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1.
Percentage of carbon
Mild steel
Up to 0.30%
Medium
carbon steel
0.30% to 0.60%
High
steel
Alloy steel
Alloy Steels are made by combining steels with one or more elements. These
elements are usually metals. They are intentionally added to obtain properties that are not
found in plain carbon steels. Example of the elements are Cobalt , Nickel and Vanadium .
Properties of steels
The properties of steel are closely linked to its composition. For example, there is a big
difference in hardness between the steel in a drinks can and the steel that is used to make
a pair of scissors. The metal in the scissors contains nearly twenty times as much carbon
and is many times harder. Changing the carbon content changes the properties of the
steel and the way that it is used.
The heat treatment given to steel can affect its properties too. Cooling red-hot
steel rapidly in cold water makes it harder and more brittle. We could have made the
same piece of metal softer by keeping it at red heat for longer and then cooling it slowly.
Heat treatment is another method that the steelmaker uses to make the properties of the
steel match the job it has to do.
Application of Steel
Steel is both the most widely used and most recycled metal material on earth.
FromStainless and high temperature steels to flat carbon products, steel's various forms
and alloys offer different properties to meet a wide range of applications. For these
reasons, as well as the metal's combination of high strength and a relatively low
production cost, steel is now used in countless products.
Steel applications can be divided into five sectors:
Construction
Transport
Energy
Packaging
Construction:
The majority of steel goes to the construction industry. Sustainable steel structures can be
built quickly at a low price. Steel, in its various forms and alloys, can be designed to meet
the requirements of unique projects, which allow it to be incorporated into infrastructure
in all environments. Depending on the conditions that the structure is exposed to, steel
can be alloyed or surface treated differently for protection.
Applications
reinforced concrete
harbours
tunnels
security fencing
Transport:
Engineering steels are wrought steels that are designed to have certain specific levels
of elasticity, strength, ductility, and corrosion resistance. They are used in the general
engineering and manufacturing sectors, but the bulk goes to transport vehicles.
Steel accounts for over 50% the weight of an average car. Advanced high-strength steels
(AHSS) are used in vehicles; it is a lightweight material that requires less energy to
produce and reduces CO2 emissions.
Different types of steel are used for the car body, doors, engine, gearbox, steering,
suspension, wheel axles and interior.
Besides the automotive market, steel is found in transport materials such as:
trucks
transmissions
trains
rails
ships
anchor chains
aircraft undercarriages
Energy:
All segments of the energy sector, including nuclear, wind power, electric and natural gas,
demand steel for infrastructure. Steel is also used for resource extraction, such as in
offshore platforms, earth-moving and quarrying equipment, cranes and fork-lifts. Due to
the demanding environments, carbon, micro-alloyed, high strength and stainless steels
are all used in the production of offshore platforms and pipelines.
pipelines
electricity pylons
wind turbines
transmission towers
electromagnets
transformer cores
electromagnetic shields
Packaging:
Steel packaging protects goods from water, air and light exposure, and is fully recyclable.
This method of storage has been around for over 200 years.
Steel allows for high-speed filling and lightweight, easy to open packaging. Packaging
steels are often made from low carbon cold-rolled steel strip and are surface finished. The
steel is tin plated to prevent corrosion and then coated with polymer, lacquered and
printed. The majority of steel packaging goes towards food and beverage container,
followed by general line, aerosols, and closures (e.g. bottle caps).
Appliances and Industry:
About 75% of the weight of typical household appliances comes from steel. Steel is found
in appliances like fridges, washing machines, ovens, microwaves, sinks, cutlery etc.Steel
also accounts of many industry goods like farm vehicles and machinery,
To remain Focussed on the PIC analysis, TATA Steel has been chosen as a
target for discussion of STP and 4P
Sequential segmentation
Situation-driven segmentation
Construction
Transport
Energy
Packaging
Appliances and Industry
2. Be Simple
Brands are complex constructs, and they have to be simplified in order to make them
presentable, understandable and acceptable. You may choose the form of a well-researched
and elaborate brand model to base your positioning statement on. But that might not even
be necessary. Not every brand needs documentation that stretches over 50 pages. Reduce
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to the max: after all, you will need to be able to reduce your documentation to one single
message. Good examples for clear and simple messages: IBM stands for a smarter planet,
UPS loves logistics,ExxonMobil takes on energy challenges and Jindal Steel
Strengthening the Economy with our wide product Canvas
3. Be Precise
Make yourself very clear when formulating a positioning statement. Avoid platitudes such as
innovation, reliability or partnership. You have to be more concrete than that. And dont
leave any room for interpretation. Designations like innovative, trustworthy or sustainable
are extremely broad notions and everybody interprets them as he likes. A good example for
an exchangeable message is the following statement: We offer intelligent solutions with
innovative products and tailor-made services. We create opportunities for success through
trusting and reliable partnerships and generate added value for our customers. This
sentence can be applied to almost every B2B company. The B2B brand Jindal Steel, a leading
steel manufacturer in India, communicates differently: Strengthening the economy and
creating Value Responsibly. TATA steel says
4. Be Inspiring
A positioning statement should function as a theme for the brand and transport its values.
This way, the statement can be lived by staff and supported by business partners. JSPL says
Creating Value Responsibly. Nothing can be said against that. TATA Steel communicates
in a completely different manner: The Tata brand over many yearshas come to represent
quality, trust,business leadership, highest ethical standard and respect for all stakeholders.
