he global steel market has been historically plagued with overcapacity and slow growth. This has created fierce competition and a perception among industrial buyers that steel is a commodity. The result has been that in many cases the deciding factor in a purchase decision is price, with resulting downward pressure on profitability. One strategy that some steel manufacturers have used is to cut operating costs to help protect profit margins. Another strategy that some manufacturers have been attempting is a product differentiation approach accompanied by a strong brand name around which to build a distinctive image. But is branding useful in an industrial (B-to-B) context? The answer appears to be yes: Industrial fi rms hold very positive views about the benefits of brand names and feel that branding is valuable to marketing success and is a major corporate asset. In addition, industrial fi rms perceive a number of competitive differential benefits in the use of manufacturer brands, with quality, reliability, and performance rated as primary factors. Clearly, industrial marketers see value in branding. However, do industrial buyers? The answer here depends on the extent to which the brand (a) creates benefits of value to buyers and (b) consistently delivers these core benefits. When these two factors are present, brand name becomes the symbol of these benefits and core values and provides for differentiation in the marketplace. In addition, consistent delivery over time results in increased trust, stronger relationships, and enhanced loyalty. Rautaruukki Ojy (RO) is a steel manufacturer in Finland. It has a strong reputation in Europe but is relatively small. Rather than go the cost-cutting route, it decided to take the differentiation route. Its opportunity came when laser cutting technology became available. After hearing initial grumbling about steel quality problems associated with laser cutting, RO conducted intensive research to understand the nature of the problem/opportunity. RO found that laser cutting involves preprogrammed computer settings. These settings involve considerable setup time, so users want to be able to save the cutting specs for use later on. However, being able to reuse the specs requires very high consistency in terms of the chemical composition and quality of the steel both within a batch of steel and across batches. The nature of the industry was also one where companies outsourced their laser cutting needs to specialty “job shops.” Order quantity from these job shops was highly variable and not predictable. Given the technical nature of laser cutting, an educated customer service department was also critical. A s a result of this research, RO created RAEX LASER brand steel. The value components included: • Consistent quality steel within and across batches to meet laser cutting specifications. • Flexibility in order size acceptance through its distributors. The supply chain for RO is one of manufacturer (RO) to distributors, to end users (job shops who do laser cutting). Since the job shops had highly variable order size needs and they were unpredictable, RO had to provide flexibility in order size fulfillment. In managing supply, RO also created a cooperative atmosphere among its distributors whereby they would share inventories if needed to keep the supply chain running. Educational seminars and an annual retreat are part of this process. • Customer service. Since education was critical, RO engaged in extensive training of its internal customer service personnel to provide them with the tools to deliver the highest customer service possible. The results have been very positive. Sales have been on the increase since the introduction of the RAEX LASER brand and its value components. Customer loyalty has increased, and buyers are now willing to pay a price premium to get RAEX LASER steel and all that goes with it. And its efforts even caught the attention of the largest laser cutter manufacturer, which now recommends RAEX to new buyers of its machines.
he global steel market has been historically plagued with overcapacity and slow growth. This has
created fierce competition and a perception among industrial buyers that steel is a commodity. The
result has been that in many cases the deciding factor in a purchase decision is price, with resulting
downward pressure on profitability. One strategy that some steel manufacturers have used is to
cut operating costs to help protect profit margins. Another strategy that some manufacturers have
been attempting is a product differentiation approach accompanied by a strong brand name around
which to build a distinctive image. But is branding useful in an industrial (B-to-B) context? The
answer appears to be yes: Industrial fi rms hold very positive views about the benefits of brand
names and feel that branding is valuable to marketing success and is a major corporate asset. In
addition, industrial fi rms perceive a number of competitive differential benefits in the use of
manufacturer brands, with quality, reliability, and performance rated as primary factors.
Clearly, industrial marketers see value in branding. However, do industrial buyers? The answer
here depends on the extent to which the brand (a) creates benefits of value to buyers and (b)
consistently delivers these core benefits. When these two factors are present, brand name becomes
the symbol of these benefits and core values and provides for differentiation in the marketplace. In
addition, consistent delivery over time results in increased trust, stronger relationships, and
enhanced loyalty. Rautaruukki Ojy (RO) is a steel manufacturer in Finland. It has a strong
reputation in Europe but is relatively small. Rather than go the cost-cutting route, it decided to take
the differentiation route. Its opportunity came when laser cutting technology became available.
After hearing initial grumbling about steel quality problems associated with laser cutting, RO
conducted intensive research to understand the nature of the problem/opportunity. RO found that
laser cutting involves preprogrammed computer settings. These settings involve considerable
setup time, so users want to be able to save the cutting specs for use later on. However, being able
to reuse the specs requires very high consistency in terms of the chemical composition and quality
of the steel both within a batch of steel and across batches. The nature of the industry was also one
where companies outsourced their laser cutting needs to specialty “job shops.” Order quantity from
these job shops was highly variable and not predictable. Given the technical nature of laser cutting,
an educated customer service department was also critical. A s a result of this research, RO created
RAEX LASER brand steel. The value components included:
• Consistent quality steel within and across batches to meet laser cutting specifications.
• Flexibility in order size acceptance through its distributors. The supply chain for RO is one of
manufacturer (RO) to distributors, to end users (job shops who do laser cutting). Since the job
shops had highly variable order size needs and they were unpredictable, RO had to provide
flexibility in order size fulfillment. In managing supply, RO also created a cooperative atmosphere
among its distributors whereby they would share inventories if needed to
keep the supply chain running. Educational seminars and an annual retreat are part of this process.
• Customer service. Since education was critical, RO engaged in extensive training of its internal
customer service personnel to provide them with the tools to deliver the highest customer service
possible.
The results have been very positive. Sales have been on the increase since the introduction of the
RAEX LASER brand and its value components. Customer loyalty has increased, and buyers are
now willing to pay a price premium to get RAEX LASER steel and all that goes with it. And its
efforts even caught the attention of the largest laser cutter manufacturer, which now recommends
RAEX to new buyers of its machines.
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