DIAGNOSES
presents analyses of the
management case by
academicians and practitioners
The cuurent issue of
Vikalpa has published a
Case titled, TATA Steelium
– A Success Story in B2B
Branding. This Diagnoses
features analyses of the
Case by Pratik Modi,
Ramendra Singh, Indu Rao,
Jaydeep Mukherjee, Sujoy
Bhattacharya and Seema.
VIKALPA • VOLUME 35 • NO 2 • APRIL - JUNE 2010
TATA Steelium –
A Success Story in B2B Branding
Kaushik Bhattacharya and Biplab Datta
Case Analysis I
Pratik Modi Ramendra Singh
Assistant Professor of Marketing Assistant Professor of Marketing
Institute of Rural Management Anand (IRMA) Indian Institute of Management Calcutta
e-mail: pratik@irma.ac.in e-mail: ramendra@iimcal.ac.in
C an Tata Steelium do an Intel with cars? Imagine buying a car one day that has a
‘Tata Steelium inside’ label on it. More importantly, should you as a customer
care about an intermediate (steel) brand? Tata Steelium brand shows a way forward
for commodity manufacturers to create value for its customers, and also for its cus-
tomers’ customers.
The case on Tata Steelium is an excellent example of how companies can success-
fully create brands in the business markets, and leverage its brand positioning to
create, deliver, and communicate value to its end customers, channel members, and
shareholders. The case also clearly exemplifies that B2B firms can come out of the
spiraling commodization of products in the Indian market. Sooner than later we
may witness many other B2B and industrial firms from India creating more value
for its customers by successfully branding commodities such as cement, chemicals,
power, and even services.
The Tata Steelium case also shows that brand building goes hand in hand with build-
ing long-term relationship with customers, channel members, and shareholders (al-
though shareholders are not explicitly emphasized in the case). B2B brands are a
symbol of holistic value for its customers. However, building brands in business
markets is more complex and time-consuming since value is often misunderstood
as price, especially for commodities such as steel. Value, as captured by Tata Steelium,
however, goes much beyond price, and instead comes as a package to the consum-
ers consisting of components such as product availability, continuous and high lev-
els of service to customers, product and service-level customization, and healthy
long-term relationship with customers that are embedded in the DNA of the brand.
As this case clearly illustrates, value in business markets needs to be captured and
communicated very clearly, otherwise it does not get across to the customers and
consumers. Customer service and long-term customer relationship are two strong
pillars from which value is derived by customers. This value when co-created with
customers is further enhanced.
127
The Tata Steelium case also shows why B2B firms should
invest in building brands over the long term. It also
shows that for their own good and for that of their in-
dustry, the B2B players need to come out of the spiraling
commoditization of product, and the endless price un-
dercutting game. Equating value with price and play-
ing the price game is like being in a prisoners’ dilemma,
where both prisoners can create a win-win situation by
telling the truth separately (about value of their offer-
ing to their customers). Tata Steelium case shows that a
strong leader brand should communicate value to its
customers more truthfully, and find a way out of the
prisoners’ dilemma (in this case, price-competition) by
emphasizing on such aspects of the brand, such as pre-
and post-sales service, long-term relational contracts,
and service support from all channel members. Also, as
the Tata Steelium case illustrates, value for the custom-
ers will translate into value for all the stakeholders in
the business. The only trap to be avoided is to avoid
playing the short-term game, not to become greedy, and
to seize a market leadership position.
As Figure 12 in the case shows, the support services ac-
count for almost 2 per cent of the premium, and rela-
tionship with distributors almost 1per cent of the price
that Tata Steelium commands over the new CRS play-
ers in the market. In a high ticket item like CRS prod-
ucts, 3 per cent of the price differential comes through
service support to customers and relationship with chan-
nel members. Tata Steel has been building B2B brand
over two decades, and brand sales have reached a quar-
ter of the total sales. However, one concern for the com-
pany is to make the growth of branded products’ sales
more consistent, as currently its growth is erratic, and
especially the growth of Tata Steelium sales is fluctuat-
ing. As far as sectoral break-up of the sales is concerned,
Tata Steelium relies too much on Automotive and Panel
segments which account for almost three-fourths of its
sales. Too much dependence on only a few segments or
customers is not a healthy sign for future growth. There-
fore, the company needs to broad-base its target cus-
tomers, through OEM tie-ups with furniture marketers
such as Godrej among others, and finding new segments
for growth. Increasing the target segments may increase
its product portfolio and inventories; however, it will
also deliver more value by creating more sub-brands
under the Tata Steelium brand.
Finally, should Tata Steel terminate relationship with
128
its casual customers? Although strategic reasons may
dictate otherwise, with the relational value that Tata
Steelium communicates to its customers, dropping cus-
tomers may contradict the promise that the brand com-
municates. This is akin to answering the question:
Should brand choose its customers? Or should custom-
ers choose their brand? A larger question that Tata Steel
should ask is: Who actually owns the brand - Tata Steel
or its customers? It is for the company to seek answers,
and only then would it establish a mutually beneficial
relationship with its customers - one that should be cher-
ished by both! We suggest a framework for building and
maintaining the brand as shown in Figure 1:
Figure1: A Model for Co-ownership of a B2B Brand to
Co-create Superior Value for B2B Customers
Company Ownership of the Brand
Channel Ownership of the Brand
Customer Ownership of the Brand
Tata Steelium
Brand
We now discuss some of the other aspects that the case
highlights.
Why Branding in Retail Market?
