BP: A Marketing Case Study

Summary:

BP’s branding as a sustainable company and adoption of the tagline “beyond petroleum” is examined
from a marketing perspective. The story of the BP Gulf Oil Spill and BP’s response is presented as a
catalyst for public knowledge of inconsistencies with brand promise and behavior. The response and
public reactions are examined before conclusions of the viability of BP delivering on its brand promise
are analyzed.

Company Information:

Name: BP
Type: Public limited company (LSE: BP, NYSE: BP)
Industry: Oil and natural gas, alternative fuels
Founded :1909 (as the Anglo-Persian Oil Company), 1954 (as the British Petroleum Company),
1998 (merger of British Petroleum and Amoco)
Headquarters: London, United Kingdom
Area served: Worldwide
Key people: Carl-Henric Svanberg (Chairman), Bob Dudley (CEO), Byron Grote (CFO)
Products: BP petroleum and derived products, BP service stations, Air BP Aviation Fuels, Castrol motor
oil, ARCO gas stations, am/pm convenience stores, Aral service stations solar panels
Revenue: US $246.1 billion (2009)
Operating income: US $26.43 billion (2009)
Net income: US $16.58 billion (2009)
Total assets: US $236.0 billion (2009)
Total equity: US $101.6 billion (2009)
Employees: 80,300 (Dec 2009)
Website: BP.com

Tags:

Oil spill, branding, BP, beyond petroleum, brand internalization, environmental disaster, crisis response,
occupational safety, greenwashing, social media, public relations, energy, renewables, fossil fuels,
marketing, brand image management, Deepwater Horizon, Gulf of Mexico, economic recovery,
deepwater drilling, offshore drilling, oil rig, honesty in advertising.

Justin Bean, Presidio Graduate School SUS6060-S1

Introduction

In July of 2003, BP (formerly British Petroleum) adopted the tagline “Beyond Petroleum”, in an effort to
rebrand itself as a socially responsible, environmentally friendly company. This “fresh reassuring, and
hopeful” strategic brand positioning was effective in making BP a consistently highly-ranked brand in the
minds of consumers throughout the first decade of this century (Heaton, 2010). However, in light of the
2010 Gulf of Mexico oil spill BP’s environmental and corporate social responsibility record has been held
under intense scrutiny, revealing a company that does not seem to hold its identity and actions in close
alignment with its marketing campaign. This paper seeks to analyze the authenticity of BP’s “beyond
petroleum” campaign and especially its branding response to the Gulf of Mexico oil spill, including its
use of social media as a new tool for reaching disillusioned customers and stakeholders.

A Fresh Start for the New BP

BP’s “beyond petroleum” campaign began in July of 2000 as a strategy to position the BP brand as a
leader in cleaner petroleum and renewable energy. Its acquisition of Solarex (as part of its Amoco
purchase) in 1999 gave BP Solar the distinguished honor of being the largest producer of solar panels at
the time, producing 30 megawatts of solar products per year (BP, 1999). Kotler (2009) reports that after
this rebranding, employees of BP felt the company was going in the right direction and had a positive
image of the new brand. The campaign was quite successful, according to the Center for Brand Analysis,
bringing it’s ranking among other global “Superbrands” to number nine in 2009 and twenty-three in the
beginning of 2010. Figure 1 also shows BP gaining brand power after the adoption of the tagline,
peaking in 2008, then dropping slightly in 2009 in accordance with decreasing advertising expenditures
(from $75 million in 2007, $53.5 million in 2008, to $32.8 million in 2009), as well as declining industry
average brand equity trends ($13 billion in 2008 to $7.4 billion in 2009, or a 43% drop), (Branding
Strategy Insider, 2010). However, according to the same research, BP’s brand equity decreased less
dramatically (from $19.9 billion in 2008 to $14.3 billion in 2009, or a 28% drop), suggesting that its brand
value may have acted as a buffer during this period.

