Killing the commodity, shaping the market- the story of brands at Tata Steel

Name of the Firm: Tata Steel Type of innovation: Business model innovation Year of innovation: 2000-2009 “He that will not apply new remedies must expect new evils; for time is the greatest innovator” _ Francis Bacon

Introduction:

The word “commodity” can be referred to specific group of products and markets with low product & service differentiation, and therefore price as the only determinant for purchase. Phrases like “ME-TOO” and “one product fits all” are typical of a commoditised market. In commodity selling the Distribution and Channel network create impermeable barriers between the consumer and the manufacturer, thereby creating dependence on the middle-man. The middle-men uses this disconnect to push products that give them maximum margins, shift loyalties between suppliers and leverage on speculative buying for providing “windfall profits”. Steel has been seen as a commodity always. It is seen as a product which is to be processed by other industries, thereby transforming it into a product which is used by the final consumer. In India, with the opening of the economy, the competitive intensity in the Steel industry intensified which led to the Steel manufacturers to focus on operating efficiencies and “Sweating their assets” to remain profitable in a commodity selling market. Non functional features of the value chain – delivery, technical support & service, distribution, customer segmentation & targeting were only heard of and not understood. This article “Killing the commodity, shaping the market- the story of brands at Tata Steel” enunciates the story of innovation in the market place by Tata Steel wherein brands of steel not only redefined the commodity mindset within the company, but completely transformed the market practices and the way others looked at Steel Marketing. This journey involves the design, development and deployment of various practices & processes that are first in the Steel industry and remains unique even after 10 years of the journey.

Innovation: In 2000 the Steel industry posed numerous challenges across markets, consumers, competition and the channel. Consumers lacked information of the product and its source identity, time consuming price discovery and apprehension of being duped on price and quantity. This was compounded by an unorganized channel network with low brand loyalty, highly opportunistic and margin sensitive in behaviour with low levels service. Under this market environment Tata Steel embarked upon its brand journey and for the first time in the Steel industry established fundamental changes in the way business was being conducted in this sector.

Tata Steel saw these “pain points” of the potential buyer of steel as an opportunity to create significant differentiation in its products & services and deliver superior value to the consumer. This article enunciates innovations implemented by Tata Steel in creating source identity of the product, in transforming the “Mandi” environment of steel selling into a consumer friendly retail experience , creating a dedicated & exclusive channel network to provide channel authentication and deploying peripheral support services to enhance shopping experience.

Tata Steel embarked in transforming a commodity into brands through 3 stages of innovation – Creating unique identity & Channel credibility, Service orientation with a focus on consumer insights and developing Channel capabilities and Establishing Brands as Solution providers with a focus on product & service customization & solution selling. The various innovative initiatives taken across the 3 phases of the brand journey is enumerated below.

1. Innovation in the product - Creating unique identity – An industry 1st , a social benchmark Establish source identity through Product Branding: Tata Steel launched product brands in the identified markets. These Brands were embossed on the products to assure genuineness of the product in the market place

2. Innovation in the Channel – a dedicated & even exclusive channel – 1st in steel industry

The Steel Industry was plagued by a highly disorganized and fragmented Distribution and Channel Network. Tata Steel articulated a Distribution dream to establish a professional distribution business for the product brands of Tata Steel. In 1999 Tata Steel came up with a two-tier channel structure comprising of Distributors and Retailers. Tata Steel’s ownership of the Channel was limited to the Distributor, who was assigned a specific territory. Distributor has the liberty to appoint retailers within the assigned territories. While Tata Steel developed strong relationship with the Distributors, the retail segment remained largely unexplored. This led to lack of knowledge on the size of the market, speculative buying by the retail channel, limited MIS to track the performance of the retail network and erratic pricing was undermining the brand equity of the Tata Steel brands in the market place.

