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We would like thank to Prof. C.V.A Prasad Rao for the support, assistance, cooperation and
useful insights which he provided us completely throughout the project. Without him it would
not have been possible for us to complete the project.

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îc rbjective of the project is to study 4 P¶s of marketing with respect to TATA STEEL LTD
îc To analyze 4 P¶s of marketing of TATA STEEL with other players and to find out
competitive advantage TATA STEEL has over its competitors
îc To understand buying behavior in case of Industrial Marketing

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The research methodology that has been adopted for this project is as follows.

îc The research was qualitative. As a part of qualitative research information was collected
from the available secondary information sources like
a.c Websites
b.c Company Reports
c.c News articles

îc rn the basis of the above information 4 P¶S of marketing pertaining to TATA STEEL
has been studied.c
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cTata Steel, formerly known as TISCr and Tata Iron and Steel Company Limited, is the world's
sixth largest steel company, with an annual crude steel capacity of 31 million tonnes. It is the
largest private sector steel company in India in terms of domestic production. Ranked 258th on
Fortune Global 500, it is based in Jamshedpur, Jharkhand, India. It is part of Tata Group of
companies. Tata Steel is also India's second-largest and second-most profitable company in
private sector with consolidated revenues of Rs 1,32,110 crore and net profit of over Rs 12,350
crore during the year ended March 31, 2008. Backed by 100 glorious years of experience in steel
making, Tata Steel is among the top ten steel producers in the world with an existing annual
crude steel production capacity of 30 Million Tonnes Per Annum (MTPA).

Its main plant is located in Jamshedpur, Jharkhand, with its recent acquisitions; the company has
become a multinational with operations in various countries. The company was also recognized
as the world's best steel producer by World Steel Dynamics in 2005. This helped the company
not only to establish a beachhead in seven countries across the region, namely Singapore,
Thailand, China, Malaysia, Vietnam, the Philippines and Australia, but also provided it with a
customer base for close to two million tonnes of steel.

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The Company¶s products consist of TSL products, produced by the Company¶s Indian operations
and its NatSteel and Tata Steel Thailand operations, and Corus products, and produced in the
United Kingdom and The Netherlands. TSL¶s products can be divided into three main categories:
1. Finished and semi-finished steel products;

2. Ferro alloys products; and

3. rther products and services, including tube products, bearing products, refractory products,
pigments, municipal services and investment activities.

Corus has four main product segments: (1) strip products; (2) long products; (3) distribution and
building systems; and (4) aluminum.

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TSL¶s finished steel products are produced at its Indian facilities, as well as in various Asia
Pacific countries by NatSteel and in Thailand by Tata Steel Thailand. TSL¶s finished steel
products can be principally divided into flat products and long products, including wires. In
addition, TSL also produces relatively smaller quantities of semi-finished steel, rings,
agricultural tools, and steel equipment.

The following table lists the various finished and semi-finished products TSL produces, as well
as the principal uses for these products and their principal markets

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TSL¶s ferro alloys segment produces chrome ore, pyroxenite and manganese ore as well as ferro
chrome and ferro manganese. Ferro chrome and ferro manganese are used by the steel industry to
create stainless steel products. TSL is the leading manufacturer of ferro chrome in India and the
leading manufacturer of chrome ore internationally.

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Corus has four main product segments: (1) strip products; (2) long products; (3) distribution and
building system products; and (4) aluminum.

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Uncoated strip products comprise hot rolled, cold reduced and electrical steels, which are sold
both in coil form and, cut to length, in sheet form. Corus is one of the market leaders in the
manufacture of coated strip products.

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Long products comprise sections and plates, and rods. Engineering steels also form part of the
long products division and are produced by the electric arc method as opposed to the basic
oxygen steelmaking method in the United Kingdom at Rotherham.

