MANAGEMENT CASE

describes a real-life situation faced, a decision or action taken by an individual manager or by an organization at the strategic, functional or operational level

TATA Steelium A Success Story in B2B Branding

Kaushik Bhattacharya and Biplab Datta

COMPANY BACKGROUND

ATA STEEL is the largest private sector steel marketer in India. Presently, its Jamshedpur (India) Works has a crude steel production capacity of 6.8 million tonnes per annum. The company has been successful in maintaining its dominant position among key segments in the Indian steel market and has also established a significant presence in the international markets through both tie-ups with customers and mergers and acquisitions. The company is aiming at enhancing its domestic steel capacity to about 30 million tonnes per annum by 2015 (TATA STEEL, 2005-06). TATA STEEL is regarded as a visionary company and is widely acknowledged and admired as the industry leader in India. In May 2002, the company launched the Vision Architecture 2007 (Tisco News, 2002); and, it can be justly said that the company has been able to transform its vision into reality. Vision Architecture 2007 is shown in Figure 1. Each element of the strategy was clearly identified, carefully framed, properly defined, and exhaustively communicated to give the core customer and the organizational issues an organization-wide clear and tight focus. Fulfillment of goals like successful branding of steel, production of lowest cost steel, economic value creation and expansion have all contributed to companys growth (TATA STEEL, 2004-05). The first strategic goal in the architecture for Vision 2007 was to move from commodities to brands. The company had also articulated the intention of achieving a turnover of Rs. 5,000 crore by the year 2012, through the brands prevailing at that time (Figure 2). During the period 20022006, the company had launched and successfully established many more brands. In a nationwide study conducted by ORG-MARG in 2005, all brands of TATA STEEL emerged as leaders having the highest brand equity amongst all brands in their respective categories (TATA STEEL, 2005-06).

KEY WORDS Business-to-Business Branding Value Proposition Relationship Building

Historically, the TATA group is the oldest, largest, and the most respected group of companies in India. They are Indias largest employer and also the largest foreign exchange earner in the private sector. TATA is perhaps the most internationally recognizable Indian business house, largely due to the role that the TATAs have played since its inception. Over the years, TATAs have been known for producing quality products and for living up to their commitments. The TATA group in general, has a strong reputation of having a good relationship with everyone in the trade as well. Like other TATA group companies, TATA STEEL uses interim names1 for their brands to capture part of the customers mind and heart (Figure 3). The

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corporate brand, TATA, acts as a co-driver in gaining power in the Indian market (Kotler and Pfoertsch, 2006). Today, the name TATA is perceived as a global, authentic brand with a strong heritage. TATA STEEL, the flagship company of the Tata group, has several awards and recognitions to its credit (See Figure 4). In addition, during 2004-05, in the TNS India Corporate Reputation Study, both the financial community and the general public rated TATA STEEL as the No. 1 company with impeccable reputation. Only among business managers did Infosys beat TATA STEEL by a margin of a single point (Tisco News, 200405). They are one of the lowest cost producers of steel in the world and the global benchmark in corporate social responsibility activities. They have a strong distribution network in the Southeast Asia and with the introduction of cold rolled steel, they are now the leading supplier to the Indian auto industry. In general, TATA STEEL proceeds with a master plan called, Branding Blueprint, focusing on all the existing brands that the company sells through its distribution channel. The brand management groups act as an integrator across all the business processes of the company. They also help create communications which correctly embody the companys brand position (Tisco News , 2002). Mr. A Sen,2 Chief of Marketing and Sales (flat products) of TATA STEEL said that the companys emphasis is on branding for credibility and comfort. The idea was to put in place a physical and accountable distribution system. The Managing Director, Mr. B Muthuraman said that companys marketing focus is on branding by de-commoditizing steel. About 1 per cent of the total revenue from sales of branded products is spent on branding initiatives (blonnet.com, 2007). The sales performance of TATA STEEL brands are given in Table 1.

product and help in highlighting it in the otherwise fragmented market for cold-rolled steel. It will not only help in product identification, but will also boost the element of brand recall, thereby creating a niche (tata.com, 2007). It was clarified that the name Steeluim connoted both strength and a feeling of being a world class brand. Mr. Sen, said that the sales target for the financial year 200405 had been fixed at Rs. 700 crore and with the nationwide distribution network, the company was confident of achieving the target easily (sify.com, 2007). During 2005-06, the sales of brand Steelium increased from 0.355 million tonnes to 0.392 million tonnes recording an increase of 10 per cent over the previous year. Over the years, TATA STEEL has invested in a number of branding activities to build its brand equity with the retail segment of cold rolled steel. TATA Steelium focused on product mix enrichment by making suitable grades and sizes available for different applications and sustaining price premium by strengthening product support services through distributors and dealers.3 TATA STEEL ensured that the TATA Steelium distributors handle the brand exclusively and because these distributors focused on servicing the identified set of major customers, they were encouraged to cultivate the relationship and the local ties and also contribute towards brand building. At TATA STEEL, efforts are continuously on for enhancing the capabilities of distributors and dealers by installing dedicated service centres, professional training to distributors/dealers salespersons, implementing quality management systems at the distributors, and through office automation of the dealers, etc. (TATA STEEL, 2005-06). Brief description of service centre facilities of a distributor, M/s Vijay Enterprise, can be found at their website vijayentps.com (2007). One of the Steelium distributors, M/s Kummachery Steels claimed, ...our relationship with TATA STEEL provides our customers with a level of service, product availability, and competitive pricing rarely found in our industry (kummachery.com, 2007). One member of the TATA Steelium brand management team explained, Our primary value proposition is the concept of providing a small customer total peace in purchase and consumption of CRS. Once, it was a dream for them, but today every customer has his own interpretation of what it means. For some, it is about assured availability; for others, it is about customization of size, and for still others, it is about dealing with a professional
TATA STEELIUM A SUCCESS STORY IN B2B BRANDING

TATA STEELIUM
On February 27, 2003, TATA STEEL launched the worlds first branded cold rolled steel (CRS) called TATA Steelium in Goa. Speaking at the launch, Mr. B Muthuraman, said Branding will give rise to a customized product in terms of value, performance, and pricing that will meet our customers needs better. Branding will go a long way in meeting the challenge of gaining a sustainable competitive edge. It will add value to the

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organization. At TATA Steelium, we offer it all. It was also explained that since TATA Steelium is bought only by small businesses who are concerned about their profitability and company image, the brand has the primary responsibility to protect their customers interest. Further, the brand must also take care of the interest of the intermediaries. However, TATA Steelium comes at a price. Today the brand is selling at a premium of Rs. 1,000-1,200 per tonne over competing products. Several advantages of TATA Steelium are illustrated in Figure 5. By engaging in branding of CRS, TATA STEEL could create value primarily in two areas. It could positively position CRS in the retail market against others in the industry and could achieve more market leverage related to pricing and negotiations. In this manner, the firm could influence customers and intermediaries so that they remain loyal to the brand. The sales performance of brand Steelium is given in Table 2. Today the brand has about 3,350 identified customers and among them about 1,800 customers are involved in active buying at any point in time. The brand is sold only through the distributor-dealer network where about 80 per cent of the total brand sales are made by the distributors directly to the customers and 20 per cent of the total sales are handled by the distributor-dealer chain. Prior to brand launch, TATA STEEL brand management team had to acquire a very clear understanding and a deep insight into what TATA Steelium should represent for the retail customers and how to differentiate the brand well from the competitive products. The branding exercise has taken into account customers behaviour and expectations, feedback from potential intermediaries, and other necessary insights from the marketplace (tata.com, 2007). Thus the roots of brand TATA Steelium arch all the way back to the marketing study revealing the customers unfulfilled needs and a strong passion of TATA STEEL for creating and capturing value by fulfilling those needs. Factors that play an important role prior to brand launch are described below.

