I.
similar quality. It’s only the end products
Steel as a Raw Material
Tata Steel (Tisco) is one of the few companies to brand its stainless steel. Global steel companies like Posco have moved a long way in branding. For instance, Posco sends branded stainless steel to India which is used for marine
(that use the stainless steel as a raw material) which are commonly branded. Stainless Steel Production will up to 4 Million Tons by 2015. Double digit growth in Stainless Steel Consumption (10-12%)
Growth
in
Stainless
Steel
Consumption is about 1.2 Times GDP.
containers.
Some of the opportunities in the Indian Until a few years back, sale of basic
Steel
stainless steel products under a brand name
considered as a material of choice,
was limited. But today, feasibility to brand
Increase in Consumption Levels /Market
basic stainless steel products like sheets
Size,
that are finished for use on consumer
Applications, New Products/Segments are
durables and cars is also being explored.
being created, Increase in demand pattern,
Does branding work in the stainless steel
Industrial Applications increasing faster.
business? Consultancy giant Booz Allen
Future Applications include Bus Body,
once demonstrated how smart strategies
LPG Cylinder, Cycle Rim, Plumbing,
and business processes could be used to
Hospital Furniture, Water Tanks and
brand commodities or even sand, if
Modular Toilet in Trains.
necessary
and
create
a
relationship
between suppliers and buyers. II.
Indian Steel Market
Stainless Steel is sold both in the B2B Market as well as B2C Market. It has seen a tremendous growth in usage. Today, the consumption is approx. 2,000,000 MT per annum. There are a number of different systems for grading stainless steels. The grade decides the quality of the stainless steel and stainless steel made of the same grade by different manufactures are of a
III.
Market
are:
Stainless
Increasing
Steel
Downstream
Likely Benefits of Branding Steel as Raw Material
In the Stainless Steel Market where quality and benefits are virtually indistinguishable, Branding is likely to make purchasing decision easier. Branding Stainless Steel is likely to command a premium price. Branding is likely to create trust and an emotional
attachment
and
positively
influence the buying decision. Branding likely to ensure a higher recognition and recall and can promise repeat business and customer
loyalty
(End
Customer
or
Business Customer). Branding will give opportunity to the company to grow – Intensive, Integrative & Diversification. And will make it possible to explore global markets. Branding will help maintain a strict quality standard. Branding is likely to reduce the threat of substitutes like aluminium products. Branding is important due to ever-increasing advertising clutter, media fragmentation, the commoditization of products, and the seemingly limitless choices customers are offered. IV.
V.
Insights of B2C Market
To understand the impact of branding of steel as a raw material in the B2C Segment, we conducted a survey across different cities in India. We sent the questionnaire
to
approximately
1000
respondants across the age group of 18 Years to 60 Years and received response from 168 respondents. To make the study unbiased,
we
covered
respondents
according to their profession - Unskilled Worker, Petty Traders, Shop Owners,
Possible Challenges in Branding Steel
Business with no employees, Business
as Raw Material
with 1-9 employees, Business with 10+
As the stainless steel has a quality grade
employees, Self employed professionals,
according to its composition, B2B and
Clerical, Salesman, Supervisory Level,
B2C Consumers might be unwilling to pay
Junior Executives, Senior Executives,
a price premium for branded stainless steel
Student (Under Graduate), Student (Post
as a raw material. The cost of branding and
Graduate), Housewife and Retired. We
brand
be
also tried to maintain a balance across the
financially viable and marginal returns of
respondents in terms of their annual house
this this investment might not be high. For
hold income and divided our respondents
the stainless steel industry, the branding
according to
activity might not affect the brand equity
income. Our respondents belonged to the
as expected.
following groups – 0-3 Lakhs, 3-6 Lakhs,
endorsement
might
not
their
annual
household
6-9 Lakhs, 9-15 Lakhs and 15+ Lakhs. We The problem can be better understood by considering a set of hypothesis which we have qualitatively analysed by conducting surveys and face-to-face interviews in the B2B and B2C Segment.
found out that 26% of the respondents had an annual household income of less than 3 Lakhs, 40% of the respondents had an annual household income of 3-6 Lakhs, 17% of the respondents had an annual household income of 6-9 Lakhs and 17%
of
the
respondents
had
an
annual
household income of 9-15 Lakhs.
