The Background and Story on Solution Marketing

POSCO’s technology-based Solution Marketing blends technology support with marketing activities to solve customer problems which allows customer value to be strengthened. It can be divided into five steps: 1) Industry·Market Analysis, 2) Solution Development & Care, 3) Solution Release & Promotion, 4) Support and Accelerated Sales, 5) Enhanced Customer Relationship Management.

Solutions provided from the steel industry come in the form of a combination of rolled steel (hardware) and utilization technology (software) which can be modified based on market situations and customer demands. By offering such solutions, POSCO is looking towards not only meeting customer demands but also to greater profitability by aggressively expanding sales of high-grade steel.

An Example of Solution Marketing

Until now, POSCO has used EVI to find customer needs first and then sold the appropriate kinds of steel. The new Solution Marketing is not only about finding customer needs, but also proactively finding the necessary technologies and workforce. During an internal presentation for POSCO employees, CEO Kwon used automotive steel sheets as an example of Solution Marketing.

He explained, “Although automotive steel sheets require high strength, if this compromises its formability, auto companies can face difficulties since weldability opportunities for car design decrease. In order to reduce problems that high strength steel used for light weight benefits can create, POSCO is providing molding and welding technologies, as well as, evaluation methods. By supplying more than just the steel hardware, we can provide our customers with optimal solutions. This is Solution Marketing. Instead of limiting to a single product, we must provide a “package” solution for our customers.”

Meeting with Domestic Shipbuilders to put Solution Marketing into Action

POSCO has sought to improve the domestic ship building industry through building trust, sharing visions, and providing win-win technology-based solution marketing to increase value for customers.

In order to strengthen “Solution Marketing” that is mutually beneficial to POSCO and its clients, CEO Kwon has made in-person visits to meet with clients in the shipping building industry including Hyundai Heavy Industries, Samsung Heavy Industries and Daewoo Shipbuilding & Marine Engineering (DSME), in order to promote and underline Solution Marketing.

Make Listening to Client Needs a Priority

On April 4, 2014, CEO Kwon went to Ulsan to meet with the Jaesung Lee, CEO of Hyundai Heavy Industries. After having a meeting and touring the facilities, he made his way to meet with the head of Samsung Heavy Industries to discuss ways to strengthen cooperation.

Pictured here: POSCO’s CEO Ohjoon Kwon listening to a presentation about LNG Vessels by Daeyoung Park, CEO of Samsung Heavy Industries

During these meetings, CEO Kwon was able to listen to client needs and promote POSCO’s Solution Marketing. During his meetings with clients that week, CEO Kwon said, “In order to recover from the global economy downturn, shipbuilding and the steel industry must strengthen mutual trust and cooperate for quick recovery.”

Pictured here: POSCO’s CEO Ohjoon Kwon meeting with Jaesung Lee, CEO of Hyundai Heavy Industries on his visit to Ulsan on April 4, 2014

On April 21, 2014, CEO Kwon went to Geojedo Island which is where one of the dockyards for POSCO’s customer, Daewoo Shipbuilding & Marine Engineering, is located. He met with the Jeho Ko, CEO of DSME, and visited sites just like he had done in Ulsan. On this day CEO Kwon emphasized, “POSCO is focusing on strengthening its competitiveness to be the global top company. Using technology-based Solution Marketing, we hope to substantially contribute to improving value for our customers.”Pictured here: POSCO’s CEO Ohjoon Kwon in Geojedo Island during a visit with DSME on April 21, 2014.

How Solution Marketing fits into the Future for POSCO and Its Customers

Pictured here: Offshore plant utilizing POSCO steel

Daewoo Shipbuilding & Marine Engineering and other Korean shipbuilders are making developments for LNG vessels for polar regions, deep sea offshore plants, eco-friendly and efficient ships. Therefore, it is crucial that POSCO can continuously supply the necessary materials to foster such advancements. In the past, technology advancements were based on meeting client needs. However, in the present, it is important for POSCO to anticipate material developments to grow and make advancements together.

POSCO also plans to reinforce R&D strategies and consolidate strategic partnerships. In addition, POSCO aims to provide materials necessary for individual customer projects. The responsiveness to customer needs in terms of product quality, size and more must be met in order to improve the overall satisfaction of POSCO’s customers. As such, strengthening Solution Marketing will be an important tool to make value-added offerings a reality.

