2. TATA STEEL
• Largest private sector steel marketer in India.
• Crude steel production capacity of 6.8 million tonnes per annum.
• The company has been successful in maintaining its dominant position
among key segments in the Indian steel market
• It has also es-tablished a significant presence in the international markets
through both tie-ups with customers and mergers and acquisitions
3. • The company is aiming at enhancing its domestic
steel capacity to about 30 million tonnes per
annum by 2015.
• In May 2002, the company launched theVision
Architecture 2007 (Tisco News, 2002);
5. TATA STEEL: KEY FEATURES
• TATA STEEL, the flagship company of theTata group, has
several awards and recognitions to its credit.
• They are one of the lowest cost producers of steel.
• 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.
6. • On February 27, 2003, ‘TATA STEEL’ launched the world’s first
branded cold rolled steel (CRS) called ‘TATA Steelium’
7. PRIORTO LAUNCH
• Branding will give rise to a customized product in terms of value
Performance
Pricing
• Help to 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
fragmented 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”
8. • Prior to brand launch,TATA STEEL brand management team had to
acquire a very clear understanding and a deep insight into whatTATA
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’ behavior and
expectations, feedback from potential intermediaries.
9. Factors that play an important role prior to
brand launch are described below.
Technology selection:
• Firstly identifying the segment that one needs to lay
stress upon(high end CRS users.)
• TATA STEEL had 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
`
10. Importance for Retail Market of CRS and Branding
• 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.
• TATA STEEL wanted to become the leader in CRS in
domestic market
11. Customer Opinion
• Prior to the launch ofTATA Steelium, customers faced a lot of problems and made a lot of
compromises.
• Solving customer’s problems was seen as a golden opportunity to make a strong hold in the
market byTATA Steel.
12. Three Major Problems faced by Customers
1) Customer was not satisfied with the quality of CRS being procured by the competitors.
TheCRS could be used for simple applications but was not fit for bending, forming and
artistic uses.
Superior quality materials available from import were beyond the reach of small
customers.
13. Interaction with Manufacturers
2) The small customers had limited access to manufacturers of CRS.
They moved from one retailer to another to fulfil their requirement.
These retailers did not entertain quality complaints from customers
because of lack of support at the backend.
Accordingly, the need for transacting with a professional
organization instead of market-based retailers was
strongly felt by the small customers.
14. • Third, identity and quality of CRS purchased from the retailers were often doubtful. Other
manufacturers apparently sold identical CRS of different specifications including inferior
grades at lucrative price and terms.
• Manufacturer’s name and other details were usually marked only on the packaging
materials that could be easily manipulated by a dishonest retailer.
• Customers hated the power of dishonest retailers more than anything else.
15. Post the Launch ofTATA Steel
• “Steelium has changed our life; it has increased our 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 withTATA CR.”
17. Critical Action Areas
• Creation of an environment where the company, distributors/dealers, and
customers had trust on one other.
• 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 professionalism and consistency among the
dealing persons.
• Improvement of service (level and quality) was long overdue in the retail
sales of CRS.
• Service improvement had to continue and service excellence over
competition had to be persistent.This is because it was understood that
similar technology can be installed by other firms later and differentiation
in the physical product may not be a determinant of the purchase
decisions in the future.
18. Brand Engineering
• Product
The company introduced choice of grade and size in a manner that best influenced the
customers’ perception of value.
• Packaging
Technology specially selected for packaging. TATA STEEL tags and unique blue seals on the
packaging which help identify the source of the material and other information.
• Pricing
Tata Steel decided to charge premium price over competition.To ensure the perceived
value , the brand management team regularly monitors competitors’ prices, market
dynamics, and components like quality premium, service premium etc.
19. • Communication
Being the world’s 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.
B2B brand was not 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.
Relationship management through distributors as well as account managers.
• Salespersons
It ensures that all Steelium distributors have a minimum number of
salespersons according to their business volume and they are knowledgeable
about the product, systems, procedures, and customers.
• Channel Design
Based on the consumption pattern and strategic business volume, the company
decided to go for selective distribution in each major location.
Web enabled distributers for better information exchange and service response
20. Distributor Selection
• TATA Steel distributors and dealers had high market reputation, premium business
location, and superior capabilities to serve the customers
• Distributor selection was done through a three-step process.
• screening was done based on the combination of criterias like investment capabilities,
interest in exclusive dealership, registration with statutory authorities, and market
reputation
• In next step screening was again done and the compensatory decision rules were usually
applied.The criteria considered in this phase are business experience, turnover, knowledge,
and quantum of sales
• Finally, in level-3, nominated senior officers of the company took decision about distributor
selection based on their ratings and scores in level-1 and level-2.
21. Distributor’s Capability Improvement
• TATA STEEL had taken multi-pronged actions for improving their channel members’ ability
to serve customers better while improving the profitability of the entire channel, these
action were as follows
Improvement of supply chain efficiency and effectiveness through the theory of constraints
(TOC)
According to the proposed scheme, the decision making authority for determining
shipments of Steelium fromTATA STEEL to a distributor would transfer from the
distributor toTATA STEEL
TATA STEEL would monitor the flow of its product through the distributors’ warehouses,
and decide what to ship to the distributor, and when to ship it.
22. Human resource development initiatives for
employees working with channel partners
TATA STEEL organized training on sales management for all employees of distributors
through reputed business schools or other corporate training organizations.