feasibility study on the cold rolling mill, assessed the nature of domestic demand (in terms of sizes, grades, applications) and gaps available (Kharkar, Chatterjee and Muthuraman, 1997). As it was found that the market for high-end use of CRS (automobile, appliance, panel, etc.) is likely to have above average growth in demand and not enough capacity to supply, the company decided to target the high-end sector of the CRS market (Tisco News, 1999). Each critical facility at Tatas cold rolling mill was selected in a manner that provides many advantages to the customers over the competitors (See Table 3).

Importance for Retail Market of CRS and Branding

The minimum yearly capacity of 1.2 million tonnes of finished product was a techno-economically viable option for an integrated steel plant with tandem mill and other technology parameters chosen by TATA STEEL. Out of this, the CRS capacity (based on annealing capacity) was fixed at about 0.8 million tonnes per annum. Further, such mills were required to produce a wide variety of sizes and grades for economical production. With such a large capacity, it was necessary that the company targeted several segments that used different kinds of steel. Volume-wise, the Indian CRS market was almost equally divided between small (say less than 60 tonne a month) and large (say above 60 tonne to 1,500 tonne a month) customers. While most of the competitors attempted selling directly to a few large customers and invested much of their efforts on the same, the large number of small customers were generally neglected and served by a few wholesalers. Moreover, the environment was changing rapidly. Many small customers of CRS (mainly manufacturers and fabricators) were becoming key suppliers to the large volume prestigious customers of CRS who used to procure steel directly from steel majors. These small but growing customers could afford to pay higher prices for better materials and service. TATA STEEL wanted to become the leader in CRS in domestic market by commanding the largest share of mind and heart and by achieving the highest profitability. They saw two ways of accomplishing this goal, but they could not undertake either directly. First, they had to market their product (about 50% of the total production) with their own sales force to the large institutional

Technology Selection
TATA STEEL was having the capacity to produce hot rolled coils (HRC) but not the facility to add further value by rolling it in room temperature that produces CRS. The marketing study, undertaken prior to any technical
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customers. For these customers, the company develops long-term strategic plans, signed off by the customers themselves, for successful and profitable relationships. Second, it was also essential to make the product available to widely dispersed large number of small customers who care for quality product, better service, and professional dealing. Apart from popularity, this could help the company achieve target profitability. However, TATA STEEL could never serve large number of small customers effectively with their limited sales force. Also an integrated steel plant of this size was not designed to meet the volume needs of small customers individually. Hence TATA STEEL had to use sufficient intermediaries at the right locations with consistent image and capabilities. This situation is illustrated in Figure 6. Unlike a directly served large-volume customer, 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 with a brand in place, the brand name, and, possibly the brand slogan are the communication that reach small customers. A strong brand name also helps the company to attract capable intermediaries, propagate congruent messages to the customer through intermediaries, and allow efficient channel management. This is how brand management becomes useful in marketing of CRS in the identified target market of retail customers.

manufacturer of CRS. They had to move from shop to shop to buy their regular requirements as availability of materials with the retailers was never certain. Such retailers usually did not entertain quality complaints from customers as they did not receive support from wholesalers or manufacturers. Accordingly, the need for transacting with a professional organization instead of market-based retailers was strongly felt by the small customers. Third, identity and quality of CRS purchased from the retailers were often doubtful. Other manufacturers apparently sold identical CRS of different specifications including inferior grades at lucrative price and terms. 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 hated the power of dishonest retailers more than anything else. They also felt frustrated for not getting to speak directly to manufacturers personnel or not having someone trustworthy supplying their requirements of CRS reliably. 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. Customers, in general, were annoyed with the sales techniques of retailers/ wholesalers/brokers and felt that most of them tried to push them into buying odd-sized CRS. Many customers opined 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. These feelings were confirmed during our interaction with the customers. Some of the customers quotes are as follows: Steelium has changed our life; it has increased our

Customer Opinion
The problems faced and compromises made by the small customers of CRS prior to the launch of TATA Steelium, as it was revealed in the marketing study, 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. Several compromises like local annealing, heat treatment, cutting, welding, etc., were necessary before use. Second, small customers were having little access to the

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productivity; it has made the life of our workers easy and has taken away many of our agonies. Our business was not going in the right direction and then we got the opportunity to change it with TATA CR. After taking the Steelium CR for a few months, we realized that it is quite different from what we used to get from the market.

Overall Business Environment

Prior to the brand launch, small customers were usually dealt with by retailers in the local trading market. 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 and take part in the transaction price. With increasing demand of CRS, the number of retailers was increasing at major trading locations. However, the number of wholesalers procuring from manufacturers was mostly constant. They were mostly unwilling to extend the scope of their business beyond the major trading locations to avoid complexity. Thus the presence of retailers at certain consumption centres (other than major trading locations) was negligible. Buyers in those areas had to depend on the nearby trading centre and were often uncomfortable with the multiple handling and logistics associated with the purchase of each consignment. All retailers and wholesalers were guided by the simple principle of buying cheap and selling dear. They were largely indifferent about the buyers preferences and compromises. They were disinterested about providing value added services and considered that to be a losing proposition. The key success factor was the ability to buy cheap from the manufacturers. Most of the old and successful wholesalers/retailers had risen through 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.

Confidential deals and discriminatory pricing were common phenomenon. Rivalry between wholesalers and retailers were always putting downward pressure on market prices. Sometimes wholesalers and retailers bought larger quantity than they could sell and when manufacturers reduced their prices further, wholesalers and retailers would start panic selling depressing the market more and more. 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. Wholesalers were uncertain about the demand; they preferred to stock minimum quantities, were reluctant in committing their purchase well in advance, and waited for month-end price relaxation. Manufacturers were rarely concerned about the actual demand in the market, or possible difficulties of the wholesalers/retailers but were concerned about selling an aggregate quantity every month. Price was considered as the only lever and a loaded (overstocked) wholesaler used to be considered as a loyal customer. Manufacturers sales offices forecasted the monthly demand of these 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. When a wholesaler bought a considerable quantity of CRS, the retailers took the opportunity to bargain hard for the best price and terms. Similarly, when the wholesaler was able to buy items that were in high demand, he dictated terms to the retailers. In short, such perceived asymmetry in relationship between the manufacturer, wholesaler, and retailer was not conducive to the formation of trust between these parties. Towards the end of 2002, the price of steel in all categories started to stabilize and it was predicted to remain firm over a long period of time. This necessitated much higher investment by each retailer to trade at similar volume and to maintain similar margins. They were now looking for assurances from the manufacturers regarding sustained business and margins. A Steelium distributor during our interaction said, We could never think of the business proposition which we are now handling profitably. Intimacy with a company like TATA STEEL and repeat business from so many satisfied customers. these are very rewarding experiences for us.