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HR Coil, HR plate and sheet, HRPr, HRSPr
Applications: Automobile, Boiler and Pressure Vessels, Ship Building, Railways,
Transmission Towers, ril and Petro Chemicals, Marine Containers, Coal and Mining
General and Heavy Engineering
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CR coil and Sheet
Applications: Automobile, White good, Cold rolled formed section, General engineering
& fabrication, Packing, Drums/ barrels, Furniture
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Galvanized Corrugated Sheet, GP Sheet and Coil
Applications: Automobile, Boiler and Pressure Vessels, Ship Building, Railways,
Transmission Towers, ril and Petrochemicals, Marine Containers, Coal and Mining,
General and Heavy Engineering.
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PPGI coil, PPGI sheet, PPGI profile
Application: Roof, Wall cladding and other building products, Household appliances,
Furniture, Automotives

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Pricing is one of the most crucial elements behind a successful product. It is more pragmatic and
fact oriented in industrial marketing as compared to pricing for consumer products. Pricing in
industrial marketing is closely related to the firm¶s product, distribution and communication
strategies.

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The most important factors which affect pricing strategies in steel industry are:

1.c Production Costs


2.c Market demand (derived in nature)
3.c Competition
4.c Government regulations

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Tata Steel is the lowest cost manufacturer of steel and keeping production costs low have played
a major role in achieving that. The following measures have helped Tata Steel in maintaining
cost leadership:

1.c Acquiring sources of raw materials in India and globally: Tata Steel has captive coal
mines in West Bokaro and Jharia. The mines in Bokaro have reserves of over 196 million
tones and the coke mine in Jharia can produce 1.9 million tones of raw coal annually. Its
iron ore mines are located in Noamundi and Joda and chromite mines at Sukinda
contribute to raw materials for Tata Steel.
Internationally, Tata Steel has 5% interest in the Carborough Downs Coal Project located
in Queensland Australia for low ash coal. The Sila Eastern Company has been established
to develop limestone mines in Thailand mainly for the captive use of Tata Steel.

2.c Capacity expansion: With the expansion of its Jamshedpur plant by 2012 and Greenfield
units in rrissa and Chhattisgarh becoming operational in 3-4 years, its manufacturing
capacity will jump to 21 mtpa. Acquisition of Corus has made Tata Steel one of the
largest manufacturers of steel.

3.c Technology: Tata Steel has developed several technologies that help in keeping
production costs low. Some of them are:
 c Process innovation and use of blue dust in sinter plants increased productivity by
60%.
 c Stamp charging technology was indigenously developed to convert low quality coal
to high quality coking coal. This reduced the import of coking coal.

All these factors and more have led to Tata Steel being the lowest cost, but still the best quality
steel manufacturer.

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Demand for steel is derived in nature since it is majorly used as an input. The following facts and
figures suggest that there exist healthy demand in market for Tata Steel to serve.

 c World consumption of steel is expected to be 1.23 billion tonnes in 2010 registering a


growth of 10% over 2009. The exports during 2010 are expected to be higher by
around 4% as compared to 2009.
 c In India, apparent consumption is expected to increase by more than 10% in FY 11
buoyed by expected strong performances from consuming segments like automotive,
construction, infrastructure and capital goods.

With economic and steel market conditions becoming more favorable and the steel producers
needing to recover the rise in input costs, it is anticipated that there will be a strong rise in the
steel prices in 2010-11. However, significant raw material price increases, interest rate tightening
and inflation may provide some downsides to an otherwise positive outlook for the industry.

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Existing and potential competition inevitably affects pricing strategy by setting an upper limit.
The amount of latitude a firm has in its pricing decision largely depends on the degree to which it
can differentiate its products in the minds of buyers.

Pricing strategy is also influenced by the anticipated reactions of competitors to pricing


decisions. Price reductions on products that are undifferentiated are generally met immediately
by all suppliers, resulting in little shift in market share.

The major competitors of Tata Steel in India are Steel Authority of India Ltd, JSW Steel Ltd and
Essar Steel Limited. ¬c & c c $ c c c c  c  $c  c c   c ' c
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primary steel-making facilities in India and look for finishing capabilities elsewhere. Greater the
volumes, lower the production costs and hence lower the prices at which its products are offered.

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A pricing strategy must be conceived in relation to overall business objectives and marketing
strategy. The success of any business depends upon a blend of long run profit, growth and
survival objectives. Price, because of its influence on unit sales volume and profit margins,
affects long run profit objectives. And maintaining profitability through sound pricing practices
is necessary to ensure the firm¶s survival over time.

