Marketing Mix of Tata Steels

Submitted To: Prof C.V.A. Prasad RaoSubmitted By:Deepika Sajja (09BSHYD0247)Gaurav Mathur (09BSHYD0289)Kapil Gupte (09BSHYD0355)Prasanna Sawarkar (09BSHYD0574)Samrat Chakraborty (09BSHYD0729)Saurabh Verma (09BSHYD1107)Varun (09BSHYD0957)SECTION-A16383002857500B2B ProjectMarketing Mix of TATA STEEL ACKNWOLEDGMENT We would like thank to Prof. C.V.A Prasad Rao for the support, assistance, cooperation and useful insights which he provided us completely throughout the project. Without him it would not have been possible for us to complete the project. Table of Contents TOC quot;
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OBJECTIVE: PAGEREF _Toc270270069 4METHODOLOGY: PAGEREF _Toc270270070 4INTRODUCTION: PAGEREF _Toc270270071 5Company Background PAGEREF _Toc270270072 54 P’S OF MARKETING: PAGEREF _Toc270270073 61. PRODUCT: PAGEREF _Toc270270074 6Tata Steel Products PAGEREF _Toc270270075 62. PRICE: PAGEREF _Toc270270076 9Factors Influencing Pricing Strategy in Steel Industry PAGEREF _Toc270270077 9Production Costs PAGEREF _Toc270270078 9Market Demand: PAGEREF _Toc270270079 10Competition: PAGEREF _Toc270270080 10Pricing Strategy: PAGEREF _Toc270270081 10Competitors’ Analysis PAGEREF _Toc270270082 113. PLACE: PAGEREF _Toc270270083 12Distribution channels at Tata Steel: PAGEREF _Toc270270084 12Distribution Channels at JSW Steel: PAGEREF _Toc270270085 134. PROMOTION: PAGEREF _Toc270270086 14Promotional activities undertaken by TATA Steel: PAGEREF _Toc270270087 14Branding Steel Based on Customer Focus PAGEREF _Toc270270088 14Branding Steel PAGEREF _Toc270270089 14Challenges Faced: PAGEREF _Toc270270090 17Value Management: PAGEREF _Toc270270091 18Benefits reaped from Promotional activities: PAGEREF _Toc270270092 18Competitor Analysis in Promotional activities: PAGEREF _Toc270270093 19BUYING BEHAVIOR PAGEREF _Toc270270094 20Competitive Advantages of Tata Steel: PAGEREF _Toc270270095 22REFERENCES: PAGEREF _Toc270270096 23 OBJECTIVE: ,[object Object]

To analyze 4 P’s of marketing of TATA STEEL with other players and to find out competitive advantage TATA STEEL has over its competitors

To understand buying behavior in case of Industrial Marketing METHODOLOGY: The research methodology that has been adopted for this project is as follows. ,[object Object]

