Marketing Campaign Case Studies

Friday, May 9, 2008


In 1997 Texaco was the fifth-largest marketer of crude oil, natural gas, and other related products. On the list of rival companies that were outperforming Texaco were the Exxon Corporation, the Royal Dutch/ Shell Group, BP p.l.c., and Mobil Corporation. To boost its market share Texaco needed to increase sales, but the brand’s image had been tarnished during the early 1990s. Texaco had been accused of polluting rainforests, overpricing its products, and institutionalizing racism in the workplace. Texaco executives calculated that improving their brand’s image would help sales; it was with this goal in mind that Texaco introduced its ‘‘A World of Energy’’ campaign.
‘‘A World of Energy’’ was the most expensive campaign in Texaco’s 95-year history. The New York office of the BBDO Worldwide ad agency released the print and television campaign with $30 million, which was half of Texaco’s annual marketing budget. Commercials debuted on Labor Day weekend in 1997. The actor Paul Newman provided the voice-over: ‘‘See Texaco run and develop, invent, visualize, hypothesize, explore, discover, and relentlessly search. Seek . . . and find the energy the world needs to run. Run world, run.’’ As Newman said, ‘‘See the world run,’’ the spot showed a baby gazing at a revolving toy complete with moving cars, planes, and trains. The scene shifted to quick shots of a helicopter taking flight, a nun operating a lawn mower, a line of Texaco’s tanker trucks carrying fuel, and Texaco workers searching for oil under the sea and in rugged mountains. Honoring the Screen Actors Guild strike in 2000, Newman did not provide a voice-over for the campaign’s last spots, which aired during the 2000 Summer Olympics. The campaign ended a few months later. Texaco reported an annual revenue drop from $45.5 billion in 1996 down to $35.7 billion in 1999. According to ad critics, however, the campaign did help Texaco’s image. Texaco improved its relationships with companies that were operated by minorities, and the government-appointed committee monitoring Texaco stated that the company had improved its ethics by diversifying its workforce.

Initially known as Texas Company, Texaco was founded in 1902 by Joseph ‘‘Buckskin’’ Cullinan and Arnold Schlaet, who struck oil near Beaumont, Texas, in 1903. Texaco’s first geophysical laboratory was established in 1919 to create durable seismic recorders for use in the fields where underground reservoirs of oil and natural gas were found. By the 1930s the firm was established throughout most of the United States, in addition to having ventures in numerous other countries, and it had begun marketing oil from the Middle East. In the 1950s and 1960s Texaco sold more gasoline than any other U.S. oil company, but its profits declined during the 1970s as the price of oil from the Middle East began to rise. American consumers responded by purchasing less gasoline, and Texaco closed many of its filling stations. After losing $10.3 billion in a lawsuit involving a merger dispute in 1985, Texaco filed for bankruptcy, from which it emerged in 1988. At the time, it was the largest firm in U.S. history to declare bankruptcy, and the legal judgment against it was the largest that had ever been awarded in a U.S. court, according to Time magazine. By 1998 Texaco ranked third among the nation’s oil companies and was operating about two dozen refineries and 23,000 gas stations.
One of Texaco’s most successful early marketing efforts was its sponsorship from 1948 to 1956 of the Texaco Star Theater, a television program with entertainer Milton Berle as the master of ceremonies. The show featured singing ‘‘men from Texaco . . . who work from Maine to Mexico.’’ Another popular marketing campaign, ‘‘You Can Trust Your Car to the Man Who Wears the Star,’’ was launched in 1962 and continued for more than two decades. It featured a memorable theme song and emphasized the bright red star-shaped logo that appeared on Texaco service stations throughout the country. In 1974 singer and comedian Bob Hope became ‘‘the man who wears the star,’’ personifying the Texaco brand in a long series of commercials. In 1988 the ‘‘Star of the American Road’’ campaign was launched to depict Texaco as a modern business with an all-American heritage. Television commercials in the campaign featured a stirring jingle that said, ‘‘Wherever you are, trust the Texaco star. Up ahead it’s there, shining bright.’’ One spot showed a family driving through a storm, running low on gasoline, and finding a Texaco station thanks to the star shining in the gloom.
The ‘‘Star of the American Road’’ campaign was discontinued in 1995 when corporate advertisements to build the Texaco brand were introduced. The new ‘‘Add More Life to Your Car, Take It to the Star’’ campaign used humor, rock music, and special effects to create a more modern image for Texaco. In 1997 Texaco launched ‘‘A World of Energy,’’ its largest corporate advertising and public-relations effort to date. Over the years the company had been accused of damaging the environment, conducting business in a racially biased manner, overpricing its products, and other unpopular practices. The new advertisements were intended to redefine the company’s image, portraying Texaco as a widely diversified firm that provided energy that improved the lives of people around the world.

