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A Project on Marketing Mix of Tata Steel

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including wires. TSL also produces relatively smaller quantities of semifinished steel. Finished and semi-finished steel products. pyroxenite and manganese ore as well as ferrochrome and Ferro manganese. and steel equipment. produced by the Company’s Indian operations and its NatSteel and Tata Steel Thailand operations. In addition. rings. TSL Products: Finished and Semi-finished Steel Segment Products TSL’s finished steel products are produced at its Indian facilities. Long products. 3.4 Ps OF MARKETING: 1. Distribution and building systems. Corus Products Strip Products PAGE 1 . TSL’s finished steel products can be principally divided into flat products and long products. PRODUCT: Tata Steel Products The Company’s products consist of TSL products. Corus has four main product segments:     Strip products. bearing products. including tube products. and Corus products. municipal services and investment activities. TSL is the leading manufacturer of Ferro chrome in India and the leading manufacturer of chrome ore internationally. Ferro Alloys Segment Products TSL’s Ferro alloys segment produces chrome ore. and produced in the United Kingdom and The Netherlands. Ferro alloys products. Ferro chrome and Ferro manganese are used by the steel industry to create stainless steel products. TSL’s products can be divided into three main categories: 1. pigments. Aluminum. Other products and services. refractory products. as well as in various Asia Pacific countries by NatSteel and in Thailand by Tata Steel Thailand. 2. agricultural tools.

Household appliances. Oil and Petro Chemicals. Railways. Automotive PAGE 2 . Ship Building. Coal and Mining. Transmission Towers. cold reduced and electrical steels. Wall cladding and other building products. Transmission Towers. HRPO. which are sold both in coil form and. Furniture Galvanized Product: Galvanized Corrugated Sheet. Railways. Long Products Long products comprise sections and plates. Ship Building. JINDAL STEELS PRODUCTS Products: Hot Rolled products: HR Coil. HR plate and sheet. HRSPO Applications: Automobile.Uncoated strip products comprise hot rolled. Boiler and Pressure Vessels. Marine Containers. Coal and Mining General and Heavy Engineering Cold Rolled Products: CR coil and Sheet Applications: Automobile. Corus is one of the market leaders in the manufacture of coated strip products. GP Sheet and Coil Applications: Automobile. PPGI sheet. Marine Containers. Oil and Petrochemicals. cut to length. in sheet form. White good. Pre-Painted Galvanized Product: PPGI coil. Packing. General engineering& fabrication. and rods. Cold rolled formed section. Drums/ barrels. General and Heavy Engineering. Furniture. Engineering steels also form part of the long products division and are produced by the electric arc method as opposed to the basic oxygen steelmaking method in the United Kingdom at Rotherham. PPGI profile Application: Roof. Boiler and Pressure Vessels.

Its iron ore mines are located in Noamundi and Joda and chromite mines at Sukinda contribute to raw materials for Tata Steel. Tata Steel is the lowest cost manufacturer of steel and keeping production costs low have played a major role in achieving that.9 million tons of raw coal annually. Pricing in industrial marketing is closely related to the firm’s product. 4. Internationally. PRICE: Pricing is one of the most crucial elements behind a successful product. Government regulations. PAGE 3 . Technology: Tata Steel has developed several technologies that help in keeping production costs low. The following measures have helped Tata Steel in maintaining cost leadership: 1. 2. 3. Factors Influencing Pricing Strategy in Steel Industry The most important factors which affect pricing strategies in steel industry are: 1. 3. Acquiring sources of raw materials in India and globally: Tata Steel has captive coalmines in West Bokaro and Jharia. This reduced the import of coking coal. Tata Steel has 5% interest in the Carborough Downs Coal Project located in Queensland Australia for low ash coal. Competition. distribution and communication strategies. Acquisition of Corus has made Tata Steel one of the largest manufacturers of steel. Production Costs. Some of them are:   Process innovation and use of blue dust in sinter plants increased productivity by 60%. its manufacturing capacity will jump to 21 million tons pa. Stamp charging technology was indigenously developed to convert low quality coal to high quality coking coal. Market demand (derived in nature).2. The mines in Bokaro have reserves of over 196 milliontones and the coke mine in Jharia can produce 1. It is more pragmatic and fact oriented in industrial marketing as compared to pricing for consumer products. The Sila Eastern Company has been established to develop limestone mines in Thailand mainly for the captive use of Tata Steel. Capacity expansion: With the expansion of its Jamshedpur plant by 2012 and Greenfield units in Orissa and Chhattisgarh becoming operational in 3-4 years. 2.

