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For creating opportunity and advantage 

Corporate Research 

Exxon Research and Engineering Company 
CR3B-H.89 Fall 1989 




Gord Thomson, Vice President 
Marketing Department 
Exxon Company, U.S.A 

As we look at all five "P’s" of the mar- 
keting mix-products, place, price, 
promotion, and people-new tech- 
nology continues to play a strong role 
in our future strategy. What is our 
strategy? Bill Stevens, our President, 
said it best in the Fall 1 988 issue of 

“In the downstream, EUSA’s 
straightforward objective is to be the 
most effective competitor in an excep- 
tionally tough marketplace. A focused 
effort is underway to enhance the 
quality image of Exxon products and 
services to differentiate them from 
those of competitors. This addresses 
the fundamental requirement of the 
downstream effort: to anticipate and 
identify customers’ needs quickly and 
accurately, and to move swiftly to 
meet them." 

Bill’s statement recognizes that cus- 
tomers are the sole reason we are in 
business. And we remind ourselves of 
this as we develop marketing plans to 
manage our five "P’s.* 

Success in our business is deter- 
mined by the edge that raises the 

value of our offering above that of 
competition in the eyes of customers. 
The bigger the edge, the better. Our 
enormous strength in technology is 
an Exxon edge. Whether we derive 
that by reducing our costs or increas- 
ing our sales, our strongest motive is 
to use new technology to improve our 
prominence and success in the 

Let's examine the five "P's” and see 
where technology might lead us. 


Customers look for products that meet 
their needs and provide efficient serv- 
ice-performance that reduces mainte- 
nance and waste. Examples are 
gasolines that measure up to the de- 
mands of sophisticated, modern en- 
gines; motor oils that reduce wear, 
corrosion, and fouling; metal-rolling 
oils that eliminate production rejects. 

Our fuels and specialty products are 
constantly improved with customer 

needs in mind. Surprisingly, the aver- 
age life cycle of our products is a very 
short three years. This emphasizes 
the need to generate and advance 
new product ideas quickly. 

Increasingly, we see that product 
advances must apply new under- 
standings of chemistry and physics. 
We continue to look for new additives 
to provide differentiable performance 
and have begun to look for new ways 
to derive or create performance ad- 
vances in the base fuels and special- 
ties themselves. 


Our customers tell us that their time is 
precious and that convenience is criti- 
cal. Thus, if our stores are not in loca- 
tions that customers find convenient, 
we will not do much business. 

Another "place” factor is our offer- 
ing-full and self-service, repairs, con- 
venience products, car wash, and so 
on. Another is layout-how the offer- 
ing is placed on the property to pro- 
mote smooth traffic flow and purchas- 
ing convenience. Yet another factor 
is style-the look and the feel of the 
store that make our customers like 
being there. 

Many outside of Marketing are sur- 
prised to learn there is a great deal of 
science behind "place." Using com- 
plex models of traffic flow, demo- 
graphics, and purchasing behavior to 
design our sites, we "marry" the so- 
cial sciences and engineering. 

continued on page 2 



by Brian Flann&y 

Shortly after I joined Exxon in 1 980, 1 
was asked to study the enhanced 
Greenhouse Effect. Nearly a decade 
ago, Corporate Research believed 
that this issue would some day have 
profound importance for the petro- 
leum industry. We felt then-and 
now— that CR could best serve Exxon 
by gaining comprehensive under- 
standing through participating in the 
science. With a background in theo- 
retical astrophysics and modeling and 
a longstanding interest in earth sci- 
ence, I felt that this would be an excit- 
ing challenge. 

Today, headlines and international 
panels address greenhouse concerns. 
Our program, begun when many 
people thought that greenhouse was 
an issue for the next century, has led 
increasingly to interactions with other 
concerned employees, affiliates, 
corporate management, federal agen- 
cies, and the international community 
organizing to respond to the issue. 

The idea that man might change the 
atmosphere enough to alter climate is 
neither obvious nor preposterous: it is 
a fit subject for scientific inquiry. We 
now know that concentrations of trace 
atmospheric gases are growing at a 
rate that could impact human and 
natural systems through global warm- 
ing and associated climate change. 