This case brings out some of the important issues facing
many such B2B organizations. Many organizations in
construction material industry also face similar situa-
tions. Traditionally, steel industry has focused on insti-
tutional sales where their products have been perceived
more as commodities by the B2B buyers who possess
expert knowledge and understand technicalities of the
product. In such a market, functional attributes and price
assumes very high importance. These two factors in a
competitive market scenario do not allow the organiza-
tion to capture full value of the product. Moreover, once
the institutional market reaches saturation, the next
phase of growth can be generated from the retail mar-
ket. Such imperatives have compelled TATA Steel to
shift focus on the retail market.
The Winning Combination
Branding becomes an increasingly relevant factor in re-
DIAGNOSES
tail market as an organization moves away from insti-
tutional to retail market. In a market where there is little
performance/technical difference between the products
of two organizations, branding becomes a major differe-
ntiator and a source of sustainable competitive advan-
tage for the organization. Retail buyers lack financial
strength and expert knowledge of institutional buyers,
which reduce their risk-bearing capacity considerably.
A strong brand, such as TATA, inspires trust, respect,
and quality perceptions with the Indian consumers. The
brand TATA Steelium creates value for the retail cus-
tomers as it provides benefits of brand recognition and
consistent quality assurance. These benefits reduce
search cost and perceived risk for the retail customers
for which they are willing to pay premium over other
alternatives. The strong service component added to the
TATA Steelium brand further fortifies it by creating a
very attractive value proposition for the retail custom-
ers. Thus, the two factors – brand and service – create a
leadership position for TATA Steelium in the market.
Should the Brand Premium be Reduced?
The imminent competition from other big players and
likely poaching of the price-sensitive distributors/deal-
ers may be an argument in favour of reducing the brand
premium of TATA Steelium. However, the right ques-
tion to ask is, ‘whether the brand premium charged is
commensurate with the additional value delivered to
the customers?’ If the brand premium is disproportion-
ately high to the value delivered to the customers, then
there is some justification for reducing the premium. The
case depicts that the service component and the brand
is valued by the class of customers who have been re-
warding the company with their loyalty and premium.
Moreover, TATA Steelium volumes have shown decent
growth over the past years which could be a testimony
of its relevance and value for the market (as it emerges
from Tables 2 and 5 in the Case). May be, the company
should try to gather more evidences related to the per-
ceived value of TATA Steelium before considering any
reduction in premium. In fact, the premium reduction
may erode the brand equity of TATA Steelium and cre-
ate dissonance amongst its loyal customer base who
would feel cheated all along. Increasing the service
standards to the next level could also help justify the
premium with the customers. TATA Steelium must en-
sure that they move forward from the tonnage-driven
culture to a value-driven culture.
VIKALPA • VOLUME 35 • NO 2 • APRIL - JUNE 2010
Distributors’/Dealers’ Loyalty
The second concern facing the organization, as men-
tioned in the Case, is that of preventing the distribu-
tors/dealers from dropping off and/or stopping them
from selling competitors’ products. TATA Steelium
brand distributors handle the brand exclusively because
of its service proposition requirements. With the immi-
nent competition, there is likelihood that some of the
distributors/dealers may drop off and/or start stock-
ing the competitors’ products for turnover considera-
tions. This is a relatively exaggerated concern in the Case.
Distributorship/Dealership of TATA Steelium is valu-
able to the channel partners for economic as well as non-
economic reasons. The company has been selective in
choosing its distributors. It has consistently invested in
developing its distributor/dealer network over the years
as well as the capabilities of the distributors/dealers
through various support programmes such as profes-
sional training, implementation of quality management
and automation systems, which has created some sort
of lock-in between the company and the channel part-
ners. The attractiveness for distributors/dealers in do-
ing business with TATA goes beyond monetary margins
earned by them. The support, service culture, and treat-
ment that the channel partners get from TATA Steel are
a big motivating factor for doing business with them.
TATA’s reputation as an ethical and socially responsi-
ble organization plays important role here, as the dis-
tributors/dealers would want to be seen associated with
such a reputed organization. In terms of monetary ben-
efits, the higher premium charged for TATA Steelium
also benefits the distributor/dealer network that earns
higher margins in turn. TATA Steelium also gets them
repeat business from loyal customers which effectively
reduce their cost of doing business. And a small per-
centage of the channel turnover could be healthy for the
company.
The issue of starting a new venture of manufacturing
and marketing its own range of steel furniture using
Steelium is framed wrongly here. The new venture into
steel furniture is proposed with the objective of provid-
ing distributors/dealers with an opportunity to earn an
additional income and thereby reducing their risk of
getting dropped off. This logic is akin to a tail wagging
the dog. It is far more logical to focus on helping the
channel partners increase their turnover from the exist-
ing business by providing them additional support and
129
service. The reason for entering into the steel furniture
market should be more strategic than mere distributor
retention. More-over, the case itself points out that there
may not be adequate synergy between the steel furni-
ture retailing and steel retailing businesses. Such a ven-
ture, if taken up, may indeed fail to meet its objective of
distributor retention. However, TATA Steelium can eas-
ily explore the opportunity for co-branding itself with
some other leading furniture manufacturer, such as
Godrej.
Launching a Stripped Down Version of the Brand
While the competition is likely to hot up in future, the
demand for CRS is looking quite healthy with automo-
biles, consumer durables, and construction sectors all
showing upward trends. Moreover, setting up greenfield
operations may not be easy for new entrants. Thus, the
fear of imminent price war could prove to be rather ex-
aggerated. TATA Steel is one of those few ambidextrous
organizations that have been able to combine the cost
leadership strategy with the differentiation strategy.
