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INTRODUCTION
Brands have arguably existed for thousands of years (Moore and Reid 2008), but the modern
idea of brands commences in the late 19th century with the introduction of trademarks and
attractive packaging (Fullerton 1988; McCrum 2000), which were developed as a guarantee
of authenticity (Feldwick 1991, p21). The origins of branding were reflected in the
American Marketing Association (AMA) 1960 definition of the brand, which focused on
tangible brand attributes as points of differentiation: A name, term, sign, symbol or design,
or a combination of them, intended to identify the goods or services of one seller or group of
sellers and to differentiate them from those of the competitors. A more recent AMA
definition (1995) adds any other feature to the attributes that might differentiate, reflecting
the developments in brand theory. Branding has gained much importance in industrial
marketing nowadays in view of immense global business opportunities (Raizada, 2012).
Externally, corporate brands can establish a number of valuable associations in the minds of
customers and other key constituents that can help to differentiate the brand, such as common
product attributes, benefits or attitudes; people and relationships; programmes and values;
and corporate credibility. Regardless of how it is constituted, a corporate image will depend
on a number of factors, such as the products a company makes, the actions it takes, and the
manner in which it communicates to consumers (Keller and Richey, 2006). The topic of
branding and brand management has clearly become an important management priority in the
past decade or so. Accordingly, academic research has covered a number of different issues
that have collectively advanced our understanding of brands (Kevin Lane Keller, 2001). In
the era of global marketing, corporations have to keep an eye on the marketing environment
to survive in the long run. Branding strategies, as the key role in the marketing mix, are
increasingly viewed as a powerful tool to obtain sustainable competitive advantages, to fully
utilize available resources and to avoid bleeding price competitions (Aaker and Keller, 1990).
Revenue growth is now a big focus, which means cross- and up-selling existing customers,
increasing lifetime customer value and doing a better job acquiring new ones. In short,
marketing and brand management is likely to become a distinct competitive advantage much
as access, customer relationship management and product quality are viewed today. (Michael
Hinshaw, 2005). A growing body of scholarship, particularly in marketing, draws on a wide
variety of theoretical traditions to examine brands as social texts. (Hatch and Rubin, 2006).
Coal India Limited (CIL) as an organized state owned coal mining corporate came into being
in November 1975 with the government taking over private coal mines. With a modest
production of 79 Million Tonnes (MTs) at the year of its inception CIL today is the single
largest coal producer in the world. CIL having fulfilled the financial and other prerequisites
was granted the Maharatna recognition in April 2011.
(1)
(2)
(3)
(4)
(5)
Accounts for 76% of total thermal power generating capacity of the Utility sector.
(6)
advantage in pillar industries can boost the development of relevant industries. A successful
industrial brand is developed when a firm keeps its commitment on quality, deliveries and
services to its customers. Such brands are able to withstand the competition with ease and
command premium prices (Raizada, 2012). A competitive price discovery process empowers
companies to follow their own judgements of market conditions and results in the fair pricing
of products (Parikh, 2013). Once the coal companies become famous by their brands, it is
easy to make product or service well known, and form a certain competitive advantage, then
increase the visibility of enterprises, finally the coal companies strong market emissive and
advantage in pillar industries can boost the development of relevant industries (NAN Yuan
Zheng, 2006). One category of industrial product is coal which is used as a raw material in
other industries. In an industrial buying process, the buyers evaluate the suppliers on the basis
of various key parameters. These are:
(1) Performance of the product;
(2) Price and its impact on the final costing of the buyers
(3) Reliability of suppliers in terms of after sales service
Areas of price increase may be considered once quality improves because consumer price
sensitivity matters less for high-quality brands (Dhar and Hoch, 1997). CSR activities has
been an important factor under consideration as there is a socioeconomic view of social
responsibility, argued by theorists like Freeman (1984), Freeman and Weharne (1999),
Clarkson (1995), Lazer (1996), and Carroll (1999) who believe that businesses owe
something back to the society that supports them, and that this debt is greater than the debt of
any individual member of the society. This is a broad view of CSR which states that
companies are responsible to the society as a whole, of which, they form an integral part.
