Marketing Case Study

Submitted To: Submitted By:

Prof. G.K. Saini Group A Amit Sinha

Gaurav Mehta

Girish Muralidhar

Manoj Kumar

Pravin bang

Rahul S

Executive Summary

As a commodity, steel falls in the B2B segment. If its value and its ability to mould futures were to be

singled out, then its true value needs to be understood. The general understanding of a material such as

Steel is that it is seen as an item to an end, not as the end itself. Hence, creating and identifying value

for the same is a very essential thing to do. This is what TATA has got right with its Steelium. By

aligning Steel with the physical, emotional, functional and rational needs, Steelium has shown that it is

the cold rolled steel (CRS) that the customers are looking for, who themselves are small, yet quality

conscious. Three characteristics come into play as a result of which TATA cemented its status in the

eyes of its customers. They include:

Excellent Functional Quality,

Exemplary Customer Service

Customer Intimacy.

In this document proposal, we attempt to analyze the success story of the first branded steel in the

world. The focus market for Steelium was the “small customer” segment of the CRS market which

was neglected by its competitors. The brand had created a successful market for itself, in spite of being

a “premium” product. Putting customer first and building long-term relationships with customers were

the most important factors responsible for this.

Now that a market was established, it is equally important to sustain that market. With competition

increasing and the entry of sophisticated steel manufacturers being a distinct possibility, the brand had

to reinvent itself. Some important questions – whether or not to foray into unknown markets, whether

or not to produce a low-priced version of Steelium, how to retain the loyalty of existing

dealers/distributors as well as get new dealers/distributors on-board – had to be answered.

The case provides valuable insights into the world of B2B marketing. It exemplifies how an

organization can market itself and position itself as being the best in the business and at the same time,

maintain cordial relationships with everyone involved in the chain. The case is a testimony to the

description of Tata Steel in one of its advertisements which said:

“We Also Make Steel”

Analysis

The success story of Tata Steelium brand shows a way forward for commodity manufacturers to create

value for not only its customers, but also for its dealers, distributors and its customers’ customers. It is

an excellent example of how B2B companies can successfully create brands in the business markets,

and leverage its brand positioning to create, deliver and communicate value to its end customers,

channel members and shareholders, as also build long-term relationships with them.

Value, as captured by Tata Steelium, goes much beyond price and instead comes as a complete

package to the consumers. Customer service and long-term customer relationship are two strong pillars

from which value is derived by customers. This value is further enhanced when it is co-created with

customers. The case shows that a strong leader brand should communicate value to its customers more

truthfully, and find a way out of the narrow price-competition by emphasizing on other strong aspects

of the brand. Value for customers will translate into value for all the stakeholders in the business.

A concern, however, for the organization is to make the growth of branded products’ sales more

consistent, as currently the growth, especially that of Steelium, is erratic and fluctuating. The brand

relies heavily on Automotive and Panel segments which account for almost three-fourths of its sales.

This is not a very healthy sign for future growth. The company needs to broad-base its target

customers, through tie-ups with furniture marketers and by finding new markets for growth.

Another question to ponder on is—Should Tata Steel terminates relationship with its casual

customers? Although strategic reasons may dictate otherwise, with the relational value that the brand

communicates to its customers, dropping customers may contradict the promise that the brand

communicates.

The following model depicts a framework (Pratik Modi and Ramendra Singh) for co-ownership of a

B2B brand to co-create superior value for B2B customers

Why Branding in Retail Market?

The important reasons for the focus on retail markets include:

1. In an institutional market, functional attributes and price assume very high importance. These

two factors in a competitive market scenario do not allow the organization to capture the full

value of its product

2. Once the institutional market reaches saturation, the next phase of growth can be generated

from the retail market

Moreover, branding assumes critical significance as an organization moves away from an institutional

market to a retail market. Branding becomes a major differentiator and a source of sustainable

competitive advantage for the organization. A strong brand inspires trust and improves the quality

perception of the customers and consumers.

Brand Premium

The arguments in favor of reducing the premium that the brand charges over other players are:

1. Imminent competition from other big players

2. Likely poaching of the price-sensitive distributors/dealers

However, it is important to know whether the brand premium charged is commensurate with the

additional value delivered to the customers. The case depicts that:

1. The service component and the brand is valued by the class of customers who have been

rewarding the company with their loyalty and premium

2. Tata Steelium volumes have shown decent growth over the past years which could be a

testimony of its relevance and value for the market

Compay Ownership

of the Brand

Channel Ownership

of the Brand

Customer Ownership

of the Brand

Tata Steelium Brand

Success Partners: Distributors/Dealers

TATA Steelium brand distributors handle the brand exclusively because of the requirements of its

service proposition. With the imminent competition, there is likelihood that some of the

distributors/dealers may move on and/or start stocking the competitors’ products for turnover

considerations.

However, from the case, it can be argued that distributorship/dealership of TATA Steelium is valuable

to the channel partners for economic as well as noneconomic reasons:

1. The company has been selective in choosing its distributors

2. It has consistently invested in developing its distributor/dealer network over the years as well

as the capabilities of the distributors/dealers through various support programmes

3. The support, service culture, and treatment that the channel partners get from TATA Steel are a

big motivating factor for doing business with them.

4. In terms of monetary benefits, the higher premium charged for TATA Steelium also benefits

the distributor/dealer network that earns higher margins in turn. TATA Steelium also gets them

repeat business from loyal customers which effectively reduce their cost of doing business.

Moreover, instead of starting a new business of furniture on its own, the company can focus on

building tie-ups with some other leading furniture manufacturer. The reason for entering into the steel

furniture market should be more strategic than mere distributor retention.

Brand Matters

The factors in favor of Tata Steel include:

1. It is one of the few organizations that have been able to combine the cost leadership strategy

with the differentiation strategy

2. It is one of the lowest cost steel producers in the world

3. It enjoys the competitive advantage of being an integrated CRS manufacturer

The reasons why the brand should avoid the temptation of competing on price front can be:

1. The demand for CRS is looking quite healthy with almost all sectors showing an upward trend

2. Setting up Greenfield operations will not be easy for new entrants

3. There is a risk of erosion of brand equity and of creating dissonance among the loyal customer

base of the brand

4. Launching a stripped down version also carries the risk of cannibalization into the Tata

Steelium brand

Key Challenges

Threat of entrance of major steel players in the arena of Cold Rolled Steel.

Competitive advantages of the company can be easily replicated.

Production Constraints

Customer service by Distributers/ Dealers is majorly susceptible to bad experiences by the

customers.

Recommendations

The company should try and penetrate in the small and medium-sized towns as these are

relatively untouched by the competitors so far.

Establishing mini-depots will facilitate delivery of smaller order size in rural and semi-urban

markets.

For the existing distribution network in urban markets, the focus on continuous service level

and relationship improvement would be the key to retention. Some of these key distributors

may be persuaded to create presence in semi-urban markets.

Leverage on the first-mover advantage to create a healthy lead time over competitors

Key distributors should be retained and developed along with incentives

Communication to the consumers regarding the “Tata Brand” of Trust backing “Steelium”

Social Media initiatives to strengthen “VIJETA” programme