We also know that the modeled pro- 
jections are far from certain: potential 
impacts could be small and manage- 
able or they could be profound and 
irreversible. Uncertainty arises from 
incomplete scientific understanding- 
and missing data-to describe the role 
of fundamental processes such as 
cloud formation and oceanic circula- 
tion, that are known to be important in 
predicting climate change. Available 
data display such large natural 
fluctuations that, today, observations 
neither confirm nor refute the possibil- 
ity of climate change from an en- 
hanced Greenhouse Effect. The com- 
plexity ol the effect and the lack of 

data caution us that the science is 
unlikely to provide definitive forecasts 
for decades. 

Emissions of important greenhouse 
gases, such as carbon dioxide, meth- 
ane, chlorofluorocarbons, and nitrous 
oxide, occur from basic, everyday 
human activities including energy gen- 
eration from burning coal, oil, gas, and 
wood; agriculture; land use, especially 
deforestation; and manufacturing. 
Projections indicate that emissions will 
increase to meet the economic aspira- 
tions of a growing global population. 

Proposed actions to address climate 
change require significant international 
cooperation and human effort. Today, 
C0 2 emissions contribute about half 
the forcing leading to a potential en- 
hancement of the Greenhouse Effect. 
Since energy generation from fossil 
fuels dominates modern C0 2 emis- 
sions, strategies to limit C0 2 growth 
focus near term on energy efficiency 
and long term on developing alterna- 
tive energy sources. Practiced at a 
level to significantly reduce the growth 
of greenhouse gases, these actions 
would have substantial impact on soci- 
ety and our industry-near term from 
reduced demand for current products, 
long term from transition to entirely 
new energy systems. Obviously, the 
issue directly affects Exxon's long- 
term planning including many R&D 

At CR, our program goals are to 
contribute to scientific understanding 
and to maintain a critical awareness of 
both scientific developments and so- 
ciety’s efforts to address the issue. 

We perform scientific research, sup- 
port selected external studies, con- 
tribute to Exxon's environmental as- 
sessments, and participate in appro- 
priate institutional forums. 

Our internal research program forms 
the core of our activities. In 1 990, the 
U.S. government will spend nearly 
$1 90 million to study climate change. 
Obviously, we need not compete with 
that level of research or with resources 
that include institutional-scale model- 
ing and satellite observations. In- 
stead, we utilize simpler models to 
study essential physics and chemistry 
in a way that lets us assess the role of 
particular processes-such as the in- 
fluence of the marine biosphere. 

These models also serve as a too) to 
analyze the effectiveness of proposed 
policies to limit change. 

Impacts on Exxon will come sooner 
from society's efforts to reduce poten- 
tial risks from climate change than 
from change itself. Proposals before 
Congress call for reductions in U.S. 
emissions of C0 2 by as much as 20% 
by the year 2000. Internationally, 
some proposals call for even more 
stringent reductions. Recognizing the 
potential for such responses to alter 
profoundly the strategic direction of 
the energy industry, we have briefed 
Exxon corporate and regional man- 
agement, describing the current state 
of the science and efforts to address 
the greenhouse issue. We have pro- 
vided similar briefings to interested 
Exxon employees, to affiliates, and to 
petroleum and other industry groups. 

The Greenhouse Effect surged to 
the center of attention last year when 
the hot summer and drought brought 
home the potential consequences of 
climate change. Now that the drought 
has ended (and been acknowledged 
as a natural weather fluctuation), me- 
dia attention has decreased. None- 
theless, the Greenhouse Effect re- 
mains prominent on the international 
environmental agenda. Next year the 
Intergovernmental Panel on Climate 
Change will issue reports on science, 
impacts, and response strategies as 
a framework for a proposed 1992 
international convention to limit cli- 
mate change. 

While uncertainty exists, science 
supports the basic idea that man's 
actions pose a serious potential threat 
to climate. Efforts to minimize that risk 
will influence the future direction of 
the energy industry. ^