Tata Shaktee – Galvanized Corrugated Sheets for roofing applications in the rural markets. By indicating thickness and zinc coating on each sheet for the first time in India; thereby changing industry practice to deliver as per promise, where cheating on thickness & coating is rampant.

Tata Tiscon – Construction re-bar for the Individual Household Builder. As a generic product it lacked distinctiveness, Tata Tiscon branded on the re-bar, ensured category awareness, no possibility of duplicate material and brand preference in the target markets

Tata Steelium – Cold Rolled Sheets for the small customers’ in general engineering segment. The only Company in the world, to innovate on watermark branding on cold rolled steel as first time in the world. This was clear authentication of “Tata” material to small buyers. Tata Steel holds a patent for the marking.

Galvano – Zero Spangled galvanized plain sheets for small customers in general engineering segment. The only Company in the industry, to innovate on UV marking which is invisible to the naked eye (visible with UV torch), so as to not affect the final look & feel of products like appliances and yet certify the authenticity of the brand.

A comprehensive programme called “Retail value management (RVM)” was initiated to transform the company’s channel network in its consumer markets. The key challenges faced were the limited access of reliable database of the retail market and low brand ownership of the retail network due to the absence of well-defined processes. RVM was designed to improve the efficiency and effectiveness of each lever of the retail value chain to provide a superior offering to the end consumer. The key initiatives under RVM include a. Mapping the market – Demand mapping, competitior profiling, market understanding and demand drivers. In Tata Shaktee alone 12000 retailers were mapped and 3500 were selected. b. Modernising mindset of the “trader & middle-man”: The quality of the retailers and the development needs of the distributor are assessed so as to align them to the overall strategic objectives and the targets being taken for the territory. c. Ideate - team generates as many improvement ideas as possible to reach the set targets. These ideas could range from improving product attributes, packaging, specific marketing initiatives, communication initiatives to be undertaken in the territory, etc. d. Implement : In the last phase, an implementation plan is developed around 9 levers of RVM implementation (Company, Distributor, Retailer, Consumer, Opinion leader, Value influencers, Direct marketing, Mass media and Word of mouth) covering the interests of each stakeholder. The plan covers aspects of network management in terms of appointing retailers in key areas as per the desired reach and the retailer mix that is aligned with the capacity to be created in the channel.

The RVM process gave a fillip to the Brands of Tata Steel in delivering Brand promise and creates a sustainable competitive advantage. While the Competition are still grappling with a disorganized and uncommitted channel, Tata Steel through its RVM process has been able to have a dedicated and exclusive Distributors, Identified & segmented retailers in all focus markets, assurance of channel authentication to the consumer, a robust channel MIS system, assured return to the channel and a sense of shared destiny with the Distribution network. Currently Tata Steel’s 6 retail brands have 170 Exclusive Distributors, served through more than 7000 Retailers with 580 exclusive branded showrooms (like SONY WORLD outlets) across 17 identified territories. This enabled the company to directly interface with the end-users to capture customer needs and design & deploy innovative service solutions.

3. Innovation in Service – raise the bar in customer expectations Unique identity of Tata Steel brands along with the setting up of the Channel network, provided the company unprecedented access to the end consumer. The products brands ascertained the expressed and latent needs of the consumers through Market research. The customer was taught to expect more while shopping for steel, therefore socially raising the bar of industry practises. Some “market shaping, first time innovations in the industry” are enumerated below: I. Transforming the “trader” to a “service providing Distributor” – In this phase of the brand journey Tata Steel implemented various initiatives in improving the capability of the channel network. The first aspect was to institutionalize professional HR practices at the Distributor’s organization. The company invested close to 10,000 man hours in training, development and consumer sensitization of the channel in the last 5 years. To improve the last mile delivery system to consumers the product stocking & handling facilities at the Distributor’s was upgraded and standardized. Retail stock unit vans were deployed to improve service levels. To create a direct communication channel, quarterly newsletters & other listening & learning platforms were created, covering more than 6000 retailers and 110 distributors. Automation & IT up-gradation: To increase Tata Steel response in supply chain, the distributor’s transactions were automated and seamlessly connected to Tata Steel’s SAP system in real time. This facilitated Tata Steel to launch and implement “Solution for Sales” offers like Replenishment of stocks,