 With economic and steel market conditions becoming more favorable and the steel producers needing to recover the rise in input costs. And maintaining profitability through sound pricing practices is necessary to ensure the firm’s survival over time. apparent consumption is expected to increase by more than 10% in FY 11 buoyed by expected strong performances from consuming segments like automotive. PRICING STRATEGY: A pricing strategy must be conceived in relation to overall business objectives and marketing strategy. The success of any business depends upon a blend of long run profit. However. Tata Steel's rare advantage is that it has captive iron ore mines with capacities far in excess of its current needs. Pricing strategy is also influenced by the anticipated reactions of competitors to pricing decisions. affects long run profit objectives. infrastructure and capital goods. it is anticipated that there will be a strong rise in the steel prices in 2010-11. it makes imminent sense to expand its primary steel-making facilities in India and look for finishing capabilities elsewhere. Price reductions on products that are undifferentiated are generally met immediately by all suppliers.23 billion tons in 2010 registering a growth of 10% over 2009. growth and survival objectives. Price. This shows that the ability to maintain lower prices of its products have given Tata Steel the edge over its competitors . construction. PAGE 4 . interest rate tightening and inflation may provide some downsides to an otherwise positive outlook for the industry. The following facts and figures suggest that there exist healthy demand in market for Tata Steel to serve. resulting in little shift in market share. Greater the volumes. The amount of latitude a firm has in its pricing decision largely depends on the degree to which it can differentiate its products in the minds of buyers.  World consumption of steel is expected to be 1. JSW Steel Ltd and Essar Steel Limited. lower the production costs and hence lower the prices at which its products are offered. MARKET DEMAND: Demand for steel is derived in nature since it is majorly used as an input. The exports during 2010 are expected to be higher by around 4% as compared to 2009.All these factors made Tata Steel being low cost but high quality steel manufacturer. Therefore. The major competitors of Tata Steel in India are Steel Authority of India Ltd. In India. because of its influence on unit sales volume and profit margins. COMPETITION: Existing and potential competition inevitably affects pricing strategy by setting an upper limit. significant raw material price increases.

Since Tata Steel is in control of large iron ore deposits it has increased its capacity manifold and so enjoys economies of scale. the iron ore from the mines have led to this price rise. Many of these manufacturers are now concentrating on backward integration just like Tata Steel wherein the iron ore mines are also owned by the company which helps in achieving lower manufacturing costs.6 MTPA to 8.e. The advantage of this kind of pricing is that it discourages competition since there is less opportunity to reap unusual benefits on investment. By setting relatively low price Tata Steel has managed to obtain large market share. Avoid inventory build-up and make production strictly market driven. Essar: Essar Steel is currently expanding its capacity at Hazira from 4. Essar Steel has pioneered the concept of steel retailing in the country through branded retail outlets ± Essar Hypermart. JSW: They are moving ahead with a two prong strategy wherein on one side the focus is on the domestic market catering mainly to OEM segment by servicing them with all value added products customized to their requirement and on the other hand a special drive in the retail segment will continue by opening of state-of-the-art branded steel retail is the largest players in the private outlets with brand name ‘JSW Shoppe´. PAGE 5 . This strategy is based on the assumption that demands for the product is highly elastic. Production of value added and customized products to create niche markets.The pricing strategy adopted by Tata Steel is the Market Penetration Strategy.5 MTPA and then to 10 MTPA. Steel manufacturers like JSW believe that increase in the raw materials i. This is primarily catering to SME segment. since it has lower production costs. It has thus maintained prices of its products lower than of its competitors and has increased the scale and efficiency of operations. COMPETITORS’ ANALYSIS: The various competitors of Tata Steel are:     SAIL JSW Essar Steel Ispat Industries Recently in India the prices of steel have increased. SAIL: Following are the strategies adopted by SAIL for effective pricing    Cost reduction and increased productivity through advanced technology and improved processes. We can see that this is an attempt to cater the large market demand and achieve economies of scale.