TATA Steel is one of the lowest cost producers of steel
in the world. Moreover, TATA Steel also enjoys the com-
petitive advantage of being an integrated CRS manu-
facturer. The competitors that do not have the facility to
manufacture HRS face cost disadvantage as HRS forms
a large portion of the production cost of CRS. These twin
advantages not only enable the organization to earn
higher per unit margins than its competitors but also
give them a space for manoeuvering with price points
to meet the future challenge from the competitors.
The premium brands such as TATA Steelium should
avoid the temptation of competing on price. This may
Case Analysis II
Indu Rao
Associate Professor
CEPT University, Ahmedabad
e-mail: indu.rao@cept.ac.in
C reating and /or sustaining a brand is one of the
most challenging tasks in business. This Case
presents a situation wherein a leading Indian business
house launches yet another brand adding to its existing
list of successful brands and strengthens its position as
130
in fact lead to erosion of the brand equity and create
dissonance among the loyal customer base of the brand.
Launching a stripped down version of TATA Steelium
may in fact cannibalize into the market of TATA Steelium.
Future Strategy
The demand for cold rolled steel products is projected
to grow steadily to 20 million tonnes by 2015 (Steelworld,
October 2006, pp 25.). There is huge potential for increas-
ing the per capita consumption of Cold Rolled Steel con-
sumption in the rural and semi-urban markets. Increasing
the awareness levels in rural markets about the usage of
steel and the benefits of branded steel may increase the
demand significantly. The company should try and pen-
etrate in the small and medium-sized towns which are
relatively untouched by the competitors so far. These
places are the consumption centres of future. Further
investment in increasing the reach of the distribution
system in such towns is strategic. Establishing mini-de-
pots will facilitate delivery of smaller order size in rural
and semi-urban markets. As for the existing distribu-
tion network in urban markets, the focus on continuous
service level and relationship improvement is the key
to retaining them. Some of these key distributors may
be persuaded to create presence in semi-urban markets.
Such a proactive focus on penetrating the untapped
semi-urban markets would provide TATA Steelium the
prime mover’s advantage and a healthy lead time over
the competitors who would feel spaced out of these small
but important markets. The TATA Steelium customers
who are fed on the brand benefits and service support
will demand parity from the competitors and this may
prove to be an important sustainable competitive ad-
vantage for the company.
a leading supplier of steel. The Tata group is the oldest,
largest, and highly respected corporate brand in India.
Established in 1907, Tata Steel is the group’s flagship
company with a current market cap of USD 13.7 billion,
manufacturing operations in 26 countries, and commer-
DIAGNOSES
cial presence in over 50 countries. It has several national
and international recognitions and awards to its credit.
In 2002, the company embarked upon an aggressive ex-
pansion strategy of venturing into new and attractive
businesses, continuing to be the lowest cost producer of
steel and enhancing value creating partnerships with
customers and suppliers for sustainable growth. The first
strategic goal was to move from commodities to brands;
and after a marketing study followed by a technical fea-
sibility study, Tata Steelium was launched in 2003.
The Context of the Launch of Tata Steelium
Traditionally, steel items were viewed as raw material
but consumers were increasingly becoming quality con-
scious and looked for assurance of quality and perceived
value. In a fragmented steel market with consumers like
auto industry, appliances, panel, furniture, etc., the mar-
ket was equally divided in volume between a few large
customers and a large number of small customers, served
by several distributors, wholesalers, and retailers. There
was a growing demand for high end cold rolled steel
(CRS) but supply was inadequate. In addition, Tata Steel
already had the capacity to manufacture hot rolled steel
which could go as an input for manufacturing CRS.
Leading manufacturers focused on a few large consum-
ers while the rest remained neglected. The small con-
sumers did not have direct access to the manufacturer
and relied on intermediaries for both price and grade of
supply of steel. The company tried to understand the
expectations of and difficulties faced by the large number
of small consumers. As it was not possible to reach them
through the company sales force, Tata steel decided to
sell CRS as a brand name hoping that the brand slogan
and communications could perhaps penetrate through
the layers of distribution channel and reach the target
consumer. The branding strategy focused on building
relationships with the distributors and dealers by em-
powering the members of its distribution channel, edu-
cating and training them about the product and service
aspects of the brand, and offering value added services
to consumers. The world’s first branded cold rolled steel
(CRS) was called Tata Steelium.
Value Proposition
The developing countries have increasingly seen a shift
from price-based competitition to quality-based compe-
VIKALPA • VOLUME 35 • NO 2 • APRIL - JUNE 2010
tition in industries and the phenomenon was also ob-
served in the steel industry in India. Identifying this op-
portunity where a growing number of small steel
consumers were willing to pay a higher price for the
perceived value of product, better materials and serv-
ice, Tata Steel conducted an intensive market research
to understand the market behaviour and consumer
needs. Value proposition for some customers meant as-
sured availability, for others customization of size, and
for still others dealing with a professional organization
besides ensuring their own company image and profit-
ability. For Tata steel, it was about achieving target prof-
itability besides popularity and penetration into the
untapped segments of the market.
Branding Strategy
While Tata Steelium inherited the brand value from its
name, the challenge was to achieve B2B branding by de-
commoditizing steel and the company did well to adopt
a branding strategy focused on building relationships
with the distribution channels and communicating about
its product and service strategy to a large number of
small customers of CRS through its network of distribu-
tors and dealers while a few institutional customers were
serviced directly by its sales force.