Rapid response delivery of material. The system integration has also been progressively expanded to the retail network and supply chain solution extend to the last leg of the channel II. Shopping for steel from exclusive showrooms: The Retail Identity Programme (RIP) was launched in order to enhance the shopping experience for the consumers. Steel buying was considered to be dirty business and there was an overpowering feeling of being cheated. To change this perception and also raise consumers expectation some brands launched the exclusive showroom currently these exclusive outlets account for 30% of branded sales.

Tata Shaktee retail Store – Tata Shaktee retail Store – AFTER the programme BEFORE the programme

Tata Tiscon – Exclusive showroom

III. “MRP” in steel – Introduction of RCP: Having put a disciplined channel in place, enabled the Brands to further raise the customers expectation by introducing Recommended Consumer Price list (RCP) creating brand preference through price transparency, uniformity, stability & authenticity. 90% of the branded products are sold to the consumers at a price list thereby eliminating the discomfort of being cheated by an opportunistic shop-keeper.

IV. Continued innovation of product : A systematic process of consumer interactions helped the company to plug many need gaps of the customers. Tata Shaktee, a rural brand launched its cost saving wider width sheet in 910 mm and 1220 mm against competitor offerings of 800 mm and 840 mm. Tata Tiscon launched TISCON 500 for heavy duty structures, Super Ductile re-bars for seismic prone zones and TISCON –CRS, with superior corrosion resistance properties for applications in coastal regions. Tata Agrico another rural retail brand, of agricultural implements have introduced more than 30 new products and 250 variants to cover 90% of the districts in India. V. Consumer Connect – Access to the consumer led to a plethora of consumer initiatives like consumer education through mobile van campaigns, Focused direct communications, user manuals on roof installation, construction guidelines, Plumbing & Irrigation processes. Localized consumer schemes were launched and influencer programmes like Masons & Plumbers club, Panchayat & BDO meets were implemented. Some of the initiatives that have provided durable consumer connect and have created unique consumer intimacy is showcased below

­ “Aajeevan” Life time guarantee for Plumbing Pipes: Tata Pipes are used for Plumbing applications. As the Plumbing pipes are concealed any leakage in the conduit of water leads to significant cost and time in rectification. To address this critical concern of the Consumer, Tata Pipes launched the Aajeevan programme which gives life time guarantee on the product quality of the pipes to the consumer. Along

with the guarantee peripheral support like plumbing installation manual, access to quality Plumbers, bundling of fittings & accessories for plumbing applications was built into the programme. This initiative created a scallop jump in the offering and led to a 10-12% growth in the sales at a premium levels of 20% vis-à-vis next best competition.

