Iron and steel industry primarily works in B2B market, but mostly players integrate their steel businesses to add more value to their products, and to explore new markets and new customers. By adding more value to the basic product with various processes and additions, they prepare themselves to sustain the ups and downs of steel industry. In this process of value addition, developed final product serves to a new target group. It may change the playing field from B2B to B2C. For eg, agricultural implements, TMT, exclusive steel furniture stores ‘Steel & Style’ from Tata steel; JSL Lifestyles Ltd for stainless steel tableware; decor accessories and modular kitchens from Jindal Group and more. Integration is a suggested strategy for any business to sustain, to expand, to increase market reach, to maximize profit, to en-cash the company’s brand equity.
There are two basic types of integration: Backward and Vertical. Vertical Integration is further divided as Horizontal Integration and Forward Integration. If a company owns a supplier, it is backward integration. When a company moves ahead and takes control of its distributors and outlets, it is forward integration; and when a company integrates with another business at the same stage of production or work, it is horizontal integration, commonly known as vertical integration.
However, these integrated product lines cater to entirely different markets. They may serve to end consumers at retail level or to other business for commercial use, and sometimes even both B2B & B2C, for eg TMT. To earn business from both kinds of buyers, sellers are suggested to understand buying behavior and influencing factors while planning branding campaigns.
Before planning branding strategy for TMT one must have insight about its buyers. TMT buyers can be classified into three different classes.
Class 1 Individual
Class 2 Middleman (Contractors,who make purchase decisions for others)
Class 3 Builders & Bulk Buyer/Government Supplier
Buying behavior differs for different classes of TMT buyers. Retailer’s push, influencing factors and opinion leaders are important factors in making buying decision. Marketers should identify these factors for planning successful marketing strategy.
Class 1: Individual Buyer (who purchase for individual use)
These buyers may belong to any socio-economic class but they are less educated/ informed about physical attributes of TMT. For making purchase decision, they are mostly dependent on their architects or contractors. The following chart summarizes their process of making buying decision:
To make purchase decision, this class pays utmost importance to quality and branding of TMT. This class, due to its very less product knowledge and awareness of market, depends on middleman like contractor/architects for market insight and product information. These middlemen guide them to few particular dealers and distributors of their own awareness set. At dealer’s outlet, buyers gather some product information and product options available for TMT. Here is where branding plays an important role. With branding at point of purchase, buyers easily recognize the well branded TMT and keep them in consideration set. Now these brands under consideration are evaluated at different parameters like price, physical attributes, quality, availability, logistics etc. Branded TMT bars get leverage of trust and familiarity, as safety and quality is a first criteria to evaluate available options. Few factors which influence final purchase decision is retailer’s push, contractor’s influence and differentiation towards brands.
Strategy for Class 1
a. Branding and Promotion: OOH, DOOH, wall paintings, print ads, paper inserts, guerilla campaigns, sponsoring recreational and social events for recognition, radio and regional TV promotion — allocate budget efficiently to different media modes as per their effectiveness.
b. Educate buyers about your TMT’s differentiation and competitive advantage through ‘direct competition compare charts’ at point of purchase.
c. Plan campaigns for dealers and contractors to develop their interpersonal skills for educating customers about your brand and managing strong retailer’s push for your product.
d. Educate dealers and contractors for product attributes. Name and details of your TMT should be on top of the mind of the retailer.
e. Pay attention for transportation:This plays an important part as buyers expect some additional favors for selecting your product.
f. Develop your dealer’s interpersonal skills for exhibiting positive and helpful attitude towards customers, through various educative sales programs for channel partners.
g. Entertain and educate contractors/architects through special meet ups, gatherings and events, arranged exclusively for them.
Class 2: Middleman/Contractor/Architect
Class 2 buyers show concern for average quality product with good retailer margin and good offerings for buyers. Here buyers and users are different. The one who is making final purchase decision are authorized to make purchases on behalf of their customers. They have sound product knowledge and are aware of technical specifications of TMT. Direct branding through conventional media is not much helpful for this class. They are either buyers or they influence buyers. Therefore, marketers must pay attention to satisfy this class. This class is very attentive for any changes in market like updates on new entrants, prices, offers, availability & service. They are experienced and carry experience based feedback for the product.
Strategy for class 2
1. Organize educational meet ups and events.
2. Distribute useful branded small articles to regular buyers through dealers and distributors, like small pocket diary with TMT branding on it, informative pamphlets, table top calendars, paper weights, measurement tapes etc.
3. Branding at point of purchase.
4. Special offers and discounts,loyalty bonus and lucrative gifts for loyal influencers.
5. Take feedback with photograph from few of them and publish in your promotional materials, with an effective campaign.
6. Conduct knowledge sharing sessions and ask leading influencers to become speakers.
Class 3: Bulk Buyer -Builder/Government Supplier
Buying behavior of builders is very typical. They purchase in bulk and prefer buying either from manufacturers or big traders. They want quality product at competitive rates. Product, price, on time delivery and logistics are the main evaluating criteria for this class. One to one discussion, word of mouth, references, personal attention and healthy negotiations with constant tapping are few effective strategies for this class of buyers.
Government buying behavior process differs from all of the above classes because internal processes and a lot of paper work is required to reach a decision to release tender for purchase of TMT. Usually, state development authorities, railway department and other central and state government departments ask for quotations through tenders for particular projects and set criteria for filling, participating, opening and finalization of tenders. Government liaising officer should keep tracking all websites and print media for advertisements of tenders and fill competitive quotation rates to grab the opportunity.
Source: Steel 360 Magazine (April -16 Issue)