Case Study TATA Steelium – A Success Story in B2B Branding (Vikalpa)

B2B – Case Study
Group - VII
Sachin Kumar_ Viva IMS_ Virar

Company Background:
• TATA STEEL is the largest private sector steel marketer
in India.
• Jamshedpur (India) Works has a crude steel production
capacity of 6.8 million tonnes per annum.
• The company is aiming at enhancing its domestic steel
capacity to about 30 million tonnes per annum by
2015.
• The Vision architect is clearly defined with goals like
successful branding of steel, production of lowest cost
steel, economic value creation and expansion have all
contributed to company's growth.

Rise of Tata Steelium
• TATA STEEL' launched the world's first branded cold rolled steel (CRS) called 'TATA
Steelium' in Goa.
• Branding will give rise to a customized product in terms of value, performance,
and pricing that will meet our customers' & will also boost the element of brand
recall, thereby creating a niche.
• ATA 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.
• 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.
• Efforts 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. 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 organisation.

Rise of Tata Steelium (Conti..)
• Strategy - CRS in the retail market against others in the
industry and could achieve more market leverage
related to pricing and negotiations.
• Sales and Distribution - The brand
is sold only through the distributor-
dealer network where about 80% of
the total brand sales are made by the
distributors directly to the customers and
20% of the total sales are handled by the
distributor-dealer chain.
• >> This is related to Pareto’s Principle (80-20Rule)

Important factors before brand
launch
• Technology Selection –
Tata Steelium developed CRS facility which gave
competitive edge over others. According to
Table3 Key facilities (Coupled shallow bath
hydrochloric acid pickling, Machine packing with
thin plastic film, Electrolytic cleaning) give
competitive advantage and also improved
productivity, low energy consumption.

launch (Conti..)
• Small Customer Focus.

launch (Conti..)
• Small Customer Focus
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.
Reason – Limited Sales Force used to market to big
institutional customers and small customers of CRS.

launch (Conti..)
Customer Opinion
• Steelium saw this as an opportunity to increase their brand by
serving these small customers.
Three major problems small customers were facing -
• The competitors were also not able to provide raw material which
was required by small customers & Superior quality materials
available from import were beyond the reach of small customers.
• The Small Customers regular requirements was not fulfilled as
availability of materials with the retailers was never certain. And
their quality complaints were also ignored. No proper
communication channel for small customers to talk to CRS
manufacturers.
• Inferior Products and Cheap substitutes were sold by dishonest
retailers.

Overall Business Environment
• Manufacturer, wholesaler, and retailer was not aligned for each others goal achievement but
only to gain self-interest this created environment where they did not trust each other.
•Manufacturers forecasting and production of monthly
demand had errors and frequent mismatchManufacturers
•They were not expanding their network to other areas
•They were interested only in buying cheap and selling
dear. They didn’t consider preferences and value added
support services.
Distributors/
Wholesalers
•Small Retailers were increasing and the CRS was
available only at specific locationsRetailers

Overall Business Environment
(Conti..)
Pricing wars were regular –
Wholesalers and Retailers purchased in
larger qualities than they could sell
Manufacturers reduced
their prices further
Wholesalers and retailers would
start panic selling depressing

TATA Steelium Action Areas
To remove the distrust in business environment critical
action areas were drawn as below -
• Price Uniformity - Tata monitored and got control over
retail prices so that customers got fair and uniform
prices at every location and the total channel profit
was maximized. Tata started delivering the number of
value added services with assured quality standard.
• Professionalism – People from various background
were lacking in business professionalism.
• Service Levels - Improvement of service (level and
quality) was long overdue in the retail sales of CRS.

Brand Engineering for Tata Steelium
Product
•Steelium CRS has best quality and specifications so together all these mean cost savings to the
customer during processing, ensuring superior performance, and premium price
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. This
was not been provided by any competitor.
Pricing
•Location-wise floor price, below which the item cannot be sold by the distributors or dealers.
Removed conflict conflict between the channel members.