­ ­ LINKs Programme : Tata Steelium serves 2300 small customers in a B2B environment. The spread of customers across 183 end use applications required specific and focused Customer engagement programme. Tata Steelium launched LINKs (Learning, Interaction, Networking and knowledge sharing) to build partnerships with our small customers. The programme raises the practising professionalism of companies that are SMEs. The initiatives on providing Knowledge, Interaction & networking platform with industry bodies, unique customer’s employee recognition programme called Steelium Vijeta and Steelium Suraksha – Safety awareness and training. This programme also facilitates best practice sharing amongst SME industries and celebrates milestones of customers. More than 150 LINKs events have been organized covering 400 customers of Tata Steelium. This has helped the Brand to command 51% SOB with Key Customers and create loyalty through a business relationship of more than 3 years. ­ HAAT Hungama creating consumer intimacy for Tata Shaktee: For a rural brand addressing 6 lakh villages HAATs are the most effective platform to socially engage the audience and raise their knowledge about the brand. Haats with a consumer footfalls of >5000 were selected for this programme. Territory specific consumer contact programmes such as Bora Katha, Mobile Video Vans and Nukkads were launched in various parts of the country. Haat Hungama, was launched nation-wide with specially designed Haat kits, which were used to involve & educate the consumers about the brand. Tata Shaktee Haat campaign is the largest ever in any category with a participation in more than 6000 Haats with 35 lakhs potential consumers contacted resulting in 30% increase in footfalls and 37% increase in sales. ­ Tata Agrico - Developing partnerships with Tata group rural brands: Tata Agrico has tied up with a number of other rural brands / companies like Tata Chemicals Ltd, Tata BP Solar Limited to share its retail network of some 25,000 plus retailers across the country. Through its tie up with TCL, Tata agrico product is being sold through Tata Kisan Sansar. Tata Agrico distributor network is being used by Tata BP Solar to sell its solar products in the rural market. ­ Selling re-bar by piece – A paradigm shift in rebar selling in India: Re-bars in India are sold by weight. This leads to unscrupulous practices by the channel, increase in cost to the consumer due to positive weight tolerances. Tata Tiscon wanted to shape the retail selling practices by selling re-bars by piece. This is a “difficult to replicate” initiative as the weight tolerance of the competition is +3% and therefore gave Tiscon an opportunity for a unique offering to the consumer. The task required reduction in sectional weight variation from -/+ 5% to 0,-2% and operational efficiencies in reducing % short length re-bars in bundles by 13% to ensure 99% compliance. This enabled the consumer to save 5-6% of the total steel buy, facilitated remote purchase (there was no need for weighment of the material). This initiative also reduced the channel costs and enhanced differentiation, premium & loyalty of the brand. This initiative still remains a unique feature of Tiscon offerings.

4. Innovation beyond product - Create & Capture value through customization & solution selling

The journey also helped the company to attempt the next step in Brand building to create value through solution selling and customization of products & services.

a. ACE Programme in Tata Steelium – Improve quality norms at service centers that serve Tata Steelium customers

Tata Steelium CR coils are routed to customers through Distributor owned Steel Service centers. The service centers processes the coil to sheets or blanks. The quality & specification of the sheets get largely affected by the type of service centre processing the coils. Tata Steel initiated a programme called ACE to certify service centers through an independent third party audit and take specific improvement plans. This was a major challenge as the service centers are not owned by the company and there was no precedent to emulate. The certification process rated the service centers on infrastructure requirements, equipment capabilities, systems & processes and people skills & training. The service centers are rated as Level 1 (Adequate), Level 2 (Competent) and Level 3 (Excellent). Implementation of specific improvement plans through daily management activities led to 17 service centers being ACE certified which now contributes to 73% of Steelium volume being processed. ACE programme has facilitated the distributors to offer value added products, enable high degree of customization, set benchmarks for service levels and interact to transfer knowledge and best practices and also earn higher margins. The customer service excellence score has increased from 12% in Fy05 to 38% in Fy09 in the customer satisfaction study. No other Steel company has similar development plan for 3rd party owned steel service centers.

b. Steeljunction : A speciality store for products made from Steel Tata Steel launched Steeljunction to foray into organized retailing. The main objective was to change the perception of steel in the minds of the consumer – create “Steel is Beautiful” experience, create brand equity of Tata Steel as the leaders in marketing steel. ‘steeljunction’ is a chain of Organized Steel Retail Store which deals with products manufactured out of steel in categories like furniture, appliances kitchenwares including Tata Steel products. ‘steeljunction’ at present has five stores (one company managed and four run on franchisee model) in and around Kolkata and has brought a number of laurels to the company. These include ‘Tata Innovation Award’ received in 2006, ‘Best Retail Concept of the Year’ Award received in 2006 and extensive coverage of the concept in Philip Kotler’s popular textbook titled “Marketing Management – A South Asian Perspective”. Besides this, the initiative has helped in giving the company retail expertise and has enabled us to study consumer behaviour in a controlled environment.