On the basis of the above information 4 P’S of marketing pertaining to TATA STEEL has been studied.INTRODUCTION: Company Background Tata Steel, formerly known as TISCO and Tata Iron and Steel Company Limited, is the world's sixth largest steel company, with an annual crude steel capacity of 31 million tonnes. It is the largest private sector steel company in India in terms of domestic production. Ranked 258th on Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of companies. Tata Steel is also India's second-largest and second-most profitable company in private sector with consolidated revenues of Rs 1,32,110 crore and net profit of over Rs 12,350 crore during the year ended March 31, 2008. Backed by 100 glorious years of experience in steel making, Tata Steel is among the top ten steel producers in the world with an existing annual crude steel production capacity of 30 Million Tonnes Per Annum (MTPA). Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions; the company has become a multinational with operations in various countries. The company was also recognized as the world's best steel producer by World Steel Dynamics in 2005. This helped the company not only to establish a beachhead in seven countries across the region, namely Singapore, Thailand, China, Malaysia, Vietnam, the Philippines and Australia, but also provided it with a customer base for close to two million tonnes of steel. 4 P’S OF MARKETING: 1. PRODUCT: Tata Steel Products The Company’s products consist of TSL products, produced by the Company’s Indian operations and its NatSteel and Tata Steel Thailand operations, and Corus products, and produced in the United Kingdom and The Netherlands. TSL’s products can be divided into three main categories: 1. Finished and semi-finished steel products; 2. Ferro alloys products; and 3. Other products and services, including tube products, bearing products, refractory products, pigments, municipal services and investment activities. Corus has four main product segments: (1) strip products; (2) long products; (3) distribution and building systems; and (4) aluminum. TSL Products: Finished and Semi-finished Steel Segment Products TSL’s finished steel products are produced at its Indian facilities, as well as in various Asia Pacific countries by NatSteel and in Thailand by Tata Steel Thailand. TSL’s finished steel products can be principally divided into flat products and long products, including wires. In addition, TSL also produces relatively smaller quantities of semi-finished steel, rings, agricultural tools, and steel equipment. The following table lists the various finished and semi-finished products TSL produces, as well as the principal uses for these products and their principal markets Ferro Alloys Segment Products TSL’s ferro alloys segment produces chrome ore, pyroxenite and manganese ore as well as ferro chrome and ferro manganese. Ferro chrome and ferro manganese are used by the steel industry to create stainless steel products. TSL is the leading manufacturer of ferro chrome in India and the leading manufacturer of chrome ore internationally. Corus Products Corus has four main product segments: (1) strip products; (2) long products; (3) distribution and building system products; and (4) aluminum. Strip Products Uncoated strip products comprise hot rolled, cold reduced and electrical steels, which are sold both in coil form and, cut to length, in sheet form. Corus is one of the market leaders in the manufacture of coated strip products. Long Products Long products comprise sections and plates, and rods. Engineering steels also form part of the long products division and are produced by the electric arc method as opposed to the basic oxygen steelmaking method in the United Kingdom at Rotherham. JINDAL STEELS PRODUCTS Products: Hot Rolled products: HR Coil, HR plate and sheet, HRPO, HRSPO Applications: Automobile, Boiler and Pressure Vessels, Ship Building, Railways, Transmission Towers, Oil and Petro Chemicals, Marine Containers, Coal and Mining General and Heavy Engineering Cold Rolled Products: CR coil and Sheet Applications: Automobile, White good, Cold rolled formed section, General engineering & fabrication, Packing, Drums/ barrels, Furniture Galvanized Product: Galvanized Corrugated Sheet, GP Sheet and Coil Applications: Automobile, Boiler and Pressure Vessels, Ship Building, Railways, Transmission Towers, Oil and Petrochemicals, Marine Containers, Coal and Mining, General and Heavy Engineering. Pre-Painted Galvanized Product: PPGI coil, PPGI sheet, PPGI profile Application: Roof, Wall cladding and other building products, Household appliances, Furniture, Automotives PRICE: Pricing is one of the most crucial elements behind a successful product. It is more pragmatic and fact oriented in industrial marketing as compared to pricing for consumer products. Pricing in industrial marketing is closely related to the firm’s product, distribution and communication strategies. Factors Influencing Pricing Strategy in Steel Industry The most important factors which affect pricing strategies in steel industry are: ,[object Object]

Market demand (derived in nature)

Government regulationsProduction Costs Tata Steel is the lowest cost manufacturer of steel and keeping production costs low have played a major role in achieving that. The following measures have helped Tata Steel in maintaining cost leadership: ,[object Object]

Internationally, Tata Steel has 5% interest in the Carborough Downs Coal Project located in Queensland Australia for low ash coal. The Sila Eastern Company has been established to develop limestone mines in Thailand mainly for the captive use of Tata Steel.

Capacity expansion: With the expansion of its Jamshedpur plant by 2012 and Greenfield units in Orissa and Chhattisgarh becoming operational in 3-4 years, its manufacturing capacity will jump to 21 mtpa. Acquisition of Corus has made Tata Steel one of the largest manufacturers of steel.

Technology: Tata Steel has developed several technologies that help in keeping production costs low. Some of them are:

Process innovation and use of blue dust in sinter plants increased productivity by 60%.

Stamp charging technology was indigenously developed to convert low quality coal to high quality coking coal. This reduced the import of coking coal.All these factors and more have led to Tata Steel being the lowest cost, but still the best quality steel manufacturer. Market Demand: Demand for steel is derived in nature since it is majorly used as an input. The following facts and figures suggest that there exist healthy demand in market for Tata Steel to serve. ,[object Object]