The pricing strategy adopted by Tata Steel is the ^*c   c . This strategy is
based on the assumption that demands for the product is highly elastic. By setting relatively low

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price Tata Steel has managed to obtain large market share. The advantage of this kind of pricing
is that it discourages competition since there is less opportunity to reap unusual benefits on
investment. Since Tata Steel is in control of large iron ore deposits it has increased its capacity
manifold and so enjoys economies of scale. It has thus maintained prices of its products lower
than of its competitors and has increased the scale and efficiency of operations, since it has lower
production costs.

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The various competitors of Tata Steel are:

îc SAIL
îc JSW
îc Essar Steel
îc Ispat Industries

Recently in India the prices of steel have increased. Steel manufacturers like JSW believe that
increase in the raw materials i.e. the iron ore from the mines have led to this price rise. Many of
these manufacturers are now concentrating on backward integration just like Tata Steel wherein
the iron ore mines are also owned by the company which helps in achieving lower manufacturing
costs.

 +: They are moving ahead with a two prong strategy wherein on one side the focus is on the
domestic market catering mainly to rEM segment by servicing them with all value added
products customized to their requirement and on the other hand a special drive in the retail
segment will continue by opening of state-of-the-art branded steel retail is the largest players in
the private outlets with brand name ³JSW Shoppe´.

: Following are the strategies adopted by SAIL for effective pricing:

a)c Cost reduction and increased productivity through advanced technology and improved
processes.
b)c Production of value added and customized products to create niche markets
c)c Avoid inventory build-up and make production strictly market driven

 : Essar Steel is currently expanding its capacity at Hazira from 4.6 MTPA to 8.5 MTPA
and then to 10 MTPA. We can see that this is an attempt to cater the large market demand and
achieve economies of scale.
Essar Steel has pioneered the concept of steel retailing in the country through branded retail
outlets ± Essar Hypermart. This is primarily catering to SME segment.

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Place represents the location where a product can be purchased. But in industrial marketing place
is often referred to as the distribution channel.

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Tata Steel Limited delivers steel products to Indian customers through:
îc ?Direct supply channels,
îc ?21 stockyards,
îc ?25 consignment agents,
îc ?15 external processing agents and
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TATA Steel main distribution channel is selling branded steel through Mjunction.It provides
cutting edge of Information Technology, is a 50:50 venture of SAIL and Tata Steel. It is India's
largest e-Commerce company and the world's largest e-Marketplace for steel. Mjunction offers a
wide range of selling, sourcing and knowledge services that empower businesses with greater
process efficiencies.

Tata Steel initiated the first online e-Sale through Mjunction in the month of February 2002 and
since then has sold 221,259 MT. The products that Tata Steel has sold through MJunction are:
HSM Defectives, HSM PrR, GP Coils, LP Defectives, Prime Billets and Secondary Products.
The results have been extremely encouraging for Tata Steel, with products being sold to
customers all over the country. The prices obtained by Mjunction have been reflective of the
market situation.

The entire cycle time of selling materials has been reduced by the speed and efficiency with
which on-line competitive bidding events has been created and managed by Mjunction. Through
intensive market-making efforts and the use of technology, it is bringing in both, greater
efficiencies to processes and greater focus to the sale of non-core products of Tata Steel.

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Full Service on a business process outsourcing(BPr) mode Mjunction.com takes end-to-end
responsibility of selling client's low 'value' and/or standard products. It undertakes market
research and market-making activities to generate buyer leads. It also creates suitable market lots
to ensure maximum participation from buyers. Some of the other services provided by Mjunction
are conducting auction event fulfillment services, undertaking collection of payments, like
earnest money deposit and principal, ensuring fast and secure handling of money. It has tied up
with Citibank and HDFC Bank for collecting sales tax documents and managing customer
complaints.
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JSW Steel has launched JSW Shoppe to markets its steel products as compared to Mjunction
launched by TATA Steel. The exclusive JSW showrooms retail all types of JSW steel, ranging
from HR coil to colour-coated steel.

"JSW is looking at opening 600 retail outlets in the next two years time to market steel in the
country. The reason for such openings is to keep a check on the variation in steel prices from
company to company," JSW Vice Chairman and Managing Director Sajjan Jindal told in a press
interview.