c. Tata Shaktee – Roofing Solutions: While Tata Shatee sells GC sheets for roofing through the retail channel, the consumer still faced problems in procuring accessories and out-sources the construction of roofs. This creates sub-optimal utilization of material, increases the time required for construction and requires significant involvement of the consumer. To ease the consumer’s problem, Tata Shaktee is in the process of launching Roofing solutions which provides Standardized Designs for roofs, offer simple yet value for money designs and improves upon the aesthetic needs of the customer. This led to the development of a unique software design to provide roof & wall design along with the bill of material. The channel partners of Shaktee are being developed to build capabilities in accessories manufacturing, create a pool of certified fabricators, training of the fabricators in good practices and Standardization of roofing designs.

d. Tata Structura : Opinion leader management

Service centers before the ACE Programme Service centers after the ACE Programme

Steel hollow sections (Rectangular, Square and Circular) were being manufactured and sold by Tata Steel for over the past twenty years. These sections did not possess a distinct brand identity and its potential for growth had remained largely unutilised and unexplored. In order to create value in this segment Tata Steel launched Tata Structura – Steel Hollow sections to create a new brand identity with a positioning of – High strength & design flexibility, aesthetics and New age product with a business philosophy to create demand and enable usage. Though TATA STRUCTURA has implemented many path-breaking initiatives, it was evident at the outset that the success of TATA STRUCTURA hinged on the effectiveness of its Opinion Leader Management initiatives. The group of influencers were identified as Architects, Structural Engineers, Project implementers, Academic community and Infrastructure planners. At its core, the target group consisted of Architects, Structural Engineers and Construction Professionals - a community that could influence the success of the brand by enabling its usage within the target segments. The role of the opinion leaders were mapped and the opinion leader management programme was rolled out to reach 30,000 architects, 50,000 structural engineers , 355 design/engineering institutes and high net worth interactions with 30 architects, 25 structural engineers and 20 design firms. The programme included creation of Structura Updates a platform for disseminating information & knowledge, Structura Directions and focused group interactions forum, “Notions of the nation” a design competition to create an Architectural and Engineering symbol for contemporary India, publications & case studies and many other marketing initiatives. The channel network was re-designed to develop their capabilities as Business Development partners. To improve upon the design and fabrication solution Structura Studio was launched which offers resource library, designing cell and construction knowledge hub. This resulted in a growth in volumes by 287% between Fy05-Fy09 , migration to high end products from 25% to 41% and % sales to relationship customers and more than doubled. Tata Structura has supplied more than 25000 mt of structurals to 26 new age Airports being built in India.

New kids in the block : a) GALVANO launched on 7th May 2009 is the last band to be launched, which is a branded offering

for Galvanized products in General Engineering segment, b) Tata Shaktee ULTIMA – a brand extension of Tata Shaktee with a patented sinusoidal profile for

roofing which is even more cost saving, aesthetically designed, better leakage proof and more durable.

c) Tiscon 500D a new age construction re-bar leveraging the strengths of Integrated Steel making

Reception & Impact Steel is no longer seen as a commodity in Tata Steel. More than 95% of Distribution products have been branded. The brands of Tata Steel account for 29% of the total turnover enabling the company to earn healthy returns through enhanced premiums. Since the inception of the brands , 3 big brands of Tata Steel ( Tata Tiscon, Tata Shaktee and Tata Steelium) together have earned Rs. 942 Crs premium over the next best competition. The EBIT impact is ~ 10.9 times the Brand and Channel spends during this period. Tata Steel products evolved from commodity-selling to brands with strong relationship chain with the channel and the consumers. This journey helped the company to transcend the typical market barriers faced in commodity markets – beating the price sensitivity, enhancing the value chain competitiveness through stable earnings of the channel and in creating brand loyalty by converting the consumers from awareness to loyalists.