In India, apparent consumption is expected to increase by more than 10% in FY 11 buoyed by expected strong performances from consuming segments like automotive, construction, infrastructure and capital goods.With economic and steel market conditions becoming more favorable and the steel producers needing to recover the rise in input costs, it is anticipated that there will be a strong rise in the steel prices in 2010-11. However, significant raw material price increases, interest rate tightening and inflation may provide some downsides to an otherwise positive outlook for the industry. Competition: Existing and potential competition inevitably affects pricing strategy by setting an upper limit. The amount of latitude a firm has in its pricing decision largely depends on the degree to which it can differentiate its products in the minds of buyers. Pricing strategy is also influenced by the anticipated reactions of competitors to pricing decisions. Price reductions on products that are undifferentiated are generally met immediately by all suppliers, resulting in little shift in market share. The major competitors of Tata Steel in India are Steel Authority of India Ltd, JSW Steel Ltd and Essar Steel Limited. Tata Steel's rare advantage is that it has captive iron ore mines with capacities far in excess of its current needs. Therefore, it makes imminent sense to expand its primary steel-making facilities in India and look for finishing capabilities elsewhere. Greater the volumes, lower the production costs and hence lower the prices at which its products are offered. This shows that the ability to maintain lower prices of its products have given Tata Steel the edge over its competitors. Pricing Strategy: A pricing strategy must be conceived in relation to overall business objectives and marketing strategy. The success of any business depends upon a blend of long run profit, growth and survival objectives. Price, because of its influence on unit sales volume and profit margins, affects long run profit objectives. And maintaining profitability through sound pricing practices is necessary to ensure the firm’s survival over time. The pricing strategy adopted by Tata Steel is the Market Penetration Strategy. This strategy is based on the assumption that demands for the product is highly elastic. By setting relatively low price Tata Steel has managed to obtain large market share. The advantage of this kind of pricing is that it discourages competition since there is less opportunity to reap unusual benefits on investment. Since Tata Steel is in control of large iron ore deposits it has increased its capacity manifold and so enjoys economies of scale. It has thus maintained prices of its products lower than of its competitors and has increased the scale and efficiency of operations, since it has lower production costs. Competitors’ Analysis The various competitors of Tata Steel are: ,[object Object]

Ispat IndustriesRecently in India the prices of steel have increased. Steel manufacturers like JSW believe that increase in the raw materials i.e. the iron ore from the mines have led to this price rise. Many of these manufacturers are now concentrating on backward integration just like Tata Steel wherein the iron ore mines are also owned by the company which helps in achieving lower manufacturing costs. JSW: They are moving ahead with a two prong strategy wherein on one side the focus is on the domestic market catering mainly to OEM segment by servicing them with all value added products customized to their requirement and on the other hand a special drive in the retail segment will continue by opening of state-of-the-art branded steel retail is the largest players in the private outlets with brand name “JSW Shoppe”. SAIL: Following are the strategies adopted by SAIL for effective pricing: ,[object Object]

