excellent * 

Demonstrates "Your success is our focus" ___Poor ___Fair ___Good ___Excellent * 

 

3. To what extent are you aware of the following value-added services we provide

(1 - Did not know; 2 - Know, but haven't used; 3 - Use occasionally; 4 - Use all the time)

Custodial training __1 __2 __3 __4 * 

Website order entry __1 __2 __3 __4 * 

Free delivery __1 __2 __3 __4 * 

Service Department repair __1 __2 __3 __4 * 

Labor Cost Reduction __1 __2 __3 __4 * 

 4. What can we start doing to improve the value you receive from Rainchem?

 _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 5. What should we stop doing that is of no value?

 _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 6. Suggestions for a product, product feature or service that Rainchem should consider adding to better meet your needs?

45

 _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 7. Is there a person that needs special recognition for exceptional customer focus and satisfaction? If so, please provide a brief description what that person did.

 _______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________