Figure 1. Source: Branding Strategy Insider (2010)


From an external and internal branding point of
view, this campaign would seem to be a
remarkable success; however, it doesn’t seem to
correspond with BP’s record. BP has been
criticized repeatedly for environmental violations,
oil and propane gas price manipulation, safety
violations, falsifying inspection reports,
hazardous substance dumping, and its
involvement in environmentally-damaging
practices such as extracting oil from Canadian oil
sands (Wikipedia, 2010). Ninety-seven percent of
flagrant willful safety violations, (which the
Occupational Safety and Health Administration
defines as: “committed with plain indifference to
or intentional disregard for employee safety and
health.”) in the refinery industry were attributed
to two of BP’s refineries (Texas City and Toledo, Figure 2. Source: Center for Public Integrity, (2010).
Ohio), many of which had been cited before in various areas of the plant and went uncorrected, leading
OSHA to the conclusion that “BP has a serious, systemic safety problem in their company.” This
disregard led to an explosion at the Texas City plant in 2005 which killed 15 people and injured 170
others, as well as a chemical leak in 2010 (two weeks before the BP Gulf of Mexico oil spill) that released
530,000 pounds of carcinogenic, poisonous, or dangerous chemicals into the air of Texas City (CPI, 2010).

Despite its successful brand positioning and strategy, BP was not delivering on the promise of its brand
internally. Even in the renewable energy sector it only dedicated 4% of its exploratory budget to some
form of renewable energy, a substantial amount and a move in the right direction, but not enough to
qualify the entire company as being beyond petroleum (Goodman 2010). In its Second Quarter Results
for 2010, BP reports that recordable injury frequency, integrity management major accidents, as well as
loss of primary containment incidents have all decreased since 2000, 2004, and 2008, respectively, and
according to the same report, injury frequency has been decreasing over the stated period for the
industry as a whole as well (BP, 2010). In spite of these efforts, BP’s overall operations still focused on
producing oil, a major contributor to climate change and human health dangers globally, and did so in a
way that put stakeholders (including shareholders) at considerable risk of harm or loss.

Trouble on the Horizon

On the night of April 20th, 2010, abnormal pressure inside a marine riser on the Deepwater Horizon
drilling rig (owned by Transocean Ltd., operating on a BP-owned well) caused an explosion on the
platform, killing 11 workers and injuring 17 others. The ensuing oil spill into the Gulf of Mexico , one of
the US’s most economically productive and biologically diverse bodies of water, released as much as 185
million gallons of crude oil (for comparison the 1989 Exxon Valdez oil spill released 11 million gallons),
the largest accidental marine oil spill in the history of the oil industry (NYT, 2010). BP’s safety record
and procedures came under intense scrutiny, and public outrage built as more was revealed about its


disregard for worker and environmental safety. Boycotts of BP gas stations, protests in front of the
London BP headquarters, and 24-hour news coverage of the spill (brandishing the name “BP Oil Spill”)
helped to degrade trust and belief in the brand image, as well as leading to a 52% drop in stock value
(the lowest since 1996), net quarterly loss of $16.97 billion, $2.9 billion in clean-up costs up to June 30th,
2010, and total costs of the spill for BP anticipated at $32.2 billion, roughly the same amount as the
entire nominal GDP of Kenya (BP, 2010; IMF, 2009).

The Crisis Response

BP’s initial reaction to the spill was to downplay the damage, estimating that only 1,000 barrels per day
of oil were spilling into the Gulf, and later saying “somewhere between 1,000 and 5,000” after a
separate 5,000-barrel-per-day leak was discovered (Slate, 2010). This had the effect of damaging their
credibility and trust early on, leaving the public skeptical of future statements. Then CEO Tony Hayward
also made a series of unfortunate contradictions and gaffes (presented in table 1), making the
company’s motives appear to be dubious, insincere, and out of touch. Hayward also initially shifted
blame to Transocean Ltd., but said they would give full support to the clean-up effort. This was
perceived as an avoidance of responsibility on BP’s part, further degrading the public trust in its
communications (Slate, 2010). Hayward later resigned and was replaced by the executive in charge of
the Gulf Coast Restoration Organization, Bob Dudley, in October of 2010. Efforts to downplay the
severity of the spill, cover only the positive developments in the clean-up, or over-sympathize with the
victims were seen as patronizing, met with public outrage, charges of greenwashing, and reiteration of
past shortcomings (Greenpeace, 2010).

