Development & Innovations in Petroleum Retailing: PetroWars Simulation

09:30 – 11:30 Petrol Station Networks

Before getting into the subject of Petrol Station Networks, we need to consider a couple of preliminary issues – the ‘offer’ and the ‘site design’.The Offer:Is your petrol station a drive-in shop or is the main purpose re-fuelling? If re-fuelling, is your market position that your fuel is superior to that of others or is your claim that your petrol station is EASIER to use. Such questions will be considered and serve as a foundation to deciding what type of network is best for you.The Site design:What is wrong with the design of our petrol stations? The answer is that from a customer perspective there are a lot of problems to be addressed – the pumps, the layout, the payment system, the staff attitude, the shop, the signalisation, etc. Some of these will make a big difference to success.The Network:We ask the question, “what are the benefits of having a network?”. We explore some of the tools and management control alternatives used by other companies.

11:30 – 13:30 Efficient PricingHere we consider the ultimate objective – usually to increase profit (but that is not always the case).

We explore the trade-off that exists between volume of sales and the unit profit margin. At a low profit margin we can achieve high volumes and conversely, at a high profit margin we will only achieve low volumes. The question is what mix of volume and profit margin is best.In order to establish the best mix, we will undoubtedly need to understand the relationship between volumes sold and price. Thus we will introduce the concept of elasticity – both theoretically and how it can be measured in practice.We will run through a numerical ‘real life’ exercise in order to illustrate the above.Attendees will be able to practice implementing the lessons learnt during the PetroWars business game in Block 5.

14:30 – 18:00 PetroWarsPetroWars is a computer simulation of a petrol market.

It behaves just like the real market. The class will be split into ten teams of 3-5 and each will pick an envelope. The envelope will reveal the brand name of the company that the team will represent – Shell, BP, Esso, etc. By definition players have different start conditions – different number of petrol stations, different quality sites, etc. The objective of each team is to do the best they can given the resources that they were allocated.Each team will be issued with a history file. Using the lessons learnt in Block 3, each team will be able to ascertain the elasticity of the Brand that they are representing and agree a strategy.We will ‘play’ seven rounds. The Ceo of each team will present in Block 6 their strategy to the class. The winner is NOT the team that made the most money but rather the team that had adopted the most sensible strategy – based on the presentation and also how they acted and reacted during the course of the game.

DAY 2

09:30 – 11:30 Retail products market in Russian

11:30 – 13:30 PetroWars continuedFollowing on from Block 5

In this session the ‘CEO’ of each team will present to the class – their assessment of elasticity,their strategy and how they performed (10 minutes for each team).Dr Cohen will then present to the class a ‘post-mortem’ analysis of the decisions made during the game. In addition to that he will present how each team could have achieved better results.An interesting discussion should hen take place!The winning team will be announced.

14:30 – 18:00 Promotion and Advertising Campaigns

We consider Promotion and Advertising separately.We review some dozen sales promotions launched by petrol companies. These will be categorised – free gifts, games, etc. In each case we consider the potential benefits and problems.Again, we review TV adverts used by petrol companies in the past and discuss the underlying strategy and how it is perceived by customers.Finally we contrast how Advertising and Promotions play differing roles in generating sales.