Answer

Executive Summary

Parallel pricing and different pricing cycles in the road fuels raise suspensions that require detailed explanations by the competing agencies in the industry. This is the reason why market conditions in the retail markets have become an essential aspect and are in constant demand. The retailers still have the role of conducting research on the consumer needs so that they can keep improving the services and satisfy consumer needs. This trend will ensure that the retailers evolve along the evolving needs of the consumers and retain them. UK petroleum retailers have engaged in the concept of linking retailing services with other services like the ATM, fast food joints and grocery shops where consumers can stop over and enjoy a quick meal as they fuel or purchase the petroleum product they want. Even with all the changes in the oil industry it is the government priority to make sure that, the UK oil sectors are resilient and secure for future use.

Introduction

Times of sharp prices in the UK petroleum industry have increased the road fuels resulting in acute concerns in the public and government sectors. At the same time, parallel pricing and different pricing cycles in the road fuels raise suspensions that require detailed explanations by the competing agencies in the industry. This is the reason why market conditions in the retail markets have become an essential aspect and are in constant demand. Competition agencies working in the petroleum retail markets have faced difficulties while trying to distinguish lawful and unlawful conduct in the industry. In recent years, some gasoline markets have exhibited regular pricing cycles where the process have increased or decreased rapidly over a short time and others over a longer period (‘United Kingdom Oil & Gas Report’ 2016, 190). Just like many have noted, gasoline and other petroleum products are an essential product to the consumer budget and play a great role in defining the economy of the retail markets. Most petroleum products are the ones that are used to control the retail markets and the economy at large. For instance, increases in road fuel prices affect not only the motorists but also the prices of many other goods in the markets. Notably, crude oil prices in the international markets have been considered the main drivers for most road users, the process result to various changes in the markets and several factors are affected by the competition in the markets along the supply chain. This paper is designated to provide an overview on the UK petroleum retail markets and how the trends have changed over the years resulting to changes in the UK economy (‘United Kingdom Oil & Gas Report’ 2016, 190).

Acquisition of Crude and Refining

It is clear to see that most UK refinery companies are facing considerable future capital expenditure since they are required to increase their requirements significantly with the operational costs in order to meet the changing trends in the UK’s global markets and legislative requirements. From now to 2013, the companies may be required to invest with more than 6 billion euros in the new emission strategies and processing capacities of crude oil (Bing, 2015, 2608). These investments are not included in the overall new equipment and requirements by the law. Most people may have noted that the regulatory burden together with the competition from other countries has led to the recent trends in the petroleum industry in the United Kingdom. The UK refinery companies could only be competitive against the global competitors only if the legislatures concentrated more on level playing fields on legislative compliance. The refiners need to be assured that there is security of the oil products being produced in the country (Energy Industry -UK, 2015, n.p)

Today consumers have become more demanding when it comes to satisfying their needs. It has become more difficult to meet the demands of all consumers considering that everyone has their preferences and demands. However, it is very crucial for the retailers to identify some of the consumer needs and try as much as possible to satisfy them to improve the overall sales and profitability margins. It may not be easy to meet the demands of all customers but it is always advisable to meet the crucial ones (Lin, 2014, 570). Notably, consumer needs and demands may be satisfied if they are classified into categories, the first category is the “Routine Chore Doer”. This kind of consumer will consider purchasing a petroleum product as a routine and consider that a menial job. The second type of courser is the “Time Poor” who is always in a rush and wants quick and efficient services rendered to them since time is of the essence to them. For this type of customer, convenience is very crucial to them and they want to save as much time as possible. The third type of customer is the “Trust Seeker”, this kind of customer is unique to the recent emerging markets and expect to be treated with dignity and integrity and wish to maintain strong relationships with their retailers. They are driven by the quality of the products and so they always go for the best brands in the markets. The last type of consumer is the “Prestige Seeker” this consumer is cautious of the brands in the markets and will always go for the top brands. (Lin, 2014, 570). They will value high levels if self-esteem and so they will go for high value market products. Since consumers have evolved in different categories, the retailers need to introduce new products that will satisfy all these kind of consumers (Lin, 2014, 570).

 Distribution, Storage and Transportation

The issue of supply demand imbalances has affected the petroleum retail markets and particularly the companies. The substantial regulations required on the petroleum sector will help reduce the capacity for most oil refiners to invest in transformation projects and improve competitiveness (Bing, 2015, 2608).