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Critical Action Areas

It was understood that distributors, dealers, and their salespeople held the key to customers perception about the brand. Most important was the creation of an environment where TATA STEEL, distributors/dealers, and customers had trust on one other. Since people with widely different background (experience, education, age, communication skills, etc.) are involved in selling, it was an enormous task to bring a minimum level of professionalism and consistency among the dealing persons. It was a Herculean task as bringing simultaneous change (marketing orientation,5a brand care,5b brand ethics,5c etc.) was necessary among the independent distributors/ dealers and their salespersons who had little customer orientation. It was important for the company to monitor and have control over retail prices so that customers got fair and uniform prices at every location and the total channel profit was maximized. Improvement of service (level and quality) was long overdue in the retail sales of CRS. Once again distributors and dealers were to be convinced for delivering the number of value added services with assured quality standard. Further, service improvement must continue and service excellence over competition must persist. This is because it was understood that similar 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.

weights of 2.5 to 3 tonnes. A customer can choose from the wide variety of standard thickness, width, and grade combinations. All Steelium CRS have absolutely flat spread, accurate thickness, superior formability, and surface finish. Together all these mean 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 metre of its length, ensures the authenticity of the material.

Packaging
Packaging of Steelium is unique in the industry. It is completely impermeable and highly protective under normal circumstances. This is mainly due to the technology specially selected for packaging. Steelium CRS is wrapped in VCI paper with HDPE laminate, metal packed with galvanized steel. As customers want protection, performance, information, and assurance from the packaging, Steelium packets are usually painted in blue and there are distinct identifiable TATA STEEL tags and unique blue seals on the packaging which help identify the source of the material. Packaging uniqueness as described in Steelium brochure is reproduced in Figure 7. The label fixed on each packet/coil carry the brand name and a great deal of important information like grade, size, weight, number of pieces/coil length, and bar code. The competitors did not have such packaging.

Pricing
Since TATA Steelium was to be positioned as a high quality pioneer brand sold only through well-equipped distributors and dealers with value added services, TATA STEEL decided to charge premium price over competition. But steel items were traditionally seen as raw materials that could never justify a premium price. Also the steel price has operated as the major determinant of buyer choice whenever sufficient suppliers are available. So, the price premium of the brand must be supported by the customers perceived value. To ensure this, the brand management team regularly monitors competitors prices, market dynamics, and components like quality premium, service premium, and relationship premium at different locations against the various grades supplied under TATA Steelium.

BRAND ENGINEERING FOR TATA STEELIUM Product

The company introduced choice of grade and size in a manner that best influenced the customers perception of value. Customized Steelium grades are available for varying applications TR15 for furniture, AU03/AU02 for ordinary drawing applications, PN01 for panel fabrications, and AU05/AU09 for extra deep drawing applications. This supported the wide variety of applications undertaken by small customers. Steelium coils are available in thickness of 0.4 mm to 3 mm and in width of 1,000 mm to 1,540 mm. Coil weights vary as per the coil width. Steelium sheets are available in packet

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To ensure that 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 (within a territory and between territories) on selling price, each grade of TATA Steelium has a location-wise floor price, below which the item cannot be sold by the distributors or dealers. Charges for various standard processing are also fixed. Moreover, distributors are taught to charge fair prices to reinforce relationship intention among customers. The distributors margin is ensured through the floor price.

presentations are made. Further, account managers and application engineers of TATA STEEL meet selected customers once in a quarter along with the distributor. These account executives also meet some of their dealers customers during their quarterly retail run. The website of TATA STEEL carries a lot of information about the brand. One can download the brochure and detailed specification from the website. Interested persons can also post their enquiry or suggestions to the company directly. Enquiries of prospective customers are thus efficiently handled through company website. In addition, the brand also has a toll-free helpdesk to answer the queries over phone and an e-mail service for the detailed written enquiries.

Communication
TATA Steelium has been a widely published brand since its launch. Being the worlds first branded cold rolled steel, it could draw sufficient media attention for quite some time. The brand features and brand achievements appear in the news time and again. Leading news channels and publications from several stock research firms report various important events related to the brand and consider the brand success as one of the key factors in their predictions. For example, Moneycontrol. com (2007), says, Tata Steels world-class facilities and the state-ofthe-art production processes ensure superior properties like formability and unbeatable flatness. Traditional advertising methods were not used for building brand awareness for Steelium. TATA STEEL decided that the key to their B2B brand strategy would not be through brand preference or brand image advertising, but by communicating its product and service strategy to a large number of small customers of cold rolled steel, mainly through the well-established network of distributors and dealers. Brand management teams carry out elaborate studies of customer segments and send customized direct mail, brochures, and other relevant information through distributors to position the brand favourably in the minds of the customers. A portion of one such brochure made for furniture manufacturers is shown in Figure 8. It carefully highlights the advantages of brand Steelium over the competing products. TATA STEEL regularly organizes meetings of distributors, dealers, and customers. Once in a year, the company organizes fabricators and OEMs meet. Also the distributors are required to organize customers meet at least twice a year. These are attended by senior company officials and brand management team and detailed
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Salespersons
TATA STEEL takes special interest in the recruitment and development of the distributors salespeople so that they support the formation of consistent brand culture. It ensures that all Steelium distributors have a minimum number of salespersons according to their business volume and they are knowledgeable about the product, systems, procedures, and customers. Training of distributors and dealers salespersons on how to manage the brand has been a regular feature since the beginning (authorstream.com 2007). Distributors are considered as the key customers and a sales team is responsible for satisfying the transaction and relationship needs of the distributors. Account managers spend a lot of time with distributors and remain accessible to them for problem solving. Personal relationships with the distributors are developed through regular visits when account managers study and help distributors/dealers to improve their operations.

Channel Design
Based on the consumption pattern and strategic business volume, TATA STEEL decided to go for selective distribution in each major location. The primary job of the channel is to provide value added support services to the customers. TATA STEEL appoints distributors who in turn appoint dealers based on the guidelines issued by the company. Steelium products are sold both by distributors and their dealers and not by TATA STEEL directly. Each distributor and dealer needs to operate strictly within the specified territory. TATA STEEL be-

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lieves in developing customer acquisition and retention plan jointly with the distributors. Thus, in the course of four years of operation, most of the important customers have been specifically attached to a distributor or a dealer for sales and service. All distributors are required to submit monthly details of their sales including their dealers sales to the company. Information thus received remains available for further analysis and validation by brand managers and brand sales team. Distributors are provided mutually agreed targets (sales volume, level of support services, and customer satisfaction scores which is not below 80%) for improving the quality of their sales and are required to report their performance in those areas. All distributors and most of the dealers are web-enabled for the purpose of communication, data exchange, and tracking order execution online. In addition, a password-protected community website, TATA Steelium Parivaar, has been designed to cater to the needs of the distributors and dealers who as Parivaar members can freely interact with each other. Since the members are dispersed geographically, the website binds them closer by offering a uniform platform to express themselves and their commitment to the branding and growth of Steelium (allindia.com, 2007).