The Brand equity index (BEI) which captures the Preference, Willingness to pay Premium and Recommendation of consumers increased from 3.9 in 2002 to 5.2 in 6 years for Tata Shaktee, 2.8 to 4.8 in Tata Tiscon. The BEI scores have actually reduced for the competition in the same period. The Brand health parameters have also shown significant gains - 51% increase in awareness in Tata Tiscon, 24% increase in usage for Tata Shaktee and increase in recommendation for all the Brands.

These innovations have also helped Tata Steel’s Brands to win many awards and Recognition

Tata Shaktee has been awarded for the “Best long-term rural marketing initiatives” by rural marketing association of India in 2007

Tata Tiscon has been selected as Super Brand in 2009

Tata Tiscon won the Gold award for the “Atoot JOD” TV campaign in 2004 in the Advertising Club of Calcutta’s consumer connect awards

Steeljunction swept all the GOLD awards for the Retail category of the Advertising club of India , Koltata in 2006

Tata Agrico hologram has been declared the “Best hologram” in 2004 by London based organization “International Hologram manufacturers Association”

How Tata Steel saw the possibility

In the year 2000, Tata Steel was ready with the finest facilities from its state-of-the-art Cold Rolling Mill, with products that were superior to any other available product in the Indian market. While much of the output from this mill was meant for the Automobile industry, there was a large volume available to sell to small buyers of steel. Analysis revealed that 200 customers accounted for 70% of Tata Steel sales and the balance 30% was accounted for by a highly disorganized and fragmented base of around 6000 customers consisting of traders, wholesalers and small order size consumers. This is where Tata Steel felt that it was “product-ready but market un-ready”. Tata Steel decided to service these fragmented customers through a Distribution network and a differentiated branded offering. To reinforce this intent, Tata Steel in 2002 enshrined in its Vision 2007 “Moving from commodities to Brands” as one of the six strategy goals. When Tata Steel addressed the subject of branding its product offering through the Distribution network, 6 products categories were identified. This resulted in the Company’s Initial Branding Focus being brought to bear on: Galvanised Corrugated Sheets (GC Sheets) used for roofing in the rural markets, Reinforcing Steel Bars (Re bars) used by Individual House Builders for construction, Cold Rolled Sheets (CR Sheets) to small & fragmented customers in General engineering segment, Steel Pipes, Bearings and Agricultural Implements and Hand-tools (called Agrico). The key guiding principle was “a promise of value to the Customer” which required Tata Steel to address – What should we “Promise” that will deliver value for the Customer? And what should we do, to “Actually Deliver “this promise. To address these questions Tata steel put in place a Branding strategy to create and grow shareholder wealth in a consistent and stable way thereby minimizing susceptibility to market changes/commitment.

Aligned Aspirations

Tata Steel’s foray into Brands started with the vision of senior management as articulated by Mr. Ishaat Hussain, Executive Director Tata Sons in an interview to Business Standard in 2000 “Today the composition

of the group’s sales in terms of Branded vs Non-Branded product is 51:49, our target is to go up to 66:34 by 2002/2003”. This dream was reinforced by Mr. B Muthuraman, Managing Director –Tata Steel in April 2003 “ A Brand represents the totality of a product or service – including its history, its uniqueness, its merits, its advantages to the customers, its reliability and the quality of efforts that has gone behind the product & service. The benefits are better value for money for the customer and a build-up of a loyal customer base for the seller. These thoughts led to the incorporation of “Moving from commodities to brands” as one of the Strategic Pillars in the co-created Vision 2007 of Tata Steel.