As the Tata group is known for its impeccable quality
and adherence to commitments, the small consumers
achieved “peace of mind in purchase and consumption
of CRS” through the brand name, Tata Steelium. Leve-
raging on the existing production capabilities and
strength of the distribution network, Tata Steel worked
on creating value relationships with its distributors who
were asked to exclusively deal in Tata Steelium and
trained to provide excellent service support system to
the end consumer. In a period of four years, a large cus-
tomer base was developed, 80 per cent of which were
served directly through distributors and the remaining
through distributor-dealer network. A well-placed
branding strategy could take the brand to widely dis-
persed customers as well as attract capable intermedi-
aries, indispensable in such case, and propagate
congruent messages to all in the retail segment. The
emphasis was on relationship building with distribu-
tors and providing superior services to customers be-
sides providing a product with excellent functional
quality.
131
Transaction Cost Perspective
TCE asserts that economic transactions are organized in
governance structures based on their attributes of asset
specificity, frequency, uncertainty, and in our context
of product quality, the difficulty to assess or measure
the attributes of products or assets. Consumers incur ex-
ante search costs, spend time and money to assess and
measure quality of product (Barzel, 1982) and yet some
characteristics of the product are observable only after
use. These transaction costs are also an opportunity for
firms that are able to mitigate them. A brand name is a
transaction-costs mitigating device as it operates both
as a decision-support mechanism and a commitment
device (Barcala and Diaz, 2006). The branding strategy
of Tata Steelium was based on the findings of market
research which revealed the difficulties faced by small
customers and opportunities emerging in many areas.
The existing supply of CRS from competitors was not
suitable for complex applications and required further
processing before final use; Tata steel’s superior tech-
nological capabilities could address this gap. Import
substitution was beyond the reach of small consumers;
hence the local presence of Tata Steelium became an
advantage. Small customers had access only to those
retailers who did not provide after-sales service; they
were required to contact several retailers for ensuring
availability of stock whereas dealing with a professional
company like the Tatas was free from those hassles..
According to the authors, manufacturer’s name and
other details were usually marked only on the packag-
ing materials which could be manipulated by the retail-
ers; thus customers were concerned about the authenti-
city of their purchase. The hassle of transporting the coils
from retailers/wholesalers to cutters/processors and the
compulsion of buying the available stock in the absence
of alternatives, compounded the problems of the small
customers. The brand Tata Steelium aggressively sought
to address these gaps.
Issues of Governance in Vertical Chains
While Tata Steelium as a brand was about transparency,
trust, congruence of dealings across the supply chain
and an assurance that quality product and service would
reach the customer, the wholesalers themselves were
unaware of the potential benefits from value added sup-
port services to the customers. Wholesalers and retail-
132
ers were at liberty to set their own selling price; hard
bargaining, discounts based on volume, confidential
deals, discriminatory pricing, and rivalry between ele-
ments of distribution channels put downward pressure
on market prices. Wholesalers were uncertain about
demand, reluctant in committing their purchase, and
waited for month end price relaxation. The salespersons
of manufacturing companies were concerned about sell-
ing an aggregate quantity every month and unaware of
the concerns of distributors. Forecasting errors and mis-
match between the forecast and the production was com-
mon. Retailers felt that the wholesalers did not pass
enough discounts to them. Overall, information asym-
metry and relationship asymmetry led to lack of trust
and coordination between different stakeholders. And
yet, it was clear that only through the distribution chan-
nel members and the salespersons can the company
monitor consumer’s perception about the brand.
It was indeed an enormous task to bring together all
these independent parties with diverse background in
terms of age, education, communication skills, etc., and
to convince and motivate them to create an environment
of trust and commitment and to promote brand ethics
and marketing orientation across all segments at every
location and maximize total channel profit. Coupled with
bounded rationality and potential opportunism, these
transactional attributes created various coordination
problems or contractual hazards. Organizational effi-
ciency is assessed through the alignment principle ac-
cording to which “transactions, which differ in their
attributes are aligned with governance structures which
differ in their costs and competencies in a discriminat-
ing (mainly transaction-cost-economizing) way”
(Williamson, 1991).
Brand Engineering
The product characteristics were developed and pro-
moted to meet the variety of applications required by
the small customers. Steelium coils and sheets were
made available in a wide range of thickness, width, and
grade combinations with Tata Steelium logo embossed
on every one metre length of CRS. Packaging was made
distinctly identifiable, impermeable to appeal to the cus-
tomers’ requirements of protection, performance, infor-
mation and assurance from packaging. A fixed price for
customers was ensured and conflicts between channel
members was avoided by setting up location-wise floor
DIAGNOSES
prices and through fixed charges for standard process-
ing.
“Tata steel’s world class facilities and state of the art
production processes ensure superior properties like
formability and unbeatable flatness.” The company in-
variably asserts the quality of its brand, not through tra-
ditional advertising methods but by sending customized
direct mails, brochures, and information to customers
through distributors. The company organizes regular
meetings for distributors and dealers and customers; dis-
tributors in turn are encouraged to do so for their cus-
tomers. It also provides support for recruitment and
development of salespersons of the distributors to help
develop a consistent brand culture. The company de-
cided on selective distribution in each major location
based on consumption pattern and strategic business
volume. A website for the Tata Steelium Parivar helps
develop community feeling. An elaborate procedure for
selection of distributors is in place for ensuring high
market reputation, premium business location, and su-
perior capabilities to serve customers. Further attempts
are made towards improvement of capabilities of deal-
ers on a continuous basis.