Because gasoline, motor oil, and related products were not commodities that consumers saw or touched when they purchased them, the difference between various brands was not readily apparent. Therefore, packaging and brand image were paramount for an oil company trying to persuade people to buy its products instead of a competitor’s. Texaco had been working to establish a strong global brand identity since the 1980s, when it had begun cultivating a new image with the Texaco star as a focal point. In 1996 the company decided to launch a bold campaign that would distinguish the Texaco brand from its competitors and emphasize the firm’s worldwide operations and diverse, dedicated personnel. Most of Texaco’s previous advertising had been geared toward selling gasoline and other products, but ‘‘A World of Energy’’ aimed to alter the general public’s perception of Texaco as a corporation. The campaign specifically targeted opinion leaders, Texaco’s shareholders, other companies that might someday form joint ventures with Texaco, and governments of foreign countries such as Indonesia and Angola where Texaco operated. It was thought that Texaco’s stock price would rise and the company’s reputation would improve as the brand image became stronger. The advertisements were also intended to boost morale among Texaco employees following a period in the early 1990s when the company had laid off large numbers of mid-level managers.

Texaco and its affiliates found, produced, and distributed oil and natural gas through a vast network of operations in more than 150 countries. The company conducted deepwater exploration primarily in the Gulf of Mexico, Latin America, and West Africa. Its major production facilities were located in the United States, the United Kingdom, the North Sea, the Middle East, and the Pacific Rim.

The $850 billion petroleum industry included about 20 major oil producers and refiners with operations in the United States, about 40 global companies, and hundreds of smaller firms. According to CNNfn Online, Exxon led the overall U.S. petroleum industry at the end of 1998, Mobil was second, and the recently formed BP Amoco was third. Shell was the largest oil company in the world, followed by Exxon, BP Amoco, and Mobil. In 1998 Exxon had worldwide sales of $100.7 billion, Shell had $93.7 billion, BP Amoco had $68.3 billion, Mobil had $46.3 billion, Texaco had $31.7 billion, and Chevron Corporation had $26.2 billion.
The industry changed rapidly during the 1990s as rival companies entered into cooperative marketing arrangements or merged their businesses. Royal Dutch/ Shell Group (a joint venture between Royal Dutch Petroleum and ‘‘Shell’’ Transport and Trading) operated 47,000 service stations around the world and owned or had interests in 1,700 companies, including its subsidiary Shell Oil Company. In 1998 Texaco formed joint ventures with Shell Oil and Saudi Refining, Inc., to combine certain refining, marketing, transportation, and lubricants operations in the United States. The two new companies, known as Equilon Enterprises LLC and Motiva Enterprises LLC, were estimated to be the nation’s largest retailers of gasoline, controlling about 15 percent of the U.S. market. The joint ventures marketed products under both the Shell and Texaco brand names.
Texaco had formed other alliances with its competitors over the years. Its Caltex company—a joint refining and marketing venture with Chevron—had operated in Asia and other regions around the Pacific Rim since 1936. As other rivals consolidated their operations, Chevron and Texaco considered merging, but in June 1999 Texaco declined the proposal. In 1998 the U.S. leader, Exxon, acquired Mobil for $80.1 billion to form a huge conglomerate named Exxon Mobil Corporation. The merger gave the new company about 13 percent of U.S. gasoline sales. Another oil giant, BP Amoco, was formed near the end of 1998 when British Petroleum acquired Amoco Corporation for $48.2 million. BP Amoco had 10.5 percent of U.S. gasoline sales in 1998. For many years Shell Oil had been known for its corporate advertising, including the ‘‘Come to Shell for Answers’’ and the subsequent ‘‘Answer Man’’ campaigns, which involved the insertion of informational booklets in magazines such as U.S. News & World Report and National Geographic. Exxon had applied most of its advertising budget in 1989 and 1990 toward revamping its tarnished reputation after its Valdez tanker ran aground and spilled millions of gallons of crude oil along the pristine shoreline of Alaska. Like Texaco, other oil companies sometimes ran ad campaigns to point out the petroleum industry’s good deeds. In 1999 a magazine advertisement for Phillips Petroleum Company featured a large, beautiful photograph of migratory waterfowl in silhouette against a gold and purple sunset. The headline read, ‘‘Thanks to Phillips, weary travelers will always have a place to stop and refuel.’’ The text said that the company had donated land to the Cactus Playa Lake Project in Texas, providing habitat for hundreds of thousands of birds that needed a place to rest during seasonal flights across the central United States. ‘‘It’s yet another example of what it means to be The Performance Company,’’ the ad concluded.

