Running Head: Marketing Strategy Development: BHP Billiton

Marketing Strategy Development: BHP Billiton

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 Running Head: Marketing Strategy Development: BHP Billiton

Table of Contents

Issue 1 ................................................................................................................................................. 3
Introduction: ........................................................................................................................................ 3
Mission Statement:............................................................................................................................... 3
Vision Statement:................................................................................................................................. 3
Objectives of BHP Billiton: .................................................................................................................. 3
Current operations:............................................................................................................................... 4
Issue 2 ................................................................................................................................................. 5
Analysis of 5Cs of the organization: ...................................................................................................... 5
Issue 3 ................................................................................................................................................. 8
Market Analysis of BHP Billiton: ......................................................................................................... 8
Issue 4 ............................................................................................................................................... 11
Developing marketing strategy of BHP Billiton: .................................................................................. 11
Issue 5 ............................................................................................................................................... 14
Developing Marketing Mix (4 P’s): ..................................................................................................... 14
Conclusion: ....................................................................................................................................... 16
Reference: ..................................................................................................................................... 17

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Running Head: Marketing Strategy Development: BHP Billiton

Issue 1

Introduction:

BHP Billiton (Broken Hill Proprietary) is one of the huge companies in Australia. It is an

Anglo-Australian multinational mining, metals and petroleum company through the

worldwide. This company was formed in 2001 in Melbourne, Australia. The company is

rolling out a $10m advertising campaign that includes television ads and a new slogan,

“Think Big”. BHP operates a wide variety of mining, processing and oil and gas production

operations in over 25 countries, employing approximately 41,000 people.

Mission Statement:

BHP Billiton is to be the company of choice by creating sustainable value for the

shareholders, employees, contractors, suppliers, customers, business partners and host

communities.

Vision Statement:

BHP Billiton fights to create long-term value through the discovery, development and

conversion of natural resources, and the provision of innovative customer and market-focused

solutions. BHP Billiton is committed to long-term orientated operations that reflect

diversification across markets and geographic regions.

Objectives of BHP Billiton:

 To have a working team engaged, motivated, innovative, passionate for “Zero Harm”

and classified with the Charter of BHP Billiton.

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Running Head: Marketing Strategy Development: BHP Billiton

 To produce high quality copper cathodes for the world market, generating high

profitability for our shareholders.

 To have production processes those are efficient, reliable and predictable.

 To contribute to the sustainable development of our Community.

Current operations:

BHP conducts a broad range of mining, processing and oil and gas production operations in

over 25 countries, employing approximately 41,000 people.

Figure1. Current business of BHP Billiton

(Source: Jeremy L. Gordon, 2012, pp 100)

The company has five main operational entities:

 Coal

 Copper

 Iron ore

 Petroleum

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Running Head: Marketing Strategy Development: BHP Billiton

 Potash

In addition of the above mentioned business BHP Billiton has secondary logistics companies-

BHP Transport and Logistics Pty Ltd and BHPB Freight Pty Ltd.

Issue 2

Analysis of 5Cs of the organization:

Company: BHP Billiton is an outstanding natural resources company. Strength of the

company is that it is one of the greatest suppliers of uranium, copper, silver, lead and

aluminum. It also produces iron ore, metallurgical coal and manganese. The Energy Coal

section of the company serves thermal coal for use in the electric power generation industry

and general industrial concerns. Therefore the revenue of the company is huge over the fiscal

year. This helps the company to retain strong rating that assists to increasing the capital in

global market. BHP Billiton is impotent due to its communication procedures.

Figure2. SWOT of BHP Billiton

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Running Head: Marketing Strategy Development: BHP Billiton

(Source: Ian Chaston, 2017, pp 458)

The employees are not energetic in responding to corporate investigation with the using of

new media or making effective group communication with the investors and stakeholders.

The company could work on enhancing its brand environment by creating new and innovative

marketing solution. Carluccio (2014) described that there are opportunities to accomplish its

aim by using energy commodities into the supply chain and operations of transportation

companies. BHP Billiton faces lots of threats from its home country. The suppliers are rising

the cost of shipping, energy and contract labors. This company is also facing political threats

regarding the infrastructure access.

