PRINCIPLES OF MANAGEMENT

Akash Shah-49 Binoy Mehta-50 Siddhant shah-51 Tirath Shah-52 Shivani Sodah-53 Shweta tewani-54

Most internationally recognizable Indian Business House Largest private steel maker Largest Foreign Exchange earner in Private Sector Known for producing quality products and for living up to their commitments 6.8 million tonnes crude steel output per annum Aims to achieve 30 million tonnes per annum Unleashed a Vision Architecture to achieve its aim

branding for credibility and comfort. branding by de-commoditizing steel. Brands its various Steel products to capture part of the customers mind and heart Branding Blueprint, focusing on all the existing brands that the company sells through its distribution channel. Spends 1% of its Sales of Branded products for Brand Management

Worlds first branded cold rolled steel (CRS) called TATA Steelium Name Steeluim connoted both strength and a feeling of being a world class brand Product mix enrichment by making suitable grades and sizes available for different applications Sustaining price premium by strengthening product support services through distributors and dealers.

Sales target for the financial year 2004-05 had been fixed at Rs. 700 crore During 2005-06, the sales of brand Steelium increased from 0.355 million tonnes to 0.392 million tonnes recording an increase of 10 per cent over the previous year.

Bought only by small customers Value Proposition of providing the customer total Peace of Mind Assured Availability Customization of Size Professional Dealings

Positively position CRS in the retail market against others in the industry and achieved more market leverage related to pricing and negotiations. The firm could influence customers and intermediaries so that they remain loyal to the brand Attracts a premium of 1000-1200 per tonne over competing products

Brand management Team acquired a clear vision of how they would position the product Took into account customers behavior and expectations, feedback from potential intermediaries, and other necessary insights from the marketplace Marketing study revealing the customers unfulfilled needs Technology Selection: Added CRS to Existing HRC facility by gauging feasibility, nature of domestic demand and gaps available

Volume-wise, the Indian CRS market was almost equally divided between small (say less than 60 tonne a month) and large (say above 60 tonne to 1,500 tonne a month) customers. The large number of small customers were generally neglected and served by a few wholesalers These small but growing customers could afford to pay higher prices for better materials and service

The product quality of competitors was not sufficient for high end usage and required many processes to make it usable Superior quality materials available from import were beyond the reach of small customers. Little access to manufacturers of CRS No procedure for Quality Complaint Identity and quality of CRS purchased from the retailers were often doubtful Customers hated the power of dishonest retailers These customers were in fact willing to pay little more to get the materials in the manner required by them

Asymmetry in relationship between the manufacturer, wholesaler, and retailer. Retailers not present at consumption centres as wholesalers grouped at major trading centers Retailers bought cheap sold Dear No value added services Discriminatory pricing based on quantity Not enough stock available due to no knowledge of demand Conflict between wholesaler and retailer depending upon who has the upper hand

Customized Steelium grades are available for varying applications This supported the wide variety of applications undertaken by small customers All Steelium CRS have absolutely flat spread, accurate thickness, superior formability, and surface finish, which means
cost savings to the customer during processing premium price for the end product by ensuring superior performance premium look to the ultimate customer during use

Unique in the industry Completely impermeable and highly protective Customers want protection, performance, information, and assurance from the packaging Steelium packets are painted in blue and there are distinct identifiable TATA STEEL tags and unique blue seals on the packaging

TATA STEEL decided to charge premium price over competition so as to position it as a high quality pioneer brand sold only through well-equipped distributors and dealers with value added services Price- major determinant of buyer choice whenever sufficient suppliers are available Brand management team regularly monitors competitors prices, market dynamics, and components like quality premium, service premium, and relationship premium Each grade of TATA Steelium has a location- wise floor price, below which the item cannot be sold by the distributors or dealers

Worlds first branded cold rolled steel Drew sufficient media attention for quite some time Communicated its product and service strategy to a large number of small customers of CRS through the well-established network of distributors and dealers Brand management teams carried out elaborate studies of customer segments and sent customized direct mail, brochures, and other relevant information through distributors

Ensures that all Steelium distributors have a minimum number of salespersons according to their business volume and they are knowledgeable about the product, systems, procedures, and customers Distributors are considered as the key customers and a sales team is responsible for satisfying the transaction and relationship needs of the distributors Personal relationships with the distributors are developed through regular visits when account managers study and help distributors/dealers to improve their operations

Dealers
Distributors Dealers TATA Steel Dealers Distributors Dealers

Level 1
investment capabilities, interest in exclusive dealership, registration with statutory authorities, and market reputation

Level 2
business experience, turnover, knowledge, and quantum of sales

Level 3
nominated senior officers of the company take decision about distributor selection based on their ratings and scores in level-1 and level-2.