JSW aims to provide a unique experience of buying steel products through branded distribution
channels. It started off with an idea to give a different feel and ambience to steel retail. JSW
Steel wanted to give a feel of a mini-departmental store or a mall, which would have the same
format, same look and feel wherever the buyer goes in the country. So, it will give a branding to
the distribution channel. It will also display all the products in one place so that the customer gets
a touch and feel of what the steel looks like. The smaller towns will be focus areas. The bigger
towns and metros will also have shops, but their focus is on tier 2 and 3 cities. If this takes off
properly, they propose to target 600 Shoppes in 2012. This will enable them to sell 600,000
tonnes a month, which comes to 7.2 million tonne a year (when the company opens 600 stores by
2012). By 2012, they are targeting at least 50% of sales through the Shoppes.

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As compared to TATA Steel,JSW Steel does not sell its products online.It is here that TATA
Steel has a competitive advantage.According to reports TATA Steel sell over 50% of its products
through Mjunction.The revenues through Mjunction has crossed 450 crores(INR) in the year
2009-10.As a result it serves as a huge platform for TATA Steel to sell its products without
incurring distribution costs.Its margins has therefore shown an upward trend in the past six years.

JSW Shoppe,the retail outlet opened by JSW Steel has started its operations in 2007 and yet to
penetrate the market whereas Steel Junction,the retail outlet of TATA Steel has already opened
its outlets in many places including semi-urban and rural areas.

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In B2B marketing advertising, promotions and publicity plays an important role in the
communication strategies. Hence, to contribute to the overall effectiveness of the promotional
strategies utmost care must be taken by the companies.
B2B promotion is used to create awareness of the company, to increase the sales of the product
and to increase the overall effectiveness of the selling efforts. The promotional programme
begins with carefully developed advertising objectives that must be formulated from corporate
and marketing objectives in such a manner as to set the direction for creating, co-coordinating,
and evaluating entire promotional programme.
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As one of India¶s most successful companies, Tata Steelcrepresents a great example of a strongly
branded B2B company. In 2001and 2005, Tata Steelcwas ranked the world¶s best steel companyc
in studies carried out by World Steel Dynamics Inc., USA (* ), a leading steel information
service provider.

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The profitability of the steel industry in India is generally linked to business cycles, reaping
profits when economy is going well and eroding them when it is in depression. In the late 1990s,
the Indian steel industry was experiencing a glut in the market which strongly affected the profit
margin of all related companies. To reduce its dependence on the external environment and
business cycles, Tata Steelcadopted a strategy which stressed the following two points:

îc Branding its products


îc Moving to high value added products.

The company soon realized that a strong customer focus is essential if any branding approach
was to be successful. It soon began to introduce   c   in order to bring the
customer-centric message to its employees. In the late 1990s, the company launched several
  c ^* c  to emphasize customer focus and service. The programs had
taglines such as:

³Customer first ± her haal mein´ (Customer comes first in any case),
³Customer first ± her haal mein, her saal´ (customer comes first in every case, every year),
³Customer ki kasam ± hain taiyaar hum´ (We pledge to the customer that we are ready for him).

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Source: www.tatasteel.com

To achieve this Tata Steelc set up a )    *c c in January 2000 to explore the
possibilities of branding TatacSteelcproducts. rnly three months later, the task force evolved into
a brand management department. Within this department they created the distinct sub functions
³market development´µ, ³order generation´ and ³order fulfillment´µ which were computerized,
enabling Tata Steelc to reduce its customer response time significantly. The company also
initiated the concept of § c c  0 who were authorized and empowered to
solve specific customer grievances immediately. The company furthermore sought to increase
customer interaction in order to better understand customer needs and to explore new and
improved ways to meet these needs and expectations.
Tata¶sc second area of key focus was to shift into the domain of high value added products. In
April 2000, Tata Steelc launched its first branded product, along with the commissioning of its
CRM plant.
Tata Shakteec is their brand for galvanized corrugated sheets. Eight months later the company
introduced its second brand, Tata Tiscon (re-bars) for rods used in the construction industry.
In February 2003, Tata Steelclaunched another product brand Tata Steelium. By September 2003,
Tata Steelchad three products as well ascthree generic brands in its brand portfolio

The leader of the company had decided that branding the commodity steel would provide them a
unique selling proposition in a great way. Branding Steel would help Tata Steelcin two big ways:

îc It would help stabilize the flow of revenues even during business downturns.
îc It would make premium pricing possible.