Distributors Capability Improvement

A member of the TATA Steelium brand management team stated, There were a lot of misconceptions about the small customers of CRS. For instance, there was a notion that small customers only see price, and hardly care for service and business relationship. So, a lot of our job was meant for educating the intermediaries on exactly what they are required to do and how they will be rewarded. TATA STEEL has taken multi-pronged action for improving their channel members ability to serve customers better while improving the profitability of the entire channel. These actions are detailed below. Improvement of supply chain efficiency and effectiveness through the theory of constraints (TOC): According to the proposed scheme of continuous replenishment programme, the decision making authority for determining shipments of Steelium from TATA STEEL to a distributor would transfer from the distributor to TATA STEEL. Instead of fulfilling orders provided by distributors, TATA STEEL would monitor the flow of its product through the distributors warehouses, and decide what to ship to the distributor, and when to ship it. All the distributors of Steelium have agreed to implement this new scheme and are in the process of investing in infrastructure. Distributors would benefit through reduced investment in inventory, increased return on assets, and enhanced ability to serve the dealers and customers. In 2006-07, the average distributor inventory of TATA Steelium Cold Rolled Sheets and Tata Shaktee Galvanised Sheets came down by as much as 20 per cent (prdomain.com, 2007). Wherever implemented, TOC has given TATA STEEL the visibility and control over inventory levels at distributors and helped distributors on how different grades and sizes should be stocked. Simultaneously, TATA STEEL educates their distributors about efficient inventory management and advises them to hold optimum inventory as they can depend on reliable supply from TATA STEEL. TOC is a part of companys commitment to provide the best support for Steelium distributors. Human resource development initiatives for employees working with channel partners: TATA STEEL organizes training on sales management for all employees of distributors through reputed business schools or other corporate training organizations. Distributors are recoTATA STEELIUM A SUCCESS STORY IN B2B BRANDING

Distributor Selection
In general, TATA Steelium distributors and dealers have high market reputation, premium business location, and superior capabilities to serve the customers. Distributor selection is done through a three-step process. The company selects a few distributors for each consumption centre from a large number of applicants. Level-1 screening is based on the combination of objective and subjective criteria like investment capabilities, interest in exclusive dealership, registration with statutory authorities, and market reputation. Level-2 screening is again based on the combination of objective and subjective criteria where the compensatory6 decision rules are usually applied. The criteria considered in this phase are business experience, turnover, knowledge, and quantum of sales. Finally, in level-3, nominated senior officers of the company take decision about distributor selection based on their ratings and scores in level-1 and level-2. The process is illustrated in Figure 9.

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mmended to organize customized training on advanced sales management topics required by them. In addition to professional training, distributors are required to implement standard HR practices for remuneration, yearly performance evaluation, recognition and rewards. The companys HRD department provides full support for problem solving (if any) and consultancy to distributors free of cost. In 2006, through its Steelium service centre, TATA STEEL Limited trained through 29 sessions in eight different languages, approximately 550 dealers on various selling techniques (sebi.gov.in, 2007). Implementation of key account management (KAM) process among distributors: Each distributor is required to identify its key customers according to profitability/ relationship criteria and submit a valid account development plan for each such customer. Distributors bring out account-wise sales plan for the year which is closely monitored. In addition, each distributor is required to establish a customer-friendly procedure for handling quality complaints and order management (receipt to fulfillment) and implement a system of no-haggle pricing and periodical monitoring of customers satisfaction on the established criteria. Further, an initiative has been taken to recognize the key employees of distributors customer through a special programme called Vijeta programme. Based on the purchase quantum and cooperation during a given period, some of these identified employees get recognition and reward from distributors/TATA STEEL. In medium-to-large organizations, this fulfills the individuals (in DMU) recognition and emotional needs. Retail value management, a programme extended to all the major brands of TATA STEEL, has successfully created long-term positive memory among its customers, and this has redefined the selling of steel by streamlining channel structure, introducing product improvements, and changing the look and feel of steel shops (highbeam.com, 2006). Optimal structuring of the retail network has ensured higher capacity and reach, high visibility across the retail chain, systematic measurement of intangibles like distributors and dealers capability, their involvement and brand care, customer account managers capability, etc. Several dedicated outlets are designed to ensure that the customers experience of buying a brand is convenient, shopping time is reduced and the visibility of companys brands are enhanced. Along with these developments, the company has been
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working to reduce transaction costs by using e-commerce for distributors and major dealers. In the next phase, distributors and dealers will be able to transact with their key customers using e-commerce. Awards to the distributors and dealers are given based on specific performance parameters and benchmarks. Dealer-meets are organized for A category distributors and dealers under each segment. Separate meets for B and C category dealers and distributors are also organized. Thus, many new ideas are generated towards strengthening the channel, creating brand ownership, and enhancing involvement of channel partners.

Evaluation of Distributors
TATA STEEL measures the performance of Steelium distributors periodically, using scorecards prepared on performance and capability parameters. Such sample scorecards are illustrated in Figure 10.1 and 10.2 respectively. The dimensions of performance scorecard include: Sales compliance Quality of feedback Inventory management Market receivable management Customer visits Margin monitor

The dimensions of capability scorecard include: Market understanding Quality of service centre Service capability Quality of HRM practices Implementation of quality management systems Work on special projects

The capability scorecard constitutes around 40 per cent of the weight in the evaluation, indicating the importance of service to customers. Besides evaluation, TATA STEEL always actively helps distributors to improve and provide superior services. And this is one of the reasons why TATA STEEL could develop very strong relationship with their distributors. In addition to the above, the distributors performance is also monitored through surveys among regular customers. Surveys include questions on steel supplied and the support services provided. This gives TATA STEEL an indication of the services available and overall im-

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pression of the customers. If a problem is identified, TATA STEEL works together with distributors and dealers, get involved in the operations, and attempts improvements.

Other Corporate Actions

TATA STEEL recognizes that all corporate actions must be consistent with brand values. In spite of the organization being considerably large, continuous efforts are made to keep everybody aware of the brand vision and goals and also about the reward and punishments for enhancing or degrading it. In this way the company ensures that all actions even the ones that are apparently far away from marketing are controlled.

