tata steelium - a success story in b2b branding.pdf

7/28/2019 TATA Steelium - A Success Story in B2B Branding.pdf

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VIKALPA VOLUME 35 NO 2 APRIL - JUNE 2010 101

M A N A G E M E N T

C A S E TATA Steelium A Success Story in B2B Branding

Kaushik Bhattacharya and Biplab Datta

describes a real-life situationfaced, a decision or action

taken by an individualmanager or by an

organization at the strategic,functional or operational level

KEY WORDS

Business-to-Business

Branding

Value Proposition

Relationship Building

COMPANY BACKGROUND

TATA STEEL is the largest private sector steel marketer in India. Presently, its

Jamshedpur (India) Works has a crude steel production capacity of 6.8 mil-

lion tonnes per annum. The company has been successful in maintaining its

dominant position among key segments in the Indian steel market and has also es-

tablished a significant presence in the international markets through both tie-ups

with customers and mergers and acquisitions. The company is aiming at enhancingits domestic steel capacity to about 30 million tonnes per annum by 2015 (TATA

STEEL, 2005-06).

TATA STEEL is regarded as a visionary company and is widely acknowledged and

admired as the industry leader in India. In May 2002, the company launched the

Vision Architecture 2007 (Tisco News, 2002); and, it can be justly said that the com-

pany has been able to transform its vision into reality. Vision Architecture 2007 is

shown in Figure 1. Each element of the strategy was clearly identified, carefully

framed, properly defined, and exhaustively communicated to give the core customer

and the organizational issues an organization-wide clear and tight focus. Fulfillment

of goals like successful branding of steel, production of lowest cost steel, economicvalue creation and expansion have all contributed to companys growth (TATA

STEEL, 2004-05). The first strategic goal in the architecture for Vision 2007 was to

move from commodities to brands. The company had also articulated the intention

of achieving a turnover of Rs. 5,000 crore by the year 2012, through the brands pre-

vailing at that time (Figure 2). During the period 20022006, the company had

launched and successfully established many more brands. In a nationwide study

conducted by ORG-MARG in 2005, all brands of TATA STEEL emerged as leaders

having the highest brand equity amongst all brands in their respective categories

(TATA STEEL, 2005-06).

Historically, the TATA group is the oldest, largest, and the most respected group ofcompanies in India. They are Indias largest employer and also the largest foreign

exchange earner in the private sector. TATA is perhaps the most internationally

recognizable Indian business house, largely due to the role that the TATAs have

played since its inception. Over the years, TATAs have been known for producing

quality products and for living up to their commitments. The TATA group in gen-

eral, has a strong reputation of having a good relationship with everyone in the

trade as well. Like other TATA group companies, TATA STEEL uses interim names1

for their brands to capture part of the customers mind and heart (Figure 3). The


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102

corporate brand, TATA, acts as a co-driver in gaining

power in the Indian market (Kotler and Pfoertsch, 2006).

Today, the name TATA is perceived as a global, authen-

tic brand with a strong heritage.

TATA STEEL, the flagship company of the Tata group,

has several awards and recognitions to its credit (See

Figure 4). In addition, during 2004-05, in the TNS IndiaCorporate Reputation Study, both the financial com-

munity and the general public rated TATA STEEL as

the No. 1 company with impeccable reputation. Only

among business managers did Infosys beat TATA

STEEL by a margin of a single point (Tisco News, 2004-

05). They are one of the lowest cost producers of steel in

the world and the global benchmark in corporate social

responsibility activities. They have a strong distribution

network in the Southeast Asia and with the introduc-

tion of cold rolled steel, they are now the leading sup-

plier to the Indian auto industry.

In general, TATA STEEL proceeds with a master plan

called, Branding Blueprint, focusing on all the existing

brands that the company sells through its distribution

channel. The brand management groups act as an inte-

grator across all the business processes of the company.

They also help create communications which correctly

embody the companys brand position (Tisco News,

2002).

Mr. A Sen,2 Chief of Marketing and Sales (flat products)of TATA STEEL said that the companys emphasis is on

branding for credibility and comfort. The idea was to

put in place a physical and accountable distribution

system. The Managing Director, Mr. B Muthuraman

said that companys marketing focus is on branding

by de-commoditizing steel. About 1 per cent of the to-

tal revenue from sales of branded products is spent on

branding initiatives (blonnet.com, 2007). The sales per-

formance of TATA STEEL brands are given in Table 1.

TATA STEELIUM

On February 27, 2003, TATA STEEL launched the

worlds first branded cold rolled steel (CRS) called

TATA Steelium in Goa. Speaking at the launch, Mr. B

Muthuraman, said Branding will give rise to a custom-

ized product in terms of value, performance, and pric-

ing that will meet our customers needs better. Branding

will go a long way in meeting the challenge of gaining a

sustainable competitive edge. It will add value to the

product and help in highlighting it in the otherwise frag-

mented market for cold-rolled steel. It will not only help

in product identification, but will also boost the element

of brand recall, thereby creating a niche (tata.com, 2007).

It was clarified that the name Steeluim connoted both

strength and a feeling of being a world class brand. Mr.

Sen, said that the sales target for the financial year 2004-

05 had been fixed at Rs. 700 crore and with the nation-

wide distribution network, the company was confident

of achieving the target easily (sify.com, 2007). During

2005-06, the sales of brand Steelium increased from 0.355

million tonnes to 0.392 million tonnes recording an in-

crease of 10 per cent over the previous year.

Over the years, TATA STEEL has invested in a number

of branding activities to build its brand equity with the

retail segment of cold rolled steel. TATA Steelium fo-

cused on product mix enrichment by making suitable

grades and sizes available for different applications and

sustaining price premium by strengthening product

support services through distributors and dealers.3

TATA STEEL ensured that the TATA Steelium distribu-

tors handle the brand exclusively and because these dis-

tributors focused on servicing the identified set of major

customers, they were encouraged to cultivate the rela-

tionship and the local ties and also contribute towards

brand building. At TATA STEEL, efforts are continu-

ously on for enhancing the capabilities of distributors

and dealers by installing dedicated service centres, pro-fessional training to distributors/dealers salespersons,

implementing quality management systems at the dis-

tributors, and through office automation of the dealers,

etc. (TATA STEEL, 2005-06). Brief description of service

centre facilities of a distributor, M/s Vijay Enterprise,

can be found at their website vijayentps.com (2007). One

of the Steelium distributors, M/s Kummachery Steels

claimed, ...our relationship with TATA STEEL provides

our customers with a level of service, product availabil-

ity, and competitive pricing rarely found in our indus-

try (kummachery.com, 2007).