Case Study for Solution Marketing: Fast Response to Steel for Ships and Technology Development

A good case study for Solution Marketing is how POSCO quickly created steel products for shipbuilders to use after the International Association of Classification Societies (IACS) created new regulations to improve ship vessel stability. Soon after the IACS announced these changes, POSCO developed technologies to provide steel products and technology that would meet these new standards. Customers in the shipbuilding industry could utilize POSCO’s solutions to design new ships. The pre-emptive technology development and quick response from POSCO allowed domestic shipbuilders to design and construct ships without delays and helped POSCO customers increase their value.

In the coming months and years, POSCO will continue its efforts to make advancements for customers across various industries by building trust, sharing visions, and cooperation for technology advancement and cooperation. Solution Marketing is a strategy that can help POSCO become “POSCO the Great”.

What is CLOV FPSO project?

The CLOV project, consisting of the oil fields at Cravo, Lirio, Orqudea and Violeta in Angloa’s offshore, involves the integrated development of a four-field cluster on the northwest sector of Angola’s offshore block 17, in water depths ranging from 1,100 to 1,400m. The FPSO (Floating Production, Storage and Offloading) facility to be utilized for the project is designed to receive, process, and store oil or natural gas, and can be maneuvered to serve different locations.

POSCO, the first steel manufacturer to provide the entire supply

Two years ago, Total, the project operator, awarded Daewoo Shipbuilding & Marine Engineering (DSME) a $1.8 billion engineering, procurement, installation and construction contract for the FPSO. With its 34-year relationship with DSME, POSCO became the first steel manufacturer to provide the entire supply of thick plate steel for a major offshore facility, from a single mill. This included some 88,000 tons of steel plate. The scale of the CLOV floating facility is huge, involving construction of what will be one of the world’s largest FPSOs. The vessel is 305m long, 61m wide, and weighs 110,000 tons. After the Pazflor FPSO, CLOV is reputed to be the second-largest FPSO in the world.

POSCO ‘Z Quality’ steels

Steel selection was a key component of the FPSO design and construction, and the need to procure high-strength, quality steel in turn underscored the importance of selecting the correct steel manufacturer. POSCO was already registered with Total as a supplier capable of meeting the strict requirements for offshore structures, one that could quickly respond to changes in plans and requirements, as needed.

POSCO was also able to meet technical requirements that only a few mills in the world are capable of meeting. Out of the total 88,000 tons of steel supplied, approximately 20,000 tons were Z quality (low-sulphur steel with tested level of ductility through the thickness direction) for the topsides and hull. These high-quality steels are often specified for critical applications, since they must endure high levels of stress. Besides, the POSCO facilities in Korea are one of the few steel mills capable of producing and supplying these Z quality steels.

POSCO completes the job in just 10 months

Another challenge was the short construction timeframe called for on the CLOV project. For most offshore facility construction projects, suppliers typically have one year to complete their order. Often, the extended time period is needed to allow for changes in design and specification that inevitably arise over the life of such projects. Here again, POSCO’s ability to respond quickly proved vital.

POSCO was able to develop and incorporate offshore structure steel production technology and lessons learned from its involvement in the Pazflor FPSO project, again with Total and DSME, As the first company in the steel industry to implement the Process Innovation business management software system since 1999, POSCO has been able to successfully manage the total process through this established IT system, receiving orders and delivering supplies quickly in response to client requests. Based upon this technical skill, POSCO was able to respond appropriately and in a timely manner during the CLOV FPSO construction process, when design changes and sudden requests were made. Even with design changes and sudden requests, the Korean steel supplier was able to provide its deliverables in approximately 10 months, from January to October 2011.

Once the final stage of work on the FPSO are completed this spring, the vessel will be prepared to sail away in May to its designated location in Angola’s offshore block 17. There, it will be moored and stationed in preparation for a mid-2014 commissioning.

POSCO will continue to sail on

In September 2011, POSCO agreed with Shell, a multinational oil company, to exclusively supply thick plates the firm needs for offshore plant projects by 2016. POSCO has also signed an MOU with GE to co-develop and supply rolled steels and related technology for energy plants.

In partnerships with POSCO E&C, Daewoo International Corporation, SungJin Geotec and other POSCO Families, POSCO is aiming to complete the developments of over 60 types of energy steel materials for obtaining energy plant contracts as well as supplying relevant steel materials. In doing so, POSCO targets to gain a 10% market share of the global energy thick plate industry by 2020.