Brand Engineering for Tata Steelium
Salespersons
•Key Account Managers spend time with distributors & solve their issues and queries to
improve operations
Channel
Design
•Appointment of dealers based on the guidelines issued by the Tata, channels operates
strictly within their territory
•'TATA Steelium Parivaar,' secured online portal has been designed for effective
intercommunication within the channels.
Distributor
Selection
•Level-l screening is based criteria like investment capabilities, interest in exclusive dealership,
registration with statutory authorities, and market reputation.
•Level-2 screening is again considers business experience, turnover, knowledge, and quantum
of sales.
•Level-3 based on their ratings and scores in level-l and level-2

Distributor's Capability Improvement
DCI
SCM
HRD
KAM
Retail
Manag.
Yearly
Meetings

1. SCM – Improvement of supply chain efficiency and effectiveness through
the theory of constraints (TOC)
• 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.
• Benefitted Distributors by reducing inventory cost, more control and
visibility to Tata
2. HRD - Human resource development initiatives for employees working with
channel partners –
Distributors are given sales management training; they also have to follow
standard HR practices for remuneration, yearly performance evaluation,
recognition and rewards.

3. KAM - Key account management (KAM) process among distributors.
“Vijeta” special programme where Tata recognises distributor's key customers
who are been continuously monitored customer satisfaction. Based on
volumes the Manager gets recognition and reward.
4. Retail value management - Ensures that the customers' experience of
buying a brand is convenient. Distributors and dealers will be able to transact
with their key customers using e-commerce.
5. Yearly Meetings - Meets of Distributors are arranged according to
categories for more interaction.

Evaluation of Distributors
• Surveys are been done to evaluate distributors this helps improve
performances and better support services to customers.
 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

Value Proposition
1. Excellent functional quality –
'Help Shape your Dreams' superior shaping and superior
quality.
2. Dream customer service –
Through highly capable distribution: Efficient order
management supply period, inform order status from
time to time, inform availability, collect payment, extend
credit in selected cases, and arrange door delivery.
3. Customer Intimacy –
Installing effective systems of dealing with customers to
solve problems, regular contact, smooth transaction.

Value Proposition
Customer
Intimacy
Dream
Customer
Service
Excellent
Functional Quality

Application of Porter’s Model
•
• No threat to input
materials
• Small unorganised retail
buyers
• Less knowledge about
market dynamics
• Import of CRS by small
buyers
• Thicker CRS to be
substituted by thinner
HRS
• Fibre glass, aluminium,
plastics
• Entry of global &
experienced players
• Strong brand names
• More than enough
funds.
Threat of
New
Entrants-
Increasing
Threat of
Substitutes-
Mixed
Threat from
Suppliers-
Weak
Threat from
Buyers-
Medium to
High
Rivalry-Increasing

Swot Analysis: Tata Steelium
STRENGTHS:
 High functional quality of the product
 High awareness & preference
 Highly capable & motivated Channel
Partners
 High quality service centre & Value
addition
 Established enduring relationship with
customers by dealer/distributors
 Special trust & Association
WEAKNESSES:
 Limited Availability with increasing
demand
 Production located at only one
place, Jamshedpur
 Steelium logo & Brand Loyality
OPPORTUNITIES:
 Contract production by quality
 Steelium has room for expansion
 Improvement of sales by increasing
the supply
 Value can be created by innovative
marketing strategies, branded furniture
 Service & sustaining competitive
advantage
THREATS:
 Loosing important customers &
distributors
 Retention of channel members
and customers & investment
 Absence of real differentiation

Challenges from TATA Steelium point
of view
Competitors are about to bring CRS of equal or superior
functional quality to the domestic market soon.
• SAIL-Bokaro major competitor.
• Essar Steel was likely to enhance its volume of equivalent
quality
• Jindal South West was on the verge of bringing new age CRS in
the
Solution: According to Table No 6 we can analyse that SAIL,
Essar, Bhushan, Uttam, Hero Cycles are the competitors for Tata
Steelium. Even though they have capacity to manufacture high
volumes and are improving good quality steel none of them have
the strong distribution network as Tata has developed.