One member of the TATA Steelium brand management

team explained, Our primary value proposition is the

concept of providing a small customer total peace in

purchase and consumption of CRS. Once, it was a dream

for them, but today every customer has his own inter-

pretation of what it means. For some, it is about assured

availability; for others, it is about customization of size,

and for still others, it is about dealing with a professional

TATA STEELIUM A SUCCESS STORY IN B2B BRANDING


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organization. At TATA Steelium, we offer it all. It was

also explained that since TATA Steelium is bought only

by small businesses who are concerned about their prof-

itability and company image, the brand has the primary

responsibility to protect their customers interest. Fur-

ther, the brand must also take care of the interest of the

intermediaries. However, TATA Steelium comes at a

price. Today the brand is selling at a premium of Rs.

1,000-1,200 per tonne over competing products. Several

advantages of TATA Steelium are illustrated in Figure 5.

By engaging in branding of CRS, TATA STEEL could

create value primarily in two areas. It could positively

position CRS in the retail market against others in the

industry and could achieve more market leverage re-

lated to pricing and negotiations. In this manner, the

firm could influence customers and intermediaries so

that they remain loyal to the brand. The sales perform-

ance of brand Steelium is given in Table 2. Today the

brand has about 3,350 identified customers and among

them about 1,800 customers are involved in active buy-

ing at any point in time. The brand is sold only through

the distributor-dealer network where about 80 per cent

of the total brand sales are made by the distributors di-

rectly to the customers and 20 per cent of the total sales

are handled by the distributor-dealer chain.

Prior to brand launch, TATA STEEL brand management

team had to acquire a very clear understanding and a

deep insight into what TATA Steelium should repre-

sent for the retail customers and how to differentiate

the brand well from the competitive products. The

branding exercise has taken into account customers

behaviour and expectations, feedback from potential

intermediaries, and other necessary insights from the

marketplace (tata.com, 2007).

Thus the roots of brand TATA Steelium arch all the way

back to the marketing study revealing the customers

unfulfilled needs and a strong passion of TATA STEEL

for creating and capturing value by fulfilling those needs.

Factors that play an important role prior to brand launch

are described below.

Technology Selection

TATA STEEL was having the capacity to produce hot

rolled coils (HRC) but not the facility to add further value

by rolling it in room temperature that produces CRS.

The marketing study, undertaken prior to any technical

feasibility study on the cold rolling mill, assessed the

nature of domestic demand (in terms of sizes, grades,

applications) and gaps available (Kharkar, Chatterjee

and Muthuraman, 1997). As it was found that the mar-

ket for high-end use of CRS (automobile, appliance,

panel, etc.) is likely to have above average growth in

demand and not enough capacity to supply, the com-

pany decided to target the high-end sector of the CRS

market (Tisco News, 1999). Each critical facility at Tatas

cold rolling mill was selected in a manner that provides

many advantages to the customers over the competi-

tors (See Table 3).

Importance for Retail Market of CRS and Branding

The minimum yearly capacity of 1.2 million tonnes of

finished product was a techno-economically viable op-

tion for an integrated steel plant with tandem mill and

other technology parameters chosen by TATA STEEL.Out of this, the CRS capacity (based on annealing ca-

pacity) was fixed at about 0.8 million tonnes per annum.

Further, such mills were required to produce a wide

variety of sizes and grades for economical production.

With such a large capacity, it was necessary that the com-

pany targeted several segments that used different kinds

of steel.

Volume-wise, the Indian CRS market was almost equally

divided between small (say less than 60 tonne a month)and large (say above 60 tonne to 1,500 tonne a month)

customers. While most of the competitors attempted

selling directly to a few large customers and invested

much of their efforts on the same, the large number of

small customers were generally neglected and served

by a few wholesalers. Moreover, the environment was

changing rapidly. Many small customers of CRS (mainly

manufacturers and fabricators) were becoming key sup-

pliers to the large volume prestigious customers of CRS

who used to procure steel directly from steel majors.

These small but growing customers could afford to pay

higher prices for better materials and service.

TATA STEEL wanted to become the leader in CRS in

domestic market by commanding the largest share of

mind and heart and by achieving the highest profitabil-

ity. They saw two ways of accomplishing this goal, but

they could not undertake either directly. First, they had

to market their product (about 50% of the total produc-

tion) with their own sales force to the large institutional


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productivity; it has made the life of our workers easy

and has taken away many of our agonies.

Our business was not going in the right direction

and then we got the opportunity to change it with

TATA CR.

After taking the Steelium CR for a few months, we

realized that it is quite different from what we used

to get from the market.

Overall Business Environment

Prior to the brand launch, small customers were usually

dealt with by retailers in the local trading market. Tra-

ditionally, these retailers do not buy directly from manu-

facturers. They procure CRS from wholesalers who in

turn buy from manufacturers. The contact between these

wholesalers and local retailers are mostly through bro-

kers who connect both sides based on the availability

and take part in the transaction price.

With increasing demand of CRS, the number of retail-

ers was increasing at major trading locations. However,

the number of wholesalers procuring from manufactur-

ers was mostly constant. They were mostly unwilling to

extend the scope of their business beyond the major trad-

ing locations to avoid complexity. Thus the presence of

retailers at certain consumption centres (other than ma-

jor trading locations) was negligible. Buyers in those

areas had to depend on the nearby trading centre and

were often uncomfortable with the multiple handling

and logistics associated with the purchase of each con-

signment.

All retailers and wholesalers were guided by the simple

principle of buying cheap and selling dear. They were

largely indifferent about the buyers preferences and

compromises. They were disinterested about providing

value added services and considered that to be a losing

proposition. The key success factor was the ability to

buy cheap from the manufacturers. Most of the old and

successful wholesalers/retailers had risen through ag-

gressive buying and selling efforts and lacked a proper

appraisal of potential benefits from value added sup-

port services to the customers.

Wholesalers and retailers were free to set their own sell-

ing prices and there used to be hard bargaining between

manufacturers and wholesalers and between wholesal-

ers and retailers on discounts and purchase volume.

Confidential deals and discriminatory pricing were com-

mon phenomenon. Rivalry between wholesalers and

retailers were always putting downward pressure on

market prices. Sometimes wholesalers and retailers

bought larger quantity than they could sell and when

manufacturers reduced their prices further, wholesal-

ers and retailers would start panic selling depressing

the market more and more. Customers knew that retail-

ers rarely pass through all the trading incentives and

were accustomed to substantial price difference among

retailers operating in the same location.

Wholesalers were uncertain about the demand; they

preferred to stock minimum quantities, were reluctant

in committing their purchase well in advance, and

waited for month-end price relaxation. Manufacturers

were rarely concerned about the actual demand in the

market, or possible difficulties of the wholesalers/re-

tailers but were concerned about selling an aggregate

quantity every month. Price was considered as the only

lever and a loaded (overstocked) wholesaler used to be

considered as a loyal customer. Manufacturers sales

offices forecasted the monthly demand of these whole-

salers with large forecasting errors and frequent mis-

match between production and the forecast were quite

common. Retailers suspected that wholesalers did not

disclose the price relaxations being received from manu-

facturers. When a wholesaler bought a considerable

quantity of CRS, the retailers took the opportunity tobargain hard for the best price and terms. Similarly,

when the wholesaler was able to buy items that were in

high demand, he dictated terms to the retailers. In short,

such perceived asymmetry in relationship between the

manufacturer, wholesaler, and retailer was not condu-

cive to the formation of trust between these parties.