We asked the respondents if they were involved in buying stainless steel products themselves. 64% of our respondents said
Annual Household Income
that they were sometime or the other directly involved in buying stainless steel
17%
< 3 Lakhs
26%
17%
product.
3-6 Lakhs
40%
Around
36%
respondents
mentioned that they were never ever
6-9 Lakhs 9-15 Lakhs
involved in buying stainless steel products. Directly Involved In Buying Stainless Steel Products
Figure 1: Annual Household Income
36%
Out of the respondents, 81% were male
Yes 64%
and 19% were female.
No
Respondents By Gender Figure 3: Involved In Purchase
19 81
Male
We asked the respondents about their
Female
buying preference when it came to
Our respondents came from different educational background like Illiterate, Literate with no formal education, School upto 4 Years, School 5-9 Years, HSC/SSC, college
Graduate/Post Graduate/Post
but
not
graduated,
Graduate
General,
Grad
between
branded
end
branded
products
like
and
non-
utensils,
cookware etc. 95% of the respondents
Figure 2: Respondents by Gender
Some
deciding
Professional.
We
conducted survey for the last four groups by a survey form created on google
mentioned that they prefer branded steel products to unbranded products. They believed that branded steel products are more reliable and durable and even though they change a premium, it is advisable to buy branded products only. A small percentage however was extremely price conscious and preferred unbranded steel products.
documents. For the first four groups, we
We asked the respondents if they were
took a face-to-face interview and got the
satisfied with the quality of steel products
survey filled.
that they were presently using. 88% of the
respondents said that they were at present
Advantage Of Using Branded Steel As Raw Material
satisfied with the quality of steel products
interesting to know that 95% of the respondents believed that using good quality branded steel as a raw material in end products like Cultery, Cookware etc
No Advantage
is an idea worth looking at, it was
Percentage of Respondents Conformance To Quality
material to manufacture end steel products
Post Sales Services
thought, using branded steel as a raw
Ease of Ordering
When we asked the respondents if they
Trust & Safety
used in the end steel products.
Reliability
were not satisfied with the quality of steel
80% 70% 60% 50% 40% 30% 20% 10% 0% Durability
they were using. 12% of the respondents
would make the end product more trustworthy and of higher quality.
Figure 4: Perceived Advantages of Using Branded Steel
When asked whether branding of steel as a
(People could select more than one
raw material and using it in the raw
benefit, so percentages may add up to
material is likely to reduce dissatisfaction,
more than 100%)
48% of the respondents were in favour of it. However 19% of the respondents felt that it would make no difference. 33% of the respondents however were not sure of the benefits and could not take sides.
When we asked the respondents, the potential benefits of using branded steel as a raw material of end steel products, the respondents
primarily
focussed
on
Durability, Reliability, Trust & Safety and Conformance to Quality. The respondents also mentioned that Ease of Ordering and better Post Sales Service were some other benefits that come along. It was interesting to find out that not even a single respondent believed that there was no advantage. We asked the respondents if they would prefer branded steel as raw material in the
end steel product, 81% of the respondents
Acceptable % Premium
said yes. 12% however were not in favour while 7% of the respondents had no
2%
opinion.
None
0% 2% 21%
Using branded steel as raw material would
1%-5%
26%
5%-10%
come at a premium and we were curious to
48%
10%-15%
know how price sensitive the respondents
15% -20%
were. We found out that 81% of the
>20%
respondents were willing to pay a price premium to have branded steel as raw material in the end steel product.
Figure 5: Acceptable % Premium
We were also curious to know how much
93% of the respondents mentioned that
premium the respondents were willing to
they would like to purchase steel end
pay for buying an end steel product made
products which use branded steel as raw
from branded steel as raw material. We
material.
found out that 69% of the respondents were willing to pay a premium between 5%-15% of the price of end product which uses unbranded steel as raw material. 26% of the respondents were willing to pay only less that 5% premium while a negligible percentage of respondents were fine with paying a price premium of more than 20%.
