Castrol Oil in Vietnam Castrol is the lubricants division of the British chemical, oil, and gas concern Burmah Castrol. In Europe and in the United States, where Castrol has a 15 percent share of the do-it-yourself lubricants market, Castrol targets motorists who want to cosset their engine by paying a bit more for Castrol’s high-margin GTX brand rather than a standard lubricant. This differentiated positioning strategy is supported by sponsoring Formula 1 racing and the Indy car series in the United States and by heavy spending on television and in automobile magazines in both Europe and the United States. Some of Castrol’s most notable successes in recent years, however, have been in the developing nations of Asia, where Castrol reaps only one-sixth of its sales but more than one-quarter of its operating profits. In Vietnam, automobiles are still relatively rare, so Castrol has targeted motorcycle owners. Castrol’s strategy is to target people who want to take care of their new motorcycles. The long-term goal is to build brand loyalty, so that when automobile ownership becomes common in Vietnam, as Castrol believes it will, former motorcycle owners will stick with Castrol when they trade up to cars. This strategy has already worked in Thailand. Castrol has held the leading share of the motorcycle market in Thailand since the early 1980s, and it now holds the leading share in that country’s rapidly growing automobile market. Unlike its practice in more developed countries, Castrol’s communications strategy in Vietnam does not focus on television and glossy print media (there is relatively little of either in Vietnam). Rather, Castrol focuses on building consumer awareness through extensive use of billboards, car stickers, and some 4,000 signs at Vietnam’s ubiquitous roadside garages and motorcycle cleaning shops. Castrol also developed a unique slogan that has a rhythmic quality in Vietnamese—Dau nhot tot nhat, or “best-quality lubricants”—and sticks in consumers’ minds. Castrol’s researchers say that a remarkable 99 percent of people in Ho Chi Minh City now recognize the slogan. At the same time, Castrol is starting to leverage some of its international promotional strategies and use them in Vietnam. In 2003, the company developed a global advertising campaign that featured English soccer star David Beckham, who is probably the most recognizable athlete in the world outside of the United States. As part of the campaign, Beckham visited several Asian nations, including Vietnam, where he attended a soccer tournament sponsored by Castrol. As elsewhere, Castrol has adopted a premium pricing strategy in Vietnam, which is consistent with the company’s attempt to build a global brand image of high quality. Castrol oil costs about $1.5 per liter in Vietnam, about three times as much as the price of cheaper oil imported from Taiwan and Thailand. Despite the high price of its product, Castrol claims it is gaining share in Vietnam as its branding strategy wins converts. Castrol has had to tailor its distribution strategy to Vietnam’s unique conditions. In most countries where it operates, Castrol divides the country into regions and has a single distributor in each region. In Vietnam, however, Castrol often has two distinct distributors in a region—one to deal with state-owned customers, of which there are still many in this nominally Communist country, and one to deal with private customers. Castrol acknowledges the system is costly but says it is the only way to operate in a country where there is still some tension between state and private entities. Case Discussion Questions 1. How does economic and business context for marketing in a developing nation like Vietnam differ from that in developed nations? 2. How did Castrol adjust its marketing mix to best match the conditions in Vietnam? 3. What does the Castrol case tell you about the importance of local customization in marketing strategy in this era of global business?

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