IIM Raipur

B2B Marketing
Strategy at TATA
STEEL
In Perspective of

Cold Rolled Steel

(CRS)

Submitted To: Prof. Neeraj

Pandey

Group 6
PGP2013-15

Table of Contents
COMPANY BACKGROUND............................................................................................ 2
TATA STEELIUM........................................................................................................... 2
Technology Selection............................................................................................... 3
CRS and Branding: Importance in Retail Market...................................................3
Opinion of the Customer......................................................................................... 5
Overall Business Environment................................................................................. 6
Critical Focus Areas................................................................................................. 6
B2B MARKETING: BRAND ENGINEERING FOR TATA STEELIUM..................................7
Product.................................................................................................................... 7
Packaging................................................................................................................ 7
Pricing..................................................................................................................... 8
Communication....................................................................................................... 8
Salespersons........................................................................................................ 9
Channel Design.................................................................................................... 9
Distributor Capability Improvement......................................................................10
Other Corporate Actions........................................................................................ 10
VALUE PROPOSITION FOR CUSTOMER......................................................................11
Excellent functional quality................................................................................... 11
Dream customer service....................................................................................... 11
Customer intimacy................................................................................................ 12
Consumption pattern............................................................................................. 12
Brand perceptions................................................................................................. 13
DISTRIBUTORS CHARACTERISTICS...........................................................................13
DEALERS CHARACTERISTICS.................................................................................... 14
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CHALLENGES AHEAD................................................................................................ 14
CUSTOMERS............................................................................................................. 16
SWOT Analysis of TATA Steelium...........................................................................18
Strengths............................................................................................................ 18
Weaknesses....................................................................................................... 19
Opportunities..................................................................................................... 19
Threats............................................................................................................... 19
STRATEGY FOR FUTURE............................................................................................ 19
KEY CHALLENGES WITH RESPECT TO B2B CUSTOMERS...........................................20
VALUE CREATION INITIATIVES FOR B2B CUSTOMERS................................................22
Improving customer engagement.........................................................................22
Customer Service Teams....................................................................................... 22
Product Application Groups (PAG)..........................................................................22
Lifecycle Assessments........................................................................................... 22
TANGIBLE VALUE CREATION...................................................................................... 23
CUSTOMER SATISFACTION........................................................................................ 24
Measuring Customer Satisfaction..........................................................................24
Leveraging feedback to deliver enhanced value...................................................25

COMPANY BACKGROUND

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A giant in steel market, TATA STEEL is present in Jamshedpur (India).The plant has a steel
production capacity of close to 10 million tonnes per annum. TATA STEEL is a dominant player
among key segments in Indian steel market. It has also established a significant presence in the
international markets through both tie-ups with customers and mergers and acquisitions.
Established in 1907 as Asia's first integrated private sector steel company, Tata Steel Group is
among the top-ten global steel companies with an annual crude steel capacity of over 29 million
tonnes per annum. It is now the world's second-most geographically-diversified steel producer,
with operations in 26 countries and a commercial presence in over 50 countries. The Tata Steel
Group, with a turnover of Rs. 1, 48,614 crores in FY 14, has over 80,000 employees across five
continents and is a Fortune 500 company.
Tata Steels larger production facilities comprise those in India, the UK, the Netherlands,
Thailand, Singapore, China and Australia. Operating companies within the Group include Tata
Steel Limited (India), Tata Steel Europe Limited (formerly Corus), Tata Steel Singapore and Tata
Steel Thailand.
The Tata Steel Groups vision is to be the worlds steel industry benchmark in Value Creation
and Corporate Citizenship through the excellence of its people, its innovative approach and
overall conduct. Underpinning this vision is a performance culture committed to aspiration
targets, safety and social responsibility, continuous improvement, openness and transparency.
In 2008, Tata Steel India became the first integrated steel plant in the world, outside Japan, to be
awarded the Deming Application Prize 2008 for excellence in Total Quality Management. In
2012, Tata Steel became the first integrated steel company in the world, outside Japan, to win the
Deming Grand Prize 2012 instituted by the Japanese Union of Scientists and Engineers.

TATA STEELIUM

Tata Steelium began its journey as the world's first branded cold rolled steel on 27th February,
2003. Tata Steelium is the first branded cold rolled (CR) product of Tata Steel. Apart from
providing a certain level of quality, it assures you of the genuineness of the product. It is ideally
suited for the manufacture of furniture; panels etc. Tata Steelium conveys "both strength and the
feel of being an international class brand". For many years TATA STEEL has invested has tried
to its brand equity in retail segment of cold rolled steel.

