You are on page 1of 28

2014

Product Industry Consumer


Analysis | Steel

Suman Sourabh, Sudipto Sen


Gupta, Goutham Krishnamurthy
SIBM, Bengaluru, MBA (EE) 2013-16
11/29/2014

Product Industry Consumer Analysis

1.

Steel as a product: the fabric of life .............................................................................................. 4

Properties of steels ................................................................................................................................. 5


Application of Steel ................................................................................................................................. 5
Segmentation Targeting and Positioning ................................................................................................ 8

Product Industry Consumer Analysis

Product Industry Consumer Analysis

1. Steel as a product: the fabric of life


Steel is an alloy of iron and carbon that is widely used in construction and other applications
because of its high tensile strength and low cost. Carbon, other elements, and inclusions
within iron act as hardening agents that prevent the movement of dislocations that
naturally exist in the iron atomcrystal lattices.
The carbon in typical steel alloys may contribute up to 2.1% of its weight. Varying the
amount of alloying elements, their formation in the steel either as solute elements, or as
precipitated phases, retards the movement of those dislocations that make iron so ductile
and weak, and thus controls qualities such as the hardness, ductility, and tensile strength of
the resulting steel. Steel's strength compared to pure iron is only possible at the expense
of ductility, of which iron has an excess.
Types of Steel:
There are two main kinds of steel:
Plain carbon steel
1. Mild Steel (Automobile Body, Buildings, Pipes, Chains)
2. Medium Carbon Steel (Rails, boilers, Axle, Crank Pins)
3. High Carbon Steel (Twist Drills, Hammer, Table Knives, Lathe Centres)
Type of steel

Percentage of carbon

Mild steel

Up to 0.30%

Medium
carbon steel

0.30% to 0.60%

High
steel

carbon 0.60% to 1.50%

Alloy steel
Alloy Steels are made by combining steels with one or more elements. These
elements are usually metals. They are intentionally added to obtain properties that are not
found in plain carbon steels. Example of the elements are Cobalt , Nickel and Vanadium .

Product Industry Consumer Analysis

Properties of steels
The properties of steel are closely linked to its composition. For example, there is a big
difference in hardness between the steel in a drinks can and the steel that is used to make
a pair of scissors. The metal in the scissors contains nearly twenty times as much carbon
and is many times harder. Changing the carbon content changes the properties of the
steel and the way that it is used.

The heat treatment given to steel can affect its properties too. Cooling red-hot
steel rapidly in cold water makes it harder and more brittle. We could have made the
same piece of metal softer by keeping it at red heat for longer and then cooling it slowly.
Heat treatment is another method that the steelmaker uses to make the properties of the
steel match the job it has to do.

Application of Steel

Steel is both the most widely used and most recycled metal material on earth.
FromStainless and high temperature steels to flat carbon products, steel's various forms
and alloys offer different properties to meet a wide range of applications. For these
reasons, as well as the metal's combination of high strength and a relatively low
production cost, steel is now used in countless products.
Steel applications can be divided into five sectors:

Construction
Transport
Energy
Packaging

Product Industry Consumer Analysis

Appliances and Industry

Construction:
The majority of steel goes to the construction industry. Sustainable steel structures can be
built quickly at a low price. Steel, in its various forms and alloys, can be designed to meet
the requirements of unique projects, which allow it to be incorporated into infrastructure
in all environments. Depending on the conditions that the structure is exposed to, steel
can be alloyed or surface treated differently for protection.
Applications

low and high-rise buildings

sports stadiums, stations

reinforced concrete

bridge deck plates

piers and suspension cables

harbours

tunnels

security fencing

coastal and flood defences

Transport:
Engineering steels are wrought steels that are designed to have certain specific levels
of elasticity, strength, ductility, and corrosion resistance. They are used in the general
engineering and manufacturing sectors, but the bulk goes to transport vehicles.
Steel accounts for over 50% the weight of an average car. Advanced high-strength steels
(AHSS) are used in vehicles; it is a lightweight material that requires less energy to
produce and reduces CO2 emissions.
Different types of steel are used for the car body, doors, engine, gearbox, steering,
suspension, wheel axles and interior.
Besides the automotive market, steel is found in transport materials such as:

trucks

transmissions

trains

rails

ships

Product Industry Consumer Analysis

anchor chains

aircraft undercarriages

jet engines components

Energy:
All segments of the energy sector, including nuclear, wind power, electric and natural gas,
demand steel for infrastructure. Steel is also used for resource extraction, such as in
offshore platforms, earth-moving and quarrying equipment, cranes and fork-lifts. Due to
the demanding environments, carbon, micro-alloyed, high strength and stainless steels
are all used in the production of offshore platforms and pipelines.

oil and gas wells and platforms

pipelines

electricity power turbine components

electricity pylons

wind turbines

transmission towers

electromagnets

transformer cores

electromagnetic shields

Packaging:
Steel packaging protects goods from water, air and light exposure, and is fully recyclable.
This method of storage has been around for over 200 years.
Steel allows for high-speed filling and lightweight, easy to open packaging. Packaging
steels are often made from low carbon cold-rolled steel strip and are surface finished. The
steel is tin plated to prevent corrosion and then coated with polymer, lacquered and
printed. The majority of steel packaging goes towards food and beverage container,
followed by general line, aerosols, and closures (e.g. bottle caps).
Appliances and Industry:
About 75% of the weight of typical household appliances comes from steel. Steel is found
in appliances like fridges, washing machines, ovens, microwaves, sinks, cutlery etc.Steel
also accounts of many industry goods like farm vehicles and machinery,

Product Industry Consumer Analysis

To remain Focussed on the PIC analysis, TATA Steel has been chosen as a
target for discussion of STP and 4P

Segmentation Targeting and Positioning

Segmentation for Steel Industry (B2B Context)


For the steel Industry there would be three popular approaches to B2B Segmentation
strategy. They are

Sequential segmentation
Situation-driven segmentation

Product Industry Consumer Analysis

Customer ranking segmentation

Sequential Segmentation Developed by Thomas V. Bonoma and Benson P. Shapiro,


authors of Segmenting the Industrial Markets, 1983, sequential segmentation takes
marketers thru multiple segmentation dimensions that answer the questions, Who, Where,
How Much, How, and Why? This approach begins by analysing readily observable or
accessible demographic and geographic data, and continues thru to dimensions that identify
customer needs. As the marketer progresses thru each dimension (answering relevant
questions), it learns more about its segments along the way and hones its focus.
Situation-driven Segmentation Situation-driven segmentation involves looking at a
companys sales history, its market environment, its product line, the segments its currently
serving, what marketing resources it can bring to bear, etc., and allowing segments to
naturally reveal themselves. That is, it looks at naturally occurring segments within the
companys existing customer base and situation to determine what segments should be
used to subdivide its target market. When using this approach, Marketers will want to ask
themselves, for instance, how do sales breakdown by customer segments? What market
trends represent opportunities (or threats)? Who are potential new customers for our
products?
Customer Ranking Segmentation Customer ranking segmentation requires marketers to
consider demographic, geographic, and product usage dimensions, as well as the lifetime
value of customers, and rank them according to their potential value to the company.
Questions to ask with this approach include, what products are the customers already
buying? What is the annual budget for the product category? What is the companys share
of their annual budget for the product category? Etc. Note that this approach assumes that
a key aspect of a companys go-to-market strategy is selling to existing customers and that
customer retention is a priority.
Some of the Important Segments would be:

Construction
Transport
Energy
Packaging
Appliances and Industry

Product Industry Consumer Analysis

Targeting for Steel Industry (B2B Context)