Towards the end of 2002, the price of steel in all catego-

ries started to stabilize and it was predicted to remain

firm over a long period of time. This necessitated much

higher investment by each retailer to trade at similarvolume and to maintain similar margins. They were now

looking for assurances from the manufacturers regard-

ing sustained business and margins.

A Steelium distributor during our interaction said, We

could never think of the business proposition which we are

now handling profitably. Intimacy with a company like TATA

STEEL and repeat business from so many satisfied custom-

ers. these are very rewarding experiences for us.


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106

Critical Action Areas

It was understood that distributors, dealers, and their

salespeople held the key to customers perception about

the brand. Most important was the creation of an envi-

ronment where TATA STEEL, distributors/dealers, and

customers had trust on one other. Since people with

widely different background (experience, education, age,communication skills, etc.) are involved in selling, it was

an enormous task to bring a minimum level of profes-

sionalism and consistency among the dealing persons.

It was a Herculean task as bringing simultaneous change

(marketing orientation,5a brand care,5b brand ethics,5c

etc.) was necessary among the independent distributors/

dealers and their salespersons who had little customer

orientation.

It was important for the company to monitor and have

control over retail prices so that customers got fair anduniform prices at every location and the total channel

profit was maximized.

Improvement of service (level and quality) was long

overdue in the retail sales of CRS. Once again distribu-

tors and dealers were to be convinced for delivering the

number of value added services with assured quality

standard. Further, service improvement must continue

and service excellence over competition must persist.

This is because it was understood that similar techno-

logy can be installed by other firms later and differen-tiation in the physical product may not be a determinant

of the purchase decisions in the future but imitating the

intangible benefits may not be possible and thus service

advantage for the brand can be sustained.

BRAND ENGINEERING FOR TATA STEELIUM

Product

The company introduced choice of grade and size in a

manner that best influenced the customers perception

of value. Customized Steelium grades are available for

varying applications TR15 for furniture, AU03/AU02

for ordinary drawing applications, PN01 for panel fab-

rications, and AU05/AU09 for extra deep drawing ap-

plications. This supported the wide variety of

applications undertaken by small customers. Steelium

coils are available in thickness of 0.4 mm to 3 mm and in

width of 1,000 mm to 1,540 mm. Coil weights vary as

per the coil width. Steelium sheets are available in packet

weights of 2.5 to 3 tonnes. A customer can choose from

the wide variety of standard thickness, width, and grade

combinations.

All Steelium CRS have absolutely flat spread, accurate

thickness, superior formability, and surface finish. To-

gether all these mean cost savings to the customer dur-

ing processing, premium price for the end product byensuring superior performance, and premium look to

the ultimate customer during use. The TATA Steelium

logo embossed on the CRS, every one metre of its length,

ensures the authenticity of the material.

Packaging

Packaging of Steelium is unique in the industry. It is

completely impermeable and highly protective under

normal circumstances. This is mainly due to the tech-

nology specially selected for packaging. Steelium CRSis wrapped in VCI paper with HDPE laminate, metal

packed with galvanized steel. As customers want pro-

tection, performance, information, and assurance from

the packaging, Steelium packets are usually painted in

blue and there are distinct identifiable TATA STEEL tags

and unique blue seals on the packaging which help iden-

tify the source of the material. Packaging uniqueness as

described in Steelium brochure is reproduced in Fig-

ure 7. The label fixed on each packet/coil carry the brand

name and a great deal of important information like

grade, size, weight, number of pieces/coil length, and

bar code. The competitors did not have such packaging.

Pricing

Since TATA Steelium was to be positioned as a high

quality pioneer brand sold only through well-equipped

distributors and dealers with value added services,

TATA STEEL decided to charge premium price over

competition. But steel items were traditionally seen as

raw materials that could never justify a premium price.

Also the steel price has operated as the major determi-nant of buyer choice whenever sufficient suppliers are

available. So, the price premium of the brand must be

supported by the customers perceived value. To ensure

this, the brand management team regularly monitors

competitors prices, market dynamics, and components

like quality premium, service premium, and relation-

ship premium at different locations against the various

grades supplied under TATA Steelium.



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To ensure that customers are not required to negotiate

the price with the channel members at the time of pur-

chase, and also to avoid conflict between the channel

members (within a territory and between territories) on

selling price, each grade of TATA Steelium has a loca-

tion-wise floor price, below which the item cannot be

sold by the distributors or dealers. Charges for various

standard processing are also fixed. Moreover, distribu-

tors are taught to charge fair prices to reinforce relation-

ship intention among customers. The distributors

margin is ensured through the floor price.

Communication

TATA Steelium has been a widely published brand since

its launch. Being the worlds first branded cold rolled

steel, it could draw sufficient media attention for quite

some time. The brand features and brand achievements

appear in the news time and again. Leading news chan-nels and publications from several stock research firms

report various important events related to the brand and

consider the brand success as one of the key factors in

their predictions. For example,Moneycontrol. com (2007),

says, Tata Steels world-class facilities and the state-of-

the-art production processes ensure superior properties

like formability and unbeatable flatness.

Traditional advertising methods were not used for build-

ing brand awareness for Steelium. TATA STEEL decided

that the key to their B2B brand strategy would not be

through brand preference or brand image advertising,

but by communicating its product and service strategy

to a large number of small customers of cold rolled steel,

mainly through the well-established network of distribu-

tors and dealers. Brand management teams carry out

elaborate studies of customer segments and send cus-

tomized direct mail, brochures, and other relevant in-

formation through distributors to position the brand

favourably in the minds of the customers. A portion of

one such brochure made for furniture manufacturers isshown in Figure 8. It carefully highlights the advantages

of brand Steelium over the competing products.

TATA STEEL regularly organizes meetings of distribu-

tors, dealers, and customers. Once in a year, the com-

pany organizes fabricators and OEMs meet. Also the

distributors are required to organize customers meet at

least twice a year. These are attended by senior com-

pany officials and brand management team and detailed

presentations are made. Further, account managers and

application engineers of TATA STEEL meet selected

customers once in a quarter along with the distributor.

These account executives also meet some of their deal-

ers customers during their quarterly retail run.

The website of TATA STEEL carries a lot of information

about the brand. One can download the brochure anddetailed specification from the website. Interested per-

sons can also post their enquiry or suggestions to the

company directly. Enquiries of prospective customers

are thus efficiently handled through company website.

In addition, the brand also has a toll-free helpdesk to

answer the queries over phone and an e-mail service for

the detailed written enquiries.

Salespersons

TATA STEEL takes special interest in the recruitmentand development of the distributors salespeople so that

they support the formation of consistent brand culture.

It ensures that all Steelium distributors have a minimum

number of salespersons according to their business vol-

ume and they are knowledgeable about the product,

systems, procedures, and customers. Training of dis-

tributors and dealers salespersons on how to manage

the brand has been a regular feature since the beginning

(authorstream.com 2007).