They operate by public consent and therefore should constructively serve the needs of the
society. This approach is illustrated by the concepts of corporate accountability and social
justice (Sacconi, 2004; Boatright, 2002; Alchian and Demsetz, 1972; Jensen and Meckling,
1976; Williamson, 1990).
The coal products of coal-mining enterprises are non-renewable natural resources, they are
influenced by geological storage conditions due to which the quality and yield has a big
fluctuation. In addition, the planned economy restricts the development of coal-mining
enterprises by the deep-rooted ideology that emphasized production, lighten the sales and the
brand strategy has been neglected all the times. In the oversupply environment of coal
market, most businesses take only low-level tactical adjustment and adaptation, have yet to
form a future-oriented system of management and marketing strategies, thus leading to the
coal products become backlog, the price inversion, and the arrears are difficult to made up,
the entire coal market is in the disorder condition of low-price dumping (NAN Yuan Zheng,
2006). Most of the industrial marketers rely on their established corporate group image to
position their products rather than going for branding it separately. However, as the demand
grows and firms aspire to grow beyond existing markets, they need to develop a branding
strategy to create a distinct identity as well as to command a better price for their products
(Raizada, 2012).
RESEARCH METHODOLOGY
The Study
Our study for this project was exploratory in nature and a self administered survey was being
used as a method to complete the study.
Research Question
The Survey
The Research questions are aimed at isolating the factors for branding and areas for pricing.
Therefore they are distributed among thirty two questions in our self administered
questionnaire and the responses thus collected will be subjected to statistical analysis and
inferences will be drawn from said analysis.
Sampling Design
Sample Size: 240 current customers of CIL whom we have contacted through
intermediary agents who handle and trade in coal with these organizations and Coal
India Limited.
Reliability test was computed through Cronbach alpha to check whether data items in
the questionnaires are reliable or not.
Factor analysis was applied to identify the major factors that might assist in branding
Research Hypothesis
The null hypothesis for our study is that the explored factors will not affect the branding
potential of coal.
The alternate hypothesis of our study is that the explored factors do have an effect on the
branding potential of coal.
Since CIL has a monopoly in the area of supply of Coal in India, therefore to achieve
a comparison on the POP and POD, we considered the growing usage of Imported
Coal as a competition. Our results show that among the consumers we interviewed,
50% prefer the usage of Domestic Coal which is being supplied by CIL. But typically
in the West Bengal region, a number of Power Plant customers have moved towards
using Imported Coal as well for their needs of power generation. 33% of the
consumers prefer Imported Coal. There are 17% of consumers who would like to
continue with using Domestic Coal provided by CIL but to meet any shortage in
demand; they are also willing to use Imported Coal. Essentially what we could gather
from the interviews we conducted with the consumers is that the mindset of 33% of
the consumers who prefer the usage of Imported Coal is that there is total lack of
transparency as to the quality of coal that is being provided by CIL. The higher grades
of coal being provided are not up to international standards of GCV though their
prices being charged are equivalent to international standards. Therefore customers
are more inclined towards ordering Coal from outside the borders since their
perception is that they are getting their moneys worth in this case. The sale of lower
grades of Coal is not impacted as such for CIL and is being used heavily in the
country.