Target markets research and analysis is an important first step to any marketing campaign.
When you define a target market, it means you have established a certain level of market
segmentation and selected the target market segment that will present the most
opportunity for profit.
Skipping the process of target market analysis and target market segmentation will waste
significant money and efforts, as your marketing campaigns will not properly address the
right client segment. It is pointless to address a target audience with little vested interest in
a particular product or service, or a target market audience that is already saturated with a
competitors offerings.
Target market research allows you to identify and define the target market that would be
most attracted to your offering. Once you have settled on a target market and initiated your
marketing activities, you can begin to identify potential niche markets within your target
market. Isolating niche markets enables you to focus on those subdivisions within a target
market audience which are defined by a shared interest or unique quality. One rule is very
important to remember: the more narrowly you can define a target audience, the easier it is
to target.
Positioning in a B2B Context (Steel industry)
The art of sharing your company's unique value in ways that resonate with your buyers,
compelling them to engage, trust, andultimatelybuy from you.
1. Position the value add to the Customer
From the customer point of view the most important aspect is the value add. The
value add could be in terms of the following:
1. Benefits like Credit Period
2. After sales service
3. Warranty / Replacement Policy
4. Dedicated office in the Customers premises

2. Be Simple
Brands are complex constructs, and they have to be simplified in order to make them
presentable, understandable and acceptable. You may choose the form of a well-researched
and elaborate brand model to base your positioning statement on. But that might not even
be necessary. Not every brand needs documentation that stretches over 50 pages. Reduce

10

Product Industry Consumer Analysis

to the max: after all, you will need to be able to reduce your documentation to one single
message. Good examples for clear and simple messages: IBM stands for a smarter planet,
UPS loves logistics,ExxonMobil takes on energy challenges and Jindal Steel
Strengthening the Economy with our wide product Canvas
3. Be Precise
Make yourself very clear when formulating a positioning statement. Avoid platitudes such as
innovation, reliability or partnership. You have to be more concrete than that. And dont
leave any room for interpretation. Designations like innovative, trustworthy or sustainable
are extremely broad notions and everybody interprets them as he likes. A good example for
an exchangeable message is the following statement: We offer intelligent solutions with
innovative products and tailor-made services. We create opportunities for success through
trusting and reliable partnerships and generate added value for our customers. This
sentence can be applied to almost every B2B company. The B2B brand Jindal Steel, a leading
steel manufacturer in India, communicates differently: Strengthening the economy and
creating Value Responsibly. TATA steel says
4. Be Inspiring
A positioning statement should function as a theme for the brand and transport its values.
This way, the statement can be lived by staff and supported by business partners. JSPL says
Creating Value Responsibly. Nothing can be said against that. TATA Steel communicates
in a completely different manner: The Tata brand over many yearshas come to represent
quality, trust,business leadership, highest ethical standard and respect for all stakeholders.
TATA steel has formulated a goal that goes far beyond traditional product and quality
statements.

11

Product Industry Consumer Analysis

4P of Steel Industry (Focus TATA Steel)


PRODUCT:
The Companys products consist of TSL products, produced by the Companys Indian
operations and its NatSteel and Tata Steel Thailand operations, and Corus products, and
produced in the United Kingdom and The Netherlands. TSLs products can be divided into
three main categories:
1. Finished and semi-finished steel products;
2. Ferro alloys products; and
3. Other products and services, including tube products, bearing products, refractory
products, pigments, municipal services and investment activities.

TSL Products:
Finished and Semi-finished Steel Segment Products
TSLs finished steel products are produced at its Indian facilities, as well as in various Asia
Pacific countries by NatSteel and in Thailand by Tata Steel Thailand. TSLs finished steel
products can be principally divided into flat products and long products, including wires. In
addition, TSL also produces relatively smaller quantities of semi-finished steel, rings,
agricultural tools, and steel equipment.
The following table lists the various finished and semi-finished products TSL produces, as
well as the principal uses for these products and their principal market.

12

Product Industry Consumer Analysis

PRICING
Pricing is one of the most crucial elements behind a successful product. It is more pragmatic
and fact oriented in industrial marketing as compared to pricing for consumer products.
Pricing in industrial marketing is closely related to the firms product, distribution and
communication strategies.
Factors Influencing Pricing Strategy in Steel Industry
The most important factors which affect pricing strategies in steel industry are:
1.
2.
3.
4.