Tony Hayward and BP Notable Gaffs
“We're sorry for the massive disruption it's caused to their lives. ...There's no one who wants
this thing over more than I do. I'd like my life back."
- May 31st, to reporters during the aftermath of the deadly explosion.
"What the hell did we do to deserve this?"
- After 760 safety violations in 3 years and lobbying for less restrictive safety regulations.
“…whether it was food poisoning or some other reason for them being ill, you know, there's a
-- food poisoning is surely a big issue when you've got a concentration of this number of
people in temporary camps, temporary accommodations. ...You know, armies march on their
stomachs."
- Speaking about the hospitalization of seven clean-up workers who experienced nausea, headaches,
nose bleeds, dizziness and chest pains, doctors surmised that they might have had negative
reactions to the toxic dispersant BP used to break up the oil spill.
" The Gulf of Mexico is a very big ocean. The amount of volume of oil and dispersant we are
putting into it is tiny in relation to the total water volume… I think the environmental impact of
this disaster is likely to have been very, very modest "
- May 28th, after scientists determined the devastation to be “catastrophic”.
"I hear comments sometimes that large oil companies are greedy companies or don't care, but
that is not the case with BP. We care about the small people."
- June 16th, Chairman Carl-Henric Svanberg, expressing his concern for the Gulf residents.
Table 1. Source: Daily Finance (2010).


Later BP pledged $500 million over a 10-year period to the Gulf Research Institute to research and
assess the environmental impact the spill had on the Gulf, provided grants totaling $170 million to the
states of Florida, Mississippi, Louisiana, and Alabama in an attempt to alleviate the impact of the spill on
the states’ economies, established a charitable fund of $100 million for unemployed oil rig workers,
donated $15 million for behavioral health outreach and support programs in Louisiana, set up a new
Safety and Operational Risk Unit which would have the authority to intervene on any technical activity,
and vowed to pay all “legitimate” claims for damages resulting from the oil spill (BP, 2010). These
actions were a step in the right direction to restore its already decimated brand value, but BP needed a
way to reconcile the need to spread word of their efforts with the need to avoid the appearance of
greenwashing.

During the Exxon Valdez oil spill which, until 2010, was the largest spill in American waters, Exxon
similarly tried to downplay the damage, pledged to pay for all of the clean-up costs, and compensate
stakeholders for the damage. However, over time it failed to deliver on this promise, was embroiled in
litigation for some time after the spill, and appealed several decisions in order to pay lower damages
and distance itself legally from the negligent conduct of the Valdez’s allegedly intoxicated captain (who
was acquitted of the charge at trial). BP and Exxon both shifted blame to other parties, vowed to pay
more than they privately admitted to intending to pay, failed to acknowledge the uncertainty in the
situation, and focused on technological solutions early on, as opposed to addressing the human crises
(Washington Post, 2008; NYT, 2010). Despite the passing of over two decades, the name Exxon is still
synonymous with the Valdez oil spill, a fate which BP’s
brand would do best to avoid. But BP is in a different world
of media than Exxon found itself in, with all the
opportunities and difficulties that go along with it.

Social Media Campaign

It took seven days after the oil spill for BP to send out a
tweet about its position or efforts to control the spill,
seemingly another mistake on their part in the early days of
the crisis. The common perception was that BP didn’t
value its stakeholders enough to communicate with them.
It also didn’t help BP appear to be technologically advanced
or in touch with modern social media communication styles.
However, after its first tweet on April 27th, BP became very
proactive with its social media presence, tweeting a dozen
or more times per day, tweeting crisis hotline numbers for
wildlife and volunteers, as well as articles and updates on
the state of the Gulf. This effort, along with its long delay
before using Twitter, drew fire from a BP twitter parody
(BPGlobalPR) that tweeted humorous and sarcastic updates,
which had over 188,000 followers, compared to BP’s
18,000. BP demanded that Twitter enforce its parody rules Figure 3. Source: Twitter.com


