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Â Â Â Â Â Â Â Â Â Â Â The carriage of oil by sea dates back to the late 19th century, through the world's first effective oil tanker called Nobel's Zoroaster, which was built at Gothenburg, Sweden. The industry since then has witnessed landfall developments & about 100 years later, the biggest ever tanker was designed with the proficiency of carrying about 560,000 metric tons deadweight of crude oil. With the amplifying reliance of the modern world on crude oil, this industry has been regarded quite critical & dynamic in many ways. The crude price & supply is said to have the biggest possible impact on the economies of emerging markets like China, India, etc.
Â Â Â Â Â Â Â Â Â Â Â I have chosen Heidmar as the topic of my marketing assignment, which commercially markets oil tankers for about 25 years now to various customers. Marketing has been defined
as a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return (Kotler, Armstrong, Wong, & Saunders, 2008)
Â Â Â Â Traditionally, oil tankers were ordered by oil companies, traders or consumers of oil. However, over the years, numerous ship owners have evolved who specialize in the trade of running oil tankers. Heidmar as a company refers to such ship owners who join their pools, as pool partners and the user of these oil tankers are referred by Heidmar as customers since they are "current or potential buyer or user of the products of an individual or organization [Heidmar and its pool partners]â€¦ through purchasing or renting goods or services." They are also in effect the "entity that uses or experiences the services of another."
A customer may also be a viewer of the product or service that is being sold despite deciding not to buy them. The general distinction between a customer and a client is that a customer purchases products whereas a client purchases services.'
Freight market for oil tankers for past few years has been very promising & lucrative, which is enhanced the growth of this market, in many ways. International banks & private funds, perceive oil tanker trade as long term sustainable market as in the healthy financial markets, oil tanker investment provided the highest yield to investments.Â Heidmar focuses on services to small fleet size oil tanker ship owners or new entrants to the oil tanker market, enterprises seeking the benefit of spot employment market beneficial rates rather employ their units on time charter, to oil majors or cargo traders. Spot tanker market or voyage tanker charter is defined as "voyage charter consigns a vessel to a specified transport of commodities between ports or regions".
Heidmar is one of the world's leading commercial operators ofÂ product, Panamax, Aframax and Suezmax tankers with a staff of over 100 people with offices in the United States, the United Kingdom and Singapore. To be more specialized in this sector, Heidmar brands the various tankers into pools Heidmar pools include:
ï‚§Â Star Tankers Inc. (panamax) Â Â Â Â Â Â Â Â Â
ï‚§Â Dorado Tankers Pool Inc. (product) Â
ï‚§Â Sigma Tankers Inc. (aframax)
ï‚§Â Blue Fin Tankers Inc. (suezmax)
ï‚§Â Seawolf Tankers Inc. (VLCC)
This segmentation makes it less complex to compete & bench mark, with other competitors and also helps in Brand management, which has been defined as
the application of marketing techniques to a specific product, product line, or brand. It seeks to increase a product's perceived value to the customer and thereby increase brand franchise and brand equity. (Brand Management and Expanding Customer Bases)
The real value to pool partners is offering around-the-clock service to customers on a worldwide basis. Customer value has been defined as
a customer's perceived preference for and evaluation of those products attributes, attribute performances, and consequences arising from use thatÂ facilitate (or block) achieving the customer's goals and purposes in use situations. (Woodruff, 1997)
The main focus for Heidmar has always been and remains to provide safe, efficient transportation and high-quality service. Many major oil companies and oil traders cover part of their transportation requirements under contract with Heidmar controlled vessels.
Since pools involve large scale marketing of ships, this makes Heidmar highly visible in the eyes of customers such as oil majors, oil traders, refineries, etc. The pool partners get the benefit of relationship marketing, which is defined as.
A form of marketing developed from direct response marketing campaigns, which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions. As a practice, Relationship Marketing differs from other forms of marketing in that it recognizes the long term value of customer relationships and extends communication beyond intrusive advertising and sales promotional messages. (Berry, 1983)
Â The major stake holders of Heidmar are one the world's prevalent oil commodity traders named "MorganStanleyInc." & one of the principal shipping companies of Greece, called "dry ships". Morgan Stanley use Heidmar pool ships on a consistent basis for commodity transactions basis C.I.F., Therefore, pool partners perceive this as a value enhancement. With dry ships as the other big stake holder of Heidmar, this brings in a fleet of very state-of-the-art ultra modern vessels to the pool, hence drastically reducing the age of the pool & making them a part of the elite contemporary along with being a diversified entity, in the oil tanker market. Value enhancement is defined as.
Human resource is the biggest asset of Heidmar & diversity in this area, helps it to stay on top. Since the oil tanker market is a much smaller market, hence customer relationships are the key value. Key value is defined as.
Language familiarity is a vital foundation for customer relationships. Hence, the fact that 17 nationalities work across the worldwide offices of Heidmar is what really lures pool partners to be participants in Heidmar pools.
One of the most experienced operative teams with a combined field knowledge amounting to 150 years is what gives commercial operational excellence. Operational Excellence is defined as.