(Refer to Table 6.1, Fig 6.1)
Tabulation of results obtained regarding the preference of the form coal in the current market
scenario for consumers
#
Form of Coal
Percentage
Domestic Coal
50
Imported Coal
33
Combination of Both
17
Table 6.1
Fig 6.1
On asking the consumers about the confidence they have regarding whether CIL can
meet the increase in demand for Coal in the country in future, the respondents
overwhelming believed that CIL is capable of such demand matching. At an average
consumer responded with 70% confidence that CIL can meet demands, but their
views were that CIL currently seems not to have the will neither the desire to improve
upon its logistics to meet such demand. (Refer to Table 6.2)
Tabulation of results on the level of confidence of consumers towards CILs future
performance
Answer
Min
Value
Max
Value
Average
Value
Standard
Deviation
Responses
60.00
85.00
70.00
8.61
240
Table 6.2
On the interesting subject of allowable price increase in the price of coal, we had
asked the consumers about their willingness to pay a premium for a service that CIL
would provide which is the Guarantee of Supply of a Fixed Quantity of Coal. CIL
would ensure that there is no slippage on the quantity being supplied to the consumers
even though the overwhelming perception in the market is of shortage of coal. If CIL
charges a premium on this service they provide, we see that 63% of the respondents
would be willing to pay the premium to avail this guarantee. This clearly shows that
for the consumers the most important consideration is the reception of coal even
though it would result to an increase in the price charged. But 37% of the consumers
vehemently disagreed to such a facility. Their opinion on this matter is that CIL is
already charging undue prices on its higher grades of Coal and therefore they would
not tolerate any increase in prices for such a service being provided. (Refer to Table
6.3, Fig 6.2)
Tabulation of results for the acceptability of price increase with the supply of fixed
quantity of coal by CIL as responded by the consumers
Answer
Response
Yes
119
63%
No
111
37%
Table 6.3
Fig 6.2
We asked the respondents on their views over the price quality compatibility of the
coal that CIL provides. Overwhelmingly the response we obtained was that there is no
compatibility in the current nature as it stands. Respondents have been candid enough
to declare that only if the quality of coal supplied by CIL improves can there be any
compatibility. Some respondents believe that CIL cannot improve the GCV value of
the coal they provide, but continuing on charging an international standardized rate on
equivalent GCV coal which is essentially not being provided is unacceptable. Prices
need to come down in order for any resemblance of compatibility to exist.
Table 6.5 gives a comparison on the quality and price parameters for Domestic Coal
and Imported Coal. This exercise was particularly done to ascertain the differences in
perception of respondents towards Domestic and Imported Coal. In totality it attempts
to give us points of parity and points of differences in the quality parameter. We have
observed that Imported Coal, on a scale of 100 performs better in the opinion of the
consumers on most quality parameters but on the price parameters Domestic Coal
fares better.
Weighted Average Performance Perception of Consumers on Quality Parameters (Scale of 100)
Quality Parameter
Domestic Coal
Imported Coal
47.8
89.5
Ash Content
40.9
83.2
VM Content
62.9
94.9
Carbon Content
46.3
82.7
Source of Origin/Supply
73.5
84
68
65.6
79.6
57.3
66.9
74.4
Table 6.5
The basic price for coal to be supplied is fixed by the Government of India and the
pricing notification describes the prices charged for surface transportation, capacity
loading, beneficiation costs and many more. But CIL would like to explore other
areas apart from the above where they could charge for fees after putting in efforts.
This exercise is purely exploratory in nature so that CIL can look for enhancement in
reasonable profits. Owing to this task, we asked the respondents to rate their opinions
on some potential areas where if CIL concentrates its efforts and then consumers
might be willing to shell out a little more for the price of coal. We observed that for
the service of providing a supply of fixed quantity of coal which we discussed above,
63% had found it agreeable to have a hike in price on this account. The consumers
believed that at an average they could probably accept a 15.5% increase in the price of
coal before switching over to the use of Imported Coal. (Refer to Table 6.4)
Answer
Percentage
increase in
price
Min Value
Max Value
5.00
25.00
Average
Value
Standard
Deviation
Responses
15.50
7.70
240
Table 6.4
The consumers believed that the 42.45% of the above price increase can be accounted
for the service of guaranteeing a fixed supply of coal. But 58.6% of the price increase,
the consumers believed can be attributed by linking the current prices to the
Wholesale Price Index and let the Inflation Indexing be a running factor for price
determination which is not happening currently. (Refer to Table 6.6)
Weighted Average Distribution of Price Increase (in %)
Price Component
Percentage Increase
7.5
Inflation Indexing
58.6
16.4
42.4
Table 6.6
Tabulation of the results obtained regarding the acceptability of price increase of coal if
washed coal is provided to the consumers
Response No.