HSM POR. The results have been extremely encouraging for Tata Steel. But in industrial marketing place is often referred to as the distribution channel. with products being sold to customers all over the country. The products that Tata Steel has sold through Mjunction are: HSM Defectives.259 MT. Prime Billets and Secondary Products. Tata Steel initiated the first online e-Sale through Mjunction in the month of February 2002 and since then has sold 221. is a 50:50 venture of SAIL and Tata Steel. It provides cutting edge of Information Technology. Distribution channels at Tata Steel: Tata Steel Limited delivers steel products to Indian customers through: Direct Supply Chain Wide Network of Distributors and Retailers 21 Stocyards 15 External Processing Agents 25 Consignment Agents B2B sales and distribution for TATA STEELS TATA Steel main distribution channel is selling branded steel through Mjunction. PAGE 6 . Mjunction offers a wide range of selling. It is India’s largest e-Commerce company and the world's largest e-Marketplace for steel. sourcing and knowledge services that empower businesses with greater process efficiencies.3. GP Coils. LP Defectives. The prices obtained by Mjunction have been reflective of the market situation. PLACE: Place represents the location where a product can be purchased.

like earnest money deposit and principal. It has tied up with Citibank and HDFC Bank for collecting sales tax documents and managing customer takes end-toend responsibility of selling client's low 'value' and/or standard products. It undertakes market research and market-making activities to generate buyer leads. Some of the other services provided by Mjunction are conducting auction event fulfillment services. ensuring fast and secure handling of money. it is bringing in both. Full Service on a business process outsourcing (BPO) mode Mjunction.The entire cycle time of selling materials has been reduced by the speed and efficiency with which on-line competitive bidding events has been created and managed by Mjunction. undertaking collection of payments. greater efficiencies to processes and greater focus to the sale of noncore products of Tata Steel. It also creates suitable market lots to ensure maximum participation from buyers. PAGE 7 . Through intensive market-making efforts and the use of technology.

B2B promotion is used to create awareness of the company. The programs had taglines such as:    Customer first . the Indian steel industry was experiencing a glut in the market which strongly affected the profit margin of all related companies. to contribute to the overall effectiveness of the promotional strategies utmost care must be taken by the companies.hain taiyaar hum (We pledge to the customer that we are ready for him). The promotional program begins with carefully developed advertising objectives that must be formulated from corporate and marketing objectives in such a manner as to set the direction for creating. In the late 1990s. reaping profits when economy is going well and eroding them when it is in depression. Moving to high value added products. It soon began to introduce Internal Campaigns in order to bring the customer-centric message to its employees. The Company soon realized that a strong customer focus is essential if any branding approach was to be successful. Customer ki kasam . promotions and publicity plays an important role in the communication strategies. a leading steel information service provider. Hence. Tata Steel represents a great example of a strongly branded B2B company. Tata Steel adopted a strategy which stressed the following two points:   Branding its products. To reduce its dependence on the external environment and business cycles.. every year). Tata Steel was ranked the world’s best steel company in studies carried out by World Steel Dynamics Inc. her saal (customer comes first in every case. and evaluating entire promotional program. Branding Steel The profitability of the steel industry in India is generally linked to business cycles.her haal mein. PROMOTION: In B2B marketing advertising.her haal mein (Customer comes first in any case). In 2001and 2005. PROMOTIONAL ACTIVITIES UNDERTAKEN BY TATA STEEL: Branding Steel Based on Customer Focus As one of India’s most successful companies. In the late 1990s.4. cocoordinating. to increase the sales of the product and to increase the overall effectiveness of the selling efforts. Customer first . USA (WSD). the company launched several Internal Marketing Programs to emphasize customer focus and service. PAGE 8 .