Texaco’s corporate advertising campaign, ‘‘A World of Energy,’’ was created by the New York office of the BBDO Worldwide advertising agency to strengthen the familiar Texaco brand and to set a unifying tone for the company’s communications. The campaign emphasized that Texaco’s diverse operations improved the lives of people all over the world by providing energy and other benefits. In a press release Peter I. Bijur, chairman and chief executive officer of Texaco, said, ‘‘Texaco plays an integral role in the global energy market, and our objective with this long-term campaign is to focus on the commitment of Texaco employees and their dedication to pursuing energy sources and delivering energy products to people around the globe. Our campaign embodies this idea, and illustrates the value we bring to the quality of life for people whose lives we touch through the exploration, production, refining, distribution and marketing of energy products, and as caretakers of our valuable resources.’’
Ted Sann of BBDO added, ‘‘This new campaign builds on, and burnishes, Texaco’s strong brand heritage for a new era. We traveled the globe to capture the vision and dedication of Texaco workers and the innovative technologies they are using to keep the world running. We want to convey that the lives we enjoy are fueled, in great part, with Texaco energy, represented by both the people of the company and its products.’’ ‘‘A World of Energy’’ received $30 million of Texaco’s annual advertising budget of more than $60 million. Television commercials in the campaign were launched on Labor Day weekend 1997 during Sunday morning programs and coverage of the US Open tennis tournament, National Football League games, and golf competitions. The commercials also ran during shows such as National Geographic Explorer on TBS, Fangs on the Discovery Channel, and Extreme Machines on the Learning Channel. A spot called ‘‘Anthem’’ showed a world in fast motion—British commuters hurrying to catch trains, a Michigan child stepping out of a school bus, airplanes flying above the port of Rio de Janeiro—juxtaposed with shots of Texaco’s geologists, oil rig crews, and other workers of various races providing energy to keep the world’s machines operating. ‘‘We’re always going, to keep you coming. To keep your whole world running,’’ said the lyrics to the commercial’s powerful theme song, ‘‘Do You See the Star?’’ Another spot showed Texaco workers on an oil platform, in hightech operations centers, in a laboratory, under the ocean, and on mountaintops. A narrator (Newman) said, ‘‘They go to the strangest places, work in the tightest quarters, and gladly keep the oddest hours. Who are they? Forever probing and prodding, digging and exploring. Who are these people? They are Texaco. And they do what they do to find the energy the world needs to keep on running.’’ In addition to television commercials the campaign included magazine advertisements and full-page ads in newspapers throughout the United States. An advertisement in Smithsonian magazine featured a large photograph of three barefoot children happily eating watermelon in the golden glow of sunbeams. The headline read, ‘‘One day while finding energy, we found a way to get water to watermelons.’’ The text explained that, while drilling for oil, Texaco often found underground water reserves. The company channeled some of that water to farms in the arid Central Valley of California, where not only watermelons but apples, oranges, and many other crops were irrigated to feed people throughout the United States. The text concluded, ‘‘It’s one more way our relentless pursuit of energy keeps the world running. Looks like that water made quite a splash.’’ The red Texaco logo and the slogan ‘‘A World of Energy’’ were centered prominently at the bottom of the ad.
The campaign concluded after the 2000 Olympics, during which Texaco released three commercials that tied the Texaco brand to athletics. Because of a strike enforced by the Screen Actors Guild, Paul Newman did not provide a voice-over for the final spots, and ad critics believed that his absence hindered the campaign’s effectiveness. One spot featured children improving their athleticism via trial and error. ‘‘Life on the playing field is not much different than life in the oil field,’’ explained a voice-over. ‘‘Sometimes, when you wonder how you’ll ever find the energy to go on, you just dig down a little deeper. And there it is.’’ Another Texaco spot venerated the company’s employees. The voice-over explained that many Texaco employees found time to volunteer as youth coaches, because ‘‘finding energy is their full-time job.’’ Ironically, on October 16, 2000, Texaco and Chevron merged to create the world’s fourth-largest oil company, and as a result 4,000 employees lost their jobs. The merged companies changed their name to Chevron Corporation in May 2005.

