Business Development Case Study: Castrol's Competitive Landscape

This case study analyzes Castrol's business strategies, focusing on the importance of Research and Development (R&D) in gaining a competitive advantage within the lubricants market. It explores how Castrol's investment in R&D enables innovation, product development, and responsiveness to changing customer demands and technological advancements, especially in the context of the automotive industry. The study also delves into the policy guidelines for maintaining and improving Castrol's market position in a competitive landscape, including customer demand, innovation, employee satisfaction, public relations, and promotional activities. Furthermore, the case study compares and contrasts product-oriented and market-oriented approaches, offering strategic advice for Castrol to implement a continuous marketing research program to stay ahead in the industry. The analysis covers Castrol's positioning, competitive dynamics, and strategic recommendations for sustained success.

CASE
STUDY

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Questions..........................................................................................................................................3
1. Importance of R&D and how it has enabled Castrol to gain competitive advantage..............3
2. Policy guidelines for retaining or improving the position in a very competitive place...........5
3. Product oriented approach versus market orientated approach ..............................................8
4. Advice to the Castrol for a continuous marketing research program....................................14
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
INDEX OF TABLES
Table 1: Merits and Demerits of Product Oriented and Market Oriented Approach.......................8
ILLUSTRATION INDEX
Illustration 1: Positioning Map of Castrol.......................................................................................6
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INTRODUCTION
Castrol oil is a member of BP Group and its sells the lubricating oil which plays a vital
role in our every day's life because it is used as a crucial component of every internal combustion
engine. Castrol supplies oils, transmission fluids, antifreeze, coolants, greases and brake fluids in
order to meet out the needs of all the customers around world (CASTROL TOP PRODUCTS,
2015). This report is mainly focused on the case study of Castrol and discussion about the
research and development of Castrol in order to bring innovations in their product and to gain
competitive advantage. Moreover, this report covers the policy guidelines which may improve
the position of a company. Further, debate has been made on the the product oriented and market
oriented approaches and also advice have been given to the company.
QUESTIONS
1. Importance of R&D and how it has enabled Castrol to gain competitive advantage
Research and Development basically referred as R&D is a separate functional department
in a company which is directed towards the introduction, innovation and improvements of
products and processes (Dash, 2015). R&D processes differs from company to company because
in every organization, there is different types of innovations. It is basically term as an activities
which is linked with corporate innovations. Generally, R&D is done to bring innovations and
introduction of new products and services. R&D is very important aspect of every organization
mainly, for the manufacturing units because they require every new process to bring innovation
and to produce as per the requirements of customer's need. This aspect is very useful for the
organization as it enhances the knowledge about the new market trends and changing needs of
the customers. Moreover, the company can also gain the competitive advantage because with the
help of R&D, innovations are done and customer's needs are fulfilled which leads to gain of
competitive advantage.
This case study is aimed towards the R&D of Castrol oil where the enterprise spent
heavily on the research and development in order to bring innovation and meet out the changing
demand of the customers (Browning, Thompson and Dawson, 2014). R&D in Castrol is very
important because Castrol operates in a changing environment and most important aspect of
change is that customers become more demanding and to meet out the demand of the buyers,
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company has to do intense research and after that has to develop the new product which satisfy
their needs. According to marketing planning, firm has to identify the needs of the customers
before manufacturing, thus identification of needs involves doing research of the whole market
so that latest trends and needs can be known and company can produce the goods as per the
desire of customers. Castrol invest heavily in R&D because its customers are both business
organization and individual buyers. Company researches and find out the information from
Original Equipment Manufacturers and motor vehicle users after that produce and supply the
best quality high technology oils in order to meet out the needs of modern engines (Evans,
Brailsford and Macauley, 2011).
Castrol is a manufacturing unit and it is highly important for the manufacturing firm to
invest in R&D because it will yield good result which will be beneficial for the company itself. It
is important to invest because it will help the firm in following manner: Gains Competitive Advantage: As Castrol is a global company and for this purpose,
company has to do constant R&D investment because it will increase the chances of
succeeding in global market. It s because, every customers in different countries have
different demands and needs for which company can find out the difference in demand by
doing R&D (Laws and et. al., 2013). This will eventually aid the company to reach
competitive edge. Growth in Sales: Undeniably it can be said that more the investment in R&D leads to
more growth in sales. Castrol investment in R&D will leads to increase the sales of their
products because through this, new processes can be known and with this respect,
products will be produced which is a satisfactory source for the customers. If it satisfies
the needs of customers than eventually sells will get increase. Innovations: R&D refers to as the important factor which helps in economic growth and
balance. Through this new ideas get emerged and it work as a tool for an entire period of
new products which transform the economic system. R&D brings innovation in the
Castrol and it easily leads to highly valued technologies, strategies and design for this
organization which helps in the origination of potential value while considering the gain
of competitive advantage (Anderson, 2012).