and have the tweeter state that it was, in fact, joking (NYT, 2010). It also updates its Facebook profile
daily with details of oil recovered for that day and total oil recovered thus far. The Facebook page
allows fans to comment about anything they want, not censoring criticism or insults, making it appear
more transparent and effectively facilitating a public venting session. In addition BP’s YouTube channel
has messages about the clean-up efforts, executives and workers speaking about the spill, while their
Flickr photostream shows photos of the cleanup, community outreach, oil-soaked wildlife, and
controversial altered images alongside the originals, next to a statement to demonstrate the extent to
which the photos were altered. BP also paid for search results on Google to bring up BP’s spill response
site link on top, above environmental group listings, assuring it maintain visibility during the crisis.

While the initial social media response was generally deemed slow and wanting for detail, BP’s later
aggressive focus on social media, while receiving a mixed bag of responses, has been perceived as a
good effort to restore its brand, giving BP a more human face than when using traditional PR tactics or
downplaying the crisis (Slate, 2010). While a steady barrage of reports and positive news from the
company itself could be perceived as propaganda, in times of crisis there is no such thing as
communicating too much. BP overall has done a relatively good job via social media of appearing to be
transparent, providing detailed information about the clean-up efforts and updating the public on its
efforts, passing along reports of the Gulf’s recovery, and making available contact information for
members of the social media network to help in the efforts to save wildlife and recruit volunteers.
Much of the criticism of the social media methods being implemented by BP revolves around not using
two-way communication, not involving itself and its stakeholders in a conversation, but rather simply
broadcasting messages and providing updates (Mitch, 2010). Because BP is new at such intensive use of
social media, it may not have yet figured out how to actually engage the public without creating liability
issues or creating more of the dreaded gaffs that helped to accelerate the downfall of the BP brand at
the outset of the crisis.

Beyond the Horizon

BP’s branding was initially a success story, becoming one of the most powerful global brands; gaining a
positive reputation, and the respect of its customers based on a sustainable social and environmental
message. However, it became apparent after the BP Gulf Oil Spill that the company’s operations and
management culture did not align its identity with this sustainable strategy. The fundamental question
BP should have asked itself before aggressively branding the company as moving “beyond petroleum”,
as well as during the following decade is “can we and are we delivering on this promise?” Great, lasting
brands are earned; built by consistently delivering on brand promises and internalizing the brand
philosophy (Kotler, p. 262, 2009). BP had a chance to leverage the goodwill within its company when
employees praised it for going in the direction of “beyond petroleum”, however, given its safety and
environmental record, and relatively small renewable energy profile, it failed to set an agenda to reverse
these trends, or internalize the spirit of the tagline into its operations and management.


An essential criticism of the beyond
petroleum campaign is that BP is, at
heart, an oil company. Oil
consumption, while demanded in
enormous quantities by consumers, is a
leading cause of many environmental
and human health issues globally. Even
if BP had adhered to or exceeded
safety and environmental regulations,
would it ever have been able to deliver
on promises of moving “beyond
petroleum”? The truth is that
petroleum made up 93% of BP’s
investments in 2008, and although
investing in the other 7% in renewables Figure 4. Source: Greenpeace (2010).
(2.79% wind, 1.39% solar, and 2.79% biofuels) is a good effort for an oil company, it far from delivers on
the claim of being beyond or moving beyond petroleum as a primary source of income or focus of
investments (Greenpeace, 2010). This very fundamental contradiction may have been forgiven and a
resevoir of of goodwill created if BP had a flawless safety record, personable executives who didn’t
unintentionally insult stakeholders, and more progressive environmental standards. But the nature of
doing business in immense volumes with a polluting, poisonus substance that the public has seen cause
numerous environmental disasters is one of immense risk to external and internal stakeholders. This
risk cannot be mitigated by a better logo design, bright, catchy commercials, or a dynamic social media
campaign. The brand may be able to recover in time and may even regain the trust of customers, but
this trust will be misplaced and fragile until BP can actually align its operations, management, and
internal philosophy with the brand promise and goals. In short, a company that implements the brand
promise of “beyond petroleum” must be able to do and show that it’s doing just that: moving beyond
petroleum.


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