Distributors are considered as the key customers and asales team is responsible for satisfying the transaction

and relationship needs of the distributors. Account man-

agers spend a lot of time with distributors and remain

accessible to them for problem solving. Personal rela-

tionships with the distributors are developed through

regular visits when account managers study and help

distributors/dealers to improve their operations.

Channel Design

Based on the consumption pattern and strategic busi-ness volume, TATA STEEL decided to go for selective

distribution in each major location. The primary job of

the channel is to provide value added support services

to the customers. TATA STEEL appoints distributors

who in turn appoint dealers based on the guidelines is-

sued by the company. Steelium products are sold both

by distributors and their dealers and not by TATA STEEL

directly. Each distributor and dealer needs to operate

strictly within the specified territory. TATA STEEL be-


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108

lieves in developing customer acquisition and retention

plan jointly with the distributors. Thus, in the course of

four years of operation, most of the important custom-

ers have been specifically attached to a distributor or a

dealer for sales and service. All distributors are required

to submit monthly details of their sales including their

dealers sales to the company. Information thus received

remains available for further analysis and validation by

brand managers and brand sales team. Distributors are

provided mutually agreed targets (sales volume, level

of support services, and customer satisfaction scores

which is not below 80%) for improving the quality of

their sales and are required to report their performance

in those areas.

All distributors and most of the dealers are web-ena-

bled for the purpose of communication, data exchange,

and tracking order execution online. In addition, a pass-

word-protected community website, TATA Steelium

Parivaar, has been designed to cater to the needs of the

distributors and dealers who as Parivaar members can

freely interact with each other. Since the members are

dispersed geographically, the website binds them closer

by offering a uniform platform to express themselves

and their commitment to the branding and growth of

Steelium (allindia.com, 2007).

Distributor Selection

In general, TATA Steelium distributors and dealers have

high market reputation, premium business location, and

superior capabilities to serve the customers. Distributor

selection is done through a three-step process. The com-

pany selects a few distributors for each consumption

centre from a large number of applicants. Level-1 screen-

ing is based on the combination of objective and subjec-

tive criteria like investment capabilities, interest in

exclusive dealership, registration with statutory authori-

ties, and market reputation. Level-2 screening is again

based on the combination of objective and subjectivecriteria where the compensatory6 decision rules are usu-

ally applied. The criteria considered in this phase are

business experience, turnover, knowledge, and quan-

tum of sales. Finally, in level-3, nominated senior offic-

ers of the company take decision about distributor

selection based on their ratings and scores in level-1 and

level-2. The process is illustrated in Figure 9.

Distributors Capability Improvement

A member of the TATA Steelium brand management

team stated, There were a lot of misconceptions about

the small customers of CRS. For instance, there was a

notion that small customers only see price, and hardly

care for service and business relationship. So, a lot of

our job was meant for educating the intermediaries onexactly what they are required to do and how they will

be rewarded.

TATA STEEL has taken multi-pronged action for im-

proving their channel members ability to serve custom-

ers better while improving the profitability of the entire

channel. These actions are detailed below.

Improvement of supply chain efficiency and effective-

ness through the theory of constraints (TOC): Accord-

ing to the proposed scheme of continuous replenishment

programme, the decision making authority for determin-

ing shipments of Steelium from TATA STEEL to a dis-

tributor would transfer from the distributor to TATA

STEEL. Instead of fulfilling orders provided by distribu-

tors, TATA STEEL would monitor the flow of its prod-

uct through the distributors warehouses, and decide

what to ship to the distributor, and when to ship it. All

the distributors of Steelium have agreed to implement

this new scheme and are in the process of investing in

infrastructure. Distributors would benefit through re-

duced investment in inventory, increased return on as-sets, and enhanced ability to serve the dealers and

customers. In 2006-07, the average distributor inventory

of TATA Steelium Cold Rolled Sheets and Tata Shaktee

Galvanised Sheets came down by as much as 20 per cent

(prdomain.com, 2007). Wherever implemented, TOC has

given TATA STEEL the visibility and control over in-

ventory levels at distributors and helped distributors on

how different grades and sizes should be stocked. Si-

multaneously, TATA STEEL educates their distributors

about efficient inventory management and advises them

to hold optimum inventory as they can depend on reli-

able supply from TATA STEEL. TOC is a part of com-

panys commitment to provide the best support for

Steelium distributors.

Human resource development initiatives for employees

working with channel partners: TATA STEEL organ-

izes training on sales management for all employees of

distributors through reputed business schools or other

corporate training organizations. Distributors are reco-



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mmended to organize customized training on advanced

sales management topics required by them. In addition

to professional training, distributors are required to im-

plement standard HR practices for remuneration, yearly

performance evaluation, recognition and rewards. The

companys HRD department provides full support for

problem solving (if any) and consultancy to distribu-

tors free of cost. In 2006, through its Steelium service

centre, TATA STEEL Limited trained through 29 ses-

sions in eight different languages, approximately 550

dealers on various selling techniques (sebi.gov.in, 2007).

Implementation of key account management (KAM)

process among distributors: Each distributor is required

to identify its key customers according to profitability/

relationship criteria and submit a valid account devel-

opment plan for each such customer. Distributors bring

out account-wise sales plan for the year which is closely

monitored. In addition, each distributor is required to

establish a customer-friendly procedure for handling

quality complaints and order management (receipt to

fulfillment) and implement a system of no-haggle pric-

ing and periodical monitoring of customers satisfaction

on the established criteria. Further, an initiative has been

taken to recognize the key employees of distributors

customer through a special programme called Vijeta

programme. Based on the purchase quantum and coop-

eration during a given period, some of these identified

employees get recognition and reward from distribu-tors/TATA STEEL. In medium-to-large organizations,

this fulfills the individuals (in DMU) recognition and

emotional needs.

Retail value management, a programme extended to all

the major brands of TATA STEEL, has successfully cre-

ated long-term positive memory among its customers,

and this has redefined the selling of steel by streamlin-

ing channel structure, introducing product improve-

ments, and changing the look and feel of steel shops

(highbeam.com, 2006). Optimal structuring of the retailnetwork has ensured higher capacity and reach, high

visibility across the retail chain, systematic measurement

of intangibles like distributors and dealers capability,

their involvement and brand care, customer account

managers capability, etc. Several dedicated outlets are

designed to ensure that the customers experience of

buying a brand is convenient, shopping time is reduced

and the visibility of companys brands are enhanced.

Along with these developments, the company has been

working to reduce transaction costs by using e-com-

merce for distributors and major dealers. In the next

phase, distributors and dealers will be able to transact

with their key customers using e-commerce. Awards to

the distributors and dealers are given based on specific

performance parameters and benchmarks. Dealer-meets

are organized for A category distributors and dealers

under each segment. Separate meets for B and C cat-

egory dealers and distributors are also organized. Thus,

many new ideas are generated towards strengthening

the channel, creating brand ownership, and enhancing

involvement of channel partners.