To achieve this Tata Steel set up a branding task force in January 2000 to explore the possibilities of branding Tata Steel products. It would make premium pricing possible. Tata Tiscon (re-bars) for rods used in the construction industry. along with the commissioning of its CRM plant. they also created TV commercials that portrayed signs of happy customers and employees reveling in the concern the company had for them. ³order generation´ and ³order fulfillment´µ which were computerized. Tata Steel launched its first branded product. By September 2003. The company furthermore sought to increase customer interaction in order to better understand customer needs and to explore new and improved ways to meet these needs and expectations. Only three months later. The communication tools used for the brand launches were primarily   Print ads Outdoor advertising. In February 2003. supported by the corporate brand as co-driver. Tata Steel had three products as well as three generic brands in its brand portfolio. ³We also make Steel´ was the punch line that signaled the triumphant finale of that TV ad. Because of these initiatives undertaken by Tata steel had put them well ahead of their competitors in promotional activities Because the corporate brand Tata was already associated with various products and attributes the company decided not to put the main focus on it but to create sub brands with separate identities. They had learned from the European competition that specialty product offerings and strong brand associations had guarded the market against the low cost importers from the Far East. Tata Steel launched another product brand Tata Steelium. PAGE 9 . In April 2000. Tata’s second area of key focus was to shift into the domain of high value added products. The leader of the company had decided that branding the commodity steel would provide them a unique selling proposition in a great way. Within this department they created the distinct sub functions³market development´µ. Tata Shaktee is their brand for galvanized corrugated sheets. enabling Tata Steel to reduce its customer response time significantly. Yet. the task force evolved into a brand management department. Branding Steel would help Tata Steel in two big ways:   It would help stabilize the flow of revenues even during business downturns. Eight months later the company introduced its second brand. The company also initiated the concept of ‘customer account managers’ who were authorized and empowered to solve specific customer grievances immediately.

Harnessing New and Better Sources of Raw Materials. Quality and Cost at the Centre-stage. Significant process changes enabled the company to totally stop the use of liquid fuels. Earlier. it used large quantities of liquid fuel from one of the petroleum refineries. Innovating to Use Blue Dust. accumulated large quantities of very fine iron ore called blue dust (an iron rich ore which is as fine as talcum powder). Simultaneously. New Coke Making Technology. the modernization of the facilities became an important focus area. Modernization of Facilities. They found vast differences between the quality practices in Japan and India. was importing large quantities of coking coal as Indian coal has high ash content compared to imported coal and cannot be used as coking coal Reducing Energy Costs. like all other steel manufacturers in India.Competitive Advantages of Tata Steel: After understanding the 4P’s of marketing pertaining to Tata Steel it was found out that Tata Steel has implemented the marketing mix better as compared to its competitors which has given them an edge and thus it is one of the leading steel manufacturer in India. The company embarked on several steps to become self-sufficient in its fuel needs. Until the late eighties. iron ore. One of the biggest strengths of Tata Steel was that it had captive sources for all key raw materials: coal. Tata Steel. PAGE 10 . which was a byproduct of iron-ore mining operations. and limestone. The company began to harness its unutilized deposits of iron ore at Joda in Orissa. Apart from that there are several advantages that Tata Steel has which gives it competitive advantage. The top management of Tata Steel was part of a delegation organized by the Confederation of Indian Industry (CII) in the early nineties to study how the Japanese implemented quality. Many of the initiatives discussed above resulted in improving the performance of the existing assets. over the years. The company had.