The company’s HRD department provides full support for problem solving (if any) and
consultancy to distributors free of cost
23. Implementation of key account management
(KAM) process among distributors:
Each distributor was required to identify its key customers according to
profitability/ relationship criteria and submit a valid account development plan
each distributor was also required to establish a customer-friendly procedure
for handling quality complaints and order management
an initiative was also taken to recognize the key employees of distributor’s
customer through a special programme called ‘Vijeta’
Based on the purchase quantum and cooperation during a given period, some
of these identified employees got recognition and reward from
distributors/TATA STEEL.
24. Evaluation of Distributors
• TATA STEEL measures the performance of Steelium distributors periodically, using
scorecards prepared on performance and capability parameters.
• The dimensions of performance scorecard include:
1. Sales compliance
2. Quality of feedback
3. Inventory management
4. Market receivable management
5. Customer visits
6. Margin monitor
25.
26. The dimensions of capability scorecard include:
1. Market understanding
2. Quality of service centre
3. Service capability
4. Quality of HRM practices
5. Implementation of quality management systems
6. Work on special projects
.
29. • Excellent functional quality:
Steelium slogan ‘Help Shape your Dreams’ indicating superior shaping
and forming application properties, formed the core of a highly-
differentiated value proposition.
• Dream customer service through highly capable distribution:
It was ensured that the distributors and their dealers in each location
provided adequate services and satisfactory buying experiences to
every customer.
• Customer intimacy:
The goal of the company is to give each customer a sense of dealing
with a professional organization indicative of ‘Tata’ brand by having
competent and concerned intermediary employees and installing
effective systems of dealing with customers.
30. Result
A large number of customers today ask forTATA Steelium
despite the premium it commands over generic CRS available
from competition.
31. Distributors Characteristics
• Satisfying the distributor’s needs, providing them with immediate solution
and there maximum satisfaction has been a key objective forTata Steelium.
• The distributors see the brand as a means for increased profitability and
growth.
32. Building relationship with distributors
• The distributors are willing to invest more in infrastructure to grow with
TATA Steelium.
• TATA has also come up with setting atleast one service centre at every
location.
• The distributors are also willing to spend Rs. 70-10 per tonne of steel sold on
brand promotion activities.
• Distributors have improved their quality management systems and are
going for ISO certifications
• The distributors have shifted to planned sales approach, and have
developed micro plans for key customers.
33. Dealer Characterstics
• Tata recognizes that dealers capabilities are yet to be developed completely.
• Dealers have to ensure wide distribution to small furniture manufacturers.
• Dealers often have to finance the customer and sell the goods on revolving credit.
• Many of the outlets are though multibrand, but now exclusive steelium dealers
have been established.
• Applications for being exclusive dealers increases day by day.
34. Challenges ahead
• It’s a highly competitive segment, with players like SAIL, Essar Steel,
Bhushan Steels etc.
• Maintaining sales growth has become a challenge.
• Increased supply means inability to charge premium .
• The two elements: superior steel quality and extraordinary customer
services.
• Quality attributes : Surface finish , packaging, labelling and distributors
capability
• Focus has shifted to organized customers and higher growth segments
35. Customers
• Tata Steelium takes care that service quality to customers is unmatched and
provides single point solution to all the customer needs and problems.
• Customers consider several factors like yield, availability, cost, product etc.
while buying the product.
• Customers are now expecting :
• Service centre facility in terms of customized blanks and sizes
• Better technical support
• Demand for new and better quality products by small customers.
• Fixed price and long term contracts.
37. Intensity of rivalry - Increasing
• The number of firms willing to serve retail customers are increasing
• Difficulty in entering into agreements with manufacturers in terns of prices
due to increased competition
• Fear that economic woes would lead to shrinkage in demand
• Decrease in international price levels will force them to focus more on
domestic markets
• Demand for customized products in terms of shape, sizes and quality.
38. Threat of new entrants
• Global and experienced players like POSCO and Mittal Steel have already
announced their entry into the domestic market.
• Customers may shift more reputed brands such as Essar steels and Jindal
steels.
• These new and big entrants have large funds to setup wide distribution
network in a short period of time.
39. THREAT FOR SUBSTITUTES: MIXED
Thinner hot rolled steel tends to replace
CRS.
Fibre glass, aluminium, plastics, etc., are
becoming suitable substitutes.
Steelium serves the complex use
decreasing threat of substitutes.
12 % of total sales coming from
unorganised sector.
40. Threat from Buyers: Medium to High
Small unorganised retail buyers.
Small customers often do not have much knowledge about market dynamics.
Some small customers are now able to import CRS.
41. Threat from Suppliers:Weak
TATA STEEL is having its own hot rolled coil
Production.
Vertical integration in SCM weakens this threat.
There are three strong forces:
Increasing competition
Threat of new entrants.
Increasing exports from buyers.
42. SWOT ANALYSIS
STRENGTH
High Quality
High awareness and preference
Good Channel partners
Good pre-sales, and after-sales
Association withTATA
WEAKNESS
Limited availability leads to
customer switching.
Logistical disadvantages.
Brand logo vanishes in further
processing.
OPPURTUNITIES
Contract production can increase
sales volume.
Considerable room for expansion.
Scope of Innovative marketing.
THREATS
High competition from players like
Essar and Jindal.
In case CRS imports, Steelium will have
to compete solely on the
strength of intangibles
43. • TATA Steel has the best customers in its portfolio.
• Had a perception of reliable and collaborative.
• Economical prices.
• Increasing demand-supply gap is hampering prospective.
SWOT ANALYSIS
44. WAY FORWARD
Concerns
• Price-sensitive customers are not going for a
repeat purchase. Should the brand premium
be reduced?
• protect the distributors’ and dealers from
competitors.
• Threat of the MNCs entering Indian market.
Strategy
• Brand premium should not be reduced.
• Look for new dealers and functional
innovations.
• Continuous improvement for competitive
advantage.