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The communication tools used for the brand launches were primarily

îc Print ads
îc rutdoor advertising.
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Yet, they also created TV commercials that portrayed signs of happy customers and employees
reveling in the concern the company had for them. ³We also make Steel´ was the punch line that
signaled the triumphant finale of that TV ad. Because of these initiatives undertaken by Tata
steel had put themcwell ahead of their competitors in promotional activities.

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Source: www.tatasteel.com

Because the corporate brand Tatacwas already associated with various products and attributes the
company decided not to put the main focus on it but to create sub brands with separate identities,
supported by the corporate brand as co-driver. They had learned from the European competition
that specialty product offerings and strong brand associations had guarded the market against the
low cost importers from the Far East.

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At the beginning, one of the major obstacles Tata Steelchad to overcome was its inexperienced
marketing personnel. Their knowledge of branding techniques was quite limited and moreover,
many of them had doubts about the feasibility of branding steel. As a solution they started
several training programs for them and organized seminars and workshops where experienced
people from other sectors came and spoke to employees regarding various issues related to
branding. It also formed separate marketing teams for its ³long´ and ³flat´ products, keeping in
view, the different approaches required for both. The positioning reinforces especially the
brand¶s leadership position, both in the market place and in the minds of the Indian consumer.

Source: www.tatasteel.com

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Tata recognized early that their employees were essential assets in the course of becoming more
customer-focused. Therefore it adopted a program of  c/c^  , under which
the company provided training to sales people recruited by the retailers to help increase sales. In
a region in northern India, for instance, sales teams trained by the company approached local
architects and convinced them of the advantages of using more steel, resulting in a doubling of
the market share of Tata Tisconcin that region. rne of the most important things in promotional
strategies is to know who you are actually messaging to.
rne of the major implications that Tata undertook in the course of their promotion efforts was a
concise target group check and distribution revamp. The company was actively involved in both
B2B branding and promotion. The B2B customers were mainly automakers Maruti, Telcoc and
Ford, who with their knowledge of steel helped the company to focus on product quality on a
holistic way, negotiating for specifications and discussing the advantages of using different
grades of steel.

Tata Steel realized that only 200 large industrial customers were providing the big chunk of its
total sales ± 80 percent ± while the remaining 20 percent were contributed to by around 5,000-
6,000 smaller customers. The logical consequence was to adopt different sales strategies for B2B
and B2C. For the 200 key accounts that made up for 80 percent of the sales, the company started
an extensive Customer Value Managementcprogram. Under this program they allocated a whole
team consisting of people from various departments of the company to one customer.

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From the beginning, the branding and promotional initiative of Tata Steelc showed impressive
results. It was found that the sale of branded products increased by 84 per cent.
The future expectations and prospects of the company are also very positive. Today, Tata Steelcis
already one of the best branded names in steel industry and has already started initiatives in the
co-branding arena with high end customers like Ashok Leylandcand Telco.

Looking to the future, Tata Steelc has announced that the company would be focusing on 
)  c   $ c with its high-end customers such as Telco, Ashok Leyland. Company
sources say that initially Tata Steelc would be focusing on the automobile sector; later the co-
branding initiative will be expanded to the consumer durables sector also.

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The main competitors for Tata Steel are


îc Ispat
îc SAIL
îc JSW

However if we look at the promotional activities undertaken by JSW and SAIL we can see that
Tata Steel is well ahead of them in promotions.

JSW basically uses two types of promotional activities

îc Print media (business magazines, trade publications and industrial directories)


îc Direct Marketing (direct mail, catalogs and data sheets)

In case of JSW Catalogs and data sheets are the main part of their promotional effort .However
the main drawback is that rarely catalogs alone are used to make a purchasing decision. They
nearly provide buyer with the basis of comparison with other companies¶ product once the
decision has been made to purchase a particular product. Data sheets provide detailed technical
information about the product. But sometimes it is a case that sales people seldom have all the
answers that the buyers require. However Tata Steel is quite instrumental in its promotional
activities as compared to its competitors. . Therefore it adopted a program of  c /c
^  , under which the company provided training to sales people recruited by the
retailers to help increase sales.