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TATA Steelium is focusing on product mix enrichment by making deviants and variants for
different applications. TATA Steelium is sustaining price premium by strengthening product
support services. Tata Steelium made sense to come up with a branded product which provides a
number of benefits to consumers. Tata Steelium, apart from providing a certain level of quality,
assures the genuineness of the product. It goes a long way in meeting the challenges of gaining a
sustainable competitive edge in the marketplace. With the name 'Tata Steelium' being marked on
the product itself, it can be assured of the authenticity of your purchase. Following are the Tata
Steelium advantage.
a) Authenticity and genuineness of the product.
b) Superior product quality.
c) Better value for products.
d) Wide range of grades, thickness and widths.
e) Well organized distribution network throughout the country.
f) Deliver superior value to customers on a consistent basis and by design.
g) Opportunity to differentiate your product on the basis of raw material source.

Technology Selection
TATA STEEL was able to produce hot rolled coils (HRC) but the facility to roll it in room
temperature which produces CRS (Cold Rolled Steel) was unavailable. For assessing the nature
of domestic demand and gaps available the marketing study was undertaken. It was found that a
demand and supply gap is likely to occur for high-end use of CRS. TATA STEEL decided to
target the high-end sector of the CRS market 1999. Every time the critical facility used to get
selected at Tatas cold rolling mill the advantages to the customers over the competitors were
taken into consideration.

CRS and Branding: Importance in Retail Market

The minimum yearly capability of 1.2 million tonnes of finished product was a technoeconomically viable possibility for integrated plant with tandem mill and other technology
parameters chosen by TATA STEEL. Out of this, the CRS capability was fastened at concerning
0.8 million tonnes once a year. Further, such mills were needed to supply a good variety of sizes
and grades for economical production. With such an oversized capability, it was absolutely
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necessary that the corporate targeted many segments that use completely different types
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. The large
number of small customers were generally neglected and served by a few wholesalers. However,
the environment was changing. These small but growing customers could afford to pay higher
prices for better materials and service.
TATA STEEL aspired to become the leader in CRS in domestic market by commanding the
largest share of mind and heart and by achieving the highest profitability. To accomplish this,
they envisioned two ways. First, they had to market their product (about 50% of the total
production) with their own sales force to the large institutional customers. Second, it was also
important to ensure the product availability to widely dispersed large number of small customers
who care for quality product, better service, and professional dealing. This would help TATA
STEEL gain popularity as well as achieve target profitability. However, a limited work force
made it impossible to serve all these dispersed customers. Hence TATA STEEL had to use
sufficient intermediaries at the right locations with consistent image and capabilities. This is
illustrated in the figure below.

Targeting Retail Customers with TATA Steelium

Small customers seldom come in contact with company sales team, and the company has little
scope for tailoring communication and marketing programmes for them. But having a strong
Brand name helps the company to attract capable intermediaries, propagate congruent messages
to the customer through intermediaries, and allow efficient channel management.

Opinion of the Customer

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As revealed by the marketing study conducted by TATA STEEL, the small customers faced a lot
of problems and had to compromise on quality of CRS (Cold Rolled Steel) prior to TATA
Steelium. This opened a unique opportunity to establish a strong position in the market by
solving customers difficulties.
Three major conclusions regarding customer opinion emerged. First, the chemical composition,
mechanical properties, and surface finish of the CRS that were mostly available from the
competitors were suitable only for simplistic applications and not for deep drawing, bending,
forming and artistic uses. Superior quality materials available from import were beyond the reach
of small customers.
Second, small customers were having little access to the CRS manufacturers. They had to move
from shop to shop to buy their regular requirements as availability of materials with the retailers
was never certain. These retailers also did not entertain any quality complaints as they
themselves did not receive any support from the Wholesalers or manufacturers. Therefore, the
need for transacting with a professional organization instead of market-based retailers was
strongly felt by the small customers.
Third, there was always doubt on the identity and quality of CRS purchased from the retailers.
Manufacturers name and other details were usually marked only on the packaging materials that
could be easily manipulated by a dishonest retailer. In spite of being aware about these problems,
a small customer had little option but to rely on these retailers. Customers were nearly
unanimous in their dislike for frequent non-availability of required items, searching for alternate
availability, negotiating price and other terms, taking the hassle of lifting the coil from a
retailer/wholesaler, delivering the same to a cutter4 and closely following up with them for the
desired size and shape. These customers were in fact willing to pay little more to get the
materials in the manner required by them. Many customers were of the opinion that wholesalers
get special incentives from manufacturers for buying leftover stock and they then motivate
retailers to ignore the actual needs and wants of small customers. To avoid the above problems,
some customers preferred buying their quarterly/half-yearly requirements at one go by incurring
much higher cost to be eligible to buy directly from the manufacturers.
The benefits of TATA Steelium were confirmed by the interaction with customers. Some of the
customers quotes are as follows:

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 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

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Prior to the TATA Steelium launch, small customers were usually dealt with by retailers in the
local trading market. Traditionally, these retailers do not buy directly from manufacturers. They
procure CRS from wholesalers who in turn buy from manufacturers. The contact between these
wholesalers and local retailers are mostly through brokers who connect both sides based on the
availability.
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.
Most of the old and successful wholesalers/retailers had risen through aggressive buying and
selling efforts and lacked a proper appraisal of potential benefits from value added support
services to the customers. Wholesalers and retailers were free to set their own selling prices and
there used to be hard bargaining between manufacturers and wholesalers and between
wholesalers and retailers on discounts and purchase volume. Customers knew that retailers rarely
pass through all the trading incentives and were accustomed to substantial price difference
among retailers operating in the same location.
Manufacturers were rarely concerned about the actual demand in the market, or possible
difficulties of the wholesalers/retailers but were concerned about selling an aggregate quantity
every month. Manufacturers sales offices forecasted the monthly demand of these wholesalers
with large forecasting errors and frequent mismatch between production and the forecast were
quite common. Retailers suspected that wholesalers did not disclose the price relaxations being
received from manufacturers. Therefore, in essence, such perceived asymmetry in relationship
between the manufacturer, wholesaler, and retailer was not conducive to the formation of trust
between these parties. The distributors were now looking for assurances from the manufacturers
regarding sustained business and margins.
A Steelium distributor during an 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
customers.these are very rewarding experiences for us.

Critical Focus Areas

The distributors, dealers, and their salespeople held the key to customers perception about the
brand. Most important was the creation of an environment where TATA STEEL,
distributors/dealers, and customers had trust on one other. It was an enormous task to bring a
minimum level of professionalism and consistency among the dealing persons because of the
widely differing backgrounds. It was important for the company to monitor and have control
over retail prices so that customers got fair and uniform prices at every location and the total
channel profit was maximized. Service improvement and Excellence was stressed 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 but imitating
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the intangible benefits may not be possible and thus service advantage for the brand can be
sustained.

B2B MARKETING: BRAND ENGINEERING FOR TATA

STEELIUM
Product
The company introduced customized Steelium grades to cater to the wide variety of applications
undertaken by small customers. Steelium CRS helped in cost savings to the customer during
processing, premium price for the end product by ensuring superior performance and premium
look to the ultimate customer during use. The TATA Steelium logo embossed on the CRS, every
one meter of its length, ensures the authenticity of the material.

TATA Steelium Advantages

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Packaging
The packaging of Steelium is premium and unique. It is completely impermeable and highly
protective under normal circumstances. 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.

Highlighting the Packaging Feature

Pricing
TATA Steelium was to be positioned as a high quality pioneer brand sold only through wellequipped distributors and dealers with value added services. Therefore, TATA STEEL decided to
charge premium price over competition. 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 relationship premium at different locations against the various grades supplied under TATA
Steelium.
In order to make sure that the customers are not hassled, each grade of TATA Steelium has a
location-wise floor price, below which the item cannot be sold by the distributors or dealers.
Customers are not required to negotiate the price with the channel members at the time of
purchase, and also to avoid conflict between the channel members. Charges for various standard
processing are also fixed. Also, distributors were taught to charge fair prices to build trust
relationship among customers.
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Communication
Tata Steelium has been the worlds first branded cold steel rolled steel which has drawn
sufficient media attention. The brands success has been used as a key factor by several stock
research firms for their predictions.
Steelium refrained from using traditional advertising methods to create brand awareness among
its B2B customers. 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 distributors and dealers.
Communication efforts taken up:

Brand management teams started carrying out researches on the customer base and
started sending direct customized mails and relevant information to these customers
through their distributors. This effort was put to favourably position the brand of Tata
Steelium in the customers mind.
Tata Steel organized regular meetings with customers, dealers and distributors which saw
the attendance of senior company officials as well as the brand management team.
Tatas key account managers and application engineers met customers once every quarter
along with the distributor.
The companys website effectively addressed the queries of customers by providing
relevant information which can be downloaded in a brochure format.
A toll-free help desk was established to answer customer queries on the phone and an email service for detailed written enquiries.

Salespersons
Tata Steel takes special interest in the recruitment of its sales person to support the formation of a
consistent brand culture. Distributors and dealers salespersons are trained on how to manage
the brand since the beginning. Sales teams are responsible for satisfying transaction and
relationship needs of distributors.