Evaluation of Distributors

TATA STEEL measures the performance of Steelium

distributors periodically, using scorecards prepared on

performance and capability parameters. Such sample

scorecards are illustrated in Figure 10.1 and 10.2 respec-tively. The dimensions of performance scorecard in-

clude:

Sales compliance

Quality of feedback

Inventory management

Market receivable management

Customer visits

Margin monitor

The dimensions of capability scorecard include: Market understanding

Quality of service centre

Service capability

Quality of HRM practices

Implementation of quality management systems

Work on special projects

The capability scorecard constitutes around 40 per cent

of the weight in the evaluation, indicating the impor-

tance of service to customers. Besides evaluation, TATA

STEEL always actively helps distributors to improve andprovide superior services. And this is one of the reasons

why TATA STEEL could develop very strong relation-

ship with their distributors.

In addition to the above, the distributors performance

is also monitored through surveys among regular cus-

tomers. Surveys include questions on steel supplied and

the support services provided. This gives TATA STEEL

an indication of the services available and overall im-


10/26


11/26


Fair and professional treatment

Caring parent company

Complete peace of mind in dealing with or using the

brand.

As a consequence, a large number of customers today

ask for TATA Steelium despite the premium it com-

mands over generic CRS available from competition.

Distributors Characteristics

Selling TATA Steelium is different from selling other CRS

that are available in India. We know we have to respond to

our customers needs much more than any reseller of steel

does in India. Our customers have got special attention; they

expect a different level of service which we think is unique to

our brand, TATA Steelium, said the owner of a distribu-

tor firm. As another distributors manager summed it

up: We attach greatest importance to the services to be de-livered to our customers, and we are to take whatever actions

that may be necessary and appropriate. It is clear that the

distributors of TATA Steelium strongly identify the

brand with their social grouping and they view the brand

as a means to their increased profitability and growth.

The relationship between TATA STEEL and the steelium

distributors and also the relationship between these dis-

tributors and their regular customers is intense and ac-

tive, which TATA STEEL has fostered over the years

through its grass-root marketing activities. As one of the

distributors expressed, Since the beginning, working with

TATA STEEL has been like working with a business partner.

It is very rewarding. Distributors dedication to customer

satisfaction has created a notable impression with the

TATA Steeliums customers:

My Steelium distributor is one of the most profes-

sional steel dealers we have ever worked with. They

are very much committed to our satisfaction.

Our distributors staff is committed to our satisfaction

and well being. It is great and they must keep it up.

Whenever I call I get somebody at distributors

premises to help me with an answer. They always try

to solve our problems. That is what I like most.

TATA Steelium distributors clearly know what the

brand represents and how it has been established and

based on that they feel that they know where the brand

can or can not go. The key characteristics are indicated

below:

There has been a large improvement in the capabil-

ity of many distributors across India. Distributors

have undergone major changes in mindset, business

knowledge, and skills with exposure to best practices

and growth among peers.

Most distributors are willing to invest more in estab-

lishing facilities and infrastructure for the future re-

alizing the benefits of growing with the TATA

Steelium brand. The company is taking up with dis-

tributors the installation of at least one service centre

with adequate facilities at every location. During

2007-08, it was expected that 15 distributors would

have their own service centres at an investment of

Rs. 50 crore in total.

Each distributor has willingly taken a target of Rs.

70-100 per tonne of steel to be sold by him during the

year towards brand promotion activities.

Distributors are committed to establish professionalorganization and systems. With growing demand

from customers for certified suppliers, many distribu-

tors have established quality management systems

in their organization and gone ahead with ISO certi-

fication. So far 14 distributors have been certified with

ISO 9001-2000 and it was expected that a total of 21

distributors would be ISO certified within 2007-08.

A strong sense of customer ownership has been in-

voked among distributors. Distributors have identi-

fied segment-wise key customers and developed a

micro plan for sales during 2007-08. They had

planned sales of 337 lakh tonnes of Steelium to key

customers against a target of 420 lakh tonnes during

2007-08. Clearly, there has been a paradigm shift from

random sales to planned sales approach.

Having established infrastructure, systems and facilities,

many competent distributors are looking for the next

level of excitement. Fulfilling the growth aspirations of

distributors continue to be the main concern in the long-

term as the production capacity of Steelium may not

increase substantially in the immediate future. Thus the

companys ability to satisfy the distributors growth

needs would be the key determinant of the ongoing re-

lationship between TATA STEEL and their Steelium dis-

tributors.

Dealers Characteristics

The role and influence of the dealers are most impor-

tant in areas where distributors capabilities are yet to


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112

be developed completely.

In most of these areas, the present dealers ensure dis-

tribution of Steelium to the widely dispersed small

furniture manufacturers.

Dealers are also doing the financing to most of the

small customers tied to them and are having revolv-

ing credit with them. While outlets were mostly multi-brand in previous

years, channel development activities have led to the

establishment of many exclusive Steelium dealers in

most of the major consumption areas.

Also more and more applications are being received

continuously by the distributors for further appoint-

ment of exclusive dealers.

CHALLENGES AHEAD

The competitive landscape of the Indian CRS market has

disturbing implications for the brand TATA Steelium

in 2007-08 and afterwards. TATA STEEL is faced with

the challenge of maintaining the sales and growth of its

brand TATA Steelium in an increasingly competitive

marketplace.

To achieve high levels of customer satisfaction and com-

mitment, TATA Steelium relied mostly on two elements:

largely superior steel quality and extraordinary cus-

tomer services through distributors and dealers. There

were ranges of subjective attributes that defined the

quality of TATA Steelium, like its surface finish, pack-

aging, labelling and distributors capabilities but it was

the consistently superior functional quality that uniquely

contributed to the brand equity of TATA Steelium. How-

ever, this value proposition confronted the brand TATA

Steelium with a challenge: competitors are about to bring

CRS of equal or superior functional quality to the do-

mestic market soon.

Because of the company image, number of years of ex-

istence in steel market, size, other product features, and

segment diversification, so far SAIL-Bokaro was the only

comprehensive competitor of TATA Steelium. The func-

tional quality of TATA Steelium was still unmatched.

Thus many small customers who purchase competing

products have shown preference for TATA Steelium. But

now Essar Steel was likely to enhance its volume of

equivalent quality CRS from 25,000 tonnes per month

to 40,000 tonnes per month in 2007-08 and Jindal South

West was on the verge of bringing new age CRS in the

market. These competitors are likely to focus their ef-

forts in their local markets first for maximizing margins.

With Steeliums focus gradually shifting to the more or-

ganized customers and higher growth segments, the

major competition will be for these segments. In spite of

this, the challenging target taken by Steelium for 2007-

08 is given in Table 5. Strengths and weaknesses of most

of the important suppliers of CRS are given in Table 6.