We also found out that 21% of the respondents had heard about Beacona Steel
Pvt. Ltd.
while 79% of the
respondents had never heard about the company. When asked their preferred way to know more about the company and use of branded Beacona Steel as a raw material for steel end products, they mentioned that TV Advertisements, Newspapers, Bill Boards, Kiosk in a Shopping Mall were most
preferred.
Some
respondents
however also preferred a visit by company representatives at home for demonstration.
Industries, Manoj Metal Works, Ishwar
Preferred Advertising Media
Chandra & Sons, Kashish Enterprise, 80%
76%
R.K.Cutlery Works, Sagar International.
70%
64%
We took a telephonic interview of point of
60%
60%
contact from these companies and got
50%
good insights. The major reason for buying from Beacona Steel Pvt. Ltd. can be
40%
31%
summarized as best quality, competitive
30%
pricing, and flexible and efficient supply
20%
12% 5%
10%
2%
5%
chain. For the B2B Market Segment
2%
0%
Quality is the primary factor for all players to buy from Beacona Steel Pvt. Ltd. All
Other
Kiosk in a Shopping Mall
Visit by company representative at home.
Phone Call from Companies
SMS Advertisements
Advertisements on EMail
Bill Boards
Newspapers
FM Radio Advertisements
TV Advertisements
0%
the customers mentioned that Beacona’s steel is of high quality. The customers also mentioned that there is a small marginal difference in price between Beacona and others, Beacona’s steel being on the higher side. However this price difference is overlooked considering the assurance of quality from Beacona. Accuracy and precision are yet other attributes which
VI.
Figure 6: Preferred Advertising Media
B2B Customers think Beacona Steel is
Insights of B2B Market
good at. The Customers are of the opinion
Beacona Steel Pvt. Ltd. has a rich customer base in the B2B Market. To better understand how the B2B Customers perceive the overall value of buying steel from
Beacona
Steel
Pvt.
Ltd.,
that Beacona Steel takes extra care to remove the stain and other marks from the steel. In traders’ words “Daana saaf hota hai” and quality bhi achi hoti hai”.
we
Relationship with Mr. Bengani, MD of the
contacted the B2B Customers - Annapurna
Bengani Group is also an important reason
Industries, Malbro Appliances, MVM
why customers prefer to buy from Beacona
Handicrafts Pvt. Ltd, Balaji Metal, Anmol
Steel. Most of the traders said that they
Metal Industries, Kanchan Enterprise,
have family like relations with Mr.
Million Metroll Agency, Shankar Metal
Bengani and hence they buy from him.
Quality processing of Beacona’s re-rolled
such products would raise their input costs
steel is an added advantage. The B2B
and hence they prefer other manufacturers
customers feel that Beacona’s steel is
for such demands. But where they need to
processed with the best technology and has
produce quality products, they go only for
high precision in width and length and that
beacona.
the company is very adaptable to their product requirements. They also feel that Beacona is very flexible in terms of size variation. The customers generally have different size requirements for different end products and beacona is flexible when it comes to size variations. The customers also appreciate the fact that Beacona handles variation in demand very well. Most of the traders said that if they have some extra requirements during festive season then beacona is able to meet their demand. But Beacona Steel isn’t the only company from which these customers mostly buy steel. Some dealers buy from mills that provide low quality steel so as to save costs and produce lesser quality goods as some of their customers are not quality conscious but are very price sensitive. Each area has a demand pattern depending on the consumer profile and demographic base. There is a market for cheaper goods in such areas where the consumers are ready for a quality and price trade-offs. So in order to meet such demand they buy from steel mills that produce lower quality cheaper re-rolled steels. Using Beacona for
Some of the B2B customers buy from various sources because they have high demand which they believe can’t be met by Beacona alone. Hence they have their network
of
suppliers
to
meet
their
demands. A few B2B customers however also buy from other companies because of the recent quality degradation on the part of beacona. On being asked why they still buy from Beacona, they said that it was because of their relations with Mr. Bengani. B2B customers who were interviewed basically fall into two categories: 1. Small scale players- manufacturers who meet domestic demands. 2. Large scale players- National and Export. When asked whether or not the B2B customers would like their end product to have a logo certifying that the product uses Beacona as a raw material, Small scale players were in favour of branding. They feel if beacona promotes itself and develops itself into a strong brand and
awareness then it would benefit mutually. They feel that it would promote their products too. Since they are small and medium sized firm and can’t go for promotions
themselves,
branding
CONCLUSION
Based on the interview with the B2C and the B2B Customers, we have concluded the following:
of
beacona will give them a competitive
Branding of Beacona Steel as a raw
advantage over other local manufacturers
material will be able to differentiate a
and help push sales. But when asked
highly similar product like stainless
whether or not paying a premium was
steel as a raw material and will enable
acceptable, they were apprehensive about
Beacona to charge a premium for a
it. But they did agree that they would be
similar quality grade stainless steel.
