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All You Need to Know About Oil Marketing Companies

Just like any other industry in the world, the petroleum industry also needs marketing strategies. The petroleum industry has to employ marketing tactics in order to bridge the gap between the industry and the consumers. Marketing strategies help oil companies relay their corporate communications to the masses, ensuring that the real message doesn’t get lost in the process.

The petroleum industry is one of the biggest industries in the world. With operations running in the whole wide world, the petroleum industry needs marketing to get its products and services to the far corners of the world. In fact, the role of marketing in the oil and gas sector is so huge that there are companies geared towards meeting the marketing objectives of oil companies. These companies are known as Oil Marketing Companies (OMCs).

It’s not just that OMCs are responsible for managing the distribution of oil in different parts of the world. These companies also take care of running promotional campaigns and CSR activities. Spectra Oil is one example of a successful oil marketing company that supplies lubricants to different African countries. Log on to spectraoil.com and learn how it manages its operations.  

This article will briefly shed light on all the important functions of Oil Marketing Companies (OMCs).

The Basic Function of OMCs

Oil marketing companies buy oil from the upstream oil exploration and production companies before refining and marketing it. Mostly, the purchase prices of these companies are based on the international price of crude oil. That’s the reason why lower prices are more favourable for oil marketing companies.

The Revenues of OMCs

The revenues of oil marketing companies always improve when there’s a decline in oil prices. The decline in oil prices causes the prices of crude oil to fall and improves the refining margins. For those who don’t know, refining margin is the difference between the crude oil price and the price of oil produced by refineries. A decline in oil prices also tends to improve the marketing margins of OMCs.

The Role of OMCs in Pricing

As it turns out, oil marketing companies have no say when in it comes to setting oil prices. They are not allowed to set their own selling prices. However, they are obliged to sell various products, like petrol, lubricants, and diesel at discounted rates.

The Impact of OMCs on the Market Size

OMCs cannot expand the market size, considering that oil marketing companies operate within the restricted marketing zone, i.e., they cannot set their own selling prices. The market size expands on its own as the population increases. Their marketing margin is also determined by the government.

Oil marketing companies are considered successful when it comes to creating brand awareness and increasing sales. In order to meet the sales target, OMCs run a number of sales promotional schemes, like loyalty programs, discounts, and advertising campaigns. OMCs perform these activities to overpower their competitors in the market and to capture a larger market share.