Inventory management, human resource development
initiatives, key account management processes, evalua-
tion and performance incentives work for better effi-
ciency and monitoring of the supply chain. The company
not only does evaluation of performance of distributors
through customer surveys and other scorecards, it also
helps them improve and provide superior service thus,
developing strong relationship with the channel mem-
bers.
Corporate actions are consistent with brand values.
Functional quality, distribution capabilities, and cus-
tomer intimacy deliver value proposition. “Fair and pro-
fessional treatment, a caring parent company, complete
peace of mind in dealing or using the brand” deliver
premium. Social grouping, raised customer service ex-
pectations, perception of brand as a means to increase
profitability, and growth are all a result of intense and
active relationship fostered over the years.
The Challenge
Although Tata Steelium succeeded in establishing itself
as a brand in just four years across various segments of
the CRS market, it is proactive in analysing threats and
VIKALPA • VOLUME 35 • NO 2 • APRIL - JUNE 2010
in preparing itself to face them. Due to large focus on
infrastructure development in the country, domestic
demand of steel has a large potential for growth. With
limited production capacity within the country and an
attractive market for investment, entry of foreign play-
ers like POSCO and Mittal Steel with international ex-
perience of selling CRS of superior quality with extra-
ordinary support services, is inevitable. Expansion strat-
egies of the few domestic competitors like SAIL, Essar,
and Jindal are also likely to intensify competition. The
distributors and dealers are in any case entrepreneurs
in their own capacities and have now been trained pro-
fessionally by Tata Steel; it may not be possible to con-
trol their activities if they decide to deal with the
competitors’ products.
The Way Ahead
Since Tata Steelium was the first to penetrate the rela-
tively unorganized market and has earned the loyalty
of its customers and built relationships with distribu-
tors, it holds an advantage vis-a-vis its competitors. The
branding strategy adopted to promote Tata Steelium is
likely to have a long lasting positive impact on brand
equity and market share of Tata Steel. Several alterna-
tives are possible. The advantage of having an integrated
steel plant is its core competency and the company may
opt for forward integration by manufacturing some end
user products. Limited capacity of the plant and a sin-
gle location of manufacturing have been identified as
constraints to meet future demand and geographic reach.
Manufacturing facilities at new geographical locations
in India and overseas can be explored to expand the pro-
duction capacity in order to meet the demand and lev-
erage on the existing brand reputation of Tata Steelium.
In order to overcome constraints due to limited capac-
ity, the company may also look at alternatives of out-
sourcing some part of manufacturing with sufficient
quality control.
Investing on relationships and building a culture of trust
and social groupings are very important in the present
uncertain environment and it may not be desirable to
cut down on them. It may be useful to focus on the gov-
ernance structures of the vertical supply chain as well
as involve in alternative brand advertising. It has been
illustrated in literature how governance of vertical chains
may constrain the set of branding strategies (Ghosh and
John, 1999). In addition, competition pushes agents to-
133
wards adopting efficient governance structures because
firms whose transactions are inappropriately governed
suffer from poor performance (Nickerson and Silverman,
2003). Customers, small or big, are increasingly looking
for quality with support services and transparent, has-
sle-free operations. Tata Steelium has the potential to
REFERENCES
Barcala, M F and Diaz, M G (2006). “Brand Equity in the Euro-
pean Fruit and Vegetable Sector: A Transaction Cost
Approach,” International Journal of Research in Marketing,
23(1), 31-44.
Barzel, Y (1982). “Measurement Cost and the Organization of
Markets,” Journal of Law and Economics, 25(1), 27-48.
Ghosh, M and John, G (1999). “Governance Value Analysis
and Marketing Strategy,” Journal of Marketing, 63(Special
Case Analysis III
Jaydeep Mukherjee
Associate Professor
Management Development Institute, Gurgaon
e-mail: jmukherjee@mdi.ac.in
T he case is about “Steelium,” the Cold Rolled Steel
(CRS) from Tata Steel. Since its inception, Steelium
has achieved a good market acceptance by virtue of its
superior product quality (specification and consistency),
better supply, leveraging of the Tata brand name, long-
term customer relationship orientation, and distributor
strength. The focus market for Steelium was the “small
customer” segment of the CRS market which was ne-
glected by its major competitors. The Steelium distribu-
tors were trained to provide customized service and
focused on the small customers who could give them
the best premium.
Competition in this segment was mostly from the low-
priced suppliers of CRS, who did not have appropriate
processes to take care of the product quality. Thus Steelium
had clear product superiority compared to the low-priced
products in the market. Also, small manufacturers sold
their products through traders who were transaction-
and profit-focused, and hence did not enjoy the trust of
the consumers. These customers were also unable to
access the import option because of their small size.
Changes in the competitive structure of the industry
were expected in the near future due to which the fol-
134
command a premium in various segments identified by
the company. Given the vast experience of the Tata
group companies and its management, the future of Tata
Steelium appears bright as there are more strengths and
opportunities available to the brand than the possible
threats offered from competition.
Issue), 131-145.
Nickerson, J A and Silverman, B S (2003). “Why Firms Want
to Organize Efficiently and What Keeps Them from Do-
ing So?” Administrative Science Quarterly, 48(3), 433-465.
Williamson, O E (1991). “Comparative Economic Organiza-
tion: The Analysis of Discrete Structural Alternatives,”
Administrative Science Quarterly, 36(2), 269-296.
lowing problems were anticipated for “Steelium”:
• Likely entry of sophisticated producers with better
products which could dilute the product superiority
of the value proposition.
• Limited production capacity of Tata Steelium and
unmet need in the market, which could lead to easy
market entry for competitors.