willing to pay a very small premium as
B2B and B2C Customers appreciate
long as they thought they stand a chance to
the intangible benefits of branded
gain sales in the market. But they also said
stainless steel as a raw material and are
that if the premium is high then they
willing to pay a price premium. In
would prefer to buy from somewhere else.
Figure 5, we see that 69% of the
On the contrary, the large scale players
respondents were willing to pay a
who manufacture utensils and other things
premium between 5%-15% of the price
for export were averse to using the
of end product which uses unbranded
beacona name in their end products. They
steel as raw material. 26% of the
argued that they wanted to gain the
respondents were willing to pay a
maximum recall and benefit that they
premium between 0-5 Percent. We also
could get from the export. “Unka naam
observed many of the small scale B2B
daal denge toh humara product kaha reh
Customers are in favour of Beacona
jayega”, was the statement of one of the
Steel branding its steel if there is a
B2B Customer. They were apprehensive
strong brand image in the market. The
about the fact that using beacona’s name
big players although apprehensive right
would dilute their brand name.
now about using Beacona Logo in their end product are likely to change if they
Some of the dealers however were neutral to the issue. They felt that such a step would not affect customer’s opinion or sales in the market and hence found branding as an irrelevant move.
realize that there is a growing demand for Beacona Steel to be used as a raw material by the B2C Customers.
Branding stainless steel as a raw material
would
increase
that this proposition is financially
brand
recognition & recall and would trigger repeat purchase and customer loyalty.
viable. Branding of stainless steel as a raw material would impact Brand Equity
Branded Stainless Steel as a raw
positively
material or end products using branded stainless steel as a raw material are perceived
to
conform
to
quality
and
thus
benefit
the
company/group in the long run. Branding of stainless steel as a raw material
standards and are considered to be
reduces
the
threat
of
substitutes like aluminum.
more reliable than similar quality grade unbranded stainless steel . In Figure 4,
However, it is very crucial for the
we saw that the respondents believed
company to build Beacona into a strong
that branded steel as a raw material is
brand. Even though customers prefer to
better
buy end products which use branded steel
in
terms
Reliability,
Trust
of
Durability, and
as raw material and are willing to pay a
The
price premium, it is imperitive that the
respondents also mentioned that Ease
customers are well aware of Beacona Steel
of Ordering and better Post Sales
as a brand and associate good attributes
Service were some other benefits that
like Durability, Reliability, Trust & Safety,
come along.
Conformance to Quality, Ease of Ordering
Conformance
to
&
Safety
Quality.
Using branded stainless steel as a raw material adds to the value perceived by the customers.
and better Post Sales Service to the brand. In the section below, we discuss some strategies to build Beacona as a stronger brand in the B2B and the B2C Segment.
Branding of stainless steel as a raw
VII.
Branding Strategy for B2B Scenario
material is financially viable and costs
We can match our product more in terms
involved for branding and brand
of customer’s requirements, specifically in
endorsements. Considering the fact
terms of the end product it manufactures.
that 81% of the respondents were
Provide the B2B customers with some
willing to pay a premium for use of
value addition so as to increase the
branded steel as raw material shows
inclination towards buying Beacona.
sustainable
considering
the
Some of the value additions that can be
Depot and Big Bazar manufacture utensils
done
Quality
using private labels and procure steel for
Inspection, and Guidance on size and
the same. Beacona can get in touch with
width to order based on end product.
these chains and provide steel to them and
are
Coating,
Shining,
Setting up stalls at export houses and other trade Expoâ&#x20AC;&#x2122;s: These places are frequently visited by various manufacturers who are potential
Beacona
clients.