They have used all channels of promotions to market their product and has equally emphasized
on its promotional activities as compared to its competitors. Because of this there is tremendous
increase in its sales and Tata Steelcis already one of the best branded names in steel industry and
is well placed ahead of its competitors.

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There are normally three types of buying behavior exhibited in the industrial buying: New task, Modified
Rebuy and Straight Rebuy. In case of Tata Steels purchases most the buying is Straight Rebuy and
Modified Buy. Sometimes the specifications and quality has to be modified and that comes under the
Modified Buy.

The role of buying center is very important while buying the material. The buying center comprises of
people from the organization who have sufficient knowledge about the raw materials. In the purchases of
raw materials the major members are the purchase manager, safety engineer, General Manager, vice-
president of operations and mining engineer. These people with their specialized knowledge prepare the
initial draft of the specifications, identify the raw materials that meet those specifications, shortlist the
suppliers, have detailed discussion about the products and negotiate their prices..

Let us explain the phenomena with an example: Suppose an automobile manufacturer wants to go for
buying of steel for manufacturing the automobile, the following procedure will be followed:

1.c The company will understand the need and characteristic of the need.
2.c The company will search for possible suppliers and will contact them..
3.c The supplier like Tata Steels will send their sales representative to interact with the company
personnel
4.c The sales representative will brief on the product specifications and suggest the tonnage required
after considering various factors like size of automobile, quality of steel offering, size of sheets,
flat or rolled.
5.c Based on the interaction the buyer may ask one particular company for a proposal or a group of
companies to submit their proposals.
6.c The buying may be done on the basis of evaluation of the proposals.
7.c In case of one company being asked for a proposal there will be a series of negotiations on price
as well as specification till the final deal is struck.
8.c The   in this decision maybe the administrative officer who looks after the upkeep and
administration of manufacturing department.
9.c The #c * will be the Public relationship department of the company and also the
secretary of the manager who filter the information reaching the buying centers.
10.c The   will be the director of the company who has the formal authority to finalize the deal
and actually will make the final decision. He will communicate his decision to the manager who
in turn will finalize the deal.
11.c rnce the deal has been finalized contract will be signed between the parties.
12.c This is an example of a 'c¬ *cin buying.

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After understanding the 4P¶s of marketing pertaining to Tata Steel it was found out that Tata
Steel has implemented the marketing mix better as compared to its competitors which has given
them an edge and thus it is one of the leading steel manufacturer in India. Apart from that there
are several advantages that Tata Steel has which gives it competitive advantage.

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rne of the biggest strengths of Tata Steel was that it had captive sources for all key raw
materials: coal, iron ore, and limestone. The company began to harness its unutilized deposits
of iron ore at Joda in rrissa

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The company had, over the years, accumulated large quantities of very fine iron ore called
blue dust (an iron rich ore which is as fine as talcum powder), which was a by-product of
iron-ore mining operations

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Until the late eighties, Tata Steel, like all other steel manufacturers in India, was importing
large quantities of coking coal as Indian coal has high ash content compared to imported coal
and cannot be used as coking coal

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The company embarked on several steps to become self-sufficient in its fuel needs. Earlier, it
used large quantities of liquid fuel from one of the petroleum refineries. Significant process
changes enabled the company to totally stop the use of liquid fuels.

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Many of the initiatives discussed above resulted in improving the performance of the existing
assets. Simultaneously, the modernization of the facilities became an important focus area.

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The top management of Tata Steel was part of a delegation organized by the Confederation
of Indian Industry (CII) in the early nineties to study how the Japanese implemented quality.
They found vast differences between the quality practices in Japan and India.

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1.c http://www.tatasteel.co.in/
2.c http://www.tatasteel.com/
3.c http://www.jsw.in/
4.c http://www.jindalsteel.com/
5.c http://www.dnaindia.com/money/report_jsw-sees-50pct-steel-sales-from-retail_1259258

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