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It has been made clear that it is important to invest more in R&D so that company can
bring innovations and meet the changing demands of customers in this dynamic environment.
R&D enables the company to gain competitive advantage which can be described by considering
following facts:
 Castrol designs its product in order to complement high quality engines and company
works closely with Original Equipment Manufacturers that is BMW, Audi, Jaguar, etc. so
as to develop high quality lubricants which meets the requirements of modern engines.
For this purpose, research is done so that information from both OEMs and motor vehicle
users. Through this research company supplies best quality high tech oils.
 As the new engines are continually developed by the engine manufacturers as per the new
specifications and requirements so Castrol do the in depth research for this purpose and it
helps the firm to provide the products as per the suitability of new engines (Wingate,
2014).
 Moreover, government introduces new regulations that is in UK and Europe, engines
should be cleaner and help to create a cleaner environment. Company researches about
the method and material which have led to the production of Eco-friendly lubricants.
 Consumer demands more sophisticated motoring products and luxurious vehicles so in
order to complement this purchase they require best quality oils thus, Castrol meet out
their expectations and due to which customers are more attracted towards this brand
(Dash, 2015).
In the light of these aspects it can inferred that R&D has enabled the Castrol to gain
competitive advantage as it depicts that company are providing the products which meet out the
demand of consumers, business organization and government as well. Thus, there is a gain of
competitive advantage as it is fulfilling the expectation of all of them which have been achieved
by doing research and development. As it is known that without R&D company cannot attain the
competitive edge (Laws and et. al., 2013).
2. Policy guidelines for retaining or improving the position in a very competitive place
The position of company refers to as the point where company stands. It is measured
against the competitor’s positions in terms of financial strength, assets, goodwill, product it
provides, innovations, etc. Presently, the market is highly competitive and every day the
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demands of the customers are changing which imposes a greater challenge on the company
because organization has to bring innovative products and satisfy the needs of the customers
(McKechnie, Grant and Katsioloudes, 2008).
Castrol also operates in a competitive market and provides customers with premium
quality lubricants. Today, Castrol has a synonyms of premium quality, high performance and
leading edge technology in lubrication. The position of Castrol is shown in the positioning map
which are depicted as follows:
(Source: Responding to a changing marketing environment, 2015)
From the above map it can be inferred that position of Castrol is excellent in present
market but due to the dynamic nature of the environment, position can get fluctuated, thus
company should follow several guidelines in order to retain or improve its position in this highly
competitive market. Some of the policy guidelines are discussed below: Meeting Customer's Demand: Company should meet the demands of customers by
providing the products as per their requirements. Moreover, firm should do research and
development in a market so that changing needs of the customers can be known and
according to the need, products should be manufactured (Katchamart, 2013). If the
company will provide the products as per the changing needs than their will be more
sales of a product because these are satisfying the needs of the customers and thus,
company will remain on the top position. Segmentation has been done on two basis and
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Illustration 1: Positioning Map of Castrol

customer's demand in both the segments are different, so company should assess their
demand and then produce the product which best suits their needs. Bringing Innovation: Company has introduced many new products in the market which
are technology driven such as GTX Magnatec uses ‘Unique Molecular Attraction’
(UMA) technology and GTD Magnatec. These products are innovated by the company so
that best support can be provided to the engines of luxurious cars which will match with
the needs of the customers (Arora, 2006). Similarly, company should bring innovations in
the market on a regular basis so that less combustion can happen and cope up with the
changes happening in the market. This will enable the company to improve its position in
the market and become market leader. Satisfying Employees: Castrol should motivate their employees on regular interval so
that their work performance can be improved. If the employees are motivated than they
will retain in the business for longer period of time which will aid to gain competitive
advantage for the firm. In order to satisfy the employees, company should motivate the
employees through monetary as well as non-monetary incentives such as bonuses,
recognition, rewards, training and development, etc. If the employees are satisfied and
highly motivated than Castrol will have highly efficient employees which will help in
gaining competitive edge. The motivated employees will perform efficient businesses and
thus productivity will get enhanced. If the firm is highly productive and their employees
serve the customers in a better manner than the position of the company can be retained
in a highly competitive market (Ulph, 2011). Public Relations: Company should maintain the relations with the customers that is both
organizational buyers and individual buyers. By closely working with OEMs Company
can maintain the relations with the vehicle manufacturers so that new designs and
specifications of the engine can be known so that Castrol could produce the lubricant as
per the suitability of engines. Through this, customer demand can be met out. Relations
with the individual customers can be maintained by using range of methods such as
regularly taking feedbacks from them, through mails, etc. This will lead to the
improvements and retention of the existing position of Castrol in the market.