Customers: BHP Billiton is the largest industry all over the world. This company

understands the need of the customers and connected with the right product (Spider book,

2015). It is working with the assets to maximize the value, progressing freight and

distribution costs. This gives the assets to focus on safety, production and cost, thereat the

sales and earnings of the company would be increased in a global market.

Collaborators: There are so many suppliers, distributors and partners who are working with

the BHP Billiton. ABB, Bechtel, Linde, Adaro Energy, Copano, EBR Energy, Polar Star

Mining etc are some of the collaborators of this company. These are the outside source or

third party help that could help the company to extend the business in the home country as

well as in a global market. Businesses must be able to identify whether the collaborator has

the capabilities needed to help run the business as well as an analysis on the level of

commitment needed for a collaborator-business relationship (Write Term Papers, 2012)

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Running Head: Marketing Strategy Development: BHP Billiton

Competitors: PotashCorp, Freshnillo, ArcelorMittal, Macarthur Coal are the huge

competitors that could challenge to the BHP Billiton. This analysis takes into consideration

the competitor’s position within the industry and the potential threat. BHP Billiton is facing

many problems by its competitors. These competitors provide the same services or products

to the same customer base are useful in gaining knowledge of direct competitors (Healey and

Gomez, 2013).

Context: The political environment under which BHP Billiton operates is more or less in its

favor. It has huge support from Government of Western Australia. Under the economical

factor the price of nickel has a huge impact on the overall profitability of the company.

Capital is easily available and at a cost which is lower than the prevailing rates in the market.

This helps the company to improve its bottom line. The other economical factor is that of the

existing business of mine and others have been proved quite profitable. Gordon (2012) stated

that it is very important for this company to get support from its local area. BHP Billiton has a

good rapport with the local people and the local government.

Figure3. Factors affecting BHP Billiton

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Running Head: Marketing Strategy Development: BHP Billiton

Figure (Source: Cristian Carluccio, 2014, pp 650)

The company has helped a lot in the development of the surrounding areas. Therefore it

would help the company to improve its brand image and reputation. BHP Billiton uses the

modern technology to enhance the business in the market. This gives major competitive edge

to the company. Under the factor of legal the company has always combined with the laws of

the country. Therefore the local as well as government supports the company. The

environment of Australia is quite sensitive for this company to carry its operation smoothly.

The employees are not too high; henceforth it improves the efficiency of the whole work.

Thus it helped to flow its business (Annual Report, 2016).

Issue 3

Market Analysis of BHP Billiton:

BHP Billiton is a famous varied resources company and one of the world’s largest major

commodity producers. BHP Billiton operates 100 locations in 25 countries. A combination

between BHP and Billiton created the company in June 2001.

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Running Head: Marketing Strategy Development: BHP Billiton

Figure4. Revenue mix of BHP Billiton

(Source: Annual report, 2016, pp 20)

The company spotlights on low-cost, long-life assets. In keeping with this target the company

decided to roll its other assets into a separate company. The assets that did not fall into the

low-cost and long-life categories were not at the center of BHP’s approach. Most of the

demerged assets were small compared to the “core” ones-iron ore, coal, copper, petroleum,

and potash and contributed only 3% of the overall EBITDA (earnings before interest, tax,

depreciation, and amortization (Annual report, 2016).

BHP Billiton is the second capital markets in Sydney on November 24, 2014. The fact which

focused on coal and copper, provided details on BHP’s productivity and capital expenditure

plans. The company has raised its productivity target by $500 million to $4 billion (bhp.com,

2014). This organization predicts to reach this aim by the end of fiscal 2017. The strategy

includes a $2.6-billion reduction in cash costs per annum. According to BHP Billiton

simplified portfolio to improve performance across businesses.