• Increasing consumers’ expectations that would make
it more difficult to have satisfied customers and could
thus lead to increased probability of competitive en-
try.
• Dependence on distributors in ensuring customer
service, which could be easily replicated.
• Distributors could also defect as they were not likely
to get their full supply from Steelium.
• The demand and supply gap was expected to become
unfavourable in future, which would challenge the
price premium of Steelium.
The challenges facing Steelium was how to retain a mar-
ket which was created by them. The net outcome would
be to insulate Steelium customers from competitive of-
fers and to leverage the brand premium in the competi-
tive CRS market.
DIAGNOSES
The Key Challenges
The future would bring in competition for Steelium from
the major players which would put pressure on the
margin. The market share would definitely go down as
Steelium would have limited production capacity while
the market was expected to grow. In the overall value
proposition (Figure 11), the part which was within the
full control of Tata Steel was its excellent functional qual-
ity. Dream customer service and customer intimacy as
envisaged in the value proposition was company-driven
but distributor-delivered and hence open to greater com-
petitive threats. The competitive advantage which is
mostly from distributors is not really very difficult to
replicate in case of strong competitors with deep pock-
ets. How to address this aspect was a key issue.
Also, the production constraint was likely to create a
situation of shortage of “Steelium.” One of the choices
the Steelium marketing team would have to make was
whether to supply all distributors a rationed quantity
of Steelium or stop supplies to some of the distributors
of Steelium to fully supply the rest. The first option was
likely to be difficult to justify and hence Steelium dis-
tributors would be required to specifically focus on the
select set of CRS consumers who were most appropri-
ate for them. How to select the specific Steelium con-
sumers who were likely to provide the highest price
premium in the long run?
A few questions that were raised regarding the customer
relationship and service for Steelium, needed to be re-
solved. Was service actually creating sufficient value for
the consumers or was it the superioriority of the prod-
uct? Was the claimed better service provided by Steelium
benchmarked against the major national competitors or
the reference set consisted of only the existing suppliers
of CRS? Were isolated interviews adequate or the more
quantitative measures of customer satisfaction required
to reflect the ground reality? Should customer satisfac-
tion be checked by surveying the existing customers or
also include customers who did not use Tata Steelium?
Was there a real brand Steelium or was it just the Tata
brand which was delivering the goods along with the
product benefits of good quality CRS? All these would
possibly help in resolving the dilemma whether better
service was capable of producing price premium for
Steelium compared to the other big competitors who
were likely to enter the market with their high quality
CRS products?
VIKALPA • VOLUME 35 • NO 2 • APRIL - JUNE 2010
To what extent were the business consumers influenced
by the emotive characteristics of brands? How did buy-
ing centre participants vary in the degree to which they
were influenced by emotive elements of brand value?
What was the relevance of the brand building exercise
of Tata Steelium for its target market?
The Analysis
Buyers process information from marketing communi-
cations either ‘centrally’ or ‘peripherally’. Highly in-
volved and motivated buyers take the ‘central’ route
with particular attention paid to the core elements of
the promotional message, such as product quality, func-
tions, and price. Persuasion is achieved through strong,
rational arguments. If a buyer is not strongly motivated
or involved, it is suggested that he should process per-
suasive communication messages through a ‘peripheral’
route, with more attention paid to contextual informa-
tion that taps their emotional drives such as visual im-
agery, the salesperson’s appearance or the presentation
of product information. Attitudes formed via the cen-
tral route are assumed to be stronger, less resistant to
change, and more predictive of future behaviour than
attitudes resulting from peripheral route processing. This
does not mean that marketers need to focus only on cen-
trally created attitudes, as research has indicated that
peripherally formed attitudes could determine the choice
when brands are viewed as essentially similar or when
the market lacks a leading brand.
The greatest opportunities for enduring brand success
emerge when you are able to orchestrate the range of
experiences around your brand in a way that puts your
brand more in a personal and emotional space. This hap-
pens only when the promise of a brand rises above the
merely functional and tangible attributes or character-
istics and incorporates some relevant feeling and emo-
tion. Competitors can match functions and features but
they just cannot easily match the promise and delivery
of a personal, emotional and special experience.
Research on brand communities indicates that members
of a brand community tend to avoid discussing the mer-
its and use of products from rival brands in favour of
products from the preferred brand. Instead, members
of brand communities tend to emphasize the merits of
products from the preferred brand and focus on dispar-
aging information about products from rival brands. As
135
a result, members of a brand community are exposed to
less information about the merits of new products from
competing brands because of their emphasis on the
merits and uses of products from the preferred brand.
By encouraging customers to join and participate in their
brand community, companies can increase the willing-
ness of customers to adopt their new products. Further-
more, encouraging customers to join and participate in
the company’s brand community can insulate the com-
pany from competitive pressure by reducing the likeli-
hood that customers will adopt competing products.
Brand communities can be particularly valuable for com-
panies that are the first to market with a new product.
In this case, the company benefits from loyal adoption
behaviour of the members of its own community but is
not penalized by oppositional loyalty from members of
the rival brand communities. The company can extract
more value from a smaller brand community by encour-
aging its members to focus their participation in the com-
pany’s community and avoid competing with the brand
community.
Recommendations
The existing strategy was not likely to be adequate in
handling future challenges of increased competition,
price pressures, and supply shortage to its consumers
and distributors. The challenge was to keep the distribu-
tors who were providing the value added services and
the end consumers of Steelium happy at the same time
and align their business interests. The best bet for
Steelium would be to be able to retain and develop those
consumers who were brand loyal, regular buyers, and
were value-oriented but not price-sensitive and looked
for value-added service support.
