Technical heads talk up the importance of the formulas of a lubricant companys products, and operations directors on plant capacities and output. But sales and marketing executives will argue that success sometimes depends on things like product giveaways and prizes for distributors.
A case in point is Chevron Lankas recently released annual report for 2015, which says such promotions seemed to have helped it grab a bigger share of a stagnating market.
Selective trade promotions run across different product categories, specifically targeted at outlets where Chevron product penetration was relatively low, enabled us to gain significant volumes from competition during the year.
The past year was profitable for many lubricant companies as falling base oil prices allowed margins to swell. But Chevron Lanka said it was also able to increase its sales volumes, even though it expects government statistics – not yet released – will show that the overall market was lackluster in 2015.
Management said it saw particularly strong sales growth in its indirect business-to-consumer sales channel, which along with increased exports more than offset a significant decline in direct business-to-business sales. The company said several promotions deserved much of the credit for the performance of the B2C channel.
First, it cited a campaign that gave consumers one free liter of engine oil with every 4-liter canister of gasoline engine oil or 5-liter container of diesel oil purchased. The annual report called the offer extremely popular. Another fruitful initiative offered prizes as incentives to distributors and sales staff for meeting volume targets.
A concerted distribution effort to push sales of its Havoline Eco 0W-20 engine oil – which is targeted for use in hybrid and newer, more energy-efficient vehicles – resulted in extremely strong sales growth for this product.
Management said increases in volumes sold through service stations were possibly as a result of a nationwide technical training campaign for operators. Previously, it said, Chevron product penetration had been relatively low in these outlets.
The company did cite factors other than marketing for contributing to its gains: installation of a data management system that allowed it to expand its sales network into more rural areas in the north and capitalize on a growing agricultural sector there; a program in which the government gave a large number of motorcycles to public sector employees, increasing the motorcycle population and demand for motorcycle oils; strategies that allowed it to increase exports to Bangladesh and the Maldives.
Chevron Lankas sales of industrial lubricants declined because several developments shifted the companys power supply base from thermal generation, which has been a large source of sales for the company; completion of some major construction projects and delays for others; a slowdown in rubber processing, which has been another large source of sales for the company.