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Running Head: Marketing Strategy Development: BHP Billiton

Figure5. Substantial reduction in Capital Expenditure

(Source: Annual report, 2016, pp 20)

BHP Billiton has minimized its capital expenditure to $14.2 billion from $14.8 billion for

fiscal year 2015. This company reduces expend, internal competition for capital and project

quality continue to rise. This would help the company achieve the same growth at a lower

spend. If the poor commodities cost are reduced by the company, then it would go forward.

This company understands the need of the customers and connected with the right product. It

is working with the assets to maximize the value, progressing freight and distribution costs.

There are the huge competitors that could challenge to the BHP Billiton. This analysis takes

into consideration the competitor’s position within the industry and the potential threat. This

company has huge support from Government of Western Australia. Capital is easily available

and at a cost which is lower than the prevailing rates in the market. This helps the company to

improve its bottom line. BHP Billiton has a good rapport with the local people and the local

government. The company has helped a lot in the development of the surrounding areas.

Therefore it would help the company to improve its brand image and reputation. The

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Running Head: Marketing Strategy Development: BHP Billiton

environment of Australia is quite sensitive for this company to carry its operation smoothly.

The employees are not too high; henceforth it improves the efficiency of the whole work.

Thus it helped to flow its business.

Issue 4

Developing marketing strategy of BHP Billiton:

The strategy is to operate large, long-life, low-cost, expandable, severe assets varied by

commodity, geography and market. The position in the resources industry is due to persistent

strategy. In line with the strategy, the growth opportunities consistent with the core skills of:

 Evaluating, developing and scrutinizing resources in the businesses.

 distributing and selling the products, and managing financial risk associated with the

revenue through marketing;

 defining and governing world-class functional standards, which are implemented

Group-wide through the Group Functions.

The company operates in a dynamic, globally competitive environment. The strategy has

delivered strong company performance over time which, in turn, underpins the creation of

long-term sustainable value for the shareholders, customers, employees and the communities

in which it operates. The aim is to deliver long-term sustainable value rather than focusing on

short-term returns. Most successful organizations today practice the marketing concept – that

is, marketers first identify customer needs and then provide products that satisfy those needs,

ensuring firms long term profitability (Cheng, 2012).

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Running Head: Marketing Strategy Development: BHP Billiton

Needs, Wants, and Demands: The most basic concept of this strategy is the customer needs,

human needs are nothing but state of felt deprivation, this include physical, social and

individual needs (Cavusgil et. al, 2011). BHP Billiton understands the need of the customers.

It targets the customer to whom the products and services are sold. Customer driven market is

choosing carefully the targeted segment that would make the company profitable and building

a good relationship with it. The company needs to identify the customer that they want to

serve profitably by dividing the consumer in segments then select the suitable segments.

Market Offerings: Market offerings fulfilled the consumer needs and wants. The

combination of products, services, information, or experiences offered to a market to satisfy a

need or a want of the customer. Market offerings are not limited to physical products. These

also include services – activities or benefits offered for sale that are basically elusive.

Value and Satisfaction: Consumers usually face a broad layout of products and services that

might satisfy a given need. It is difficult to choose the product by the customer among these

many market offering. Customers form expectations about the value and satisfaction that

various market offerings will deliver and buy accordingly. Satisfied customers buy again and

tell others about their good experiences. Dissatisfied customers often switch to competitors

and despise the product to others. Marketers must be careful to set the right level of

expectations. In this regard Ireland et. al.(2012) defines that the customer value and customer

satisfaction are the key for developing and managing customer relationships.

Exchanges and Relationship: Exchange is the act of obtaining a desired object from

someone by offering something in return. In the broad sense, the marketer tries to bring about

a response to some market offering. Mansouri (2010) stated that marketing consists of actions

taken to build and maintain desirable exchange relationships with target audiences involving

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Running Head: Marketing Strategy Development: BHP Billiton

a product, service, idea, or other object. Marketers always try to attract new customers and

companies want to retain customer to grow the business. Marketers want to build strong

relationships by steadily delivering great customer value.

Markets: A market is the set of actual and potential buyers of a product or service (Singh and

Ramamurti, 2011). These buyers share a particular need or want that can be satisfied through

exchange relationships. Sellers must search for buyers, identify their needs, design good

market offerings, set prices for them, promote them, and store and deliver.