Production Costs
Market demand (derived in nature)
Competition
Government regulations

13

Product Industry Consumer Analysis

Production Costs
Tata Steel is the lowest cost manufacturer of steel and keeping production costs low have
played a major role in achieving that. The following measures have helped Tata Steel in
maintaining cost leadership:
1. Acquiring sources of raw materials in India and globally: Tata Steel has captive coal
mines in West Bokaro and Jharia. The mines in Bokaro have reserves of over 196
million tones and the coke mine in Jharia can produce 1.9 million tons of raw coal
annually. Its iron ore mines are located in Noamundi and Joda and chromite mines at
Sukinda contribute to raw materials for Tata Steel.
Internationally, Tata Steel has 5% interest in the Carborough Downs Coal Project
located in Queensland Australia for low ash coal. The Sila Eastern Company has been
established to develop limestone mines in Thailand mainly for the captive use of
Tata Steel.
2. Capacity expansion: With the expansion of its Jamshedpur plant in 2012 and
Greenfield units in Orissa and Chhattisgarh becoming operational in 3-4 years, its
manufacturing capacity will jump to 21 mtpa. Acquisition of Corus has made Tata
Steel one of the largest manufacturers of steel.
3. Technology: Tata Steel has developed several technologies that help in keeping
production costs low. Some of them are:
- Process innovation and use of blue dust in sinter plants increased productivity by
60%.
- Stamp charging technology was indigenously developed to convert low quality
coal to high quality coking coal. This reduced the import of coking coal.
All these factors and more have led to Tata Steel being the lowest cost, but still the best
quality steel manufacturer.
Market Demand:
Demand for steel is derived in nature since it is majorly used as an input. The following facts
and figures suggest that there exist healthy demand in market for Tata Steel to serve.
-

14

World consumption of steel is expected to be 1.4 billion tonnes in 2010


registering a growth of 17.5 % over 2013.
In India, apparent consumption is expected to increase by more than 10% in FY
14 buoyed by expected strong performances from consuming segments like
automotive, construction, infrastructure and capital goods.

Product Industry Consumer Analysis

With economic and steel market conditions becoming more favourable and the steel
producers needing to recover the rise in input costs, it is anticipated that there will be a
strong rise in the steel prices in 2014-15. However, significant raw material price increases,
interest rate tightening and inflation may provide some downsides to an otherwise positive
outlook for the industry.
Competition:
Existing and potential competition inevitably affects pricing strategy by setting an upper
limit. 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.
Pricing strategy is also influenced by the anticipated reactions of competitors to pricing
decisions. Price reductions on products that are undifferentiated are generally met
immediately by all suppliers, resulting in little shift in market share.
The major competitors of Tata Steel in India are Steel Authority of India Ltd, JSW Steel Ltd
and Essar Steel Limited. Tata Steel's rare advantage is that it has captive iron ore mines
with capacities far in excess of its current needs. Therefore, it makes imminent sense to
expand its primary steel-making facilities in India and look for finishing capabilities
elsewhere. Greater the volumes, lower the production costs and hence lower the prices at
which its products are offered.
This shows that the ability to maintain lower prices of its products have given Tata Steel
the edge over its competitors.
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, growth and
survival objectives. Price, because of its influence on unit sales volume and profit margins,
affects long run profit objectives. And maintaining profitability through sound pricing
practices is necessary to ensure the firms survival over time.
The pricing strategy adopted by Tata Steel is the Market Penetration Strategy. This strategy
is based on the assumption that demands for the product is highly elastic. By setting
relatively low price Tata Steel has managed to obtain large market share. The advantage of
this kind of pricing is that it discourages competition since there is less opportunity to reap
unusual benefits on investment. Since Tata Steel is in control of large iron ore deposits it has
increased its capacity manifold and so enjoys economies of scale. It has thus maintained
prices of its products lower than of its competitors and has increased the scale and
efficiency of operations, since it has lower production costs.

