Pursuing Digital Marketing and Sales Transformation in an Emerging Market: Lessons from India’s Tata Steel
Vikalpa: The Journal for Decision Makers
Many articles on digital
transformation report on the successes of born-digital pioneers (a.k.a. digital
natives) in new, high-tech industries in developed countries These frequently
cited initiatives have critical advantages from the start. Their founders and
employees understand, possess, and are passionate about emerging technologies.
They are not burdened by significant investments in legacy technologies and
investors who seek returns on those assets. Instead, they are able to remain
nimble. And because those companies operate in developed countries, they have
access to bountiful funding and large markets.
All too often, research
in those settings does not shed light on a more challenging question: How can
older firms in traditional industries in emerging markets digitally transform
long-standing marketing and sales practices to capitalize on changing market
conditions? To succeed in new markets, companies must overcome resistance from
senior managers who were successful in the traditional business world, marked
by limited and dated technological systems and resources. Our case study
examines how one company, Tata Steel in India, has successfully addressed these
challenges.
Tata Steel, founded in 1907, is part of the Tata
Group. Tata Steel’s total revenue from operations in India during the 2018–2019
fiscal year was about ₹836 billion (about $11.5 billion) and for Tata Group
overall, about ₹7,927 billion (about $108 billion). In India, Tata Steel has
32,984 employees with a production capacity of 19.5 million metric tons per
annum.
Tata Steel serves three principal market segments. By
far, business-to-business companies (B2B) constitute the largest group of
customers with about 60% of sales. The company’s B2B market includes key
segments such as automobiles, appliances, construction, industrial products,
metal components and power generation. The company also serves an emerging
corporate account segment (B2ECA), which is about 20% of sales. These B2ECAs,
alternatively known as small and medium-sized enterprises (SME’s), are the
growth engine of India’s manufacturing sector. The final segment, focused on
serving consumers (B2C), is a recent target of Tata Steel’s efforts (about 20%
of sales). For this segment, Tata Steel sells rebars for home construction, galvanized
sheet steel used to build homes in the rural sector, as well as the recently
launched doors, home building products and furniture to do-it-yourself
consumers.
The initiative for digital transformation at Tata
Steel is spearheaded by its Marketing & Sales (M&S) function to
integrate digital technology to solve problems and address customer needs. Tata
Steel constituted a focused special task force under the Head of Digital
Projects representing the Business Excellence & New Projects division and
working with key business verticals: Automotive & Special Products, Branded
Products & Retail, and Industrial Products, Projects & Exports. Each of
these verticals is headed by a Chief of Marketing & Sales and is supported
by a Business Excellence & New Projects team.
Any initiative that is launched in a
large company loses novelty in six to twelve months. As competitors are prone
to mimic the initiatives launched by the leader, these initiatives are treated
as hygiene factors or, over time, become stale inside the organization. Hence
the company felt the need to identify newer pain points and use advanced
analytics to solve them. The way steel was bought in 2010 is very different
from how steel will be bought in 2025. Consumer behaviour also undergoes
change, and hence there is a need to find new ways of reaching customers and
discovering new pain points. Providing digital as a solution is thus a moving
target.
The article offers insights
to companies in traditional industries and those in emerging
markets on how to embrace digital transformation for enhanced business
performance.
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