Secondly, because of the increased supply, there is a

strong probability that the overall market sentiment will

decline and it will not be easy to sustain the price pre-

mium and sales growth in a falling market. Further, these

new entrants are quite unlikely to invest in establishing

a brand name and they may try to offer customers just

the basic product without any service component so that

they can keep their cost as low as possible. Some of the

brands dealers and distributors may consider taking

part in trading competitors CRS in a different name in

order to fulfill their growth needs.

Customers

Brand has always played a critical role in steel purchas-

ing decision. When selecting cold rolled steel, retail cus-

tomers considered several factors: yield, availability,

cost, support service, company image, product authen-

ticity, brand culture, brand values, and above all rela-

tionship with the dealers or distributors. One customer,

during recent interaction, seemed to have spoken formany, One salesman contacts us almost everyday to find

out our requirements. We get the steel packets as per our re-

quirement on the desired date and time from the Tata dis-

tributor if we inform them about our requirements in advance.

This is a huge benefit to us.

Over time, however, customers have become very vo-

cal, especially after they developed intimacy with the

TATA Steelium distributors and dealers. Many custom-

ers personally know the TATA STEEL account manag-

ers and brand managers. They talk to all of them veryopenly about the quality of steel and that of additional

services where they want the company to improve fur-

ther. In brief these are as follows:

Expectations of service centre facility in terms of cus-

tomized blanks, sizes, etc., are increasing.

Expectation for technical support is increasing.

With India gradually becoming a global hub for

outsourcing for many industries especially auto an-



13/26


cillaries and panel (Metals, 2006), small customers

demands in terms of product quality and service lev-

els are becoming more stringent. They are demand-

ing product development and new product introduc-

tion.

With increasing price and reduced availability con-

tinuing since 2004, customers felt a kind of power

shift to TATA STEEL and brands distribution net-

work. Some of the very small customers demanded

fixed price contract and long-term supply contract.

TATA STEEL recognizes that such a feeling can be det-

rimental to the ongoing business relationship and spe-

cial care has been taken to ensure timely supplies to the

distributors. Also the distributors and dealers have been

advised to maintain service quality and enhance their

capabilities so that additional services and ready avail-

ability is ensured to the customers. This will alleviate

the felt effect of power shift by creating more goodwill.

It was TATA STEEL that first manufactured exceptional

grade of cold rolled steel with a great brand name; they

have never lost sight of their customers and distribu-

tors. Company-intermediaries-customers all trusted

each other in an ongoing relationship. The debate and

dilemma lie in whether or not the present relationship-

oriented branding strategy will continue to the benefit

of the brand under the changing market scenario or the

company should think of reframing its marketing strat-

egy.

Industry Structure

In order for TATA Steelium to develop an effective

appraisal of the present market situation and success-

fully develop its future plan, it is necessary to examine

its strengths, weaknesses, opportunities, and threats. To

do so, we first take a structured look at the industry us-

ing Porters five forces model. For this purpose, data was

collected through various interactions with industry

experts comprising of the executives of SAIL, TATA

STEEL, Essar, Jindal, Bhusan, etc.

Intensity of Rivalry Increasing

There are a limited number of firms competing in

the retail market of CRS with the top quality pro-

duct like Steelium. But competitors like Essar and

Jindal are also eyeing the retail market with compa-

rable quality and capacities. Essar was increasing its

supply from October-November, 2007 while the sup-

ply from Jindal was likely to commence only from

the end of 2007 or beginning of 2008. The supply from

SAIL-Bokaro is likely to remain at the same level till

it adds further capacity which is expected in another

two years time.

For the trade segment, earlier there used to be gen-

tlemens agreement between manufacturers regard-

ing monthly prices, but such agreements may not be

feasible now with so many firms likely to operate in

the near future.

Though most of the sectors served by TATA Steelium

are expected to grow at a healthy rate (Table 4), this

growth rate may not sustain for a long time and over-

all market may fall substantially if economic woes

plague again. This means that all these firms will be

competing for a larger share of a shrinking pie. At present stand-alone cold rollers are concentrat-

ing on exports for better realizations. But the drop in

international/domestic prices will force them to

refocus on domestic retail market putting further

pressure on price levels.

Over a period of about four years, however, the typi-

cal Steelium buyers have learned to buy CRS not

just on price. They are interested in other attributes

like service comfort, brand assurance, and the rela-

tionship with the Steelium distributors/dealers.

They look for customized shapes and sizes from the

distributors service centres and other value added

services. In spite of competition, therefore, brand

Steelium has an opportunity to build on its unique

capabilities in the retail CR market of India.

Threat of New Entrants Increasing

Global players like POSCO and Mittal Steel with

a long experience of supplying CRS in international

market have already announced their arrival in the

Indian market. These MNCs and the new domestic players like Essar

and Jindal have good corporate image. Some of the

brand loyal customers of Steelium may be taken

away by these firms.

These new entrants have no dearth of funds and can

establish large and capable distribution network in a

short time.


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114

Threat of Substitutes Mixed

In general, the thicker CRS is getting substituted by

the thinner hot rolled steel (HRS).

Fibre glass, aluminum, plastics, etc., are becoming

suitable substitutes of CRS in many applications like

car body, furniture, etc.

CRS from competitors may remain unbranded. Butany such effort may result in a large impact upon the

long-term performance of TATA Steelium and it will

require significant change in decision making.

As Steelium serves the complex use and consump-

tion needs of the customers, the large number of sat-

isfied users are likely to pose considerable resistance

to substitution by other brands or other materials.

Threat from Buyers Medium to High

So far the small retail buyers of CRS are not well or-

ganized.

Sometimes small customers bargain on the retail

prices but usually they do not pursue this aggres-

sively as often the credit provided by the trade chan-

nel is more important to them than the price.

Small customers often do not have much knowledge

about market dynamics and they are less likely to

initiate purchase action from other sources unless

they are properly identified, approached, and per-

suaded by a new supplier.

Some small customers are now able to import CRSeasily and many such customers are demanding new

product development/customized production.

Threat from Suppliers Weak

Since TATA STEEL is having its own hot rolled coil

production, there is no threat to the input materials

for the production of Steelium.

Summary

There are three strong forces worth considering. Rivalryand threat of new entrants are on the increase. Buyers

can become very powerful as an equivalent grade CRS

could be easily available in future. TATA Steelium can

stay ahead of competition by leveraging its unmatched

distribution network and customer service culture. To

be able to do so, TATA STEEL must be able to maintain

and enhance its relationship quality with channel mem-

bers and must sustain its strong and clearly differenti-

ated brand image.

SWOT Analysis of Brand TATA Steelium

The source of this analysis is the data collected in vari-

ous interactions with industry experts comprising the

executives of SAIL, TATA STEEL, Essar, Jindal, Bhusan,

etc.

Strengths

High functional quality of the product and grades

suitable for different applications of CRS

High awareness and preference among retail custom-

ers in all locations

Established, highly capable and motivated channel

partners supported by able Tata employees (account

managers and application engineers)

Value addition through dedicated and high quality

service centres

Long emphasized service culture in all stages like pre-

sales, sales, and after-sales Enduring relationships with customers already es-

tablished by the distributors/dealers

Major supply chain improvement initiatives through

TOC will help improvement of supply chain effec-

tiveness

Association with TATA name brings special trust

among the Indian customers.