Production of value added and customized products to create niche markets

Avoid inventory build-up and make production strictly market drivenEssar: Essar Steel is currently expanding its capacity at Hazira from 4.6 MTPA to 8.5 MTPA and then to 10 MTPA. We can see that this is an attempt to cater the large market demand and achieve economies of scale. Essar Steel has pioneered the concept of steel retailing in the country through branded retail outlets – Essar Hypermart. This is primarily catering to SME segment. 3. PLACE: Place represents the location where a product can be purchased. But in industrial marketing place is often referred to as the distribution channel. Distribution channels at Tata Steel: Tata Steel Limited delivers steel products to Indian customers through: Direct supply channels, 21 stockyards, 25 consignment agents, 15 external processing agents and Figure SEQ Figure ARABIC 1: B2B sales and distribution for TATA STEELS TATA Steel main distribution channel is selling branded steel through Mjunction.It provides cutting edge of Information Technology, is a 50:50 venture of SAIL and Tata Steel. It is India's largest e-Commerce company and the world's largest e-Marketplace for steel. Mjunction offers a wide range of selling, sourcing and knowledge services that empower businesses with greater process efficiencies. Tata Steel initiated the first online e-Sale through Mjunction in the month of February 2002 and since then has sold 221,259 MT. The products that Tata Steel has sold through MJunction are: HSM Defectives, HSM POR, GP Coils, LP Defectives, Prime Billets and Secondary Products. The results have been extremely encouraging for Tata Steel, with products being sold to customers all over the country. The prices obtained by Mjunction have been reflective of the market situation. The entire cycle time of selling materials has been reduced by the speed and efficiency with which on-line competitive bidding events has been created and managed by Mjunction. Through intensive market-making efforts and the use of technology, it is bringing in both, greater efficiencies to processes and greater focus to the sale of non-core products of Tata Steel. Full Service on a business process outsourcing(BPO) mode Mjunction.com takes end-to-end responsibility of selling client's low 'value' and/or standard products. It undertakes market research and market-making activities to generate buyer leads. It also creates suitable market lots to ensure maximum participation from buyers. Some of the other services provided by Mjunction are conducting auction event fulfillment services, undertaking collection of payments, like earnest money deposit and principal, ensuring fast and secure handling of money. It has tied up with Citibank and HDFC Bank for collecting sales tax documents and managing customer complaints. Distribution Channels at JSW Steel: JSW Steel has launched JSW Shoppe to markets its steel products as compared to Mjunction launched by TATA Steel. The exclusive JSW showrooms retail all types of JSW steel, ranging from HR coil to colour-coated steel. quot;
JSW is looking at opening 600 retail outlets in the next two years time to market steel in the country. The reason for such openings is to keep a check on the variation in steel prices from company to company,quot;
JSW Vice Chairman and Managing Director Sajjan Jindal told in a press interview.JSW aims to provide a unique experience of buying steel products through branded distribution channels. It started off with an idea to give a different feel and ambience to steel retail. JSW Steel wanted to give a feel of a mini-departmental store or a mall, which would have the same format, same look and feel wherever the buyer goes in the country. So, it will give a branding to the distribution channel. It will also display all the products in one place so that the customer gets a touch and feel of what the steel looks like. The smaller towns will be focus areas. The bigger towns and metros will also have shops, but their focus is on tier 2 and 3 cities. If this takes off properly, they propose to target 600 Shoppes in 2012. This will enable them to sell 600,000 tonnes a month, which comes to 7.2 million tonne a year (when the company opens 600 stores by 2012). By 2012, they are targeting at least 50% of sales through the Shoppes. Comparison of distribution Channels of TATA Steel Vs JSW Steel As compared to TATA Steel,JSW Steel does not sell its products online.It is here that TATA Steel has a competitive advantage.According to reports TATA Steel sell over 50% of its products through Mjunction.The revenues through Mjunction has crossed 450 crores(INR) in the year 2009-10.As a result it serves as a huge platform for TATA Steel to sell its products without incurring distribution costs.Its margins has therefore shown an upward trend in the past six years. JSW Shoppe,the retail outlet opened by JSW Steel has started its operations in 2007 and yet to penetrate the market whereas Steel Junction,the retail outlet of TATA Steel has already opened its outlets in many places including semi-urban and rural areas. 4. PROMOTION: In B2B marketing advertising, promotions and publicity plays an important role in the communication strategies. Hence, to contribute to the overall effectiveness of the promotional strategies utmost care must be taken by the companies. B2B promotion is used to create awareness of the company, to increase the sales of the product and to increase the overall effectiveness of the selling efforts. The promotional programme begins with carefully developed advertising objectives that must be formulated from corporate and marketing objectives in such a manner as to set the direction for creating, co-coordinating, and evaluating entire promotional programme. Promotional activities undertaken by TATA Steel: Branding Steel Based on Customer Focus As one of India’s most successful companies, Tata Steel represents a great example of a strongly branded B2B company. In 2001and 2005, Tata Steel was ranked the world’s best steel company in studies carried out by World Steel Dynamics Inc., USA (WSD), a leading steel information service provider. Branding Steel The profitability of the steel industry in India is generally linked to business cycles, reaping profits when economy is going well and eroding them when it is in depression. In the late 1990s, the Indian steel industry was experiencing a glut in the market which strongly affected the profit margin of all related companies. To reduce its dependence on the external environment and business cycles, Tata Steel adopted a strategy which stressed the following two points: ,[object Object]

Moving to high value added products.The company soon realized that a strong customer focus is essential if any branding approach was to be successful. It soon began to introduce Internal Campaigns in order to bring the customer-centric message to its employees. In the late 1990s, the company launched several Internal Marketing Programs to emphasize customer focus and service. The programs had taglines such as: “Customer first – her haal mein” (Customer comes first in any case), “Customer first – her haal mein, her saal” (customer comes first in every case, every year), “Customer ki kasam – hain taiyaar hum” (We pledge to the customer that we are ready for him). Source: www.tatasteel.com To achieve this Tata Steel set up a branding task force in January 2000 to explore the possibilities of branding Tata Steel products. Only three months later, the task force evolved into a brand management department. Within this department they created the distinct sub functions “market development”‘, “order generation” and “order fulfillment”‘ which were computerized, enabling Tata Steel to reduce its customer response time significantly. The company also initiated the concept of “customer account managers” who were authorized and empowered to solve specific customer grievances immediately. The company furthermore sought to increase customer interaction in order to better understand customer needs and to explore new and improved ways to meet these needs and expectations. Tata’s second area of key focus was to shift into the domain of high value added products. In April 2000, Tata Steel launched its first branded product, along with the commissioning of its CRM plant. Tata Shaktee is their brand for galvanized corrugated sheets. Eight months later the company introduced its second brand, Tata Tiscon (re-bars) for rods used in the construction industry. In February 2003, Tata Steel launched another product brand Tata Steelium. By September 2003, Tata Steel had three products as well as three generic brands in its brand portfolio The leader of the company had decided that branding the commodity steel would provide them a unique selling proposition in a great way. Branding Steel would help Tata Steel in two big ways: ,[object Object]

It would make premium pricing possible.The communication tools used for the brand launches were primarily ,[object Object]

Marketing Mix of Tata Steels

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