Choice of
Percentage
Increase
Response
Percentage
Distribution
0-5%
64
27%
5-10%
16
7%
10-15%
3%
15-20%
72
30%
20-25%
80
33%
25-30%
0%
30-35%
0%
35-40%
0%
40-45%
0%
10
45-50%
0%
11
More than
50%
0%
240
100%
Total
Table 6.7
Fig 6.3
No. of Reponses
Response
Fig 6.4
Valid
%
30
100.0
.0
30
100.0
Reliability Statistics
Excludeda
Cronbach's
Total
a.
Alpha
N of Items
.658
15
the procedure
Table 6.8
We can see that Cronbach's alpha is 0.658, which indicates a high level of internal
consistency for our scale with this specific sample.
Regression Analysis
Model Summary
Model
Change Statistics
R
1
.981
R
Square
Adjusted
R
Square
Std.
Error of
the
Estimate
.963
.924
.443
R
Square
Change
F
Change
.963
24.523
df1
df2
15
14
Sig. F
Change
DurbinWatson
.000
1.981
Table 6.9
In the above case, 96.3% of the variation in the dependent variable can be explained by the
collection of the independent variables.
ANOVA
Sum of
Squares
Model
Regression
Residual
Total
Mean
Square
df
72.218
15
4.815
2.749
14
.196
74.967
29
Sig.
24.523
.000
Table 6.10
Factor Analysis
Approx. Chi-Square
.535
479.637
df
105
Sig.
.000
Table 6.11
Communalities
Initial
Extraction
Quality_PurchaseInfluence
1.000
.845
TransportCost_PurchaseInflunce
1.000
.766
OtherCharges_PurchaseInfluence
1.000
.946
TimelyDelivery_PurchaseInfluence
1.000
.934
TransportMode_PurchaseInfluence
1.000
.747
InfoCIL_PurchaseInfluence
1.000
.881
GovPolicies_PurchaseInfluence
1.000
.887
CILPersonnelService_PurchaseInfluence
1.000
.864
Clarity_TermsConditions_PurchaseInfluence
1.000
.846
FutureCILPlans_PurchaseInfluence
1.000
.850
PerceptionIndustry_PurchaseInfluence
1.000
.877
PerceptionOtherIndustry_PurchaseInfluence
1.000
.945
CIL_CSR
1.000
.941
Inflation_PurchaseInfluence
1.000
.773
CIL_GreenPromotion
1.000
.874
Table 6.12
The above table basically helps us in extracting the important factors. We have the choice of
either selecting the factors from the above table and compare their respective with Eigen
values from the below table and considering the ones greater than 1, decide on our reduced
number of factors.
Total Variance
Explained
Extraction
Sums of Squared
Loadings
% of
Cumulativ
Total
Variance
e%
Component
Initial Eigenvalues
% of
Cumulativ
Total
Variance
e%
6.718
44.787
44.787
6.718
44.787
44.787
5.541
36.941
36.941
2.168
14.454
59.241
2.168
14.454
59.241
2.530
16.869
53.809
1.680
11.202
70.442
1.680
11.202
70.442
1.771
11.809
65.618
1.399
9.325
79.767
1.399
9.325
79.767
1.703
11.351
76.969
1.011
6.738
86.506
1.011
6.738
86.506
1.431
9.537
86.506
.627
4.183
90.688
.491
3.274
93.963
.319
2.127
96.090
.247
1.648
97.738
10
.179
1.193
98.931
11
.067
.445
99.376
12
.038
.255
99.631
13
.034
.226
99.858
14
.017
.111
99.969
15
.005
.031
100.000
Table 6.13
Fig 6.5
From the above table and Scree plot, we can see that there are 5 major factors that we need to
consider from the questionnaire and survey we conducted.
