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”.

This was the second case where all thick plates of a single project were supplied altogether, and POSCO is the only global steel company to have done so. The first being was for FPSO unit of the Daewoo Shipbuilding and Marine Engineering (DSME) where 90,000 tons of thick plates were supplied.

The 150,000 tons of thick plates supplied was approximately 58% of the entire 260,000 tons of steel materials required in Shell’s LNG development project structure, and is equivalent to an amount that can build 7 buildings at the POSCO Center scale which used 20,000 tons of thick plates.

The ‘Shell’s FLNG Project’ to which the company successfully supplied all thick plate materials is a 3 billion USD scale order won by Samsung Heavy Industries from Shell in 2010 for the world’s first LNG drilling, production, and storage facility (FLNG: Floating Liquefied Natural Gas).

It is a mega-scale offshore plant that has a length of 468 m, a width of 74 m, and a height of 100 ml, producing 3.5 million tons of LNG annually, with the capacity to store 450,000㎥ of LNG which is equivalent to three days of all LNG consumption in Korea.

▲ Image of the world’s first LNG drilling and FLNG facilities led by Shell

POSCO was able to supply all thick plates to the massive project as it was recognized for excellent materials, timely supply, and responsiveness to urgent requests.

POSCO satisfies strict safety and quality standards applied to energy steel materials used in offshore and deep sea plants such as the FLNG, as they must be able to be processed for application to various parts, have corrosion resistance against water, and have high toughness and solidity of steel materials, as they must firmly connect each part of the facilities and equipment.

To supply all products within the appointed date of delivery, the company also prepared all necessary thick plate production lineups for the project and minimized defect rates.

In addition, the ability to efficiently respond to urgent steel material orders due to inevitable frequent changes in design played a factor in being able to supply all the materials.

This project is particularly being seen as an exemplary case where joint correspondence with the client company led to successful execution.

POSCO has successfully carried out steel material development for LNG partitions and low temperatures, as well as applicability tests and the WPQT (welding procedure qualification test) for shipyard drydock equipment through joint technology cooperation with Samsung Heavy Industries.

POSCO prepared a project task force where all related departments of quality control, manufacturing, production, and transportation logistics participated so that there was no delay or mishaps in supply through production status monitoring as well as quality and supply management.

The company will continue to proactively provide support at early project stages so that client companies can receive large-scale overseas orders, and plans to provide a firm system to be able to supply excellent quality steel materials at the right time when needed.

Furthermore, considering energy steel materials as a future match for the steel industry, the company expects to see results in its efforts of strengthening R&D and investment, through marketing in the field, and to also strengthen its position in the energy steel material market.

The global energy steel material market has been supplied by select steel companies of Europe and Japan with high technology levels and excellent supply records, but POSCO has rapidly increased market share by successfully completing major global projects based on its technology.

Meanwhile, the company has completed development of 23 types of steel, with an additional 60 types of energy steel material developments planned for completion.

Further, POSCO family companies POSCO E&C, Daewoo International, and Sungjin Geotec, by supplying steel materials concurrently with energy plant orders, has the goal of reaching a market share of more than 10% in the global energy steel material market by 2020.