beanjustinbpcasestudysus6060-101014121136-phpapp01

8/6/2019 beanjustinbpcasestudysus6060-101014121136-phpapp01

1/12


2/12

Justin Bean, Presidio Graduate School SUS6060-S1

Summary:

BPs 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 BPs 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.


3/12


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 the2010 Gulf of Mexico oil spill BPs 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 BPs 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

BPs 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 its 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 bill ion in 2009, or a 43% drop), (Branding

Strategy Insider, 2010). However, according to the same research, BPs 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)


4/12


From an external and internal branding point of

view, this campaign would seem to be a

remarkable success; however, it doesnt seem to

correspond with BPs 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 BPs 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 toqualify 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, BPs 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 USs 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). BPs safety record

and procedures came under intense scrutiny, and public outrage built as more was revealed about its


5/12


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

BPs 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

companys 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 BPs 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).

Table 1. Source: Daily Finance (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 wantsthis 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 ofpeople in temporary camps, temporary accommodations. ...You know, armies march on theirstomachs."- 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 negativereactions 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 ofthis 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, butthat 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.


6/12


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 Valdezs allegedly intoxicated captain (whowas 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 BPs

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 didnt

value its stakeholders enough to communicate with them.

It also didnt 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 BPs

18,000. BP demanded that Twitter enforce its parody rules Figure 3. Source: Twitter.com


7/12


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 BPs 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 BPs 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, BPs 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 betransparent, providing detailed information about the clean-up efforts and updating the public on its

efforts, passing along reports of the Gulfs 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

BPs 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 companys 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.


8/12


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 BPs

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 didnt

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 its doing just that: moving beyond

petroleum.


9/12


Sources:

Barnes, Robert. (n.d.). Justices Slash Damages for Exxon Oil Spill - washingtonpost.com.

Retrieved October 6, 2010, from

http://www.washingtonpost.com/wp-dyn/content/article/2008/06/25/AR2008062500663.html

Beam, Christopher. (n.d.). What P.R. experts think of BP's response to the oil spill. Slate

Magazine. Retrieved October 5, 2010, from http://www.slate.com/id/2253099/

Bergin, Tom, & Hays, Kristen. (n.d.). WRAPUP 7-BP gets 'wake-up call' and $32 bln in spill

charges. Reuters. Retrieved October 4, 2010, from

http://www.reuters.com/article/idUSLDE66Q09I20100727

BP - Wikipedia, the free encyclopedia. (n.d.). . Retrieved October 4, 2010, from

http://en.wikipedia.org/wiki/BP

BP and Greenwashing - SourceWatch. (n.d.). . Retrieved October 4, 2010, from

http://www.sourcewatch.org/index.php?title=BP_and_Greenwashing

BP Brand Lesson: When Brands Lie | Tronvig Group: Branding, Strategy and Interactive. (n.d.). .

Retrieved October 4, 2010, from http://www.tronviggroup.com/bp-brand-lesson/

BP Brand Ranking | All Brand Rankings where BP is listed! (n.d.). . Retrieved October 5, 2010,

from http://rankingthebrands.com/Brand-detail.aspx?brandID=132

BP Creates Safety Unit, Fires Executive - DailyFinance. (n.d.). . Retrieved October 5, 2010, from

http://www.dailyfinance.com/story/company-news/bp-creates-safety-unit-fires-

executive/19653110/

BP Global - Press - BP Amoco Invests $45 Million in Solarex Stake to Create World's Biggest

Solar Company. (n.d.). . Retrieved October 5, 2010, from

http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=2001268

BP launches image overhaul and ditches Tony Hayward | MNN - Mother Nature Network,

Reuters. (n.d.). . Retrieved October 4, 2010, from http://www.mnn.com/earth-

matters/wilderness-resources/stories/bp-launches-image-overhaul-and-ditches-tony-hayward


10/12


BP wins coveted 'Emerald Paintbrush' award for worst greenwash of 2008 | Greenpeace UK.

(n.d.). . Retrieved October 7, 2010, from http://www.greenpeace.org.uk/blog/climate/bps-wins-

coveted-emerald-paintbrush-award-worst-greenwash-2008-20081218

Buskirk, Eliot Van. (n.d.). BPs Social Media Campaign Going About as Well as Capping That

Well | Epicenter | Wired.com. Retrieved October 5, 2010, from

http://www.wired.com/epicenter/2010/06/bps-social-media-campaign-going-about-as-well-as-

capping-that-well/

Capstick, Ian. (n.d.). MediaShift . 5 Digital PR Lessons from BP's Oil Spill Response | PBS.