15

Product Industry Consumer Analysis

3. PLACE:
Place represents the location where a product can be purchased. But in industrial marketing
place is often referred to as the distribution channel.
Distribution channels at Tata Steel:
Tata Steel Limited delivers steel products to Indian customers through:

Direct supply channels,

21 stockyards,

25 consignment agents,

15 external processing agents and

Figure 1: B2B sales and distribution for TATA STEELS


TATA Steel main distribution channel is selling branded steel through Mjunction.It provides
cutting edge of Information Technology, is a 50:50 venture of SAIL and Tata Steel. It is
India's largest e-Commerce company and the world's largest e-Marketplace for steel.
Mjunction offers a wide range of selling, sourcing and knowledge services that empower
businesses with greater process efficiencies.
Tata Steel initiated the first online e-Sale through Mjunction in the month of February 2002
and since then has sold 221,259 MT. The products that Tata Steel has sold through
MJunction are: HSM Defectives, HSM POR, GP Coils, LP Defectives, Prime Billets and
Secondary Products. The results have been extremely encouraging for Tata Steel, with
products being sold to customers all over the country. The prices obtained by Mjunction
have been reflective of the market situation.
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.
Through intensive market-making efforts and the use of technology, it is bringing in both,
greater efficiencies to processes and greater focus to the sale of non-core products of Tata
Steel.

16

Product Industry Consumer Analysis

Full Service on a business process outsourcing(BPO) mode Mjunction.com takes end-to-end


responsibility of selling client's low 'value' and/or standard products. It undertakes market
research and market-making activities to generate buyer leads. It also creates suitable
market lots to ensure maximum participation from buyers. Some of the other services
provided by Mjunction are conducting auction event fulfillment services, undertaking
collection of payments, like earnest money deposit and principal, ensuring fast and secure
handling of money. It has tied up with Citibank and HDFC Bank for collecting sales tax
documents and managing customer complaints.

4. PROMOTION:
In B2B marketing advertising, promotions and publicity plays an important role in the
communication strategies. Hence, to contribute to the overall effectiveness of the
promotional strategies utmost care must be taken by the companies.
B2B promotion is used to create awareness of the company, to increase the sales of the
product and to increase the overall effectiveness of the selling efforts. The promotional
programme 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, co-coordinating, and evaluating entire promotional programme.
Perspectives on Steel by Steel using industries
Infrastructure and Construction
Globally, steel demand from construction and infrastructure accounts for more than half of
the overall steel demand.
It accounts for 55% of steel demand in China and about42% in the US.
Investment in infrastructure is seen as a critical success factor for economic growth. It is
estimated that the global investment required by 2030 is c. US$57t and is expected to be
incurred across all aspects of infrastructure assets; steel intensive infrastructure such as rail,
ports and airports will require about US$7.2t over the same period

17

Product Industry Consumer Analysis

Implication for Steel Makers


Increasing investment in construction and infrastructure led to an 8% y-o-y increase in
global demand for long products in 2013, but this varied considerably between countries
and regions.

18

Product Industry Consumer Analysis

China will retain importance in the long products market despite slowing growth in
Chinese construction sector. Chinese long product demand growth is expected to settle by
2018 to below 5%.
Geographic hotspots are emerging for construction demand e.g., the Asian construction
market accounts for approximately 40% of total global construction spending.
This is translating into signifi cant steel demand in various countries, e.g., in Indonesia in the
first half of 2013 demand for long products increased 73% to 3 million tonnes.38
Steelmakers can increase sales by diversifying sales channels, including export channels, to
take advantage of these hotspots.
New product development to increase competitiveness with substitute materials, e.g.,
Tata Steel plans to introduce
Ground Granulated BF Slag (GGBS) for the construction sector. This product is sustainable,
cost effective, increases compressive strength and reduces carbon foot-print significantly.
There are significant opportunities for product innovation and branding to differentiate
construction steel products in the market.
While long product volumes are expected to increase, to profit from these increases it will
be necessary to have either flexibility in supply chain to supply hotspots in emerging
markets or specialist steels to improve margins

AUTOMOTIVE
According to the EY Global Automotive Center there are eight mega trends affecting the
automotive industry.

