Branding a Commodity - Tata Steel
About Tata Steel
Tata Steel was established in 1907 by JN Tata at Jamshedpur in Bihar, India. The company commenced production in 1911. In the early 1980’s, the company initiated a modernization program for its steel plants. By the mid 1990’s, Tata Steel was Asia’s first and India’s largest integrated steel producer in private sector. In 2003, Tata Steel declared a turnover of Rs 98.44 billion with a profit after tax of Rs 10.12 billion.
Q1. Discuss the reasons for aggressive branding and marketing by Tata Steel of its products in early 2000’s?
1. The first reason was to reduce the dependence of Tata Steel on the external environment. The profitability of steel industry in India is strongly linked to variations in business cycle. Steel companies register heavy profits when there was boom in the economy and profits decrease when there is depression. In the late 1990’s, the Indian steel industry was experiencing a glut and this affected the profit margins of players. To reduce its dependence on external environment, Tata Steel adopted a two-prolonged strategy in this period. The strategy involved:
❖ Branding its products ❖ Moving to high value products
To get its branding exercise right, Tata steel focused on strong customer focus. It initiated internal campaigns emphasizing customer focus and service. Tata Steel set up a branding task force to explore the possibilities of branding its steel products. It tool the help of R. Gopalakrishnan who had experience in branding in HLL. It also took help of FMCG companies to train its marketing personnel in branding.
2. The second reason was low revenues coming from B2C segment. 80% of its revenues were coming from B2B customers (about 200 large business customers), while only 20% revenues were coming from B2C segment (bout 5000-6000 customers). Customers in this segment were not very concerned about the quality of steel or brand name. They were concerned with only product availability and prices.
Tata Steel was established in 1907 by JN Tata at Jamshedpur in Bihar, India. The company commenced production in 1911. In the early 1980’s, the company initiated a modernization program for its steel plants. By the mid 1990’s, Tata Steel was Asia’s first and India’s largest integrated steel producer in private sector. In 2003, Tata Steel declared a turnover of Rs 98.44 billion with a profit after tax of Rs 10.12 billion.
Q1. Discuss the reasons for aggressive branding and marketing by Tata Steel of its products in early 2000’s?
1. The first reason was to reduce the dependence of Tata Steel on the external environment. The profitability of steel industry in India is strongly linked to variations in business cycle. Steel companies register heavy profits when there was boom in the economy and profits decrease when there is depression. In the late 1990’s, the Indian steel industry was experiencing a glut and this affected the profit margins of players. To reduce its dependence on external environment, Tata Steel adopted a two-prolonged strategy in this period. The strategy involved:
❖ Branding its products ❖ Moving to high value products
To get its branding exercise right, Tata steel focused on strong customer focus. It initiated internal campaigns emphasizing customer focus and service. Tata Steel set up a branding task force to explore the possibilities of branding its steel products. It tool the help of R. Gopalakrishnan who had experience in branding in HLL. It also took help of FMCG companies to train its marketing personnel in branding.
2. The second reason was low revenues coming from B2C segment. 80% of its revenues were coming from B2B customers (about 200 large business customers), while only 20% revenues were coming from B2C segment (bout 5000-6000 customers). Customers in this segment were not very concerned about the quality of steel or brand name. They were concerned with only product availability and prices.