 "Door to Tata Steel's branding")
In 2003, when Tata Steel set up its branding team, it was just the first step in a long journey to de-commoditisation. Today, more than a decade later, the steel major is looking at branding finished products that would entail reaching out to consumers with offerings like doors and furniture.
A pilot project on doors, breaing the Tata name, is currently on. By the first week of July, 225 doors would hit some of the retail outlets in semi-urban West Bengal that showcase Tata Tiscon, the rebar brand from the Tata Steel stable, with proper advertising around it.
"We have done enough of mother-product branding, competitors have caught up. We slowly want to graduate to a service and solutions vertical. For instance, doors and furniture - these are all coming out of our own products, but someone else is making money from the value chain. A Tata name for the product would be of immense value. So, we would like to have a service solutions model in place, so that our own products are processed by us in a finished form to the consumer rather than in an intermediary form as it goes out today," Tata Steel's chief-marketing & sales (branded products retail & solutions), Atrayee S Sanyal, explains.
What's in it for Tata Steel?
For a door, the price paid would be Rs 20,000 apiece. "That is the money that is lying in the supply chain," Sanyal explains. Obviously, if it sold just the mother product, which in this case would be steel sheet, the price would be much less.
Unbranded Chinese steel doors are available in the market for Rs 10,000 per piece. But with the Tata brand, Sanyal thinks the retail customer will be willing to pay double. After all, these are one-time investments.
"People who are buying for individual needs are willing to pay a higher price for the product and the services that come with it," Sanyal adds. That is the reason that Tata Steel is reaching out to end consumers directly, rather than roping in real estate developers. Right now, the company is busy working out the number of doors that it could sell. Volumes are important for economies of scale, or it becomes expensive.
Branding is being used by Tata Steel to beat the ups and downs of the commodity cycle. And, branding mother products has translated into economic benefits for the company. It accounts for 41 per cent of Tata Steel's turnover. "We have a plan of Rs 16,090 crore for FY-15," Sanyal says. According to her, each of the brands were priced15-20 per cent higher than competition in the B2C space.
Tata Steel has been doing consumer branding for a while now. To stay ahead of competition, it is now looking to do things that other players will find difficult to do. It wants to offer end products to customers which are too minute for competition to deliver, as they entail a lot of back-end fabrication. The added advantage is, of course, that the steel company is in a position to invest.
Sanyal who is anticipating a lot of after-sales service, is initially banking on the dealers and distributors to address customers' needs for the doors. "They will be given expertise, but they will have to build their own team," she says.
The skill-set required for such projects is very different from selling steel and iron ore. Sanyal knows it. After all, Tata Steel already has one sub-brand in place, Nest-In, which is a steel frame that can be used for houses.
"We thought, can we deliver a house at a feasible affordable price without welding that can be retailed from the counter and we came up with Nest-In. These are the new brands that are corollary to the main (steel) flat products and long products," Sanyal points out.
The current exercise is the third leg in the de-commodisation journey that started in 1999 when it started by identifying the right distributors. The branding team was established in 2003. There are around 25,000 outlets that stock Tata Steel products and 8,000-9,000 are dedicated to Tata Steel's long and flat steel products.
A pilot project on doors, breaing the Tata name, is currently on. By the first week of July, 225 doors would hit some of the retail outlets in semi-urban West Bengal that showcase Tata Tiscon, the rebar brand from the Tata Steel stable, with proper advertising around it.
"We have done enough of mother-product branding, competitors have caught up. We slowly want to graduate to a service and solutions vertical. For instance, doors and furniture - these are all coming out of our own products, but someone else is making money from the value chain. A Tata name for the product would be of immense value. So, we would like to have a service solutions model in place, so that our own products are processed by us in a finished form to the consumer rather than in an intermediary form as it goes out today," Tata Steel's chief-marketing & sales (branded products retail & solutions), Atrayee S Sanyal, explains.
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For doors, Tata Steel has tied up with a door manufacturer in South India. "We have a non-disclosure agreement with the manufacturer, so I can't reveal the name, but it is extremely popular and has a capacity of 9,000 doors a month. The design, quality assurance, and brand will be Tata Steel's," Sanyal says.
What's in it for Tata Steel?
For a door, the price paid would be Rs 20,000 apiece. "That is the money that is lying in the supply chain," Sanyal explains. Obviously, if it sold just the mother product, which in this case would be steel sheet, the price would be much less.
Unbranded Chinese steel doors are available in the market for Rs 10,000 per piece. But with the Tata brand, Sanyal thinks the retail customer will be willing to pay double. After all, these are one-time investments.
"People who are buying for individual needs are willing to pay a higher price for the product and the services that come with it," Sanyal adds. That is the reason that Tata Steel is reaching out to end consumers directly, rather than roping in real estate developers. Right now, the company is busy working out the number of doors that it could sell. Volumes are important for economies of scale, or it becomes expensive.
Branding is being used by Tata Steel to beat the ups and downs of the commodity cycle. And, branding mother products has translated into economic benefits for the company. It accounts for 41 per cent of Tata Steel's turnover. "We have a plan of Rs 16,090 crore for FY-15," Sanyal says. According to her, each of the brands were priced15-20 per cent higher than competition in the B2C space.
Tata Steel has been doing consumer branding for a while now. To stay ahead of competition, it is now looking to do things that other players will find difficult to do. It wants to offer end products to customers which are too minute for competition to deliver, as they entail a lot of back-end fabrication. The added advantage is, of course, that the steel company is in a position to invest.
Sanyal who is anticipating a lot of after-sales service, is initially banking on the dealers and distributors to address customers' needs for the doors. "They will be given expertise, but they will have to build their own team," she says.
The skill-set required for such projects is very different from selling steel and iron ore. Sanyal knows it. After all, Tata Steel already has one sub-brand in place, Nest-In, which is a steel frame that can be used for houses.
"We thought, can we deliver a house at a feasible affordable price without welding that can be retailed from the counter and we came up with Nest-In. These are the new brands that are corollary to the main (steel) flat products and long products," Sanyal points out.
The current exercise is the third leg in the de-commodisation journey that started in 1999 when it started by identifying the right distributors. The branding team was established in 2003. There are around 25,000 outlets that stock Tata Steel products and 8,000-9,000 are dedicated to Tata Steel's long and flat steel products.