19

Product Industry Consumer Analysis

These are as diverse as increased regulation to ensure safer, cleaner transportation to how
social media is transforming marketing in the sector. A good understanding of how these
trends will affect both the commercial and light vehicle industry over the next decade will
enable steelmakers to become more competitive in how they pitch their products to this
industry.

Cars of the future will drive demand for advanced high-strength steel
Mandatory emissions control is one of the biggest challenges faced by the automotive
industry in North America and Europe,
As a result of these regulations, vehicle manufacturers are now aggressively looking to reinvent their products (hollow seat frames, engine downsizing and electric power steering)
and manufacturing processes (resistance spot-welding, rotary forging and resin transfer
molding). In addition, they are increasing their research on hybrid vehicles and ultimately
working toward complete electrification of vehicles using fuel cell technology to produce
commercially viable EVs. Some of the top vehicle manufacturers, such as Toyota, General
Motors, BMW and Ford Motor Company, have already showcased their versions of hybrid
and pure EVs.

Implications of Steel Makers


Automotive steel demand accounts for around 12% of global steel consumption.
Flat steel demand is expected to remain stable or decrease slightly due to continued
weight reductions and material substitution offset by the increase in the number of new
vehicles manufactured. However, the lightweight strength attributes of these products will
attract higher margins.
Steel accounts for 68% of passenger car material. While the use of other materials is
increasing, steel could remain the

20

Product Industry Consumer Analysis

largest used material in automobiles for the foreseeable future.


Increasing use of AHSS in automotive production even though aluminium and carbon fiber
reinforced polymer (CFRP) are lighter. This is largely because on AHSS offers the right
balance on a cost-weight-strength basis.
Implementing strategic joint ventures to take advantage of increasing automotive demand
in certain regions, e.g., ArcelorMittal and Nippon Steel & Sumitomo Metal also recently
acquired ThyssenKrupps Steel America assets in Alabama for US$1.6b to gain greater
market share in the US auto sector.
Regulation to increase industrial activity, for example the removal or lowering of excise
duties on vehicles in India, will have a positive effect on fl at steel demand.
Effi cient procurement of steel is vital for automotive manufacturers and they are often
willing to share in the cost of ensuring a stable supply of steel.
OIL and GAS
Demand for oil country tubular goods (OCTGs) is going to increase in line with growing
capital expenditure in upstream oil and gas.
According to the EY Global Oil and Gas Center the oil and gas industry is witnessing an
unprecedented wave of capital spending, driven by the need to build capacity to meet the
growing energy demand from emerging markets and to replace depleting supply sources.
This capital expenditure is being underpinned by consistently higher global oil prices as well
as gas prices in and outside of North America, driven by what is called the shale
revolution.
Era of easy oil approaches its end
An increase in unconventional oil and gas projects gives OCTG steel producers an
opportunity to tap into a niche market where premium steel products will be essential.
As these more demanding oil and gas projects come online, we expect to see an increase in
demand for premium casings and connections. The grade and quality of OCTG is determined
by a number of factors, including the use of oil versus gas, drilling direction and extremity of
the drilling environment (e.g., corrosive or high pressure).
The Pipeline and Gas Journals 2014 survey shows that 109,066 miles of pipelines are
planned or under construction. In North America alone, US$22b will be spent on the
construction of more than 23,000 miles of pipeline during 201422. Mexico plans to invest
US$8b expanding its natural gas pipeline system. In China, Sinopec is involved in an
US$11.3b coal-to-gas plant project in Zhundong, which could result in 4,971 miles of gas
pipeline being built by 2021. In Australia, LNG developments continue to be the focus

21

Product Industry Consumer Analysis

Refinery projects
A significant increase in refining capacity to 2035 will lead to an increase in steel use at
least during the construction phase.
There will also be continued capital expenditure in new refinery projects. New refinery
projects around the world amount to about 7.4mb/d in net refining capacity to be added
before 2020, and a further 5mb/d of refinery capacity is likely to be added between 2020
and 2035. Most of the capacity additions will be in China, India and the Middle East.