Quality_PurchaseInfluence
.079 -.220
.173
-.311
.815
TransportCost_PurchaseInflunce
.132 -.028
.831
.001
.238
OtherCharges_PurchaseInfluence
.952
.087
.018
.034
-.173
TimelyDelivery_PurchaseInfluence
.960
.067
.005
.088
.034
TransportMode_PurchaseInfluence
-.194
.093
.796
-.081
-.244
InfoCIL_PurchaseInfluence
.864
.202
-.268
.050
.135
GovPolicies_PurchaseInfluence
.284
.886
.111
.040
-.084
CILPersonnelService_PurchaseInfluence
.072 -.163
.037
.905
-.104
Clarity_TermsConditions_PurchaseInfluence
.323
.428
-.394
.634
-.031
-.438
.004
-.267
.316
.698
PerceptionIndustry_PurchaseInfluence
.671
.578
-.283
.083
.075
PerceptionOtherIndustry_PurchaseInfluence
.827
.450
-.002
.172
-.168
CIL_CSR
.945
.139
.138
-.019
-.089
Inflation_PurchaseInfluence
-.081 -.699
-.038
.477
.222
CIL_GreenPromotion
-.699 -.615
.055
-.020
.060
FutureCILPlans_PurchaseInfluence
Table 6.14
By analyzing the maximum value of each rotated component we can distribute them in the 5
whole components that they have been reduced to. The factors would belong to the
component in which they have the highest loading value.
Factor Name
Quality Inference
Quality
Future plans of CIL
Transportation
Services
Mode of Transport
Transportation Cost
Image Perception
Organizational
Service
Government Policy
Government Policies
Table 7.1
Our study therefore in conclusion, provides the above tabulated factors that can be used as
stepping stones for the creation of a brand for coal supplied by Coal India Limited.
Quality Inference
The quality of coal supplied by Coal India becomes very important to the consumers in the
sense that it is linked to the efficiency of the power plants and affects the output directly.
Transportation services
Proper mode of transport helps the consumer reduce costs to a great extent. Poor transport
infrastructure facilities increases the cost and causes inconvenience to the consumers.
Image Perception
Through our study we have found that the decision to purchase coal whether it be Domestic
Coal or Imported Coal, does depend to a certain extent on the perception of the other players
in the same Industry to which a particular customer belongs. Similarly the assessments of
other Industries about the coal supplied by CIL also influences a consumers buying
behavior.
The information provided by CIL on the quality and grade determination methods if
transparent builds the reputation of the organization in the minds of the consumers and thus
enhances chance of the same consumer buying Domestic Coal from CIL.
Organizational Service
To build the brand for coal, it is important to build the reputation of CIL. Now this can be
done by improving the image, meaning with considering intangible evidences. It can also be
improved by improving the interaction between company agents and consumers. If CIL
provides transparency and clarity on the terms and conditions for selling of coal, it also
improves the perception of the consumer.
Government Policies
Since coal is a national commodity used for the good of the nation and industrial growth, it is
extremely important that the friendliness of government policies be understood by the
customers. If government policies are favorable, it creates a positive attachment for the
consumer towards the Domestic Coal
IMPLICATIONS
No artificial demand would be generated: If the coal allocated to the consumers match
their actual requirements or actual consumption, then the gap between demand and supply
may be greatly reduced. This can be done by periodic reviews targeted towards matching the
actual consumption of coal and the quantity allocated to the plants.
For a more comprehensive outlook it might have been possible to have a larger reach
of consumers to help us in our study, but time and geographical constraints limited us.
Our study focused more on establishing what the current consumers believed about
the state of coal supply by Coal India Limited. A further step would have been to
explore on the possibilities that might have been presented by potential consumers
and their perceptions.
Since Government policies influence the coal industry in a major way, the current
political scenario in the country might result in certain ideological biases in the minds
of the respondents.
The technical aspects on our survey regarding the quality of coal were not necessarily
aspects which some consumers were aware of and hence the responses might not have
been accurate enough.
We believe that this study has thrown up potential branding factors and the next logical step
for the organization, if and when it chooses to do so, is to invest in preparing branding
strategies based on the factors concluded from our research. Coal India Limited currently
enjoys a monopoly in the country but it is never a bad idea to brand the coal they supply in
order to have a head start on any competition which might crop up in future.
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www.coalindia.in