CHAPTER ONE

INTRODUCTION

1.1            BACKGROUND OF THE STUDY

The sensitivity of petroleum resource is clearly reflected in the fact that it has remained or continued to be the goose that lay a golden eggs for the Nigerian economy as well as the supreme foreign exchange earner contributing over 80% of government revenues and helps the development of Nigeria’s infrastructures and other industries (Anya 2002; Chukwu 2002; Gary and Karl 2003). However, due largely to the highly technical nature of exploration and production, the sector depends substantially on imported technologies and facilities for most of its operations. In view of the critical importance  of the sector to the nation’s economy  and its capacity to generate far-reaching multiplier effect, the grooming of highly skilled indigenous manpower to participate keenly in the activities of the sector to redress the foreign dominance becomes imperative (Baker 2006). The rapid development of an indigenous technical workforce has become more compelling than ever before against the background of the expected imminent injection of massive investment in the sector. With a current production capacity of about 30 million barrels per day (bpd), Nigeria plans to increase her production capacity to about 40 million bpd by 2010 (Utomi 2001; Obi 2003; Mathiason 2006). Already, Nigeria is the leading oil and gas producer in Africa, currently ranked the seventh highest in the world (NNPC 2004; The Guardian 2006). In addition to the above,  Nigeria  which  is  widely referred to as a gas province, has natural gas reserves that triple crude oil reserves, being estimated in excess of 187.5 trillion standard cubit feet (SCF) (Africa Oil and Gas  2004). The foregoing underscores the vast investments and potentials of the Nigerian petroleum sector, and therefore calls for commensurate investments in the development of the Nigerian human capital base. The Federal Government has stated that one of its objectives is to achieve 50 per cent local content in the oil and gas sector by 2010. Adegbulugbe (2002)  observes  that Nigeria began exporting oil in 1958 with crude oil production of 5000 barrels per day (bpd) rising by 1979 to a peak of 2.3 million bpd. Currently, Nigeria’s crude oil production is about 1.5 million barrels per day (bpd) and is expected to rise to 2.5 million bpd . Nigeria is the 13th largest oil producer in the world and 6th largest oil producer among the Organisation of Petroleum Exporting Countries (OPEC). Determined by crude oil reserves and output, gas reserves and output, refinery capacity and product sales volume, Nigeria ranks first in Africa in oil production. It ranks 5th in gas reserves which makes the country more of a gas rather than an oil country (CBN 2002). Indeed, Nigeria is often described as a gas zone with some oil in it. However, gas resources are largely untapped and Nigeria’s gas reserves place it among the top ten countries in the world in that category (Assael 2000; Ekpu 2004). Assael (2000) and Ekpu (2004) also observe that   other energy resources such as hydro power, wind energy, and coal, which is produced in Enugu and Benue States abound in the country.  Nigeria is in fact the only coal-producing West African nation. About 43% of Nigeria’s natural gas is associated with oil which according to (Ekpu 2004) is unfortunately   largely flared to the detriment of the economy. Consequently, the energy resources base of the country can be classified into two, namely: Fossil fuels, which are all non-renewable or finite in supply and renewable resources, which in principle are infinite. Fossil fuels comprise crude oil, natural gas, coal, bitumen and tar sand, while renewable resources consist of hydropower and solar energy. For the latter group, the rate of exploration is less than the natural rate of replenishment. Energy consumption is in the area of petroleum products, which according to (Dixton et al 2005), accounted for between 70% and 80% of total energy consumed in Nigeria between 1970 and 1980, the major consumers being the transportation, household and industrial sectors.

1.2 STATEMENT OF THE PROBLEM

Many research efforts in  the area of marketing  practices in developing economies have dealt with macro issues and emphasized the management of company’s structure and strategies, conduct and performance of marketing activities as  they relate to performance indices such as  market share, growth, efficiency and well being of consumers and clients lament that the key defect with this static and macro analysis of marketing practices in developing economies is that it minimizes the impact of marketing environment on the achievement of performance measures.

Achieving efficient and effective product marketing strategy by an organization is difficult, as a result of the ambiguity and instability of environmental factors. The peculiarities of oil and gas marketing services may create or set modalities for goal actualization parameters that are different from those found in the marketing of tangible products. The peculiarities may, also, require unique inter-industry/marketing commitment and approaches. However, marketing concepts, principles and goals are of relevance in the marketing of oil and gas service. Sound and robust marketing commitment on the part of organization and sales-people are important to the survival and growth of the oil and gas industry, considering the subtle, unstable and seemingly aggressive business environments in which modern business organizations operate. In order to formulate and implement effective and efficient goal actualization and inter-industry marketing commitment in product distribution, oil and gas companies should have a thorough and continuous understanding of the relevant environment that impacts on their marketing strategies.

1.3 OBJECTIVE OF THE STUDY

1.4 RESEARCH QUESTIONS

1.5             STATEMENT OF HYPOTHESIS

1.6 SCOPE OF THE STUDY

This research work is limited to the issues of strategic marketing management in the Nigerian oil and gas sector using Nigerian National Petroleum Corporation (NNPC) Benin City, as a study. This means that the area in which data were collected in form of primary source of data is limited to Nigerian National Petroleum Corporation, Benin City, Edo State.

1.7 SIGNIFICANCE OF THE STUDY

Due to the economic necessities, the complex of modern business activities, the dynamic and ever changing nature of market environment, the high rate of inflation, its has become imperative to adopt an effective marketing strategy management in order to control the trend in the complex and competitive economy.

Another significance of the study is that, the study recommends that the competitive nature of business activities demands that companies and business organizations should apply marketing ethics measures that will increase marketing shares.

1.8             LIMITATION OF THE STUDY

During the conduct of the study, some factors posed challenges to the researcher. These include:

Financial constraint: This is the major factor that limits the extent to which the research work was conducted. Traveling expenses were incurred in getting materials and typing of questionnaire and the distribution of the questionnaires.

Time is another factor that posed hindrance in carrying out this research work.

Management restriction often does not allow access to information that is considered very confidential like details information of the organization profile. As a result of this restriction, the researcher was not able to get full information that was considered vital.

The attitude of the respondent in giving out information was another limitation. The researcher mainly used the information that was given.

1.9             DEFINITION OF TERMS

Management: Management is the effective and efficient utilization of organization resources so to achieve its predetermined goal.

Sales: it is the pre-determined actions designed to increase consumer demands stimulate market demand or improve product availability for a limited time.

Market: Market consists of individual and organizational activities designed to sense and serve the consumer’s need and to facilitate and expedite exchange with the view to achieving the goals of the individual or organization through the satisfaction of the consumer’s needs.

Strategy: Strategy is a means of operationalizing policy and for achieving some predetermined objectives.

Strategies are schemes, methods, maneuvers which management hopes to deploy in order to move the organization from its present position to arrive at its target goals.

Planning: Planning is an intellectual, the conscious determination of course of action the basic of decision on purpose, fact and considered estimate. To plan is to forecast into the future that is using related facts and assumptions.

Marketing Mix: the marketing mix is that particular blend of controllable marketing variables that a marketer uses to achieve his objective in a particular market segment. The four basic elements in the marketing mix are the product, price place or distribution and promotion. These four elements are popularly known as the 4ps.

Marketing Planning: this is defined as the systematic management process of introducing the identification and assessment of marketing problem, opportunity and organization capacity, the selection of target markets and formulation of marketing objectives.

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