Retaining loyal consumers with their CRS when Posco,
Essar, and Jindal enter the fray would be the key chal-
lenge. There is a good chance that the price premium
would be under pressure as the product differentiation
would not be working in its favour. Challenges could
be overcome by making consumers seek special serv-
ices which competitors would not be able to match,
charge a premium and get the best results with its lim-
ited production capacity. Hence Steelium has to differ-
entiate itself on service delivery which is a dealership
136
activity. It can leverage its head-start in the market and
customer intimacy to develop and deliver service
differentiators. Targeting the specific end-user segments
would be critical. Steelium would have to pre-select a
set of target consumers preferably for each of its dis-
tributors. This could be actualized by incorporating the
key account management process with its dealerships
and including a consumer loyalty programme in the
marketing process.
The way to manage the short supply of Steelium to the
distributors would be a tricky issue as that could de-
motivate them, which could have a company-wide im-
pact. One of the ways it could be achieved would be by
embedding some special dealer delivered consumer
services as part of the Steelium offer. This would increase
the overall value of the product, create differentiation
from competitors, and increase the floor price of
Steelium. This would discourage the price-sensitive end
consumers as well as less service-oriented distributors.
Tata Steelium had the advantage of consumer trust that
all Tata brands enjoyed in India. This needed to be high-
lighted in its communication with the consumers of
Steelium either directly or through distributors.
Brand community and its development could be the
primary brand building tools. The Vijeta programme
could be very significant in ensuring consumer loyalty
as well as price premium for Steelium. Web-enabled
Steelium consumer forums and even using social media
could be exciting possibilities for delivering value-added
personal, emotional, and special experience services for
the decision makers in the buyer’s decision making units.
In summary, Steelium should consolidate its lead in the
CRS market by leveraging the Tata brand association
for Steelium and strengthen the value added service
benchmark for the industry by investing in the service
delivery through its large base of capable distributors.
It should identify potential value-conscious consumers
and nurture them by initiating a consumer loyalty pro-
gramme and engage the buying team or decision mak-
ers’ community of CRS by strengthening its operational
Vijeta initiative through web-enabled and other appro-
priate initiatives like social media.
DIAGNOSES
REFERENCES
Keller, K L and Lehmann, D R (2006). “Brands and Branding:
Research Findings and Future Priorities,” Marketing Sci-
ence, 25(6), November-December, 740-759.
Sekar Raju, H; Rao, Unnava and Montgomery, Nicole Votolato
(2009). “The Moderating Effect Of Brand Commitment
On The Evaluation Of Competitive Brands,” Journal of
Case Analysis IV
Sujoy Bhattacharya
Assistant Professor
Vinod Gupta School of Management, IIT-Kharagpur
e-mail: sujoybtc@vgsom.iitkgp.ernet.in
T he Case deals with brand building within a pro-
duct category which was by and large seen as a com-
modity in the Indian market. It lists the strategic plan-
ning steps and discusses their implementation and the
successes achieved by TATA STEELIUM towards its
emergence as India’s largest CRS brand. It also lists the
major challenges which the brand expects to face with
more players entering the branded CRS market. The
Case provides insights into distribution management in-
cluding manufacturer-distributor co-operation towards
achieving mutual gains. The Case provides lessons in
brand building when the primary brand communica-
tion happens through the distributor/dealer network.
The Case also illustrates the role of brand STEELIUM in
reaching out to the ‘small customer’ segment.
Case Overview
TATA STEEL has successfully de-commoditized steel
through its brand building efforts for its STEELIUM
brand for the retail segment of cold rolled steel and thus
has the first mover advantage amongst branded CRS.
This effort was matched by product mix enrichment
making available different grades and sizes for differ-
ent use situations. It led the brand to command a pre-
mium in the market. STEELIUM was able to achieve
market leverage linked to pricing and negotiation. Thus
it was in a position to influence customers and distribu-
tors/dealers to remain loyal to the brand. STEELIUM
was primarily being sold through distributors’/dealers’
network. In 80 per cent of the cases, STEELIUM sales
were made by the distributors directly to the customers
while the remaining 20 per cent of the sales was man-
VIKALPA • VOLUME 35 • NO 2 • APRIL - JUNE 2010
Advertising, 38(2), Summer, 21-35.
Thompson, Scott A and Sinha, Rajiv K (2008). “Brand Com-
munities and New Product Adoption: The Influence and
Limits of Oppositional Loyalty,” Journal of Marketing, 72
(November), 65-80.
Seema
Independent Management Consultant
e-mail: seema_pandey_19@rediffmail.com
aged by the distributor-dealer chain. The key elements
of the delivered value included the product support serv-
ices which STEELIUM offered through the distributors-
dealers and supported by the manufacturer.
The ‘small customer’ segment which STEELIUM tar-
geted had sought consistency in value terms and also
assurance of availability for itself. The STEELIUM brand-
promise was an assurance of both consistency in deliv-
ered value as well as its availability. The STEELIUM
brand-promise was thus of superior quality, variety and
avoidance of discriminatory pricing and confidential
deals within the same area. This improved the produc-
tivity of many STEELIUM customers and saved them
from the hassles of buying odd-sized CRS which had
led them to losing yield earlier.
The brand faces challenges from ESSAR and JINDAL
STEEL that have the capacity, capability, and compara-
ble quality as that of STEELIUM. Also global players
like POSCO and MITTAL STEEL with their experience
of supplying CRS in the international market are set to
enter the CRS market in India. Thus, STEELIUM faces
the challenges of retaining its leadership position in the
CRS market and thus needs to find ways of retaining
the competitive advantage.