Channel Design
Due to the strategic design volume and consumption pattern, Tata Steel decided to go for
selective distribution in each major location. Based on the guidelines issued by the company,
Tata Steel appoints distributors who in turn appoint dealers to work in a specific territory.

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TATA STEEL believes in developing customer acquisition and retention plan jointly with the
distributors. All distributors need to submit their sales as well their dealers sales information to
the company every month. Mutually agreed targets are provided to distributors. Web-enabled
approach has been adopted by dealers and distributors for data exchange and communication
purpose as well as online tracking of execution. A community website called Tata Steelium
Parivaar has been designed to cater to the needs of the dealers and distributors called the
Parivaar members.

Distributor Capability Improvement

In order to ensure that their distributors serve their customers well, Tata Steel has a multipronged action. This includes:
1. Using Theory of Constraints to improve supply chain effectiveness and efficiency.
2. Human Resource initiatives for employees of channel partners
3. Implementing the process of key account recognition among distributors through the
Vijeta program
Apart from these measures, Steelium evaluates the performance of its distributors. They look into
the following parameters.
a.
b.
c.
d.
e.

Sales compliance
Feedback quality
Customer visits
Inventory management
Margin monitor

The objective is to get an indication of the quality of the services provided by Tata Steels
distributors and overall impression of their customers. In case, Tata Steel identifies a problem, it
works with its distributors and dealers, gets involved in operations to bring about improvements.

Other Corporate Actions

Corporate actions taken up by TATA STEEL have been consistent with brand values. Even
though the organization is considerably large, TATA STEEL has made a conscious effort to make
everyone be aware of the brand vision/goals through B2B marketing efforts and also the
rewards/punishments for upholding or degrading the same. This is one way in which the
company ensures that all the actions taken up stakeholders are controlled and monitored.
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VALUE PROPOSITION FOR CUSTOMER

TATA Steelium was introduced in the Indian market with perfectly alignment with the
rational/emotional and stated/secret needs of the target market. Tata Steelium offers a highly
integrated value proposition for the Indian market consisting of many quality conscious CRS
(Cold Rolled Steel) customers. TATA Steeliums value proposition consists of three essential
elements as depicted in the below diagram:

Each of the above mentioned aspects have been described below:

Excellent functional quality

During the introduction of Steelium in the Indian market, small quality conscious customers had
limited options with regards to high performance and defect-free Cold Rolled Steel. In such a
situation, all the CRS items produced by TATA STEEL through its new mill were highly
distinguishable in terms of superior quality. Eventually, the customers and users on the shop floor
showed an inclination towards TATA Steelium. Core of the highly differentiated value
proposition of TATA Steelium is reflected in their slogan: Help Shape your Dreams, which
indicates superior forming and shaping application properties.
Steelium CRS has also changed the way in which end users rated the aesthetics and yield of such
products. Value creation has come in the form of providing ample flexibility (with substantial
peace of mind) to the end customers to perform array of functions with TATA Steelium.

Dream customer service

One of the essential aspects through which TATA Steel achieves superior customer service is
through its highly capable distribution. TATA Steel ensured that all their distributors and their
respective dealers in each location across the nation provide substantial services and satisfactory
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yet memorable buying experiences to all their customers. The above mentioned intermediaries
ensured that the process of finding, ordering, purchasing, and also the usage of CRS work the
way they are supposed to, and on par with customer expectations. Few of the activities taken up
by these intermediaries are as mentioned below:

Book the order from customers

Confirm supply period
Inform order status regularly and inform availability
Collect the payment, extend the credit in special cases
Wherever necessary, arrange door delivery

Conscious effort has been made by many distributors to reduce the cost and hassle significantly
by investing in setting up new service centers to deliver customized sizes and shapes of TATA
Steelium.

Customer intimacy
Distributors and their dealers were encouraged to know their customers individually. Also, TATA
Steel encouraged the intermediaries to contact their customers at regular intervals and
proactively solve customers problems. Focus was laid on ensuring hassle-free service and
subsequent transactions. One of the objectives of TATA Steel is to give all its customers a sense
of association with a professionally managed organization. The image should be in alignment
with Tata brand and this can be ensured by putting in place competent intermediaries,
employees and by installing effective systems for dealing with plethora of customers. In order to
establish a strong relationship between end customers and their respective intermediaries, TATA
Steel has implemented processes such as account management and centralized distribution
among the distributors. The following aspects were recognized as a result of the value delivered
by TATA Steel:

Consumption pattern
TATA Steelium finds its application primarily in forming and shaping applications which require
superior steel with respect to quality and technology. Major revenue contributing segments like
panel and auto require higher quality products for shaping and forming, than other segments.
Since most of the small customers do not have the facilities to test the quality of steel
(destructive and non-destructive tests), they fully rely on Steelium logo, which stands for
genuine and reliable Cold Rolled Steel. Most of the TATA Steel customers need Steelium
products frequently and place their requirements/requests to their distributors/dealers well in
advance. A significant dependence for these customers is laid on the service components, and
they are usually willing to pay a premium price for consistent and delightful brand experience.