In conjunction with ‘‘A World of Energy’’ advertising, Texaco improved its brand image by sponsoring the U.S. Olympic Team through the year 2004, the XIX Winter Olympic Games in Salt Lake City, the US Open Tennis Championship tournament, auto racing, and the Metropolitan Opera.

The campaign’s tagline, ‘‘A world of energy,’’ became a general corporate signature and was used in other advertising campaigns during 1999, unifying the company’s marketing efforts. To demonstrate Texaco’s sensitivity to racial issues and its appreciation for its diverse customers and employees, two campaigns that targeted African-American and Hispanic consumers were developed by minority-owned ad agencies. The tagline was translated into Spanish as ‘‘Un mundo de energ´ıa’’ for use in markets such as Texas, California, Arizona, and Colorado and for publication in magazines such as Latina and Hispanic Business. In May 1999 Texaco launched a television campaign to publicize Havoline motor oil with the slogan ‘‘Add more life to your car.’’ The commercials revolved around youth and aging. One spot starred Dick Clark, a celebrity who had been famous for decades but never seemed to age. In June 1999 the joint venture between Shell Oil and Texaco released a $40 million advertising effort consisting of separate campaigns for two types of consumers: the drivers who patronized Shell’s full-service stations and the drivers who patronized Texaco for its ‘‘car friendly’’ gasoline. The Shell campaign featured the tagline ‘‘Count on Shell to keep you going.’’ The Texaco campaign’s tagline was ‘‘Get that 5th tank feeling,’’ which referred to a claim by Texaco that its gasoline improved an engine’s performance by the fifth tank. While a worldwide economic slowdown and an oversupply of oil and gasoline caused prices to plummet and created a significant slump in the industry, U.S. demand for gasoline actually increased by 2.4 percent in 1998. (The United States was home to 5 percent of the world’s population but used 30 percent of all energy produced.) Texaco reported revenues of $45.5 billion in 1996, $46.7 billion in 1997, $31.7 billion in 1998, and $35.7 in 1999. From an ad-industry perspective the campaign received little praise. According to some critics the campaign did, however, improve Texaco’s brand image, which had been marred during the early 1990s.

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