These
manufacturers should be explained about the high quality steel that Beacona is highly competent at and also competitive pricing and flexibility in demand and size they offer. Through these Beacona can gain awareness among the manufacturers.
give them certain benefits and value additions in return of the products that specify that it uses Beacona steel as a raw material. VIII.
Branding Strategy for B2C Scenario
Customer Education: Beacona can run a campaign where it educates consumers about the benefits of using stainless steel and
also
teach
them
how
proper
maintenance can increase the life of the
B2B
product. The campaign can be a door to
Buyers: At Present all the buyers are
door campaign or a mass promotional
Utensils and plates manufacturers. New
event. Customer engagement is ensured
products types, that use steel, are being
first by guiding them first about the proper
increasingly made available in the market.
and safe way to use stainless steel
Such products are durable, comparatively
products. Once customer engagement is
price competitive and stylish and hence
achieved, the companyâ&#x20AC;&#x2122;s representative
have a high purchase among consumers.
can go about educating them about the
Beacona should target such manufacturers
standardization of steel used as a raw
and try to sell its steel to manufacture thse
material and then covey to them how
products. Though these are not steel
Beacona
satisfies
intensive products but fairly use large
criteria.
Through this we can build a
quantities
personalized
Shifting
customer
of
base
re-rolled
across
steels.
With
the
standardization
relationship
with
the
branding of beacona, these relatively new
consumer and build trust, awareness and
products will gain credibility and hence a
strong position among them.
win-win for both the sides.
Trade fair and Expos: These are frequented
Tie-Ups with retail houses selling Steel
by consumers and setting up a stall at these
products: Retail chains such as Home
places would increase awareness about
Beacona among the customers. Both the
effective and efficient implementation of
above mentioned steps will achieve the
brand personality-building program. We
following:
would measure the impact and feed back
to the re-designing of the brand personality Increase in Brand Awareness and Brand Consideration
Increase demand of branded raw material and thereby demand for premium products.
Decrease the threat of substitutes like Aluminum and encourage the usage of stainless steel products among users.
Also
encourage the
usage of
stainless steel among various other product
categories
like
stacks,
shelves etc.
IX.
Future Work
In the days to come, we plan to contact some of the companies like Pigeon, Glan, Prestige and Bajaj who currently do not buy from Beacona. We plan to set up a meeting with some of their decision makers to understand why they are not buying steel from Beacona and identify some common issue which when resolved might help Beacona to make a giant leap in business. We also plan to get insights about the Beacona Brand from its B2B Customers
by
conducting
personal
interviews and focus group discussions. With the knowledge of the Strategic Intent of Beacona,
we would begin with an
elements and programs.
Team Members Aditya Zutshi Aditya Zutshi is pursuing MBA from VGSoM, IIT Kharagpur (Batch 2009-2011; Marketing & Finance) and is the PLACEMENT COORDINATOR. He is the BRAND AMBASSADOR of BRITISH AIRWAYS INDIA. As a part of the MBA Program, he interned with NODWIN Consultants as a Management Consultant during May -June 2010 and Consulted Essar Oil Ltd. for Non-Fuel Revenue Strategy and Jindal Steel and Power Ltd. for Process Improvement of Bank Guarantees. He has had 3 years of diversified work experience in Tata Consultancy Services in Investment Banking Domain, Multimedia Semantics and Virtual Worlds and was awarded the prestigious TCS CEO's Award besides many others. His White Paper on "A Study of Virtual Environments for Enterprise Collaboration" has got international acclaim and has been published in Association for Computing Machinery, Inc.(ACM) in Proceedings of the 8th International Conference on Virtual Reality Continuum and its Applications in Industry. He aspires to pursue a Career in Marketing or Management Consulting. For More Details, please visit www.adityazutshi.com
Sourabh Agarwal Sourabh Agarwal is an Electronics and Communications Engineer. He interned for two months at IMRB International where he worked on various projects including Pack design test, Brand Analysis, Product test, etc. He is currently pursuing his MBA from Vinod Gupta School of Management, IIT Kharagpur.