With the realization for a strong customer oriented processes a set of 15 customer facing processes were defined to enable the organization to create peripheral support in our journey towards branded products. Marketing functions were clearly delineated to develop and implement product brand initiatives. The Brand management group was set up in 2000 to facilitate interactions within the product brands. To establish alignment with Individual performance management system, Key performance indicators like % sales of Branded products, Customer satisfaction scores, capability & performance scores of the channel was incorporated in the KRA of individual officers and groups. Training programmes to the sales team, production & supply chain groups and the channel network facilitated alignment of goals and objectives. One critical component of Aligned aspirations includes proactive inputs from Consumers and Channel members and taking periodic corrective actions. The product brands of Tata Steel established various listening and learning posts like Customer / Channel meets, Visits of Sr. management, interactions with the production & supply chain executives, external inputs from Customer satisfaction studies, Brand health audits and focus group discussions. Many marketing initiatives and Brand programmes were launched through inputs gleaned from such interactions. Any major initiative is first piloted in a test market and only after rigorous post pilot analysis the programme is completely rolled out.

Permeable Boundaries The branded journey of Tata Steel started with a team of few people who were owners and immediate implementers of the innovation. This team provided central guidelines on the Branding process and alignment with the Tata group brand philosophy. As the product brands began to take shape, Distribution and Branded product departments were created in each profit centers. Brand managers were designated to develop & implement initiatives in the brands assigned to them. As the brands evolved and consolidated the sales set-up of Tata Steel also underwent a change. Customer account managers (CAMs) were independently allocated sales responsibilities for branded products. Specific training & development programmes in distribution & branded product sales were imparted to create sales experts in this field. Peripheral support systems like Market research group, Brand management group and Marketing communications group were created to give central support for the product brands.

Flexibility & Openness Flexibility & Openness is embedded in the brand and brand building process of Tata Steel. For example brand identity is a co-created process which involves even the associates of Tata Steel. The branding process involves participation of cross functional groups. A Knowledge community in branding, facilitates informal interactions with various stakeholders, sharing of best practices and critical review of initiatives & programmes. The Brand managers interact with Channel members to discuss initiatives and facilitate cross-learning within the channel network. Informal meeting like Distributor Parivaar meets also provide forums to discuss and seek guidance from Sr. managment. De-centralization & delegation is key to ensure flexibility & openness which is facilitated by Distributors being allowed to develop & implement location brand initiatives, keeping in mind minimum critical rules.

Minimum Critical Rules In the brand journey of Tata Steel the simplicity of the rules permeated across profit centres. The rules had 3 objectives

a) Rules needed to be simple b) Rules needed to be uniform & c) Rules needed to be measurable

Rules pertained to the brand and channel service partners Minimum rules are as follows:

The field should adhere to Brands Guidelines in terms of log, colour scheme, by-line, positioning, ad campaigns

The brand performance will be measured in terms of BEI (Brand Equity Index)

The brand will be sold only through authorised service partner

The brand will be positioned as a premium over all other players.

The distributors will be exclusive to Tata Steel brand

The retailer shop should adhere to stocking & decor guidelines as per manual

The brand to be sold at Recommended Consumer Price only

Overcoming Adoption Hurdles Skills and Mindset: Tata Steel realized that success in Branding required acquisition of branding skills and

altering the commodity mindset of in-house and the channel partners. The company addressed these challenges by introducing branding & brand development in the strategy plan of 2000, setting up of a branding task force and training all marketing & sales personnel and the Distributors in Branding & selling concepts since 2001. Inputs from external brand & marketing consultants and a dedicated branding organization facilitated change in mindset towards branding.

Selecting the right business partners & sustaining commitment – In a commoditized steel industry the channel network has a disproportionately high bargaining power with the suppliers. Margin maximization was a key motive. Under this scenario Tata Steel’s distribution policy clearly enunciated selection of business partners that are exclusive to Tata Steel with focus on creating value to consumer thereby increasing the premium earning potential. To put in action this policy, Tata Steel put in place a channel selection programme under the Out-bound Logistics initiative. This necessitated understanding of other industry channel network, expression of interest from distributors of other industrial products like cement, paints etc. In some cases established Steel distributors were not selected due to their reluctance to adhere to Tata Steel’s Distribution policies. Once the channel was selected the challenge was in securing commitment to the brand. This was implemented through idea generation, implementation of channel sensitisation programmes and building channel loyalty through Distributor Parivaar.