Retrieved October 6, 2010, from http://www.pbs.org/mediashift/2010/07/5-digital-pr-lessons-

from-bps-oil-spill-response193.html

Daye, Derrick, & VanAuken, Brad. (n.d.). Rebranding: Not Beyond Credibility: Branding

Strategy Insider. Retrieved October 5, 2010, from

http://www.brandingstrategyinsider.com/2010/05/rebranding-not-beyond-credibility.html

Embattled BP chief: I want my life back - Times Online. (n.d.). . Retrieved October 4, 2010,

from

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article7141137.

ece

Goodman, Amy, & Gonzalez, Juan. (n.d.). BP Funnels Millions into Lobbying to Influence

Regulation and Rebrand Image. Retrieved October 5, 2010, from

http://www.democracynow.org/2010/5/5/bp_funnels_millions_into_lobbying_to

Gregory, Jim. (n.d.). How BP's "Beyond Petroleum" Branding Strategy Became an Epic Failure |

TalentZoo.com. Retrieved October 5, 2010, from http://www.talentzoo.com/news.php/How-BPs-

Beyond-Petroleum-Branding-Strategy-Became-an-Epic-Failure/?articleID=7587

Greyser, Stephen A. (n.d.). The BP Brand's Avoidable Fall - Stephen A. Greyser - HBS Faculty -

Harvard Business Review. Retrieved October 4, 2010, from

http://blogs.hbr.org/hbsfaculty/2010/06/the-bp-brands-avoidable-fall.html


11/12


Gulf of Mexico response | Oil spill | BP. (n.d.). . Retrieved October 5, 2010, from

http://www.bp.com/extendedsectiongenericarticle.do?categoryId=40&contentId=7061813

Hanssen, Liane. (n.d.). BP's New Strategy Includes Humility : NPR. Retrieved October 4, 2010,

from http://www.npr.org/templates/story/story.php?storyId=128907115

Joel, Mitch. (n.d.). Social media won't help big, bad BP. Retrieved October 6, 2010, from

http://www.vancouversun.com/news/Social+media+help/3194602/story.html

Kotler, Philip, & Keller, Kevin Lane. (2009).Marketing Management(13th ed.). Upper Saddle

River, N.J. : Pearson Prentice Hall.

Lee, Jessica. (n.d.). BruceClay - BP, Crisis Communications and Social Media. Retrieved

October 6, 2010, from http://www.bruceclay.com/blog/2010/07/bp-crisis-communications-and-

social-media/

McLeod, Fergus, Grote, Byron, & Hayward, Tony. (n.d.). BP 2Q 2010 Results Presentation 27th

July 2010 | Quarterly results and webcast | Results and reporting. Retrieved October 5, 2010,

from http://www.bp.com/sectiongenericarticle.do?categoryId=717&contentId=7037108

Merriam Associates, Inc. Brand Strategies. (n.d.). . Retrieved October 4, 2010, from

http://merriamassociates.com/

Morris, Jim, & Pell, M.B. (n.d.). Renegade Refiner: OSHA Says BP Has Systemic Safety

Problem - The Center for Public Integrity. Retrieved October 5, 2010, from

http://www.publicintegrity.org/articles/entry/2085/

Mulkern, Anne C. (n.d.). BP's PR Blunders Mirror Exxon's, Appear Destined for Record Book -

NYTimes.com. Retrieved October 6, 2010, from

http://www.nytimes.com/gwire/2010/06/10/10greenwire-bps-pr-blunders-mirror-exxons-appear-

destined-98819.html

Report for Selected Countries and Subjects, Gross Domestic Product, Current Prices. (n.d.). .

Retrieved October 5, 2010, from

http://www.imf.org/external/pubs/ft/weo/2010/01/weodata/weorept.aspx?sy=2009&ey=2009&sc

sm=1&ssd=1&sort=country&ds=.&br=1&c


12/12


Robertson, Cambell, & Krauss, Clifford. (n.d.). Gulf Spill Is the Largest of Its Kind, Scientists

Say - NYTimes.com. Retrieved October 5, 2010, from

http://www.nytimes.com/2010/08/03/us/03spill.html?_r=2&fta=y

Shelter, Brian. (n.d.). BP Parody on Twitter Posts a Disclaimer - NYTimes.com. Retrieved

October 6, 2010, from http://www.nytimes.com/2010/06/10/us/10twitter.html

Silverthorne, Sean. (n.d.). Your Best Ideas for Healing BP Dealers' Reputations With Customers

| BNET. Retrieved October 4, 2010, from http://www.bnet.com/blog/harvard/your-best-ideas-

for-healing-bp-dealers-reputations-with-customers/7440

Tharoor, Ishaan. (n.d.). A Brief History of BP - TIME. Retrieved October 5, 2010, from

http://www.time.com/time/business/article/0,8599,1993361,00.html

The Gulf of Mexico oil spill: After the kill | The Economist. (n.d.). . Retrieved October 4, 2010,

from http://www.economist.com/node/17095664

The One Thing BP Is Doing Right In Social Media | Social Media Today. (n.d.). . Retrieved

October 5, 2010, from http://www.socialmediatoday.com/SMC/203627

Walker, Haley. (n.d.). Recapping on BP's long history of greenwashing | Greenpeace USA.

Retrieved October 6, 2010, from http://www.greenpeace.org/usa/en/news-and-blogs/campaign-

blog/recapping-on-bps-long-history-of-greenwashing/blog/26025

Watson, Bruce. (n.d.). Lessons in Public Relations: Tony Hayward's Biggest Gaffes -

DailyFinance. Retrieved October 5, 2010, from http://www.dailyfinance.com/story/media/pr-

lessons-tony-haywards-biggest-gaffes/19526309/

beanjustinbpcasestudysus6060-101014121136-phpapp01

Documents

Transcript of beanjustinbpcasestudysus6060-101014121136-phpapp01