TATA steel has formulated a goal that goes far beyond traditional product and quality
statements.
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TSL Products:
Finished and Semi-finished Steel Segment Products
TSLs 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. TSLs 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 market.
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PRICING
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 firms product, distribution and
communication strategies.
Factors Influencing Pricing Strategy in Steel Industry
The most important factors which affect pricing strategies in steel industry are:
1.
2.
3.
4.
Production Costs
Market demand (derived in nature)
Competition
Government regulations
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Production Costs
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. 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 tons 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. Capacity expansion: With the expansion of its Jamshedpur plant in 2012 and
Greenfield units in Orissa 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. Technology: Tata Steel has developed several technologies that help in keeping
production costs low. Some of them are:
- Process innovation and use of blue dust in sinter plants increased productivity by
60%.
- 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.
Market Demand:
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.
-
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With economic and steel market conditions becoming more favourable 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 2014-15. However, significant raw material price increases,
interest rate tightening and inflation may provide some downsides to an otherwise positive
outlook for the industry.
Competition:
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. Tata Steel's rare advantage is that it has captive iron ore mines
with capacities far in excess of its current needs. Therefore, it makes imminent sense to
expand its 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.
This shows that the ability to maintain lower prices of its products have given Tata Steel
the edge over its competitors.
Pricing Strategy:
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 firms survival over time.
The pricing strategy adopted by Tata Steel is the Market Penetration Strategy. This strategy
is based on the assumption that demands for the product is highly elastic. By setting
relatively low 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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3. PLACE:
Place represents the location where a product can be purchased. But in industrial marketing
place is often referred to as the distribution channel.
Distribution channels at Tata Steel:
Tata Steel Limited delivers steel products to Indian customers through:
21 stockyards,
25 consignment agents,
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4. PROMOTION:
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.
Perspectives on Steel by Steel using industries
Infrastructure and Construction
Globally, steel demand from construction and infrastructure accounts for more than half of
the overall steel demand.
It accounts for 55% of steel demand in China and about42% in the US.
Investment in infrastructure is seen as a critical success factor for economic growth. It is
estimated that the global investment required by 2030 is c. US$57t and is expected to be
incurred across all aspects of infrastructure assets; steel intensive infrastructure such as rail,
ports and airports will require about US$7.2t over the same period
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China will retain importance in the long products market despite slowing growth in
Chinese construction sector. Chinese long product demand growth is expected to settle by
2018 to below 5%.
Geographic hotspots are emerging for construction demand e.g., the Asian construction
market accounts for approximately 40% of total global construction spending.
This is translating into signifi cant steel demand in various countries, e.g., in Indonesia in the
first half of 2013 demand for long products increased 73% to 3 million tonnes.38
Steelmakers can increase sales by diversifying sales channels, including export channels, to
take advantage of these hotspots.
New product development to increase competitiveness with substitute materials, e.g.,
Tata Steel plans to introduce
Ground Granulated BF Slag (GGBS) for the construction sector. This product is sustainable,
cost effective, increases compressive strength and reduces carbon foot-print significantly.
There are significant opportunities for product innovation and branding to differentiate
construction steel products in the market.
While long product volumes are expected to increase, to profit from these increases it will
be necessary to have either flexibility in supply chain to supply hotspots in emerging
markets or specialist steels to improve margins
AUTOMOTIVE
According to the EY Global Automotive Center there are eight mega trends affecting the
automotive industry.
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These are as diverse as increased regulation to ensure safer, cleaner transportation to how
social media is transforming marketing in the sector. A good understanding of how these
trends will affect both the commercial and light vehicle industry over the next decade will
enable steelmakers to become more competitive in how they pitch their products to this
industry.
Cars of the future will drive demand for advanced high-strength steel
Mandatory emissions control is one of the biggest challenges faced by the automotive
industry in North America and Europe,
As a result of these regulations, vehicle manufacturers are now aggressively looking to reinvent their products (hollow seat frames, engine downsizing and electric power steering)
and manufacturing processes (resistance spot-welding, rotary forging and resin transfer
molding). In addition, they are increasing their research on hybrid vehicles and ultimately
working toward complete electrification of vehicles using fuel cell technology to produce
commercially viable EVs. Some of the top vehicle manufacturers, such as Toyota, General
Motors, BMW and Ford Motor Company, have already showcased their versions of hybrid
and pure EVs.
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Refinery projects
A significant increase in refining capacity to 2035 will lead to an increase in steel use at
least during the construction phase.
There will also be continued capital expenditure in new refinery projects. New refinery
projects around the world amount to about 7.4mb/d in net refining capacity to be added
before 2020, and a further 5mb/d of refinery capacity is likely to be added between 2020
and 2035. Most of the capacity additions will be in China, India and the Middle East.
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In the largest markets, the US and Canada, demand for both electric resistance welded
pipe (ERW) and seamless OCTG products is expected to increase from 2012s level of about
7.1 million short tons to 8.4 million short tons by 2018.
South Korean pipe mills efficient logistics and mill design, easy access to HRC and cheap
financing are driving their ability to compete with US producers despite freight.
Imports into the US are declining after anti-dumping levies were imposed on Taiwanese
and Thai OCTG.
Line pipe demand in the US is expected to pick up due to replacement of aging pipeline
infrastructure.
Steel pipe and tube volumes are expected to increase over the next five years. Margins
will be best in those regions where drilling and pipeline construction activity is most active.
Geographic Outlook for steel demand
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