POSCO Strengthens Brand Marketing... Overcoming COVID-19 Through Domestic Market Expansion

Active Marketing for Ganggeonjae Integrated Brand 'Inobilt'
Expanding Domestic Market Ahead of Full Impact of COVID-19 in Q2

[Asia Economy Reporter Hwang Yoon-joo] As the automotive industry, a major client of POSCO, was hit by the COVID-19 pandemic, POSCO has focused on individual product brand marketing and has begun expanding its domestic market.

According to the steel industry on the 21st, POSCO is strengthening cooperation with large construction companies through the integrated structural steel brand 'Innovilt,' launched last year. Through this, it is also expected to expand sales of composite pile foundations using POSCO steel products instead of the commonly used H-beams in construction processes.

POSCO has recently been putting effort into product brand marketing. The structural steel brand 'Innovilt,' launched in November last year, is a representative example. Along with Innovilt, marketing for the new product 'PosArt Marble' of the color steel sheet brand 'PosArt' is also actively underway.

This approach differs from POSCO's previous marketing strategies. Rather than emphasizing a single product brand, POSCO has focused on technology that can carry the phrase 'world's first' and customized 'solutions' in the form of integrated orders and supply.

A representative case is the 'Early Vendor Involvement (EVI)' marketing during former Chairman Jung Joon-yang's tenure. This strategy involves having key component suppliers participate in the early stages of new car development by automakers to improve quality and reduce costs. POSCO introduced this concept into steel sales. At that time, it was the first instance of a steel company conducting EVI activities targeting all business customers, including shipbuilding and construction. Thanks to this marketing, POSCO recorded its highest-ever sales of 68.939 trillion won in 2011.

In particular, POSCO introduced a 'vehicle lightweighting' project targeting automotive customers with high steel demand, which attracted global attention. Based on this, during former Chairman Kwon Oh-joon's tenure, 'total solution' marketing was emphasized. A steel industry insider explained, "At that time, POSCO marketed that 'you can build a whole ship with our steel.' Shipbuilding involves not only plates but also hundreds of types of steel products such as pipes and various cold-rolled steels. POSCO emphasized that it could produce all these according to customer orders."

The reason POSCO has recently emphasized product brands centered on structural steel is the judgment that the existing strategy has limitations in sales. This is due to the main upstream industries such as shipbuilding and automotive being shaken by the COVID-19 crisis. The impact on steel companies is expected to become more pronounced in the second quarter of this year. Accordingly, POSCO plans to expand sales of high value-added products with high profitability, focusing on the domestic market. Strengthening structural steel brand marketing is interpreted in this context.

According to the Korea Iron & Steel Association, the domestic market size for construction steel is about 22 million tons, with rebar and H-beams, mainly used at construction sites, accounting for 10.6 million tons and 2.7 million tons respectively. Dongkuk Steel primarily sells rebar, and Hyundai Steel holds the number one market share in H-beams. POSCO has a broader product portfolio including architectural interior and exterior materials and steel sheets. POSCO's domestic construction steel market size is estimated at about 30 million tons.

A steel industry official evaluated, "Although competition will intensify in the short term as POSCO actively promotes construction steel marketing, in the long term, it will lead to technological competition such as the development of construction steel products, which will be positive from a market perspective."