Weaknesses

Limited availability with increasing demand may

force the existing customers and channel members

to look for other sources

Production being located at only one place

(Jamshedpur in India), logistics disadvantage is likely

for supplying to certain parts of India

Brand identity (logo) of Steelium is lost when proc-

essed further (like slitting, blanking, etc.) in a service

centre.

Opportunities

Contract production by maintaining quality stand-ard and other parameters can enlarge customer base

and sales volume.

Within the present market size, there exists consid-

erable room for Steelium to expand and enhance prof-

itability.

Improvement of sales and realization potential is

possible by increasing the supply of drawing and

deep drawing grades.

Further value can be created and captured by inno-



15/26


vative marketing strategies like production and sales

of exclusive and branded furniture. If the existing dis-

tributors are inducted, this will fulfill their growth

needs too.

Continual improvement in service will help in sus-

taining competitive advantages.

Threats

By far the most significant threat Steelium faces is

that of losing some of the important customers and

distributors in the hand of competitors like Essar and

Jindal that can also become a quality national sup-

plier.

On the back of this uncertainty, Steelium has to con-

tinue investing on relationship with channel mem-

bers and customers.

In absence of any real differentiation in material qual-

ity, Steelium will have to compete solely on thestrength of intangibles.

SUMMARY

Today the brand TATA Steelium has the best customers

in its portfolio and gets the best chance to sell in the

market. Compared to the other steel producers, TATA

STEEL is viewed by customers and intermediaries as

much more collaborative. In comparison to Essar, the

price of TATA Steelium works out cheaper, after con-

sidering the service and relationship value to the cus-

tomers. This is illustrated in Figure 12. In view of the

large demand-supply gap that exists in the CRS market,

TATA STEEL can afford to sacrifice some of its casual

customers and maintain its premium position with serv-

ice-sensitive customers.

New Strategy?

A large number of small customers and steel merchants

are now familiar with the TATA Steelium brand and

hold a favourable, strong, and unique brand association

in their memory. The brand is also distributed in a veryeffective way. It is true that the brand is being driven by

the sophisticated service seekers who are also coopera-

tive customers. Price-sensitive customers are not the

regular buyers and cost is the primary reason for their

not going for a repeat purchase. Though brand building

through relationship and service has always been the

primary focus of the company, it is important to con-

sider the other reasons that customers bought the brand

for, which included brands functional quality and avail-

ability constraint from competitors.

Today, the brand holds a dominant market position and

an excellent long-term profit potential in view of the

likely growth in the consumption of CRS and further

improvement of market prices. However, the potential

for the volume growth of the brand is limited due to

fixed production capacity.

Under such circumstances, the first and foremost con-

cern of the brand will be to achieve customers percep-

tion as the fairest-priced CRS with its brand features and

associations. Should the brand premium be reduced or

the company must find avenues to add more value

through tangibles or intangibles? Reduction of price will

surely mean reduction in profit for the whole chain while

adding new values will require further research and

possibly new competencies. The next important concern

is to protect the distributors and dealers loyalty. Whilecompetitors may entice away some of the existing part-

ners, few others may be tempted to start a parallel busi-

ness of distributing competitors product for higher

turnover and growth. Should the company motivate

these distributors and dealers to sell its other brands or

should it start a new venture of manufacturing and

market its own range of high quality, innovative line of

stylish yet affordable steel furniture using Steelium, for

home and office? The existing distributors and dealers

can install manufacturing facility and open a chain of

retail furniture stores. In selling other brands, the dis-

tributors and dealers will have to serve different cus-

tomers and will be subjected to different guidelines. In

the business of related end product like furniture, the

market will be new to the company as well as to the

distributors. All participants will require new skills and

a proper understanding of the product, market, custom-

ers, collaborators, and competitors. Also, the new busi-

ness will consume the raw material; and to maintain the

current market share, the company will require capac-

ity addition.

Capacity addition will take a little more time but it is

forthcoming as all the existing steel majors including

TATA STEEL have taken definite steps towards the

same. In fact, the Indian CRS market of small customers

may witness yet another revolution with the entry of

multinationals as they will not only bring good quality

steel but also extraordinary support services. This may

result in acute competition for the brand Steelium. The


16/26

116

new entrants would be vying for the same service-sen-

sitive segment of the CRS customers. Measuring the

success of relationship initiative and customer intimacy

under the changed marketing environment will be ex-

tremely difficult. At this stage, therefore, the company

may seriously think whether the current relationship-

oriented initiatives are worth reinvesting in or whether

the company should prepare to launch a stripped-down

version of the brand in standard specifications offering

lower prices and only essential services. This second

option may also make the Indian CRS market little un-

attractive to the new entrants. Importantly, in continuing

with the current strategy, continual improvements will

be required and the evolutionary path, that will help the

brand to sustain its competitive advantages, will have to

be made clear to the company in a very short time.

Table 1: Sales Performance of Branded Products

Rs. Crore

2003-04 2004-05 2005-06 2006-07

Sale of branded products 2,365 3,362 3,848 4,604

Growth over previous year (%) 42 14 20

Total sale of products 11,332 15,251 16,521 17,700

Growth over previous year (%) 35 8 7

Brand sales w.r.to total sales (%) 21 22 23 26Source: TATA STEEL Annual Reports

Table 2: Sales Performance of TATA Steelium

Lakh Tonnes

2003-04 2004-05 2005-06 2006-07 2007-08(E)

Steelium Sales Volume 2.83 3.55 3.92 3.71 4.2

Growth over previous year (%) 25 10 -5 13

Source: TATA STEEL Annual Reports

Table 3: Technology Parameters and its Advantages

Key Facilities Advantage over Competition

Coupled shallow bath Lower idle time and improved productivityhydrochloric acid pickling Less damage of the strips

Uniform product quality Low acid and energy consumption

Tandem cold rolling mill Better gauge and shape accuracy No damage during storage Lower cost in terms of investment, manpower, and consumables Less off-gauge and higher yield

Batch annealing Can take care of orders in small lots which is the characteristic of Indian retail market Can get close to customers requirement of draw- ability, ductability along with strength

Skin passing Precise amount of surface roughness is imparted, Possibility of surface defects like stretch marks, etc., are eliminated No need for the customer to prepare the coil before deformation

100% inspection under strobe lights 100% performance at customers end and not merely a specification guaranteeby trained inspector and with Matching precise oil requirement of the customer and thus ensuring smooth operationelectrostatic oiling capability at customers end.

Machine packing with thin No damage due to moisture or loss of oilplastic film Increased protection to handling damage

Electrolytic cleaning Removes dirt or contaminations from the grooves and deepening on strip surface

Electro discharge texturing machine Matte, bright and mirror bright finish depending on the customers end use requirements

Source: Tisco News, 1999 and Kharkar et al., 1997.