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Brand perceptions
Due to its superior quality, Tata Steel has been able to attract strong association from its
customers. As a result of which a significant number of customers have been asking for TATA
Steelium, even though the product is available at a premium over other competitors products.

Many Tata Steel customers enjoy the below aspects of TATA Steel service:

Fair and professional treatment

Caring parent company
Peace of mind in dealing with the distributors and the company
Reliable delivery
Customized sizes
Lower inventory
Higher yield,
Trusted brand outlet,
Professional dealings
Strong company image

DISTRIBUTORS CHARACTERISTICS
From the secondary research that we performed we have noticed that the distributors believe
selling TATA Steelium is very different from selling other cold rolled steel products that are
available in the market. Tata Steels customers expect a different level of service due to increased
brand association and awareness of TATA Steelium. The distributors lay significant importance
on the customer services, and lay emphasis on taking necessary actions to improve the CSAT.
TATA Steeliums distributors strongly associate with the brand and consider the brand to be
generating significant profitability and growth.
By maintaining positive relationship with TATA STEEL, steelium distributors have been
considered as business partner and usually enjoy higher profit margins than their competitors.
The business partners have the following characteristics:

Large improvement in the capability & capacity

Willingness to invest more in facilities and infrastructure
Active involvement in brand promotion
Establish a professional organization with proper management systems
Establish quality management systems (ISO 9001-2000)
Strong sense of customer ownership
Shift from random sales approach to planned sales approach
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Considering that production capacity of TATA Steelium may not increase by a substantial
amount in near future, it is of paramount importance to address the growth aspirations of Tata
Steeliums distributors. In near future, it is believed that Tata Steels ability to satisfy the
Steeliums distributors growth needs would play an important role in determining the future
relationship between Tata Steel and its distributors.

DEALERS CHARACTERISTICS
Importance of dealer is realized in areas where distributors are yet to develop their capabilities
completely. The following characteristics can be observed for Tata Steeliums dealers:
Ensure Steeliums distribution to small furniture manufacturers
Provide financing facility (revolving credit) to small customers.
Change from multi-brand channels to exclusive Steelium dealers

CHALLENGES AHEAD
In recent years, Tata Steelium has been facing challenges with respect to the competitive
landscape in the Cold Rolled Steel market in India. Tata Steel is faced with the challenge of
sustaining its growth levels in the midst of competition. In order to achieve high levels of CSAT
(customer satisfaction), Tata Steelium relied primarily on two aspects: Superior quality and
customer services (with the help of distributors and retailers).
There were a many subjective attributes that significantly defined the quality aspect of TATA
Steelium. Few of them were as follows:

Surface finish,
Packaging,
Labeling
Distributors capabilities

However, most of the contribution for brand equity of Tata Steelium came from the superior
consistent functional quality. Up until now this has been a unique aspect of TATA Steelium. With
the advent of competition, this unique value proposition has posed a challenge for TATA
Steelium brand. The major challenge was that the new competitors are planning to introduce
Cold Rolled Steel of a quality that is equal or superior to the functional quality of Tata Steelium.
Up until now only SAIL-Bokaro was considered to be a close competitor for Tata Steel,
primarily because of Tata Steels image, years of existence and experience in steel market, size
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of operations, product feature and most importantly the segment diversification. However, it is
worth noting that the functional quality of TATA Steelium was still unmatched. Due to these
aspects, many customers have shown preference for TATA Steelium products.
In recent years, Essar Steel has enhanced its volume of its Cold Rolled Steel products from
25,000 tonnes per month to 45,000 tonnes per month. Also, Jindal was on planning on bringing
superior quality Cold Rolled Steel in the market, especially in South and West regions. It is
expected that the new competitors would focus all their efforts in their respective local markets
with an intention to maximize margins.
In the recent years, Tata Steeliums focus has been gradually shifted to organized customers who
are usually considered as higher growth segments. Due to growth opportunities, it is expected
that major competition will be seen in these segments. Key strengths and weaknesses of the
important suppliers of Cold Rolled Steel, who have the potential to threaten the market share of
Tata Steel are as mentioned below:

Another significant challenge that arises from the competition is the increased supply. There is a
strong possibility that the market sentiment might come down, due to availability of products
that are similar in terms of quality and performance. In a situation such as this, it would be
difficult to continue to charge a price premium, as sales growth might decline in competitive
market.
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Also, there is a strong possibility of new entrants not investing in establishing a strong brand
name in the market and would most probably try and offer customers a basic product without any
value addition such as inclusion of service component. This would help them in keeping their
costs lower than Tata Steeliums production. There is a high likelihood of Tata Steeliums
distributors/dealers getting associated with the competitor in order to sustain their growth rates.