"Providing customers with reliable products or services at competitive prices and delivered with minimal difficulty or inconvenience". Additionally this helps a centralized operation team provide Customer intimacy, which is Segmenting and targeting markets precisely and then tailoring offerings to match exactly the demands of those niches. Companies combine detailed customer knowledge with operational flexibility - can respond quickly to almost any need and creates customer loyalty. (Treacy & Wiersema, 1993)
Dealing on a large scale with customers due to a big oil tanker fleet size helps strategic relationships & networks. This is the biggest selling point for any of the Heidmar pools.
Small fleet pool partners are unable to capture on spiking in oil tanker freight levels. This is catered well by a large outfit such as Heidmar, hence taking benefits out of an unforeseen event, e.g. Chilean earth quake tripled the demand of gas oil, and in conclusion, gas oil carriers commanded a premium for shipping to Chile. Market spiking is defined as "
A pool partner with a small fleet size is not in a position to evaluate a global marketing strategy which for him an outfit like Heidmar is enabled to do. This strategy could pertain to ice trading for the Baltic sea or may be stock piling of oil inventories for Japanese winter months, etc. market positioning.
The main overhead for oil tankers day to day running is fuel for vessels. Heidmar has a special fuel trading cell Port costs, tuggage, agency handling.
Heidmar pools present "value proposition" is I.T. development & managements. The investment in this area is far higher compared to other competitors. The technology employed by the company provides the best transparency to all pool partners, as well as customers. Heidmar is the creator of Q88, the biggest oil tanker database with all the technical information on a single site, updated by ship owners & viewed by various customers or service providers to the oil tanker industry. Financial returns can be monitored real time &worldwide tracking of the fleet is available on a touch of a mouse, by the unique work site of Heidmar called the efleetwatch. Value proposition
describes the unique offering (companies) make to the customer, with all its hard and soft dimensions, and how (it) will differentiate itself from the rest in its target market segments (Piercy 2009 p 336)
Customer relationship management for other pool operators may not be a priority. However, Heidmar is a systematic database since inception, which is over 25 years old now. Transparency & understanding of the market, is what Heidmar pools unique. Other peers of Heidmar are mostly reporting financial returns on a quarterly basis, hence generating a disconnect for the pool partner. Â Â Â Â Â
Strategic pricing, i.e. management fees, address commissions & pool partners working capital. Conventional value proposition.
Outperform publicly listed peers Positioning of the vessels, capturing spikes. Market capitalization
Heidmar has created a unique wing unlike peers, named the Freight & research assessment group, who are constantly analysing trading patterns, using statistical analysis to predict market curves, futurology, market mapping, New build inventory.
Worldwide trading exposure -
Heidmar constantly deploys the product-customer matrix, which helps it capture Seasonal markets or
Diversified fleet type - contango.
Contango is a term used in the futures market to describe an upward sloping forward curve (as in the normal yield curve). Such a forward curve is said to be "in contango" (or sometimes "contangoed").Formally, it is the situation where, and the amount by which, the price of a commodity for future delivery is higher than the spot price, or a far future delivery price higher than a nearer future delivery. This is a normal situation for equity markets. (Morrissey, January 2009)
The opposite market condition to contango is known as backwardation (Fekete, 2008)
-Â Â Â Â Â Â Â dividing market into groups of buyers who make coherent targets, e.g., by demographics for consumers to industry type for companies
-Â Â Â Â Â Â Â aims to develop consistent marketing programmes for segments with potentially different approaches for each
Diversified fleet type hence helps Heidmar to create new market space
I.T. Company -
Triangulation - round trip & backhaul
Bunker contracts - inventorisation
Derivate bunker trading - Daily Profit & Loss from Fuel Oil Derivatives Activity
Customer base -
Forex trading Â
Â Peripheral business although spot market remains the core business. core business - targets with a good fit and where we can do well. peripheral business - market is less attractive to us but we will take a strong position
Prahalad and Hamel: successful companies understand, exploit, invest to create and sustain their core competences
Â Â Â
Derivate freight futures, cannibalization.Doing new things in an old set up.
The pools due to large fleet sizes & volume of cargoes being handled, get the benefit of transactional marketing thru ship brokers, cargo traders, etc. Transational marketing is defined as
Specialized account teams -
Miscellaneous claims -
Hence, leaders must move from red oceans of bloody competition to blue oceans of profitable growth value innovation & profitable growth - traditionally all the big commercial tanker ppols seems to be evoluting& existing from united states. Our primary competitor identified this bue ocean strategy & head quarteted themselves in the niche market of far east. First mover advantage. The first step they took was to set themselves well in the gaeteway to the far east market i.e. Singapore. (Kim & Mauborgne, January-February 1997)
Hedimar capital inflow
Not listed on stock exchange
Us sanctions, corporate social resposnibilty
Management based out of U.S.A.
Lack of contracts in the far east due to western origin of he company
Fleet composition of competitors
Hedging of main costs -
Risk management -
Media nedgative -
Poaching of hr -