22

Product Industry Consumer Analysis

Implications for steelmakers


Globally, the pipe and tube sector accounts for around 8% of total steel consumption.
Premium OCTG casing, tubing and connections are used for more challenging drilling
environments. Major players in this sector have advanced connection technology which
prevents over-torquing and maintains a gas-tight seal in extreme drilling environments.
Pipes are being designed for specific situations and challenges, for example, corrosionresistant alloys.

23

Product Industry Consumer Analysis

In the largest markets, the US and Canada, demand for both electric resistance welded
pipe (ERW) and seamless OCTG products is expected to increase from 2012s level of about
7.1 million short tons to 8.4 million short tons by 2018.
South Korean pipe mills efficient logistics and mill design, easy access to HRC and cheap
financing are driving their ability to compete with US producers despite freight.
Imports into the US are declining after anti-dumping levies were imposed on Taiwanese
and Thai OCTG.
Line pipe demand in the US is expected to pick up due to replacement of aging pipeline
infrastructure.
Steel pipe and tube volumes are expected to increase over the next five years. Margins
will be best in those regions where drilling and pipeline construction activity is most active.
Geographic Outlook for steel demand

24

Product Industry Consumer Analysis

25

Product Industry Consumer Analysis

26

Product Industry Consumer Analysis

Customers Perspective on Steel


Consumers expect an ever changing variety of attractive, high quality products, often
customised to suit their requirements like reliability and flexibility in supply and service;
innovation, technical support and competitive advantage.
An Example: Value Creation, by TATA Steel
The process of value creation at Tata Steel is based on five key actions.
Customer need identification through a number of active listening and learning
mechanisms.
Analyses and prioritisation of inputs.
Evaluation of potential value for customers and feasibility checks.
Implementation of pilot projects through cross functional teams.
Monitoring of projects.
New value propositions are being created for small and medium consumers (SMEs) through
the 'Emerging Corporate Value Management' programme. An example of this is the
Companys ReadyBuild Brand a customised cut and bend (CAB) rebar solution for its
customers.
The customer gains through faster completion of projects, a drop in scrap generation, less
wastage and pilferage at site and a solution for the lack of storage space at construction site
within city limits
Serving the overall well-being of society
Tata Steels products meet all necessary national and global regulations, standards and
guidelines. Health and safety considerations strongly influence new product development.
No incidents of non-compliance in the matters of customer health and safety were reported
during 2011-12.
Tata Steel also takes its role as a supplier seriously with regard to information on health,
safety and environment down the supply chain. In Europe, the Company fulfils its
responsibilities under REACH (Registration, Evaluation, Authorisation and Restriction of
Chemicals), supplying Safety Data Sheets (SDS) for all substances classified as hazardous to
downstream customers, even though its products fall outside the legal scope of REACH.

27

Product Industry Consumer Analysis

Educating customers on safe and responsible usage of


steel products
In 2011-12, the Companys Long Product Division launched RAISE (Responsible Architectural
Initiatives and Structural Engineering), an initiative promoted with INSDAG, to engage with
architects and structural engineers across India. The programme aims at driving responsible
construction practices and creating brand ambassadors in the process.
Leveraging feedback to deliver enhanced value
Tata Steels New Product Development programme, knowledge-sharing and customer
engagement initiatives are a product of the Companys strategic goals as well as inputs
received from customers on emerging needs and future product applications.
Once such example is the information shared through Steelovation a unique initiative
targeted at creating value for Key Account Customers of the Galvano andSteelium brands.
Based on feedback from customers, the products have been customised, enhancing value
and ensuring end-customer satisfaction.
Steelovation is a knowledge-sharing initiative aimed at customers, which was launched by
Tata Steel Flat Products. This is a landmark programme, as it has been conceived, developed
and implemented with a focus on customer issues.
References
http://www.tatasteel.com/investors/annual-report-2011-12
http://www.oecd.org/industry/ind
http://www.ey.com/Publication/vwLUAssets/Global-Steel-Report-2014/

28