Soon after Indian steel industry freed from regulatory controls in 1991, all controls on pricing and distribution were removed. So Indian steel industry got the competetive edge and companies became more market focussed. Globalized outlook of customers, put pressure on steel manufacturers to add value, and incresing information savvy made the market prone to competition.
Tata Steel, established in 1907 by J.N.Tata commenced its production in the year 1911. The opening of economy made the steel industry face huge glut that affected the profit margins of the companies significantly. The Industry was staring at inefficient operations, excess capacity, project delays and a big steel plan mindset. The concept of serving the customer was hardly practiced. In order to beat the ups and downs in the industry and to face emerging competition, Tata Steel started a branding exercise to achieve revenue stability and an ability to charge premium prices. It realsied that the old way of selling steel is no more a winning proposition and aggressively positioned its products as superior brands to reckon with.
The company launched many internal campaigns in the 1990s for the employees to identify with and align themselves to the objectives of customer service and product. The company set up a branding task force to explore the possibility of branding its steel products. This task force was divided along three functions-market development,order generation, and order fulfillment.The entire sales and marketing team was overhauled and brought on a par with the best practices of the top global steel companies. The changes were carried out with respect to three crucial elements-product,distribution and service.
Inorder to decommoditise steel, the company launched product brands in the identified markets. It realised that the premium on branded products was higher than the non-branded ones. In order to assure the market about the authenticity of products, the brands/names were embossed on them. During this time brands like Tata Shaktee, Tata Tiscon was launched.
To support the branding effort, Tata Steel launched Retail Value Management(RVM) in the year 2002 a model which was usually adopted by FMCG companies. Under the RVM initiative aggressive market mapping,education of traders, and idea generation were undertaken.
In the brand journey of Tata Steel, the simplicity of rules permeated across profit centres. These rules were uniform and measurable and pertained to the brand and channel service partners.Some of the rules are:
1.The field should adhere to brand guidelines in terms of logo, colour scheme, by-line, positioning, and ad campaigns.
2.The brand will be sold only through an authorised service partner.
3.The brand will be positioned as a premium product over all other players.
4.The retailer shops should adhere to the brand guidelines.
Tata Steel shows us how an initiative in branding could organise a market.
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