Key Challenges Mastered by STEELIUM
• Towards the building of STEELIUM brand, TATA
STEEL was able to create an environment of trust and
commitment among distributors/dealers and cus-
tomers. It realized that brand building would not be
137
 possible without the active involvement of distribu-
tors/dealers and their sales people.
• TATA STEEL was able to bring in professionalism
in the management of dealers/distributors and their
sales people and consistency in the dealings. It set
itself to monitoring and controlling retail prices so
as to ensure customers getting uniform prices at every
location. It was able to bring in customer orientation
amongst its distributors and dealers thereby leading
to superior value delivery for its customers.
• TATA STEEL was able to improve the service level
and service quality in the retail sales of STEELIUM
and introduced value added services with assured
quality standard for the brand. It further realized that
service advantage of the brand could not be copied
and service improvement made an ongoing activity
in collaboration with the dealers/distributors.
• STEELIUM introduced a location-wise floor price for
each of its grades. This ensured that the conflict be-
tween channel members on selling price and custom-
ers negotiating prices with channel members were
brought to an end. The distributors were educated
on charging fair prices from their customers (the dis-
tributors’ margins were taken care of through the
floor price)
• TATA STEEL ensured that STEELIUM got wide cov-
erage in media since its launch. One reason for this
however was that STEELIUM was the first CRS brand
in the Indian market.
• Training of distributors’ salespeople, support for
improvement in distributors’ operations and capa-
bility and managing the customers’ acquisition and
retention jointly with the distributors created strong
bonds with STEELIUM distributors.
Basis of Competition in the Branded CRS Market
Improved technology could be used by other players
and product quality could be improved by the competi-
tors in future. Competitors are expected to introduce CRS
of equal or superior quality in the Indian market soon.
Superior functional quality would not thus remain the
source of unique brand equity of STEELIUM. Thus the
future competitive advantage for STEELIUM was not
dependent upon the physical product but the value ad-
dition in terms of services. This was difficult to copy
and was a source of superior customer perceived value
which the brand enjoyed currently.
138
Competing on Customer Perceived Value in Future
Competition
The current source of superior customer perceived value
(based upon value addition in terms of services) for the
brand STEELIUM may be eroded because of the supe-
rior support services to customers offered by the entry
of MNCs to India.
To overcome this challenge, STEELIUM needs to acquire
new competencies towards achieving customer intimacy
and continue to be perceived as the fairest priced CSR
brand. Thus STEELIUM needs to continue to focus on
the ‘intangible sensitive’ customers. Establishment of
large and effective distribution networks by MNCs
would pose little problem to them due to their access to
vast funds. Also MNCs have global experience at their
disposal in setting up of distribution networks.
STEELIUM must be prepared to augment its current
capabilities leading to customer intimacy and relation-
ships of customers with distributor/dealers while of-
fering augmented and varied value added services.
Superior customer intimacy and relationship capabili-
ties leading to higher customer perceived value for the
‘service-sensitive’ segment holds the key to the brand’s
future.
Distributor Loyalty and Capacity
In the absence of capacity, the distributors may choose
to start a parallel business of distributing competitors’
products to meet their objectives of high turnover and
growth. Thus, capacity increase, which has been recog-
nized as a problem, needs to be pursued as it impacts
distributors’ loyalty and thus may impact the brand eq-
uity of STEELIUM. However, since it is forthcoming and
since TATA STEEL has already taken definite steps to-
wards this, this would be a problem in passing.
The Option of Getting Out of Service-conscious
Segment
This option of offering only stripped-down version of
the brand with essential services with lower prices would
destroy the first mover advantage which STEELIUM
enjoys. STEELIUM has de-commoditized STEEL and is
able to charge a premium. If it chooses to be a low end
brand to make Indian CRS market less attractive to MNC
entrants, it may become a me-too brand amongst the
Indian players and past effort towards brand building
DIAGNOSES
would be largely lost. Hence this option is not recom-
mended.
Initiating a New Venture of Steel Furniture
The major challenge would be for the distributors and
dealers to serve a different set of customers and be sub-
jected to a different set of guidelines. The stylish yet af-
fordable high quality steel furniture using STEELIUM
would give distributors opportunities for higher turno-
ver and growth. This would further cement the relation-
ship of the brand with the distributors. However,
support by TATA STEEL towards helping distributors
and dealers in setting up of manufacturing facilities
would be required. Also new learning and skills would
be required to understand the customers, competitors,
and collaborators. Capacity addition would have to be
pursued to set up this parallel business. This option is
The power of the brand name to consumers is a
shortcut — it provides a way to simplify things.
VIKALPA • VOLUME 35 • NO 2 • APRIL - JUNE 2010
recommended as it would allow the distributors/deal-
ers opportunities for growth and higher turnover
thereby strengthening distributor loyalty.
CONCLUSION
STEELIUM enjoys market leadership in India. To retain
its leadership position, it needs to recognize customer
perceived value as the source of its competitive advan-
tage. This would stand the brand in good stead as MNCs
would bring in functional quality and excellent distri-
bution and even compete at the level of intangibles.
Hence customer perceived value enhancement through
competence building for the service-conscious segment
in areas of customer intimacy and relationships is the
way forward. This added with increased capacity would
prepare the Brand STEELIUM to take on the competi-
tors, both Indian and MNCs, in the coming future.
— Kevin Keller
139