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Volume :2 Issue : 8 1976      Add To Cart                                                                    Download

DIMENSIONS OF THE MARKETING PROBLEM IN THE ARAB PETROLEUM INDUSTRY

Auther : Dr. S.M.Afifi Saddik

 

The paper aims to study the marketing activities in the Arab petroleum industry drawing mainly on the evidence of a field survey of petroleum marketing policies and practices in a number of Arab countries.  It evaluates those policies and practices against the normative model of marketing strategy under the modern marketing concept, and presents appropriate recommendatios to strengthen the marketing function in the Arab petroleum industry.  The evaluation is carried out within the framework advanced by the modern marketing concept which identifies five major elements in the marketing mix, namely:  product, price, promotion, channels of distribution and physical distribution.

Despite some important areas of progress, the paper concludes, there are serious deficiencies in the policies and practices of marketing Arab Petroleum.  Pricing stands out as the area where most of the progress is achieved, especially after the Arab-Israeli war in 1973.  Prices are now at a reasonable level and the right to determine prices is now unquestionably established for the producing countries.

That success in the area of pricing is not, however, matched by similar advances in other areas of marketing, particularly with respect to product planning, promotion and channels of distribution.  Misconceptions about marketing are mainly responsible for underdevelopment of those functions.  A narrow concept of marketing still prevails coupled with a “production-oriented” philosophy governing major decisions in the industry.  The marketing task is viewed as the mere disposal of what is produced rather than the creation and satisfaction of market needs.  Consequently product planning is an almost totally neglected function.

The long-established structure of the international oil industry is partly responsible for the limited influence exercised by the Arab countries over the channels through which their oil is distributed.  But a more important reason for this lack of control is the prevailing “shipping-platform” attitude to channels of distribution, which leads to lack of concern with the product once it is loaded at the shipping point.

The role of promotion as a dynamic force in the marketing mix is hardly appreciated in the Arab petroleum industry, hence the failure of the Arab countries to influence the demand for petroleum.  Reaction to decline in demand is conflicted to the reduction of production.  Whether or not Arab countries seek to sell more of their petroleum, they have to develop the ability to create and maintain demand when they need to, and to regulate demand if needed.

Other weaknesses of a general nature were noted.  Among these were the shortage of trained marketing specialists, the instability or organization structures in the industry and the lack of adequate information systems to serve the needs of the marketing planner.

 

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