Ensuring sustained investment in brand building the FMCG way – In a market environment without any precedent of assessing the effectiveness of brand investments and in an industry wherein cost optimization was the “mantra”, Tata Steel committed itself to invest financially towards brand building. Each product brand was allocated product promotion budgets in the annual business planning process. To understand and gain competencies in brand activities many initiatives were piloted and researched. Although some initiatives did not give commensurate returns the activities were pursued to provide consumer behaviour data and inputs. Some specific activities like LINKs in Steelium, HAAT programme in Shaktee and Apna Home consumer programme in Tiscon, had a sustained financial commitment every year to ensure continuity. Separate organizational set-up was created to implement major initiatives like retail value management & Brand protection.

Continuity of innovation to ward off competition – Tata Steel pioneered many “one of its kind” initiatives and programmes in Channel development and Brand building, which has enabled it to command consistent premium over next best competition in all branded products of Tata Steel. However successful programmes are subsequently emulated by competition like product branding, setting up of exclusive Shoppe by ESSAR and Jindal for steel products. This therefore requires a continuous process of identifying and implementing innovative initiatives. The Brand managers are required to develop brand programmes for the next 3 years with firm one year plan incorporated in the annual brand plan. Tata Steel has innovated new products like Wider GC, Tata Shaktee Ultima, Tata Tiscon 500, Innovation in services thru solutions as explained above. Overcoming the above challenges has ensured brand leadership in almost all segments.

Conclusions The Brand journey of Tata Steel started with “Steel” being perceived as a commodity both in the market place and in the mindset of the employees, a fragmented and speculative channel network and low consumer connect. While sustained product development and operational efficiencies enabled superior product offerings, Tata Steel was not geared to leverage the advantage in servicing more than 6000 customers served through the trade network. This need for developing a differentiated brand offering led to the articulation of “Moving from commodities to brands” in Vision 2007 with “a promise of value to the Customer” as a key guiding principle. This strategic intent created the foundation for brand building in Tata Steel, through 3 specific innovation phases 1. Innovation in the product – Creating unique identity – This phase involved the launch of product

brands for source authenticity and reinforcing category awareness. This required innovations in branding on the products like watermark branding in Tata Steelium, UV marking on Galvano .

2. Innovation in the Channel a dedicated and exclusive channel network – Implementation of “Retail Value management” created a dedicated and exclusive distribution network for the 1st time in the Steel industry. This led to the transformation of a transactional and fragmented channel to a set of 170 exclusive distributors, served through more than 7000 retailers with 580 exclusive branded showrooms across 17 identified territories. Market shaping , first time channel innovations in the industry like professionalizing infrastructure, implementing human resource practices, automation & IT up-gradation and creating emotional bonds were implemented.

3. Innovation in Service – A structured and branded offering allowed Tata Steel to develop and implement initiatives in the market place to create a differentiation in service offerings. This involved the creation of exclusive branded showrooms, “MRP” in steel selling, consumer connect programmes like “aajeevan” life time guarantee, LINks initiatives, HAAT hungama etc.

These innovations in the market place helped Tata steel to evolve from a commodity selling to brands with strong relationship chain with the channel and consumers. The journey also helped the company to take the next step in brand building to create value through solution selling and customization of products & services. Developing and implementing programmes like ACE – improving & standardizing service norms of steel service centres, launching of Steeljunction: a specialty store for steel, roofing solutions from Tata Shaktee and the launch of Tata Structura are some of the initiatives in this direction.

Authors: Mrs. Atrayee Sanyal, Chief - Distribution and Branded products (FP M&S) Mr. P. Anand, Head Marketing - Steelium (FP M&S)