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 Promotions: More the promotions, more will be the sales of a product. Thus, Castrol
should promote its products heavily (Aaker and McLoughlin, 2010). It can promote in the
events such as car races F1, sponsor the car racing events, conference can be organized in
order to promote the new products and also the outhouse promotions that is advertising
using hoardings and advertising can be done. If the promotion is done in an attractive
manner than customers will be more attracted and this will retain the positions of a
company in a dynamic environment. Research and Development: Enterprise has to invest lot of money in doing research and
development for introducing new products which satisfy the changing demand of the
customers (Arora, 2006). If regular research is done than company can come up with the
innovative products and procedures to produce that product which will help in reduction
of cost of production and through this firm can supply the product at relatively cheaper
prices than other competitors. This will help in more sales of the oils which will
eventually build the brand image in the minds of consumers and also company can retain
its position at the top in an industry.
 Comparison with the Competitors: The strategy of the other competitors should be
assessed so that company can make the strategies against the competitors. For this
purpose, company has to make good relations with the competitors and fair game should
be played so that unfair practices can be avoided. Moreover, company should compare its
every factor with that of competitors so that loopholes can be identified and company
should work upon it in order to gain the competitive edge in the market (Katchamart,
2013). If Castrol improves its productivity and other aspects by comparing with the
competitors than it can improve its position in the market which is changing every now
and then and the best positions can be retained as well.
3. Product oriented approach versus market orientated approach
Table 1: Merits and Demerits of Product Oriented and Market Oriented Approach
Meaning Merit Demerit
Product Oriented
Approach
This type of
orientation refers to as
 If the firm
adopts product
 It is not
necessary that
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the company's focus is
solely on the product
which an organization
intends to sell (Chang
and Ahn, 2005). The
marketing activities
are emphasized on the
products features, its
quality and
standardization.
However, firm
assumes that if the
product is of high
standard than
consumers will buy
and consume the
product.
oriented
approach than
quality of the
product can be
obtained.
Further, it
allows the
company to
focus on the
quality of its
product and in
this approach
quality will be
not be
undermined.
 Main
emphasize of
the marketer is
on the features
of the product
and thus, for
this purpose,
company will
do heavy
investment on
the
technological
advancement
in order to
make the
customer will
always buy
what is
available in the
market for sale.
They
sometimes
want the
products as per
their
requirements.
Firm which is
solely adopt
this approach
may miss
several
opportunities to
build their
brand as per
the customer
needs. Through
this, brand
image get lost
in the minds of
consumers.
 In this
changing and
dynamic
environment,
this approach
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product of
utmost level.
 Third merit is
that if they
adopt this
approach than
economies of
scale can be
developed in
an easier
manner. This
will help in
reducing the
cost of the
production and
this will lead to
the reduction
of per unit
price. This will
eventually
decreases the
price of the
product and
customers may
get the product
of highest
quality at lower
price.
has become
obsolete.
Organization
which are
following this
concept cannot
survive in this
environment
(Lings, N. I.
and Greenley,
2010).
 This kind of
approach is of
short term and
customer's
loyalty cannot
be raised by
adopting such
approach. This
kind of
approach
requires intense
research and
product testing
which may
involve heavy
expenditure
and lot of time.
Market Oriented It is a business  This approach  Deep research
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Approach approach in which
marketers focuses on
identifying and
meeting the specified
or hidden needs and
requirements of a
customer. In this,
company focused
solely on the
customer's needs and
then make the product
as per their
requirements. The
company makes the
product which is of
highest quality and
fulfill the expectations
of the customers (Urde
and Koch, 2014).
is a customer
centric
approach.
Company
produces and
sells the
product which
satisfy the need
of the
customers.
Further, the
business is
wholly built on
the basis of
addressing the
needs of the
people whom it
is serving.
 Market
oriented
approach leads
the business to
gain
competitive
advantage. It is
because
making the
customers at
top priority
will help the
is involved in
such case
which requires
high amount of
money and
time which
may reduce the
profitability of
the company.
 Due to
changing
demands of the
customers,
company has to
bring changes
in the product
as per the
needs which
becomes a very
complex
process.
 This approach
lacks the
predictability
and there is
less product
differentiation
because all the
companies are
providing the
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business to
succeed in the
industry and
become a
market leader.
 To build a
product as per
the needs of
buyers does not
only help to
develop
products which
suits but also
help to
promote in a
better manner
which persuade
the customers
to buy those
products.
 This type of
approach will
help the
company to
focus on the
customers
along with that
focus on the
features,
quality and
products as per
the need which
involves less
differentiation
in the products.
 Such type of
approach
involves
intense
competition
among the
brands and
rivalry level
also get rise
which reduces
the harmony of
the industry
(Aaker and
McLoughlin,
2010).
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