CUSTOMERS
It is a known fact that brand plays an important role during the purchasing phase of steel. While
selecting CRS (cold rolled steel) most of the customers consider the following factors

Yield
Brand values
Cost
Company image
Support service
Brand culture
Product authenticity
Availability
Positive relationship with distributors and their dealers

Over time, however, customers have become very vocal, especially after they developed
intimacy with the TATA Steelium distributors and dealers. It is worth noting that many TATA
Steel customers know their account managers at Tata Steel and were accustomed to openly
discuss about the quality of steel.
Few of the expectations of the customers are as below:

Customized blanks, sizes etc

Stringent product quality and service levels
Technical support
Long-term supply contract and fixed price contract
Product development (new product introduction)

TATA STEEL acknowledges the fact that in an extremely competitive environment, special care
has to be taken to ensure timely supply to the customers and distributors. Emphasis has been laid
on maintaining service quality of the distributors and dealers, and efforts were underway to
enhance their capabilities. This is to further ensure that required services are readily available to
the customers. This would help in creating goodwill that would help Tata Steel sustain its growth
rate.
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Being the first manufacturer of superior quality Cold Rolled Steel with great brand equity, TATA
STEEL has always laid emphasis on differentiation through quality. However, recently it has
been contemplating whether or not the present (value addition based) relationship oriented
strategy would continue to provide the required benefits to Tata Steel and its distributors in a
highly competitive environment or Tata Steel should contemplate on introducing a new
marketing strategy.
TATA STEEL recognises the need of providing service quality to its dealers and distributors.
This in term translates to quality service delivery to customers. TATA steel advices it channel
partners to maintain the service quality as it delivers to them. This will result in creating more
goodwill to the customers. TATA steel was the first to manufacture cold rolled steel of
exceptional quality and leveraged the brand name along with it. Care has been taken that value
added benefits has to be given to intermediaries and the customers. TATA focuses to deliver the
same even if the market scenario changes in time.
In order to decide which all value added benefits has to be given to the customers and
intermediaries data was captured from major steel manufacturers such as Jindal, Essar, SAIL ,
Bhusan etc. Then the SWOT analysis was carried out to examine the industry in detail. This was
necessary to gauge the present market condition and to plan the future strategy.

Intensity of rivalry -Increasing

Though there are not many competitors in this industry of cold rolled steel but the
manufacturers such as Essar and Jindal are competing in the same segment. Sail is also
matching in terms of capacity within 2 years.
Earlier there used to be agreement between manufacturers for monthly prices but as there
more number of manufacturers coming in the pictures there arent such agreements.
Though this market has huge growth potential but it is very sensitive to economic
conditions. This market may fall substantially if economic downturn is observed.
At present these cold rolled steel have better price realization in foreign market hence
they are exported but subsequent fall in prices may force them to concentrate on
domestic market.
There has been shift in what consumers but from steel to services as customized shape
and sizes, brand assurance etc.

Threat of new Entrant- Increasing

Global players like POSCO and Mittal Steel have already announced their entry into
the segment of cold rolled steel.
Because the new MNC and domestic players like Jindal and Essar steel have good brand
image they might pull away the customers from TATA steel.
They have huge funds to set up distribution channel in short time to match the
distribution network of TATA steel.
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Threat of substitute- Average

Thicker Cold rolled steel are being replaced by thinner hot rolled steel.
Fibre glass, aluminium and plastics are being used in place of Cold rolled steel.
But the areas where we find the complex uses of cold rolled steel this poses a resistance
against substitution.

Threat from Buyer- Average

Some of the customers are importing CRS while others are demanding product
development or customization according to their order.
Small customers of CRS are not organised.
Some customers lack market knowledge hence they dont buy unless they are not
identified approached and persuaded by suppliers.
Some of the customers do not bargain for retail prices since credit provided to them by
the channel partners is more important.

Threat from supplier-Weak

Since TATA has its own hot rolled coiled production hence there is no threat of input
materials.

