A Project on Marketing Mix of Tata Steel

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4 Ps OF MARKETING:
1. PRODUCT:

Tata Steel Products

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. 3. Other products and services, including tube products, bearing products, refractory products, pigments, municipal services and investment activities. Corus has four main product segments: Strip products. Long products. Distribution and building systems. Aluminum.

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 semifinished steel, rings, agricultural tools, and steel equipment. Ferro Alloys Segment Products TSLs Ferro alloys segment produces chrome ore, pyroxenite and manganese ore as well as ferrochrome and Ferro manganese. Ferro chrome and Ferro manganese are used by the steel industry to create stainless steel products. TSL is the leading manufacturer of Ferro chrome in India and the leading manufacturer of chrome ore internationally.

Corus Products Strip Products

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Uncoated strip products comprise hot rolled, cold reduced and electrical steels, which are sold both in coil form and, cut to length, in sheet form. Corus is one of the market leaders in the manufacture of coated strip products. Long Products Long products comprise sections and plates, and rods. 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.

JINDAL STEELS PRODUCTS

Products: Hot Rolled products: HR Coil, HR plate and sheet, HRPO, HRSPO Applications: Automobile, Boiler and Pressure Vessels, Ship Building, Railways, Transmission Towers, Oil and Petro Chemicals, Marine Containers, Coal and Mining General and Heavy Engineering Cold Rolled Products: CR coil and Sheet Applications: Automobile, White good, Cold rolled formed section, General engineering& fabrication, Packing, Drums/ barrels, Furniture Galvanized Product: Galvanized Corrugated Sheet, GP Sheet and Coil Applications: Automobile, Boiler and Pressure Vessels, Ship Building, Railways, Transmission Towers, Oil and Petrochemicals, Marine Containers, Coal and Mining, General and Heavy Engineering. Pre-Painted Galvanized Product: PPGI coil, PPGI sheet, PPGI profile Application: Roof, Wall cladding and other building products, Household appliances, Furniture, Automotive

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2. PRICE:

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. Production Costs. 2. Market demand (derived in nature). 3. Competition. 4. Government regulations.

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 coalmines in West Bokaro and Jharia. The mines in Bokaro have reserves of over 196 milliontones 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 by 2012 and Greenfield units in Orissa and Chhattisgarh becoming operational in 3-4 years, its manufacturing capacity will jump to 21 million tons pa. 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.

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All these factors made Tata Steel being low cost but high 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. World consumption of steel is expected to be 1.23 billion tons in 2010 registering a growth of 10% over 2009. The exports during 2010 are expected to be higher by around 4% as compared to 2009. In India, apparent consumption is expected to increase by more than 10% in FY 11 buoyed by expected strong performances from consuming segments like automotive, construction, infrastructure and capital goods.

With economic and steel market conditions becoming more favorable 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 2010-11. 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.

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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.

COMPETITORS ANALYSIS:

The various competitors of Tata Steel are: SAIL JSW Essar Steel Ispat Industries

Recently in India the prices of steel have increased. Steel manufacturers like JSW believe that increase in the raw materials i.e. 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. 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. SAIL: Following are the strategies adopted by SAIL for effective pricing Cost reduction and increased productivity through advanced technology and improved processes. Production of value added and customized products to create niche markets. Avoid inventory build-up and make production strictly market driven.

Essar: Essar Steel is currently expanding its capacity at Hazira from 4.6 MTPA to 8.5 MTPA and then to 10 MTPA. We can see that this is an attempt to cater the large market demand and achieve economies of scale. Essar Steel has pioneered the concept of steel retailing in the country through branded retail outlets Essar Hypermart. This is primarily catering to SME segment.

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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 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. It provides cutting edge of Information Technology, is a 50:50 venture of SAIL and Tata Steel. It is Indias 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.

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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 noncore products of Tata Steel. Full Service on a business process outsourcing (BPO) mode Mjunction.com 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. 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.

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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 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, cocoordinating, and evaluating entire promotional program.

PROMOTIONAL ACTIVITIES UNDERTAKEN BY TATA STEEL:

Branding Steel Based on Customer Focus As one of Indias most successful companies, Tata Steel represents a great example of a strongly branded B2B company. In 2001and 2005, Tata Steel was ranked the worlds best steel company in studies carried out by World Steel Dynamics Inc., USA (WSD), a leading steel information service provider. Branding Steel The profitability of the steel industry in India is generally linked to business cycles, reaping profits when economy is going well and eroding them when it is in depression. In the late 1990s, the Indian steel industry was experiencing a glut in the market which strongly affected the profit margin of all related companies. To reduce its dependence on the external environment and business cycles, Tata Steel adopted a strategy which stressed the following two points: Branding its products. Moving to high value added products.

The Company soon realized that a strong customer focus is essential if any branding approach was to be successful. It soon began to introduce Internal Campaigns in order to bring the customer-centric message to its employees. In the late 1990s, the company launched several Internal Marketing Programs to emphasize customer focus and service. The programs had taglines such as: Customer first - her haal mein (Customer comes first in any case), Customer first - her haal mein, her saal (customer comes first in every case, every year), Customer ki kasam - hain taiyaar hum (We pledge to the customer that we are ready for him).

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To achieve this Tata Steel set up a branding task force in January 2000 to explore the possibilities of branding Tata Steel products. Only three months later, the task force evolved into a brand management department. Within this department they created the distinct sub functionsmarket development, order generation and order fulfillment which were computerized, enabling Tata Steel to reduce its customer response time significantly. The company also initiated the concept of customer account managers who were authorized and empowered to solve specific customer grievances immediately. 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. Tatas second area of key focus was to shift into the domain of high value added products. In April 2000, Tata Steel launched its first branded product, along with the commissioning of its CRM plant. Tata Shaktee is their brand for galvanized corrugated sheets. Eight months later the company introduced its second brand, Tata Tiscon (re-bars) for rods used in the construction industry. In February 2003, Tata Steel launched another product brand Tata Steelium. By September 2003, Tata Steel had three products as well as three generic brands in its brand portfolio. The leader of the company had decided that branding the commodity steel would provide them a unique selling proposition in a great way. Branding Steel would help Tata Steel in two big ways: It would help stabilize the flow of revenues even during business downturns. It would make premium pricing possible.

The communication tools used for the brand launches were primarily Print ads Outdoor advertising.

Yet, they also created TV commercials that portrayed signs of happy customers and employees reveling in the concern the company had for them. We 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, supported by the corporate brand as co-driver. 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.

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Competitive Advantages of Tata Steel:

After understanding the 4Ps 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. Apart from that there are several advantages that Tata Steel has which gives it competitive advantage. Harnessing New and Better Sources of Raw Materials. One of the biggest strengths of Tata Steel was that it had captive sources for all key raw materials: coal, iron ore, and limestone. The company began to harness its unutilized deposits of iron ore at Joda in Orissa. Innovating to Use Blue Dust. The company had, over the years, accumulated large quantities of very fine iron ore called blue dust (an iron rich ore which is as fine as talcum powder), which was a byproduct of iron-ore mining operations. New Coke Making Technology. Until the late eighties, Tata Steel, like all other steel manufacturers in 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. The company embarked on several steps to become self-sufficient in its fuel needs. Earlier, it used large quantities of liquid fuel from one of the petroleum refineries. Significant process changes enabled the company to totally stop the use of liquid fuels. Modernization of Facilities. Many of the initiatives discussed above resulted in improving the performance of the existing assets. Simultaneously, the modernization of the facilities became an important focus area. Quality and Cost at the Centre-stage. 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. They found vast differences between the quality practices in Japan and India.

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