17/26


Table 4: Segment-wise Sales of TATA Steelium

Segments % Sales in Sectoral Growth2006-07 Rate Estimated(%)

Automotive 38 18

Panel 34 16

Gen Engg 16 9

Furniture 5 10

Tube 3 N.A

Stamping 2 N.A

Packaging 1 9

Others 1 N.A

Source: Company records

Table 5: Sales Target of TATA Steelium

2006-07 2007-08Actual Plan

Market Size 21.79 24.21

Growth (%) 11

Steelium Sales 3.71 4.2

Growth (%) 13

Market Share (%) 17 17

Premium (Rs./Ton) 800 1300


Table 6: Strengths and Weaknesses of Major Competitors of Steelium

Competitors Name Strengths Weaknesses

SAIL Large capacity; operates through financially strong CRS quality not suitable for higher-end

traders all over India; supplier of many other applications; do not have authorized sellingcategories of steel in retail market; sales tax (VAT) agents; little control over traders; focus onadvantage due to many number of own stockyards low-end segments; sells large quantity ofacross India. CRS in standard grade.

Essar Steel High volume, superior technology, good quality No organized distribution network for retailproduct, good distribution network existing for marketing of CRS; no experience oftheir hot rolled items; ability to supply number of providing technical support to the channelflat products to the distributors, location advantage members and customers; attempt to sellfor western and southern parts of India; targeting CRS through multiple channel creatinghigh end sectors like auto, appliance, etc. dissonance.

Bhusan Steel & Power Good product quality; supplies in customized Not an integrated steel plant (howeverand Bhushan Steel & blanks; focus on high margin customers like auto captive HR is coming up) not having strong

Strips and appliance; good quality service centre in the distributors network, availability of CRS ismill; can supply small quantities of deep drawing not regular and mostly opportunistic ingrades to retail segments. nature based on price differential between

domestic and export market.

Uttam Galva Excellent tie-up both domestic and international Not an integrated steel plant and depend onfor hot rolled steel as input material; doubling the import for input materials; availability ofproduction capacity; good quality of product; CRS is not regular.concentrates on local sales with better service andhigher margins; controls the thinner CR marketin western region.

Hero Cycles Narrow mill; 60% own consumption; can supply High input cost, small volume.customized sizes; good product quality.

Source: Authors


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118

Figure 1: Vision Architecture 2007

Source: Tisco News, 2002.

Figure 2: Brand Revenue Target

Source:Tisco News, 2002.



19/26


Figure 3: Branded House of TATA STEEL

Creating Value by Branding


Figure 4: Awards and Recognitions for TATA STEEL


Figure 5: TATA Steelium Advantages

Source: Steelium Brochure.


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120

Figure 6: Targeting Retail Customers with TATA Steelium

Source: Authors

Figure 7: Highlighting the Packaging Features

Source: Steelium Brochure

Large Customerserved directly

(About 0.4 MT/year)

ALL CUSTOMERS

Small Customersserved through

Distribution(About 0.4 MT/year)

Tailored strategy and communicationfor long-term relationship

Cannot sell more than 0.4 MT/year

with large customers only

Brand Management Relation with channel members Value for customers



21/26


Figure 8: Brochure Showing Steelium Advantages for Furniture Segment

Source: Steelium Brochure


22/26

122

Figure 9: Steps in Distributor Selection




23/26


Figure 10.1: Step 1 in Distributor Evaluation



24/26

124

Figure 10.2: Step 2 in Distributor Evaluation




25/26


Figure 11: Value Proposition for TATA Steelium

Source: Authors

Figure 12: Utility of Price Comparison Potential Benefit of Customers in buying TATA Steelium

Source: Customer interviews

NOTES

1. Interim names: Company trade name combined with in-dividual product names. TATA STEEL ties its group nameto an individual brand name for each product.

2. Mr. A Sen designated as Chief of Marketing and Sales, is asenior level marketing executive of TATA STEEL handlingflat products of the company. At TATA STEEL, brandmanagement including the initiatives of internal branding

falls under the responsibility of Chief of Marketing andSales, flat products and long products. They report to thecompany Managing Director, Sri B Mutturaman.

3. Dealers: At TATA Steelium, retailers are called dealers.They are appointed by the distributors as per companyguidelines.

4. Cutters act as a service centre for steel coils. Here the coilsare decoiled, cut into specific sizes, sometimes silted andrecoiled depending on the customers requirements. TATASTEEL encourages their distributors and major dealers toinstall such facilities and beyond.

5a. Marketing orientation is an organizational orientation thatcentres its activities on achieving success by satisfying the

needs and wants of its customers.5b. To safeguard brand power, all brands require some care

(judiciousness in avoiding harm or danger) such as mak-ing sure that all marketing activities undertaken by thedistributors and dealers send a consistent message aboutthe brand.

5c. Ethics (a general enquiry into what is good) is an inescap-

able part of brand management. All marketing decisionsand actions of distributors and dealers must be consistentwith the brands stated ethical intentions and in all suchactions, ethical issues must be taken into account so thatthe actions are culturally good and there is no harmful ef-fect on customers, employees, company, other partners,the community and the world as a whole.

6. In compensatory decision rule, the weakness of a distribu-tor on one attribute can be compensated for by strength onanother, and the scores are summed up to determine thehighest scoring (most favourable) and the lowest scoring(most unfavourable) distributor.

Excellent

FunctionalQuality

Dream Customer Service

Customer Intimacy

Price of TATASteelium

Includes freight)

Loss for nosupport service

Impact ofrelationship with

distributors

Value of CRS fromnew entrants

Essars current price(includes freight)

Rs.42,700

Rs.700

Rs.400 550

Rs.42,150


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publications.aspx?date=20060216&pageNumber=8,TATA STEEL Implements Retail Value Management;Creates Long-term Positive Memory Among ConsumersFebruary 16, 2006.

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Kharkar, H C; Chatterjee, A and Muthuraman, B (1997), Tech-nology Selection for TATA STEEL Cold Rolling Com-plex, TATA Tech, 28.

Kotler, P and Pfoertsch, W (2006). B2B Brand Management,Springer, 264-265.

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Lynch, J and Chernatony, L D (2007), Winning Hearts andMinds: B-to-B Branding and the Role of the Salesperson,Journal of Marketing Management, 23(1-2), 123-135.

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Kaushik Bhattacharya is a Ph.D candidate at the Vinod GuptaSchool of Management, Indian Institute of Technology,Kharagpur. He has over 15 years of experience in marketingand sale of Indian steel industry.

e-mail: [email protected]

Biplab Datta, a Ph.D from the Indian Institute of Technology,Delhi, is currently an Assistant Professor of Marketing at theVinod Gupta School of Management, Indian Institute of Tech-nology, Kharagpur. His teaching and research interests includerelationship marketing, customer relationship management,

brand management, consumer behaviour and e-business. Hehas worked on various management projects and co-authoredseveral articles for Indian as well as international journals.

e-mail: [email protected].

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