The greatest challenge for petroleum retailers in the UK lies on the effort to satisfy the diverse consumer needs. Note that most consumers will first do a market research on products they want to purchase and try to gauge them with the consumer expectations. The consumers will first list the hygiene factors in relation to the products and so retailers must work towards trying to satisfy some of those needs. For instance, the retail outlet employee will be required to act with courtesy while attending to consumers and maintain a good relationship with them. The speed and quality of a service will be the one that will determine the happiness and satisfaction of the consumer (‘Oil & Gas Industry Profile: United Kingdom’ 2016, 30). It is for this reason that the UK petroleum retailers have engaged in the concept of linking retailing services with other services like the ATM, fast food joints and grocery shops where consumers can stop over and enjoy a quick meal as they fuel or purchase the petroleum product they want. Recent research shows that this kind of retailing is proving to be a successful strategy and keeps customers satisfied with the services rendered to them. However, the retailers still have the role of conducting research on the consumer needs so that they can keep improving the services and satisfy consumer needs. This trend will ensure that the retailers evolve along the evolving needs of the consumers and retain them (‘Oil & Gas Industry Profile: United Kingdom’ 2016, 30).

Marketing and retail

It is important to note that a brand is different from a commodity; a commodity is simply a common product among people. However, different manufactures could be producing the same commodity although the brands make them different. Different manufacturers will have different brand names to differentiate them from the rest of the manufacturers of the same commodity. In a competitive market, the brand name is the one that determines the price of the commodity in the markets (Mcchlery, Kouhy, & Hussainey 2015, 5930). Products made by well-known brands will always have more value in the markets compared to those products from small brands or without brand names. Even if the manufacturer manages to make improvements in their commodity they cannot sell it in the retail markets at a higher price since the consumer, will not be willing to pay more for the same products from the same brand name. The perceived value of a commodity in the market according to its brand name is higher in the minds of the consumers and this gives the company an added advantage in the markets. Developing a brand name and making it known to the consumers may not be easy but it helps most manufacturers set higher prices for the same commodities because of the brand name. The consumer will be willing to spend extra money thinking that the product they are buying is of higher quality became of the strong brand name which also helps increase demand of the product in the markets (Mcchlery, Kouhy,  & Hussainey 2015, 5930).

The UK petroleum market is not like any other stagnant market since it is a dynamic and changes constantly depending on the economy of the country. The quality of the petroleum products keeps on getting better because of the strict environmental rules put in place by the government. The consumer demands are also a great contributing factor to the quality of the products offered to customers. Based on this kind of research, companies dealing with petroleum products have taken several steps in a move to accomplish their goals. First of all most companies have designated certain locations for petroleum pumps as well as distribution centers to ensure that the products reach the intended consumers length and breadth within the desired time. Secondly, the introduction of other services at the petrol stations has provided a positive impact to the petroleum sales as well (Mcchlery, Kouhy,  & Hussainey 2015, 5930).The marketing companies have also devised a way of introducing new products into the markets with improved quality that gives increased performance to the vehicles. The oil companies have now began focusing on consumer needs and taking steps towards fulfilling them (Mcchlery, Kouhy,  & Hussainey 2015, 5930).

Notable Changes in the Petroleum Industry

The UK fuel supply markets have drastically changed as we have discussed above and has recently faced downward pressures on the overall margins resulting to the closure of many of them. Many people working in the industry say that the key challenge facing the supply chain markets in the UK petroleum industry is the cost of meeting the set environmental measures and regulations that have been applied by the sector. They say that the UK has faced higher regulatory costs compared to other refineries from neighboring countries (Simpson, 2016, n.p). These regulations are bringing down the petroleum industries and some of them opt to close down after suffering loses. Concerns have been raised on the regulatory compliance measures and the different measures in the application of regulations in different sectors. Although regulation in the petroleum sector is very important to the climate and environment, the businesses are facing higher regulation costs of regulations than other nations of the world and so it influences competitiveness. (Simpson, 2016, n.p).

Conclusion

Even with all the changes in the oil industry it is the government priority to make sure that, the UK oil sectors are resilient and secure for future use. This is only possible if the government allows the supply of fuels to be supplied directly to consumers in the UK even in cases of supply disruptions. This will promote the industry locally and create more avenues for global markets (Simpson, 2016, n.p). The government wants a sector that will improve the overall economy of the country by creating value and contribute to the society. However even with all that it is always important for both the government and the oil refiners to be cautious of the global oil context over the development capacity and capability. Given the current overcapacity in the product supply in the oil industry, there is room for future rationalization without affecting the supply security.