Marketing Strategies of Visakhapatnam Steel Plant

Introduction:

A marketing strategy allows an organization to concentrate its limited resources

on the greatest opportunities to increase sales and its competitive advantage. Often

companies will spend a ton of money on promotional activities that don't get results.

Instead take a closer look at your product, packaging and pricing; your customer; and

what makes your company stand out. When you are clear and confident on your

offerings, you can spend less on your marketing strategy and achieve better results.

Marketing strategies serve as the fundamental underpinning of marketing plans

designed to fill market needs and reach marketing objectives. Plans and objectives are

generally tested for measurable results. Commonly, marketing strategies are developed

as multi-year plans, with a tactical plan detailing specific actions to be accomplished in

the current year. Time horizons covered by the marketing plan vary by company, by

industry, and by nation, however, time horizons are becoming shorter as the speed of

change in the environment increases. Marketing strategies are dynamic and interactive.

They are partially planned and partially unplanned.

Marketing strategy involves careful scanning of the internal and external

environments. Internal environmental factors include the marketing mix, plus

performance analysis and strategic constraints. External environmental factors include

customer analysis, competitor analysis, target market analysis, as well as evaluation of

any elements of the technological, economic, cultural or political/legal environment likely

to impact success. A key component of marketing strategy is often to keep marketing in

line with a company's overarching mission statement.

Once a thorough environmental scan is complete, a strategic plan can be

constructed to identify business alternatives, establish challenging goals, determine the

optimal marketing mix to attain these goals, and detail implementation. A final step in

developing a marketing strategy is to create a plan to monitor progress and a set of

contingencies if problems arise in the implementation of the plan.

Marketing Strategies of Steel Plant

The Visakhapatnam Steel Plant (VSP) is coming up with a new marketing

strategy to ensure better penetration of its products and also to ensure that products

reach end users directly. VSP, which sells an average of 30 lakh tonnes of steel every

year, expects Rs 7,500 crore in sales turnover this fiscal. According to the proposed

marketing strategy, the company will widen its market network which will see its

products being available across the state. “At present, they have 24 branch offices and

160 long term contractors (LTC) across the country. About 50 LTC dealers sell only

VSP products but now they want to broaden this network across south India, mainly in

Andhra Pradesh. To this end they have set up a committee which will survey the market

and recommend the places where they need to set up an additional dealer network,” Y

Siva Sagar Rao, director (commercial), VSP, told Business Standard.

“The quality of VSP steel is better than that of competitors and if customers engaged

good designers, the consumption of our steel products in construction could come down

between 10 and 15 per cent,” Rao claimed, adding, “It is because of this reason that

customers prefer our steel despite them being priced higher between Rs 1,000 and Rs

2,000 per tonne, when compared to products from other steel companies,” he stated. At

present, VSP’s major customers like reroller mill operators and wire products

manufacturer have been depending on dealers for VSP products.

They are paying a premium to get these materials from the dealers which has led

to VSP mulling the supply of material directly to its major users.

Steel Industry in India

The Indian Steel industry is almost 100 years old now. Till 1990, the Indian steel

industry operated under a regulated environment with insulated markets and large scale

capacities reserved for the public sector. Production and prices were determined and

regulated by the Government, while SAIL and Tata Steel were the main producers, the

latter being the only private player. In 1990, the Indian steel Industry had a production

capacity of 23 Million Ton (MT). 1992 saw the onset of liberalization and the Indian

economy was opened to the world. Indian steel sector also witnessed the entry of

several domestic private players and large private investments flowed into the sector to

add fresh capacities.

The last decade saw the Indian steel industry integrating with the global economy

and evolving considerably to adopt world-class production technology to produce high

quality steel. The total investment in the Indian steel since 1990 is over Rs 19,000

crores mostly in plant equipments, which have been installed after 1990. The steel

industry also went through a turbulent phase between 1997 and 2001 when there was a

downturn in the global steel industry. The progress of the industry in terms of capacity

additions, production, consumption, exports and profitability plateaued off during this

phase. But the industry weathered the storm only to recover in 2002 and is beginning to

get back on its feet given the strong domestic economic growth and revival of demand

in global markets.

With a current capacity of 38 Million Ton the Indian Steel Industry is today the 8th

largest producer of steel in the world. Today, India produces international standard steel

of almost all grades/varieties and has been a net exporter for the past few years,

underlining the growing acceptability of its products in the global market.

With capital investments of over Rs 100, 000 crores, the Indian steel industry

currently provides direct/indirect employment to over 2 million people. As India moves

ahead in the new millennium, the steel industry will play a critical role in transforming

India into an economic superpower.

The present steel consumption per capita per annum is about 30 kg in India,

compared to 150 kg in the world, and 350 kg in the developed world.The estimated

urban consumption per capita per annum is around 77 kg in the country, expected to

reach Approximately 165 kg in 2019-20.

Marketing Department

VSP has 23 no of Branch Sales Offices all over India and five Regional Offices

viz. North Delhi, South - Chennai, West - Mumbai, East - Kolkata and Andhra -

Visakhapatnam. Main Activities of the Marketing are as follows:

Collecting Market feedback and Customers requirements for the

preparation of Annual Sales Plan in coordination with Works Department,

for the sale of Pig Iron, Steel and Byproducts.

Preparation of Marketing Policies.

Finalisation of MOUs, Spot sale agreements etc, in Domestic and Export

Markets.

Preparation of Monthly Rolling Plans in coordination with Works

Department for meeting the sale commitments.

Processing of Materials like straightening of coils, cutting, bending,

bundling, packaging etc. at the plant premises and in the branches to

meet customers’ requirements.

Dispatch of products to various stockyards by road or rail or to customers

from the plant on direct dispatch basis.

Operation of the contracts for transportation of products by road and

stockyard handling/ consignment agency contracts for domestic sales,

stevedoring contracts and third party inspection agency for exports.

Sale of products at branches, Headquarters and on direct dispatch basis

to the customers in domestic markets and on Ex-works and fob

Visakhapatnam basis in exports subject to tying up of commercial and

financial terms and conditions. Ensure documentation as per the

procedures and as per the statutory requirements.

Rendering after sales services, obtaining customer feedback and

Customer Relations Management.

The details/information on the following aspects of Marketing are available

in www.vizagsteel.com, Marketing Module.

a. Rolling Plan

b. Products

c. Prices

d. Exports

e. Network

f. Customer Relation

Further, five Consignment Sale Agencies are also functioning at Jamshedpur,

Raipur, Pondicherry, Jammu and Guwahati.

Objectives of the Study

The present study is undertaken with the following specific objectives:

To study the Marketing plans of Visakhapatnam steel plant designed to fill market

needs.

To understand internal and external environment.

To give suggestions for better performance in future.

Methodology

The data obtained for the study is divided into two groups.

Primary data

Secondary data

Primary data is collected directly from people and organization through structured

questionnaire. Primary data comprises information obtained during discussions with the

heads of department, the officials and the staff.

Secondary data means that the data is obtained from sources such as annual

report or computer database. Secondary data comprises of information obtained from

annual reports, balance sheets and financial statements and other important documents

maintained by the organization.

For this project, most of the data was be collected from secondary data viz.,

Annual reports of Visakhapatnam Steel Plant and data collection through Internet.