Thus considering all the factors we see that cold rolled steel may be easily be available in future,
this increases the buyer power. In order to maintain its relationship and quality of service TATA
should leverage its strong brand image.

SWOT Analysis of TATA Steelium

Strengths

TATA is an established brand in India.

High quality and grade of CRS product.
High awareness among the customers among all locations.
TATA employees led capable and motivated channel partners.
Value added services are high in quality.
Commitment of the company to deliver more at every stage of transaction i.e.
Presales, sales and post sales.
Huge customer base with existing long term relationship.

Weaknesses

Limited supply of the product and increasing demand may result in suppliers looking for
other sources.
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When Steelium is used in consequent products it results in dilution of the brand name.
Supply of the product is based on single source this results in logistics disadvantages.

Opportunities

Increasing demand can be better matched with sales and supply of grades of steel.
There still exists room for Steelium to expand and enhance profitability.
Maintaining the product and service quality will result is much larger customer base.
Other products can be marketed such as branded furniture.
Continuous service improvement will ensure lasting relationship with the customers.

Threats

As new competitors are venturing into the market they are capturing the customer base of
TATA.
TATA has to invest continuously to make the relationship and enduring one.
After the commoditization of the product, the product only will be differentiated on the
services offered.

STRATEGY FOR FUTURE

TATA has been successful in leveraging its brand image with the service quality and the product
quality it offers. All its customers have high association with the brand image. There is a small
share of price sensitive customers that are not the regular buyers. Brand building through
relationship and service quality has been the focus of TATA. This differentiated TATA from all its
competitors. Because of this the Brand holds a significant position in market share and would be
able to increase it with the developing need of Cold rolled steel. However the only constraint is
the fixed capacity of the production it can meet.
The target of TATA should be to get the perception of customers that it is the fairest brand
available in the market. Delivering the above TATA charges a premium for that. It cant cut the
prices as it will result in reduction of the profit throughout the value chain.
On the other hand the loyalty of the dealers is also a major factor. With other manufacturers
venturing into the market, Dealers find it more profitable to sell products of these manufacturers
as well. In such case TATA can motivate the dealers through incentives and promotional
activities to sell only TATAs product.
Production capacity is one of the challenges faced by TATA. It is working towards this but it may
take a while before the capacity may actually be utilized. In the meantime small buyers are
depending on other manufacturers for short supply of the product. So continuing with the current
strategy of improvement the brand has to sustain the service quality to maintain the competitive
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advantage. In the future this can be leveraged to attract more customers who are aware of the
value offered by TATA.

KEY CHALLENGES WITH RESPECT TO B2B CUSTOMERS

Tata Steelium, since its inception, had achieved a good market acceptance. Their target group
comprised of the small customer segment of Cold Rolled Steel (CRS) market which was
neglected by Tata Steels competitors. Steelium trained its distributors to provide customised
service and focus on small customers who could give them the best premium.
Steelium was preferred over its local competitors because of its products superiority. However,
Steelium expected to face certain problems due to changes in the industry.
The challenges which stared Steelium in its face was how to retain the market created by them.
How should they insulate their B2B customers from competitive offers and leverage its brand in
the CRS market.

Future competition from major players could lead to a loss in their customer share. This
would create pressure on the margin.
Their competitive advantage was to provide dream customer service and customer
intimacy. The trouble was that though this value proposition was company driven, it was
distributor delivered, hence easy to replicate by competitors. This was a key challenge for
Steelium.
Another dilemma that they faced was whether to supply a rationed quantity to all
distributors or cut supplies to some distributors and supply the rest. For this it was
important to select those specific CRS customers who would, in the long run, provide
Steelium with the highest premium.