Figure6. Marketing strategy of BHP Billiton

(Source: Fethi Mansouri, 2010, pp 138)

Activities such as consumer research, product development, communication, distribution,

pricing, and service are core marketing activities. The arrows of the above image is represent

relationship that must be developed and managed to create customer value and profitable

customer relationship

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Running Head: Marketing Strategy Development: BHP Billiton

Issue 5

Developing Marketing Mix (4 P’s):

Marketing Mix of BHP Billiton analyses the brand or company which covers 4Ps (Product,

Price, Place, Promotion) and explains the business & marketing strategies of BHP Billiton.

Product: BHP Billiton is a famous varied resources company and one of the world’s largest

major commodity producers. The company stays in the leading position all through. The

major commodities of the company are coal, iron ore, copper and oil-gas. The oil gas segment

is the main sector for the company. It is the world’s greatest player in this segment. The other

commodities also have a large share in the world market. Fletcher and Crawford (2013)

denote that the commodities which are supplied by the company generally depend on the

demography. BHP Billiton has a large hand at playing the supply of the products to the whole

world.

Price: The prices of the products and services are based on the global market. These prices

are varying according to the market values. Grant et. al.(2012) mentioned that the pricing

strategy in the marketing mix of BHP Billiton is basically depend upon external factors like

global markets, competition etc. Price could be changed due to up-down market. It is noticed

that the cost of the raw materials are low. The prices the commodities also might vary in the

various countries. This is how the price of coal, iron ore, copper is maintained or varied. But

the prices of these raw commodities are varying on a daily basis.

Place: The places where these products and services are marketed. These places are not based

on a country. These products and services are marketed globally. The raw materials are found

all over the world. The final products are propagated all over the world. The mode of

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Running Head: Marketing Strategy Development: BHP Billiton

transportation is very efficient to carry those commodities. The company makes sure that

these products are available to the people. BHP Billiton has become one of the largest

resources of these raw materials through a set of merger and acquisitions (Petit, 2017). This

makes the company widen its horizon and make sure that the company stays ahead in this

sector. This has in turn made BHP Billiton one of the largest leader in the field of raw

material supplies.

Figure7. 4Ps of BHP Billiton

(Source: Vincent Petit, 2017, pp 420)

Promotion: BHP Billiton has offered a lot of effort when it comes to promotion. As per

Dufey et. al.(2010) point of view, the promotional activities of the company are upto the

mark. The company is investing is all kinds of promotions like the newspaper, radio,

television and now even in the online processes. BHP Billiton also has a great number of CSR

(Corporate Social Responsibility) activities which is wide spread all over the world. This

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Running Head: Marketing Strategy Development: BHP Billiton

helps in making the company more promotions indirectly by reaching the common people.

Hepburn (2015) stated that the company also makes promotion in the form of business to

business. This helps in increasing the customer horizon base of the company.

Conclusion: BHP Billiton is the top producer of the major commodities which include iron

ore, coal, copper and uranium. The company is mainly focused on the minerals like copper,

iron ore, coal. The other minerals which they extract more are like nickel mainly in Australia.

The company has more than 65000 employees and contractors included. The company has

made itself into a large player by investing into all kinds of commodity like oil & gas and the

products are marketed all over the world.

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Running Head: Marketing Strategy Development: BHP Billiton

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2017]

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Realities. Pearson Higher Education, United Kingdom

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Cheng, S. (2012). China's Reality and Global Vision: Management Research and

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Dufey, A., Gran M. G. And Ward, H. (2010). Responsible Enterprise, Foreign Direct

Investment and Investment Promotion: Key Issues in Attracting Investment for Sustainable

Development. IIED, United Kingdom.

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Running Head: Marketing Strategy Development: BHP Billiton

Fletcher, R. And Crawford, H. (2013). International Marketing: An Asia-Pacific Perspective.

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Running Head: Marketing Strategy Development: BHP Billiton

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