Performance Parameters
Sales compliance Quality of feedback Inventory management Market receivable management Customer visits Margin monitor

Capability Parameters
Market understanding Quality of service centre Service capability Quality of HRM practices Implementation of quality management systems Work on special projects

 Excellent functional quality Dream customer service through highly capable distribution Customer intimacy Consumption pattern Brand perceptions

TATA Steelium Brand Equity build up on its superior steel quality & excellent customer service Competitors offering similar or even superior value preposition Pricing pressures Price premium sustenance a tough task

Expectations of service centre facility are increasing. Expectation for technical support is increasing. With India gradually becoming a global hub for outsourcing for many industries especially auto ancillaries and panel, small customers demands in terms of product quality and service levels are becoming more stringent. With increasing price and reduced availability, customers felt a kind of power shift to TATA STEEL and brands distribution network. Some of the very small customers demanded fixed price contract and long-term supply contract

INTENSITY OF RIVALRY - increasing

Competitors Essar, Jindal, SAIL-Bokaro - increasing their supply. Trade segment gentlemens agreement regarding monthly prices no more feasible. The healthy growth rate of Target sectors after the economic downturn may not sustain for a long time. These firms will be competing for a larger share of a shrinking pie. The stand-alone cold rollers that are currently concentrating on exports will refocus to domestic retail because of the drop in international prices Other attributes like service comfort, brand assurance, and the relationship with the Steelium distributors/dealers, customized shapes and sizes and other value added services - opportunity for TATA to build on its unique capabilities

Global players - POSCO and Mittal Steel have announced their arrival in the Indian market. These have good corporate image Steeliums brand loyal customers may be taken. Have no dearth of funds and can establish large and capable distribution network in a short time

Since TATA STEEL is having its own hot rolled coil production, there is no threat to the input materials for the production of Steelium.

 High functional quality of the product and grades suitable for different applications of CRS High awareness and preference among retail customers in all locations Established, highly capable and motivated channel partners supported by able Tata employees (account managers and application engineers) Value addition through dedicated and high quality service centres Long emphasized service culture in all stages like presales, sales, and after-sales Enduring relationships with customers already established by the distributors/dealers Major supply chain improvement initiatives through TOC will help improvement of supply chain effectiveness Association with TATA name brings special trust among the Indian customers.

Limited availability with increasing demand may force the existing customers and channel members to look for other sources Production being located at only one place (Jamshedpur in India), logistics disadvantage is likely for supplying to certain parts of India Brand identity (logo) of Steelium is lost when processed further (like slitting, blanking, etc.) in a service centre.

Contract production by maintaining quality standard and other parameters can enlarge customer base and sales volume. Within the present market size, there exists considerable room for Steelium to expand and enhance profitability. Improvement of sales and realization potential is possible by increasing the supply of drawing and deep drawing grades. Further value can be created and captured by innovative marketing strategies like production and sales of exclusive and branded furniture. If the existing distributors are inducted, this will fulfill their growth needs too. Continual improvement in service will help in sustaining competitive advantages.

By far the most significant threat Steelium faces is that of losing some of the important customers and distributors in the hand of competitors like Essar and Jindal that can also become a quality national supplier. On the back of this uncertainty, Steelium has to continue investing on relationship with channel members and customers. In absence of any real differentiation in material quality, Steelium will have to compete solely on the strength of intangibles

to achieve customers perception as the fairest-priced CRS with its brand features and associations price reduction or value addition? To protect distributor/dealer loyalty motivate them to sell its other brands or manufacture & market its own range of stylish furniture Capacity addition Customer relationship initiatives in the wake of entry of MNCs superior quality of product & services