Steeliums marketing team needed to understand what mattered to its customers. Was it product
quality or service that they preferred? Was it the TATA brand that was doing all the magic or did
Steelium have a brand value too? What was the degree to which business consumers were
influenced by the emotive characteristics of the brand?
The marketing team found, after carrying out isolated interviews with customers, was that
information through marketing consumers is processed by buyers either 'peripherally or
centrally. If the buyer was highly motivated and highly involved, they would pay attention to
the core message in the marketing communication thereby taking the central route.
On the other hand, the buyer takes the peripheral route if he is not strongly involved or
motivated. They pay greater attention to contextual information.
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While attitudes formed via the central route tend show a greater probability of forming stronger
relationships with less resistance. This does not imply that Steelium should not focus on
customers who have taken the peripheral route as research has indicated that when brands are
viewed as essentially similar, peripherally formed attitudes determine the choice.
The most important takeaway was that it is necessary to orchestrate a range of experiences
around the brand so that it starts occupying an emotional and personal space. This takes place
when the brands promise starts rising above mere tangible and functional characteristics to
incorporate relevant emotions. This is because competitors would find it difficult to replicate the
promise of delivering a special, personal and emotional experience even if they match the
products features and functions.
This would lead to the creation of a brand community. Once a brand community is created, a
company can leverage it to increase willingness among customers to buy the brands products.
This loyal adoption would benefit the company. Thus, if TATA Steelium could create a small
brand community, it could extract more value.
The challenge for the marketing team is to keep distributors who were providing value added
services to Steeliums end customers were keeping them happy and aligning themselves with
Steeliums business strategy. Steelium had to differentiate itself from its competitors through
service delivery which could only be achieved through dealership. It needed to incorporate key
account management processes with its dealerships and include a consumer loyalty program in
its marketing process.
They could provide special dealer delivered customer service to create differentiation and
increase floor price of Steelium. This move could discourage less service oriented distributors as
well as price sensitive customers. Also, by leveraging the Tata brand it should consolidate its lead
in the CRS market.

VALUE CREATION INITIATIVES FOR B2B CUSTOMERS

Tata Steel believes in providing additional benefits beyond their basic needs to its select set of
customers. Value Creation for Customers encompasses building mutually advantageous
partnerships that create real benefits by addressing needs captured through verbal inputs from
customers and on-site observations. Value created can be tangible (reduces the total cost of
ownership for the customer) and/or intangible (provides convenience to customers).
Tata Steel has established unique processes and customized approaches in seeking new routes to
markets and connecting with customers for mutual value creation. Capturing customer needs is
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pivotal to its value creation approach. Tata Steels processes undergo improvement through
specific approaches such as Customer Value Management (CVM), Retail Value Management
(RVM)

Improving customer engagement

Tata Steel is the first steel company in India to develop a Distribution Strategy, a move that has
differentiated it from other players in the market. An Automotive Strategy has also been framed,
which encapsulates a product-service strategy for the Indian Automotive customers, a focus
segment for the Company.

Customer Service Teams

Individual Customer Service Teams (CSTs) cater to Auto OE customers, large construction
companies & WR Rod OE customers to strengthen relationships and create value for customers.
CSTs comprise experts from across functions. Active participation of customers, especially auto
component manufacturers, has led to the indigenisation of these products and localisation
benefits for auto majors by anticipating their needs.

Product Application Groups (PAG)

To fully support the needs of its customers, Tata Steel has aligned its sales and marketing teams
with targeted steel end-use markets, creating market sector teams with both production and
supply chain activities. The market sector teams offer individual customers a single dedicated
account team to ensure they have optimum access to the Companys extensive product range and
technical, logistical and R&D resources.

Lifecycle Assessments
LCAs are also extensively used to advise customers at the design stage on the sustainability of
downstream products made from steel. This approach has led to energy-efficiency products
within end-user markets. For example, the Companys range of advanced high-strength steels
make cars lighter and more fuel efficient.

TANGIBLE VALUE CREATION

Value-In-Use Program

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The Marketing & Sales Team of Flat Products Division has launched Value-in-Use, a crosscompany, cross-functional initiative. This programme focuses on key customers of CRS to
provide better value for small and fragmented customers in the SME Segment, being served
through the distribution route.

By improving awareness on product features and benefits, it enhances their capability as service
partners to offer better products and services and realize the full value potential of the product.

Tata Steels programmes train personnel of distributors, dealers and Customer Service Engineers
(CSE) to guide retail mass consumers on the correct usage of its products.

CUSTOMER SATISFACTION

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Measuring Customer Satisfaction

Satisfaction Surveys are conducted by Tata Steel for all branded and non-branded products
among its OE customers/ distributors / dealers across India. These annual surveys rate Tata Steel
as a preferred supplier with respect to competition.
Capturing customer needs is the key to the value creation approach. Tata Steel has different
listening & learning posts to capture the voice and needs of the customers. After compilation of
these inputs, analysis and prioritisation is undertaken to capture product/ service gap issues and
new product/ service ideas.

Leveraging feedback to deliver enhanced value

Based on feedback from customers Steelovation - a unique initiative targeted at creating value
for Key Account Customers of the Steelium brands - was customised in 2011-12 to their specific
needs. It addresses wastage due to the problems during welding, resulting in wastage, quality
issues and a less than perfect finish.

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Through the customer feedback programme Rishtey, the sales team and the operations
personnel are able to interface with customers so that corrective actions are taken by the plant to
improve customer satisfaction as well as the quality of product and services.

-----------------Thank You----------------

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