confirm likely supply period, inform order status from time to time, inform availability, collect payment, extend credit in selected cases, and arrange door delivery wherever necessary. Many distributors have invested in setting up service centres to facilitate delivery of customized sizes and shapes that helped customers to reduce cost and hassle significantly. Customer intimacy: Distributors and dealers are motivated to know all their customers individually, contact them at regular intervals, solve customers problems under all circumstances, and ensure hassle-free transactions. The goal of the company is to give each customer a sense of dealing with a professional organization indicative of Tata brand by having competent and concerned intermediary employees and installing effective systems of dealing with customers. To develop relationship and intimacy between customers and their intermediaries, the company has been implementing account management process among the distributors. As a result of the value delivered by the company and its trade partners, the following consumption pattern and brand perceptions were recognized: Consumption pattern: TATA Steelium is mostly used by customers for shaping and forming applications that require technically superior steel. Segment-wise sales data of 2006-07 shown in Table 4 confirms this. The highest consuming segments like auto and panel require significantly higher forming and shaping properties than other segments. Small customers lack the facility to carry out destructive and non-destructive testing on steel and rely fully on Steelium logo for genuine and reliable CRS. Most of these customers have regular requirements and confirm their requirements to the specified distributor or dealer well in advance, depend very much on the service components, and are willing to pay premium price for consistently satisfactory brand experience. Large numbers of regular users of the brand are now enjoying reliable delivery, customized sizes, lower inventory, higher yield, trusted brand outlet, professional dealings, and strong company image. Brand perceptions: Among the retail segment, Steelium is widely regarded as the best CRS to use and conjures up a number of strong associations among both customers and intermediaries alike:
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VALUE PROPOSITION
TATA Steelium came into the Indian market with highlyintegrated value proposition that was perfectly aligned with the rational, emotional, stated, and secret needs of the target market consisting of many small yet quality conscious customers of CRS. The value proposition of TATA Steelium consisted of three primary elements as shown in Figure 11. Excellent functional quality: When Steelium was introduced, there were limited options for small customers requiring high performance defect-free CRS for sophisticated use. Against this, all CRS items produced by the new mill of TATA STEEL were distinguishable as superior quality by customers and users in the shop floor loved to use it. Steelium slogan Help Shape your Dreams indicating superior shaping and forming application properties, formed the core of a highly-differentiated value proposition. Steelium CRS has changed the manner in which aesthetics, paintability and yield are rated among end users. Value is achieved by enabling the customers to do almost anything with TATA Steelium with substantial peace of mind. Dream customer service through highly capable distribution: It was ensured that the distributors and their dealers in each location provided adequate services and satisfactory buying experiences to every customer. These intermediaries made sure that the process of ordering, finding, purchasing, and using CRS must work the way it is supposed to. They book the order from customers,

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 Fair and professional treatment Caring parent company Complete peace of mind in dealing with or using the brand. As a consequence, a large number of customers today ask for TATA Steelium despite the premium it commands over generic CRS available from competition.

Distributors Characteristics
Selling TATA Steelium is different from selling other CRS that are available in India. We know we have to respond to our customers needs much more than any reseller of steel does in India. Our customers have got special attention; they expect a different level of service which we think is unique to our brand, TATA Steelium, said the owner of a distributor firm. As another distributors manager summed it up: We attach greatest importance to the services to be delivered to our customers, and we are to take whatever actions that may be necessary and appropriate. It is clear that the distributors of TATA Steelium strongly identify the brand with their social grouping and they view the brand as a means to their increased profitability and growth. The relationship between TATA STEEL and the steelium distributors and also the relationship between these distributors and their regular customers is intense and active, which TATA STEEL has fostered over the years through its grass-root marketing activities. As one of the distributors expressed, Since the beginning, working with TATA STEEL has been like working with a business partner. It is very rewarding. Distributors dedication to customer satisfaction has created a notable impression with the TATA Steeliums customers: My Steelium distributor is one of the most professional steel dealers we have ever worked with. They are very much committed to our satisfaction. Our distributors staff is committed to our satisfaction and well being. It is great and they must keep it up. Whenever I call I get somebody at distributors premises to help me with an answer. They always try to solve our problems. That is what I like most. TATA Steelium distributors clearly know what the brand represents and how it has been established and based on that they feel that they know where the brand can or can not go. The key characteristics are indicated below:
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There has been a large improvement in the capability of many distributors across India. Distributors have undergone major changes in mindset, business knowledge, and skills with exposure to best practices and growth among peers. Most distributors are willing to invest more in establishing facilities and infrastructure for the future realizing the benefits of growing with the TATA Steelium brand. The company is taking up with distributors the installation of at least one service centre with adequate facilities at every location. During 2007-08, it was expected that 15 distributors would have their own service centres at an investment of Rs. 50 crore in total. Each distributor has willingly taken a target of Rs. 70-100 per tonne of steel to be sold by him during the year towards brand promotion activities. Distributors are committed to establish professional organization and systems. With growing demand from customers for certified suppliers, many distributors have established quality management systems in their organization and gone ahead with ISO certification. So far 14 distributors have been certified with ISO 9001-2000 and it was expected that a total of 21 distributors would be ISO certified within 2007-08. A strong sense of customer ownership has been invoked among distributors. Distributors have identified segment-wise key customers and developed a micro plan for sales during 2007-08. They had planned sales of 337 lakh tonnes of Steelium to key customers against a target of 420 lakh tonnes during 2007-08. Clearly, there has been a paradigm shift from random sales to planned sales approach. Having established infrastructure, systems and facilities, many competent distributors are looking for the next level of excitement. Fulfilling the growth aspirations of distributors continue to be the main concern in the longterm as the production capacity of Steelium may not increase substantially in the immediate future. Thus the companys ability to satisfy the distributors growth needs would be the key determinant of the ongoing relationship between TATA STEEL and their Steelium distributors.

Dealers Characteristics
The role and influence of the dealers are most important in areas where distributors capabilities are yet to

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be developed completely. In most of these areas, the present dealers ensure distribution of Steelium to the widely dispersed small furniture manufacturers. Dealers are also doing the financing to most of the small customers tied to them and are having revolving credit with them. While outlets were mostly multi-brand in previous years, channel development activities have led to the establishment of many exclusive Steelium dealers in most of the major consumption areas. Also more and more applications are being received continuously by the distributors for further appointment of exclusive dealers.

market. These competitors are likely to focus their efforts in their local markets first for maximizing margins. With Steeliums focus gradually shifting to the more organized customers and higher growth segments, the major competition will be for these segments. In spite of this, the challenging target taken by Steelium for 200708 is given in Table 5. Strengths and weaknesses of most of the important suppliers of CRS are given in Table 6. Secondly, because of the increased supply, there is a strong probability that the overall market sentiment will decline and it will not be easy to sustain the price premium and sales growth in a falling market. Further, these new entrants are quite unlikely to invest in establishing a brand name and they may try to offer customers just the basic product without any service component so that they can keep their cost as low as possible. Some of the brands dealers and distributors may consider taking part in trading competitors CRS in a different name in order to fulfill their growth needs.

