B2B Marketing Strategy at Tata Steel

Table of Contents

2COMPANY BACKGROUND

2TATA STEELIUM

3Technology Selection

3CRS and Branding: Importance in Retail Market

5Opinion of the Customer

6Overall Business Environment

6Critical Focus Areas

7B2B MARKETING: BRAND ENGINEERING FOR TATA STEELIUM

7Product

7Packaging

8Pricing

8Communication

9Salespersons

9Channel Design

10Distributor Capability Improvement

10Other Corporate Actions

11VALUE PROPOSITION FOR CUSTOMER

11Excellent functional quality

11Dream customer service

12Customer intimacy

12Consumption pattern

13Brand perceptions

13DISTRIBUTORS CHARACTERISTICS

14DEALERS CHARACTERISTICS

14CHALLENGES AHEAD

16CUSTOMERS

18SWOT Analysis of TATA Steelium

18Strengths

19Weaknesses

19Opportunities

19Threats

19STRATEGY FOR FUTURE

20KEY CHALLENGES WITH RESPECT TO B2B CUSTOMERS

22VALUE CREATION INITIATIVES FOR B2B CUSTOMERS

22Improving customer engagement

22Customer Service Teams

22Product Application Groups (PAG)

22Lifecycle Assessments

23TANGIBLE VALUE CREATION

24CUSTOMER SATISFACTION

24Measuring Customer Satisfaction

25Leveraging feedback to deliver enhanced value

COMPANY BACKGROUNDA 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.

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 SelectionTATA 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 yearlycapabilityof1.2 million tonnes of finished product was a techno-economically viablepossibility forintegrated plantwithtandemmill and other technology parameters chosen by TATA STEEL. Out of this, the CRScapability wasfastenedatconcerning 0.8 million tonnesonce a year. Further, such mills wereneededto supplya good variety of sizes and grades for economical production. With suchan oversizedcapability,it was absolutely necessary thatthe corporate targetedmanysegments that usecompletely differenttypesof 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 CustomerAs 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

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 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

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 well-equipped 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.

CommunicationTata 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 e-mail 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.

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 multi-pronged 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. Sales compliance

b. Feedback quality

c. Customer visits

d. Inventory management

e. 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.

VALUE PROPOSITION FOR CUSTOMERTATA 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 qualityDuring 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 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 intimacyDistributors 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 patternTATA 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.

Brand perceptionsDue 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

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 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.

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.

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.

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 SteeliumStrengths

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.

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 FUTURETATA 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 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 CUSTOMERSTata 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.

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 CUSTOMERSTata 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 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 engagementTata 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 TeamsIndividual 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 AssessmentsLCAs 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 CREATIONValue-In-Use Program

The Marketing & Sales Team of Flat Products Division has launched Value-in-Use, a cross-company, 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 SATISFACTIONMeasuring 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 valueBased 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.

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----------------IIM Raipur

Group 6

PGP2013-15

B2B Marketing Strategy at TATA STEEL

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Cold Rolled Steel (CRS)

Submitted To: Prof. Neeraj Pandey

In Perspective of

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