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Case Study Steelco

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| Steelco | | | Week 3 | Case Analysis of Marketing | | |

Steelco

Case Analysis of Marketing
Introduction
The so-called I-beams are a standard element in modern construction used to build e.g. bridges, stadiums and super high-rise buildings. The I-beam market can be further segmented into small size beams up to 14-inches, in which a number of firms are active and a kind of perfect competition is taking place. As for the 14-inch to 24-inch range only Steelco and USX remain in an oligopoly. Above 24-inches though, USX holds a monopoly. Looking at the steel wide-flange beams in the US as a whole, one can see that Steelco and USX are the two major oligopolists. With Steelco pushing into the large range sector, ideally it can …show more content…

It is not unheard of that steel mills practise direct marketing with constructors, but it is risky since a contractor would always want a one-stop service: fabricators can always satisfy the need of various materials, but Steelco has only beams to offer.
In addition, vertical integration in this industry is cost intensive and requires a large amount of information and processing capabilities, which Steelco lacks. For that reason one can say that the marketing channels are set and cannot be easily changed.
As for the price, even the firms’ very own sales people are concerned that the current price of the new large beams is much too low to justify the relevant expenses. But since Steelco will have a monopoly in the large range I-beams, it can to a certain point adjust prices in its favour.
That leaves the product open for analysis. As mentioned above the use of steel I-beams is a standard procedure in modern construction works. The argument can be made that buildings can be finished with existing “standard” sized beams. However, that does not mean the use of above 36-inch beams would not make it easier. Especially, since steel beams are sold by weight and not by size. (Although there are differences between the big size beams and the small ones, it is relatively small). In other words, there is no reason why large size I-beams should not have a market in the US, a country that is prone to building ever bigger and more complex

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