CHALLENGES AHEAD
The competitive landscape of the Indian CRS market has disturbing implications for the brand TATA Steelium in 2007-08 and afterwards. TATA STEEL is faced with the challenge of maintaining the sales and growth of its brand TATA Steelium in an increasingly competitive marketplace. To achieve high levels of customer satisfaction and commitment, TATA Steelium relied mostly on two elements: largely superior steel quality and extraordinary customer services through distributors and dealers. There were ranges of subjective attributes that defined the quality of TATA Steelium, like its surface finish, packaging, labelling and distributors capabilities but it was the consistently superior functional quality that uniquely contributed to the brand equity of TATA Steelium. However, this value proposition confronted the brand TATA Steelium with a challenge: competitors are about to bring CRS of equal or superior functional quality to the domestic market soon. Because of the company image, number of years of existence in steel market, size, other product features, and segment diversification, so far SAIL-Bokaro was the only comprehensive competitor of TATA Steelium. The functional quality of TATA Steelium was still unmatched. Thus many small customers who purchase competing products have shown preference for TATA Steelium. But now Essar Steel was likely to enhance its volume of equivalent quality CRS from 25,000 tonnes per month to 40,000 tonnes per month in 2007-08 and Jindal South West was on the verge of bringing new age CRS in the

Customers
Brand has always played a critical role in steel purchasing decision. When selecting cold rolled steel, retail customers considered several factors: yield, availability, cost, support service, company image, product authenticity, brand culture, brand values, and above all relationship with the dealers or distributors. One customer, during recent interaction, seemed to have spoken for many, One salesman contacts us almost everyday to find out our requirements. We get the steel packets as per our requirement on the desired date and time from the Tata distributor if we inform them about our requirements in advance. This is a huge benefit to us. Over time, however, customers have become very vocal, especially after they developed intimacy with the TATA Steelium distributors and dealers. Many customers personally know the TATA STEEL account managers and brand managers. They talk to all of them very openly about the quality of steel and that of additional services where they want the company to improve further. In brief these are as follows: Expectations of service centre facility in terms of customized blanks, sizes, etc., are increasing. Expectation for technical support is increasing. With India gradually becoming a global hub for outsourcing for many industries especially auto anTATA STEELIUM A SUCCESS STORY IN B2B BRANDING

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cillaries and panel (Metals, 2006), small customers demands in terms of product quality and service levels are becoming more stringent. They are demanding product development and new product introduction. With increasing price and reduced availability continuing since 2004, customers felt a kind of power shift to TATA STEEL and brands distribution network. Some of the very small customers demanded fixed price contract and long-term supply contract. TATA STEEL recognizes that such a feeling can be detrimental to the ongoing business relationship and special care has been taken to ensure timely supplies to the distributors. Also the distributors and dealers have been advised to maintain service quality and enhance their capabilities so that additional services and ready availability is ensured to the customers. This will alleviate the felt effect of power shift by creating more goodwill. It was TATA STEEL that first manufactured exceptional grade of cold rolled steel with a great brand name; they have never lost sight of their customers and distributors. Company-intermediaries-customers all trusted each other in an ongoing relationship. The debate and dilemma lie in whether or not the present relationshiporiented branding strategy will continue to the benefit of the brand under the changing market scenario or the company should think of reframing its marketing strategy.

Industry Structure
In order for TATA Steelium to develop an effective appraisal of the present market situation and successfully develop its future plan, it is necessary to examine its strengths, weaknesses, opportunities, and threats. To do so, we first take a structured look at the industry using Porters five forces model. For this purpose, data was collected through various interactions with industry experts comprising of the executives of SAIL, TATA STEEL, Essar, Jindal, Bhusan, etc.

rable quality and capacities. Essar was increasing its supply from October-November, 2007 while the supply from Jindal was likely to commence only from the end of 2007 or beginning of 2008. The supply from SAIL-Bokaro is likely to remain at the same level till it adds further capacity which is expected in another two years time. For the trade segment, earlier there used to be gentlemens agreement between manufacturers regarding monthly prices, but such agreements may not be feasible now with so many firms likely to operate in the near future. Though most of the sectors served by TATA Steelium are expected to grow at a healthy rate (Table 4), this growth rate may not sustain for a long time and overall market may fall substantially if economic woes plague again. This means that all these firms will be competing for a larger share of a shrinking pie. At present stand-alone cold rollers are concentrating on exports for better realizations. But the drop in international/domestic prices will force them to refocus on domestic retail market putting further pressure on price levels. Over a period of about four years, however, the typical Steelium buyers have learned to buy CRS not just on price. They are interested in other attributes like service comfort, brand assurance, and the relationship with the Steelium distributors/dealers. They look for customized shapes and sizes from the distributors service centres and other value added services. In spite of competition, therefore, brand Steelium has an opportunity to build on its unique capabilities in the retail CR market of India.

Threat of New Entrants Increasing

Global players like POSCO and Mittal Steel with a long experience of supplying CRS in international market have already announced their arrival in the Indian market. These MNCs and the new domestic players like Essar and Jindal have good corporate image. Some of the brand loyal customers of Steelium may be taken away by these firms. These new entrants have no dearth of funds and can establish large and capable distribution network in a short time.

Intensity of Rivalry Increasing

There are a limited number of firms competing in the retail market of CRS with the top quality product like Steelium. But competitors like Essar and Jindal are also eyeing the retail market with compa-

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Threat of Substitutes Mixed In general, the thicker CRS is getting substituted by the thinner hot rolled steel (HRS). Fibre glass, aluminum, plastics, etc., are becoming suitable substitutes of CRS in many applications like car body, furniture, etc. CRS from competitors may remain unbranded. But any such effort may result in a large impact upon the long-term performance of TATA Steelium and it will require significant change in decision making. As Steelium serves the complex use and consumption needs of the customers, the large number of satisfied users are likely to pose considerable resistance to substitution by other brands or other materials. Threat from Buyers Medium to High So far the small retail buyers of CRS are not well organized. Sometimes small customers bargain on the retail prices but usually they do not pursue this aggressively as often the credit provided by the trade channel is more important to them than the price. Small customers often do not have much knowledge about market dynamics and they are less likely to initiate purchase action from other sources unless they are properly identified, approached, and persuaded by a new supplier. Some small customers are now able to import CRS easily and many such customers are demanding new product development/customized production. Threat from Suppliers Weak Since TATA STEEL is having its own hot rolled coil production, there is no threat to the input materials for the production of Steelium. Summary There are three strong forces worth considering. Rivalry and threat of new entrants are on the increase. Buyers can become very powerful as an equivalent grade CRS could be easily available in future. TATA Steelium can stay ahead of competition by leveraging its unmatched distribution network and customer service culture. To be able to do so, TATA STEEL must be able to maintain and enhance its relationship quality with channel members and must sustain its strong and clearly differentiated brand image.

SWOT Analysis of Brand TATA Steelium

The source of this analysis is the data collected in various interactions with industry experts comprising the executives of SAIL, TATA STEEL, Essar, Jindal, Bhusan, etc. Strengths High functional quality of the product and grades suitable for different applications of CRS High awareness and preference among retail customers in all locations Established, highly capable and motivated channel partners supported by able Tata employees (account managers and application engineers) Value addition through dedicated and high quality service centres Long emphasized service culture in all stages like presales, sales, and after-sales Enduring relationships with customers already established by the distributors/dealers Major supply chain improvement initiatives through TOC will help improvement of supply chain effectiveness Association with TATA name brings special trust among the Indian customers. Weaknesses Limited availability with increasing demand may force the existing customers and channel members to look for other sources Production being located at only one place (Jamshedpur in India), logistics disadvantage is likely for supplying to certain parts of India Brand identity (logo) of Steelium is lost when processed further (like slitting, blanking, etc.) in a service centre. Opportunities Contract production by maintaining quality standard and other parameters can enlarge customer base and sales volume. Within the present market size, there exists considerable room for Steelium to expand and enhance profitability. Improvement of sales and realization potential is possible by increasing the supply of drawing and deep drawing grades. Further value can be created and captured by innoTATA STEELIUM A SUCCESS STORY IN B2B BRANDING