Challenges Ahead
Challenge#1:
• The potential for the volume growth of the brand is limited due to
fixed production capacity.
• 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.
Solution#1: Keep it premium brand and then add new product
Thinner HRS which is demanded – Setup New plant as expansion
strategy.

Challenges Ahead
Challenge#2:
• The next important concern is to protect the distributors' and dealers' loyalty.
• 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?
• If the existing distributors and dealers 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.
Solution#2: Distributor & dealer will be loyal unless the market share of
competitor is increasing, profit margins are falling, distributors quality issues (to
counter complaints), order management - lead time is longer, Tata has internal
organisations conflicts of employees, better products and better brands are
introduced.
• Internal company issues are change of management who will affect the
dealer and distributor relations, which will have to start from new.

Challenges Ahead
Challenge#3:
• Capacity addition is forthcoming plan.
• With entry of multinationals will bring good quality steel but also extraordinary
support services.
• Multinational will use same strategy of relationship initiative and customer
intimacy.
• The company may seriously think whether the current relationship-oriented
initiatives are worth reinvesting in or whether the company should prepare to
launch a stripped-down version of the brand in standard specifications offering
lower prices and only essential services. Second option will make Indian market
little unattractive to the new entrants. Third option continual improvements will
be required and the evolutionary path, that will help the brand to sustain its
competitive advantages.
Solution#3: Dilution of our company would be not wise decision as lot of resources,
time and work invested by Tata to develop relationships with the channels.

Concept of Customer- Relating
Capability
Three tightly connected components
• Orientation towards relationship
• Information about relationships
• Configuration

Concept of Customer- Relating
Capability
1. Orientation towards relationship
• Customer retention is shared goal throughout Tata Steelium.
• The Sales Force are continuously communication with distributors to understand
their needs and requirements.
• Orders are taken in advance to ensure smoother supply of material.
• Tata also provides assistance to setup HR management practices at distributor.
2. Information about relationships
• “Vijeta, AdvantEdge ” special programme which are hubs for knowledge and
communication among channels.
• In short, competitive advantage means outperforming rivals during all stages of
market learning & communication process.
3. Configuration
• This component includes structure, systems & processes that enable information
to be applied within the organization.
• Tata is designed the best distributor/dealer network having control over it. It
focused customers rather than positioned only by products & functions.

Recommendations
• Association with Intangible Qualities - CSR
Tata group is involved in Social causes and CSR activities. This should be
highlighted often by the company. It works in field of education, livelihoods,
health, sports, and environment.
ASSOCHAM Has Honoured Tata Steel
For Its Exemplary Contribution to CSR

Recommendations
• Rejection Material Policy/Reverse logistics -
Company should formulate certain norms or policy for rejected material
which will ensure the customer is not affected in terms of their
manufacturing schedules. This gives assurance to customers that Tata is
caring for their customer deliveries.
• Credit Worthiness -
Company should have credit policy designed for distributors/dealers on basis
previous record and payment transactions which will facilitate other
distributors and dealers to improve their payments.
• Exclusive Contracts –
No brand association with competitors. Distributors / Dealers have an
agreement with Tata to restrict other competitors to convert into their
distributors as multi-brand.

Recommendations
• EDI & Online System
Tata should integrate its internal EDI systems to Online Portals so that
all the enquires, complaints and disputes are directly been addressed
by the Tata employees and record of same is maintained. Online
Tenders and Automatic Quotations will ease distributors as it will
lessen time for execution of ordering and documentation. It will also
bring transparency among Tata & all the channels.

Thank You

Case Study TATA Steelium – A Success Story in B2B Branding (Vikalpa)

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