Marketing Mix 4 P's

1. MARKETING MIX

Marketing services is Marketing People. When a customer signs an underwater IRM contract, he is buying a service to be performed. In the end, he will be the owner of a tangible product, Inspection Report, but the quality and cost, as well as the suitability of that report as a solution to his problem depend largely on the services rendered by the contractor. The buyer's best evidence of the quality and competitive superiority of the service he will buy is the impression he gets of the professional capabilities of the manager and staff of the contractor. Therefore, the selling and creation of satisfaction for the buyer before, during, and after executing of the work is the responsibility of the diving firm's personnel who interact with the customers and who are assigned to the project.

Too often an underwater Inspection, Repair and Maintenance (IRM) contract is "sold" by the contractor's manager or salesperson and carried out by other supervisory personnel who feel too little responsibility for satisfying the customer throughout the project.

Therefore in this aspect of people, SES personnel who will both supervise the underwater work and work with the clients are made known to and evaluated by the clients from the time of contract negotiation or awarding of contract, and they have the responsibility of providing feedback to management during the course of the underwater work so that corrective action can be taken or negotiated should performance fall short of the client's expectation. All other personnel involved or performing the underwater inspection work are also evaluated and approved/accepted prior mobilisation to the worksite.

1.1 PRODUCT / SERVICE

A purchaser of a product makes his commitment after the product is completed and has a tangible object to consider; a purchaser of a service make his commitment before production and has only intangible promises of the seller about performance to consider, a much more difficult purchasing decision.

SES IRM service is specifically focused on the tangible product it has to produce, i.e. Inspection Report, placing considerable emphasis on Quality Control (QC) and Quality Assurance (QA) when executing the work in order to meet the clients' needs. The successful completion of each project is the result of a combination of technology, efficient process and most importantly, uncompromising quality control.

One of the main concerns to the clients of the Oil and Gas Industry is the availability of work barges or boats to execute their work. This is the one area where PCSB and SM-EP faces most problems every year. SES capitalizing on this problem has made commitment to PCSB and SM-EP to ensure that they will have the work barge or boat to execute their work in time. For example at the time of writing this report, SES currently has all their three work barges plus one outsourced and two work boats working on both PCSB and SM-EP contracts.

Product Life Cycle

SES is also capitalizing on this area to rejuvenate its product (service) life cycle. SES this year has included into their fleet of work barges and boats a Class One Dynamic Positioning (DP) vessel, which is committed to SM-EP for October this year for one of their project. There is yet a Malaysian company that owns a DP vessel.

This vessel will be a cost saving for the client, as it does not require dropping anchors, which mean no anchor handler and topographical boats are required. Setting up on location for a DP vessel takes only a half hour compared to eight and four hours respectively for a work barge and workboat. This also diminishes the risk of anchors getting drop or drag on pipeline(s). One other advantage to the client is that some of the complexes (numerous jackets linked together by bridges) have no access for workboats or work barges due to the abundance of subsea pipelines, which makes it impossible to drop anchors. At these areas only vessel with DP capabilities can gain access. To further rejuvenate the life cycle it is already plan for the vessel to be upgraded to a class two DP vessel, which will then be utilised for diving.

Another area where the Company should consider as an effort to rejuvenate its service life cycle in the underwater IRM industry is the development of online logging software. To date, there is no suitable software of this nature that is able to serve this purpose. Although PCSB has engaged third party to develop such software but have so far proven not to be successful. This software will also enable historical database to be kept for future trend analysis by the client.

In the spirit of Kaizen (Continual Improvement), plans are already being made to upgrade the equipment (DP vessel) and process (ISO 19001:2000) for the Company.

1.2 PRICING

As mentioned earlier in my last assignment, the strategy of SES is to attain coat leadership, where the efficiency of the organization is of utmost importance.

Resulting from the recommended cost leadership strategy there is a requirement for more effort in the development of clientele scope and operation efficiency. Focusing on the routine operations and achieving efficiency on its own is insufficient. In order to achieve competitive advantage through cost leadership the Company must return some of the result from the efficiency to the customer in the form of discount. In other words the Company's efficiency can be related by the price of the service/product it offers to the market.

In this industry the players compete as much on prices as on their capability of providing a better service. Price war is a common practice when there is a shortage of jobs. SES has two competitive advantages in which they compete aggressively in these areas:

1. The Company offers very competitive price for their mobilisation/demobilisation cost, which makes up the bulk of the cost for the client, especially for the vessels. Because the work barges and workboats are placed either at Miri or Labuan when they are not working and PCSB mobilisation/demobilisation point is Miri, Labuan or Kemaman while for SM-EP is either Miri or Labuan. SES incurs minimal cost for mobilisation/demobilisation of their work barges or workboats. SES also offers discount, no additional mobilisation/demobilisation cost to the client when job gets roll over from one to the other. For example, the Company has got two different contracts with SM-EP for topside services and underwater IRM services. The Company would not charge SM-EP for demobilisation/mobilisation for their vessel when she completes the job for the topside contract and