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vative marketing strategies like production and sales of exclusive and branded furniture. If the existing distributors are inducted, this will fulfill their growth needs too. Continual improvement in service will help in sustaining competitive advantages. Threats By far the most significant threat Steelium faces is that of losing some of the important customers and distributors in the hand of competitors like Essar and Jindal that can also become a quality national supplier. On the back of this uncertainty, Steelium has to continue investing on relationship with channel members and customers. In absence of any real differentiation in material quality, Steelium will have to compete solely on the strength of intangibles.

ability constraint from competitors. Today, the brand holds a dominant market position and an excellent long-term profit potential in view of the likely growth in the consumption of CRS and further improvement of market prices. However, the potential for the volume growth of the brand is limited due to fixed production capacity. Under such circumstances, the first and foremost concern of the brand will be to achieve customers perception as the fairest-priced CRS with its brand features and associations. Should the brand premium be reduced or the company must find avenues to add more value through tangibles or intangibles? Reduction of price will surely mean reduction in profit for the whole chain while adding new values will require further research and possibly new competencies. The next important concern is to protect the distributors and dealers loyalty. While competitors may entice away some of the existing partners, few others may be tempted to start a parallel business of distributing competitors product for higher turnover and growth. Should the company motivate these distributors and dealers to sell its other brands or should it start a new venture of manufacturing and market its own range of high quality, innovative line of stylish yet affordable steel furniture using Steelium, for home and office? The existing distributors and dealers can install manufacturing facility and open a chain of retail furniture stores. In selling other brands, the distributors and dealers will have to serve different customers and will be subjected to different guidelines. In the business of related end product like furniture, the market will be new to the company as well as to the distributors. All participants will require new skills and a proper understanding of the product, market, customers, collaborators, and competitors. Also, the new business will consume the raw material; and to maintain the current market share, the company will require capacity addition. Capacity addition will take a little more time but it is forthcoming as all the existing steel majors including TATA STEEL have taken definite steps towards the same. In fact, the Indian CRS market of small customers may witness yet another revolution with the entry of multinationals as they will not only bring good quality steel but also extraordinary support services. This may result in acute competition for the brand Steelium. The

SUMMARY
Today the brand TATA Steelium has the best customers in its portfolio and gets the best chance to sell in the market. Compared to the other steel producers, TATA STEEL is viewed by customers and intermediaries as much more collaborative. In comparison to Essar, the price of TATA Steelium works out cheaper, after considering the service and relationship value to the customers. This is illustrated in Figure 12. In view of the large demand-supply gap that exists in the CRS market, TATA STEEL can afford to sacrifice some of its casual customers and maintain its premium position with service-sensitive customers.

New Strategy?
A large number of small customers and steel merchants are now familiar with the TATA Steelium brand and hold a favourable, strong, and unique brand association in their memory. The brand is also distributed in a very effective way. It is true that the brand is being driven by the sophisticated service seekers who are also cooperative customers. Price-sensitive customers are not the regular buyers and cost is the primary reason for their not going for a repeat purchase. Though brand building through relationship and service has always been the primary focus of the company, it is important to consider the other reasons that customers bought the brand for, which included brands functional quality and availVIKALPA VOLUME 35 NO 2 APRIL - JUNE 2010

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new entrants would be vying for the same service-sensitive segment of the CRS customers. Measuring the success of relationship initiative and customer intimacy under the changed marketing environment will be extremely difficult. At this stage, therefore, the company may seriously think whether the current relationshiporiented initiatives are worth reinvesting in or whether the company should prepare to launch a stripped-down Table 1: Sales Performance of Branded Products

version of the brand in standard specifications offering lower prices and only essential services. This second option may also make the Indian CRS market little unattractive to the new entrants. Importantly, in continuing with the current strategy, continual improvements will be required and the evolutionary path, that will help the brand to sustain its competitive advantages, will have to be made clear to the company in a very short time.

Rs. Crore 2003-04 Sale of branded products Growth over previous year (%) Total sale of products Growth over previous year (%) Brand sales w.r.to total sales (%)
Source: TATA STEEL Annual Reports

2004-05 3,362 42 15,251 35

2005-06 3,848 14 16,521 8 23

2006-07 4,604 20 17,700 7 26

2,365 11,332

21

22

Table 2: Sales Performance of TATA Steelium

Lakh Tonnes 2003-04 Steelium Sales Volume Growth over previous year (%)
Source: TATA STEEL Annual Reports

2004-05 3.55 25

2005-06 3.92 10

2006-07 3.71 -5

2007-08(E) 4.2 13

2.83

Table 3: Technology Parameters and its Advantages

Key Facilities Coupled shallow bath hydrochloric acid pickling Advantage over Competition Lower idle time and improved productivity Less damage of the strips Uniform product quality Low acid and energy consumption Better gauge and shape accuracy No damage during storage Lower cost in terms of investment, manpower, and consumables Less off-gauge and higher yield

Tandem cold rolling mill

Batch annealing Skin passing

Can take care of orders in small lots which is the characteristic of Indian retail market Can get close to customers requirement of draw- ability, ductability along with strength Precise amount of surface roughness is imparted, Possibility of surface defects like stretch marks, etc., are eliminated No need for the customer to prepare the coil before deformation

100% inspection under strobe lights 100% performance at customers end and not merely a specification guarantee by trained inspector and with Matching precise oil requirement of the customer and thus ensuring smooth operation electrostatic oiling capability at customers end. Machine packing with thin plastic film Electrolytic cleaning Electro discharge texturing machine No damage due to moisture or loss of oil Increased protection to handling damage Removes dirt or contaminations from the grooves and deepening on strip surface Matte, bright and mirror bright finish depending on the customers end use requirements

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

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Table 4: Segment-wise Sales of TATA Steelium

Segments Automotive Panel Gen Engg Furniture Tube Stamping Packaging Others
Source: Company records

Table 5: Sales Target of TATA Steelium

2006-07 Actual Market Size Growth (%) Steelium Sales Growth (%) Market Share (%) Premium (Rs./Ton)
Source: Company records

% Sales in 2006-07 38 34 16 5 3 2 1 1

Sectoral Growth Rate Estimated(%) 18 16 9 10 N.A N.A 9 N.A

2007-08 Plan 24.21 11

21.79

3.71

4.2 13

17 800

17 1300

Table 6: Strengths and Weaknesses of Major Competitors of Steelium

Competitors Name SAIL Strengths Large capacity; operates through financially strong traders all over India; supplier of many other categories of steel in retail market; sales tax (VAT) advantage due to many number of own stockyards across India. High volume, superior technology, good quality product, good distribution network existing for their hot rolled items; ability to supply number of flat products to the distributors, location advantage for western and southern parts of India; targeting high end sectors like auto, appliance, etc. Good product quality; supplies in customized blanks; focus on high margin customers like auto and appliance; good quality service centre in the mill; can supply small quantities of deep drawing grades to retail segments. Weaknesses CRS quality not suitable for higher-end applications; do not have authorized selling agents; little control over traders; focus on low-end segments; sells large quantity of CRS in standard grade. No organized distribution network for retail marketing of CRS; no experience of providing technical support to the channel members and customers; attempt to sell CRS through multiple channel creating dissonance. Not an integrated steel plant (however captive HR is coming up) not having strong distributors network, availability of CRS is not regular and mostly opportunistic in nature based on price differential between domestic and export market. Not an integrated steel plant and depend on import for input materials; availability of CRS is not regular.

