Branding a Commodity - The Tata Steel Way

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Case Details:

Case Code : MKTG083
Case Length : 13 Pages
Period : 1990-2003
Pub Date : 2004
Teaching Note : Available
Organization : Tata Steel
Industry : Manufacturing
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"To beat the industry trend in a situation of over-supply we need to move away from selling commodities into marketing brands. Even as we will continue to leverage and take to greater heights the value of the TATA brand, there will be efforts to create new images and associations for our services and products in current as well as new businesses"

- Tata Steel Annual Report 2003.

"Branding will give rise to a customized product in terms of value, performance and pricing; it will meet our customers' needs better. Branding will go a long way in meeting the challenge of gaining a sustainable competitive edge."

- Mr. B. Muthuraman, Managing Director - Tata Steel, in February 2003.¹

Steeling the Show

In February 2003, Tata Steel invited the media to Goa for the nationwide launch of a brand. Brand launches are a regular affair for companies, but this was different - it was the launch of a Steelium - a new brand of steel. Tata Steel has been launching branded steel products since 2000.

Company sources felt that branding Steel would help Tata Steel in two big ways: 1) it would help stabilize the flow of revenues even during business downturns, and 2) it would make premium pricing possible. However, the company would need to work hard to make this new concept of branded steel work. Prior to launching branded steel products, Tata Steel took various steps to become more customer-focused.

In the late 1990s, the company undertook internal campaigns to focus the attention of its workforce on customer orientation and service. Tata Steel also made changes in its distribution system. On the recommendation of consultants, Booz Allen Hamilton, the company introduced the hub and spoke model to reduce expenditure on logistics.

It also revamped its distribution system in the B2C segment. The initiatives paid off and the share of branded steels in total sales increased over the years.

Background Note

Tata Steel was established in 1907 by J N Tata² at Jamshedpur in Bihar, India. The company commenced production in 1911 with a capacity of 0.1mn tonne of mild steel³. By 1958, its capacity had increased to 2 mn tonnes. Over the years, Tata Steel acquired many companies. In 1973, it acquired some flux mines and collieries near Jharia, West Bokaro⁴.

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1] Tata Steel Launches Steel with Soul, www.tata.com, February 27, 2003.

2] Jamshedji Nusserwanji Tata (J N Tata) was the founder of the Tata Group of companies.

3] Steel with less than 0.15% carbon is known as Mild Steel. It is also known as low-carbon steel and soft cast steel.

4] Initially Bokaro was in Bihar. Since 2000, Bokaro has been in Jharkhand, the new state carved out of Bihar.