Essar Steel

Bhusan Steel & Power and Bhushan Steel & Strips

Uttam Galva

Excellent tie-up both domestic and international for hot rolled steel as input material; doubling the production capacity; good quality of product; concentrates on local sales with better service and higher margins; controls the thinner CR market in western region. Narrow mill; 60% own consumption; can supply customized sizes; good product quality.

Hero Cycles

High input cost, small volume.

Source: Authors

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Figure 1: Vision Architecture 2007

Source: Tisco News, 2002.

Figure 2: Brand Revenue Target

Source: Tisco News, 2002.

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Figure 3: Branded House of TATA STEEL Creating Value by Branding

Source: TATA STEEL Annual Reports

Figure 4: Awards and Recognitions for TATA STEEL

Source: TATA STEEL Annual Reports

Figure 5: TATA Steelium Advantages

Source: Steelium Brochure. VIKALPA VOLUME 35 NO 2 APRIL - JUNE 2010

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Figure 6: Targeting Retail Customers with TATA Steelium

Large Customer served directly (About 0.4 MT/ year) ALL CUSTOMERS

Tailored strategy and communication for long-term relationship

Cannot sell more than 0.4 MT/year with large customers only

Small Customers served through Distribution (About 0.4 MT/year)

Brand Management Relation with channel members Value for customers

Source: Authors

Figure 7: Highlighting the Packaging Features

Source: Steelium Brochure

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Figure 8: Brochure Showing Steelium Advantages for Furniture Segment

Source: Steelium Brochure

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Figure 9: Steps in Distributor Selection

Source: Company records

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Figure 10.1: Step 1 in Distributor Evaluation

Source: Company records

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Figure 10.2: Step 2 in Distributor Evaluation

Source: Company records

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Figure 11: Value Proposition for TATA Steelium

Customer Intimacy Dream Customer Service Excellent Functional Quality

Source: Authors

Figure 12: Utility of Price Comparison Potential Benefit of Customers in buying TATA Steelium
Rs.42,700 Rs.700 Rs.400 550 Rs.42,150

Price of TATA Steelium Includes freight) Source: Customer interviews

Loss for no support service

Impact of relationship with distributors

Value of CRS from new entrants

Essars current price (includes freight)

NOTES
1. Interim names: Company trade name combined with individual product names. TATA STEEL ties its group name to an individual brand name for each product. 2. Mr. A Sen designated as Chief of Marketing and Sales, is a senior level marketing executive of TATA STEEL handling flat products of the company. At TATA STEEL, brand management including the initiatives of internal branding falls under the responsibility of Chief of Marketing and Sales, flat products and long products. They report to the company Managing Director, Sri B Mutturaman. 3. Dealers: At TATA Steelium, retailers are called dealers. They are appointed by the distributors as per company guidelines. 4. Cutters act as a service centre for steel coils. Here the coils are decoiled, cut into specific sizes, sometimes silted and recoiled depending on the customers requirements. TATA STEEL encourages their distributors and major dealers to install such facilities and beyond. 5a. Marketing orientation is an organizational orientation that centres its activities on achieving success by satisfying the
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needs and wants of its customers. 5b. To safeguard brand power, all brands require some care (judiciousness in avoiding harm or danger) such as making sure that all marketing activities undertaken by the distributors and dealers send a consistent message about the brand. 5c. Ethics (a general enquiry into what is good) is an inescapable part of brand management. All marketing decisions and actions of distributors and dealers must be consistent with the brands stated ethical intentions and in all such actions, ethical issues must be taken into account so that the actions are culturally good and there is no harmful effect on customers, employees, company, other partners, the community and the world as a whole. 6. In compensatory decision rule, the weakness of a distributor on one attribute can be compensated for by strength on another, and the scores are summed up to determine the highest scoring (most favourable) and the lowest scoring (most unfavourable) distributor.

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http://www. allindia.com/sst_projects-2005.asp accessed on 17.03.2007 http://www.authorstream.com/Presentation/sainipk269424-tata-bajaj-auto-ppt-entertainment-powerpoint/ accessed on 25.12.2007 http://www. blonnet.com/2003/05/21/stories/20030521024 10200.htm accessed on 17.03.2007 http://www.highbeam.com/The+Hindustan+Times/ publications.aspx?date=20060216&pageNumber=8, TATA STEEL Implements Retail Value Management; Creates Long-term Positive Memory Among Consumers February 16, 2006. Gregory, R J and Sexton, E D (2007). Hidden Wealth in B2B Brands, Harvard Business Review, March, 23. Kharkar, H C; Chatterjee, A and Muthuraman, B (1997), Technology Selection for TATA STEEL Cold Rolling Complex, TATA Tech, 28. Kotler, P and Pfoertsch, W (2006). B2B Brand Management, Springer, 264-265. http://www. kummenchery.com/inpages/profile.htm accessed on 17.03.2007 Lynch, J and Chernatony, L D (2007), Winning Hearts and Minds: B-to-B Branding and the Role of the Salesperson, Journal of Marketing Management, 23(1-2), 123-135. Metals 2006, Steel For Auto and Construction, Published in an industry meet organized by Bengal Chamber of Commerce & Industry, 28.11.2006 http://www.moneycontrol.com/india/news/pressmarket/ tata-steelium-organises-managing-changesthe-panelinds/23/10/299719 accessed on 25.12.2007 http://www.prdomain.com/companies/T/TataSteel/ newsreleases/20074340008.htm accessed on 12.05.2007. http://www.sebi.gov.in/dp/tatasteel.pdf accessed on 01.09.2007. http://headlines. Sify.com/news/fullstory.php accessed on 17.03.2007 http://www. tata.com/tata_steel/releases/20030227.htm accessed on 17.03.2007 TATA STEEL, (2004-05), 98th Annual Report TATA STEEL, (2005-06), 99th Annual Report Tisco News, (1999), Facing the Future October. Tisco News, October 1, 2002 Tisco News (2004 05), The Best Name in India says TNS Survey, Issue 4. http://vijayentps.com/services.htm accessed on 17.03.2007. Webster, Jr. E F and Keller, L K (2004). A Roadmap for Branding in Industrial Markets, Brand Management, Vol II (5), 388-402.

Kaushik Bhattacharya is a Ph.D candidate at the Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur. He has over 15 years of experience in marketing and sale of Indian steel industry. e-mail: bhattacharya.kaushik.67@gmail.com

Biplab Datta, a Ph.D from the Indian Institute of Technology, Delhi, is currently an Assistant Professor of Marketing at the Vinod Gupta School of Management, Indian Institute of Technology, Kharagpur. His teaching and research interests include relationship marketing, customer relationship management, brand management, consumer behaviour and e-business. He has worked on various management projects and co-authored several articles for Indian as well as international journals. e-mail: bd@vgsom.iitkgp.ernet.in.

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