Industrial Marketing Management 33 (2004) 345 – 354

Successful branding of a commodity product:

The case of RAEX LASER steel
Daniel H. McQuiston*
Department of Marketing, College of Business Administration, Butler University, 4600 Sunset Avenue, Indianapolis, IN 46208, USA
Received 9 November 2002; received in revised form 10 June 2003; accepted 21 July 2003

Abstract

In today’s competitive business environment, industrial marketers must work harder than ever before to achieve some degree of
differentiation for their products to avoid being viewed as a commodity. Many firms have sought to achieve this differentiation by branding
their products. Branding, however, is more than simply putting the company’s name on a product and broadcasting that name to its target
audiences. For industrial products, branding is a multidimensional construct that includes not only how the customers view the physical
product, but also the logistics, customer support, and corporate image and policy that accompany this product. This paper discusses how the
Finnish steel company Rautaruukki was able to successfully incorporate these four components into their RAEX LASER steel, a brand
specifically targeted for job shops who do laser cutting. The paper concludes with managerial implications and suggestions for how industrial
marketers might implement their own branding strategy.
D 2003 Published by Elsevier Inc.

Keywords: Branding; RAEX LASER; Commodity product

1. Introduction compelling and consistent brand experience for their cus-

In today’s competitive business environment, customers
in the business-to-business (B2B) arena have more infor-
mation, access to more choices, are more sophisticated, and
as a result have higher expectations than ever before. For the
marketers of industrial products, the end result of this highly
competitive environment is having to put forth a greater
effort to create some form of product differentiation to avoid
their products being viewed as commodities. To cope with
these challenges and avoid this commoditization, many B2B
marketers are increasingly seeking to brand their products to
differentiate themselves from their competition (Mitchell,
King, & Reast, 2001; Mudambi, Doyle, & Wong 1997;
Ward, Light, & Goldstine, 1999). Coupled with this desire
for differentiation is the fact that an increasing amount of
research has shown that branding of industrial products
plays a more important role in industrial decision making
than has been thought previously (Mudambi, 2002).
As marketers of consumer products have discovered, the
companies that thrive will be the ones that create the most
* Tel.: +1-317-940-9474; fax: +1-317-940-9455.
E-mail address: dmcquist@butler.edu (D.H. McQuiston).
tomers (Prophet, 2001). An important component of this
brand experience is the ability to develop a relationship with
the customer at key interaction points of that experience. To
develop this relationship, the marketer must understand how
the B2B customer defines the concept of ‘‘value’’ and then
work to deliver that value throughout all interactions with
the customer. When the product is delivered in a way the
customer understands, desires, and is willing to pay for, the
brand has a greater opportunity of having a higher perceived
value for that customer. Having a brand with high perceived
value will set the stage for a long-lasting relationship to
develop, and the depth of the relationship between the brand
and its customers will be the foundation for the ongoing
success and sustained competitive advantage despite dis-
ruptions in the marketplace (Schultz, 2001).
While consumer brands have traditionally sought to
develop these relationships, industrial products are increas-
ingly using branding to differentiate their product and also
develop these relationships. Industrial firms that are able to
create a viable brand identity for their product or line of
products can achieve that degree of differentiation that can
be the difference between success and failure in the mar-
ketplace (Mudambi, 2002).

0019-8501/$ – see front matter D 2003 Published by Elsevier Inc.

doi:10.1016/j.indmarman.2003.07.001
346 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
This paper will present a case study detailing how the
Finnish steel company Rautaruukki Ojy was able to create
the RAEX LASER brand for use with laser cutting
machines. Within this case study will be examples of how
Rautaruukki, by developing a thorough understanding of the
needs of all their relevant audiences, went about trans-
forming the basic commodity product of flat hot-rolled steel
into a highly differentiated product that was able to meet the
unique needs of their customers better than their competi-
tion. This in turn allowed them to create a successful brand
identity for this product in the highly competitive European
steel market.
2. Consumer branding research
A logical point of departure for developing an under-
standing of industrial branding is to examine the research on
consumer branding. As has been pointed out elsewhere
(Mudambi et al., 1997), the depth and extensiveness of
consumer branding research offer industrial branding
researchers an extensive background into the nuances of
branding that can be applied in the industrial sector. Some of
the better-known writings in this area are by Aaker (1991,
1996) who has defined how brand equity generates value in
the following areas: brand loyalty, brand awareness, per-
ceived quality, brand associations, and other brand assets.
Other writings have shown how dominating brands can
create meaningful images in the minds of their customers
(Keller, 1993; Shocker, Srivastava, & Ruekert, 1994), can
predict brand preference (Bass & Wilkie, 1973; Jacoby &
Kyner, 1973), and increase brand loyalty (Shocker et al.,
1994).
The inherent strength of a consumer brand has tradition-
ally been thought of as those parts of the brand that can be
vocalized or communicated as well as easily recalled by the
consumer (Kotler, 2002). Keller (1993) described brand-
name awareness as the strength in the customers’ mind that
identifies the brand under differing conditions as well as the
degree of likelihood that the consumer will recall the brand
name. One of the most studied aspects of successful brand-
ing has been name recognition, especially where repurchase
decisions rely heavily on the previous experiences of the
consumer (Aaker, 1989). Other research has shown that
strong positive associations can be developed, which can
connote a uniqueness to the brand, with the success of the
brand depending on a retained understanding of the core
meaning of the brand and the ability of the consumer to
maintain a consistent image over a long term (Doyle, 1988).
This retained understanding on the part of consumers will
result in them being able to infer quality, value, reputation,
and credibility from an acceptable brand name (Zeithaml,
1988), which can in turn be linked to these consumers
forming an overall favorable image of the brand (Maathuis,
1993). Drawing on their experience with studying consumer
brands, Prophet (2001) has proposed five steps to building a
strong consumer brand: clearly articulate the brand’s iden-
tity, establish a customer value proposition and use it to
guide each department, define the optimal customer expe-
rience, cultivate relationships with customers, and work to
strengthen the brand over time.
3. Branding research in the B2B arena
Although research on branding industrial products has
been limited, a number of empirical studies have been
conducted in recent years that have expanded the body of
knowledge of the subject. In one of the first attempts to
examine industrial branding, Saunders and Watt (1979)
examined the use of brand names for industrial fibers, which
are basically commodity industrial products. While they
concluded that industrial brand names tend to be confusing
and not effective, they surveyed housewives rather than
industrial purchasers, somewhat calling their results into
question. Sinclair and Seward (1988), operating on the
general premise that branding is less effective for industrial
products than for consumer products, looked at branding in
the paperboard industry. Their results found that the primary
reasons for branding industrial products were to provide
some degree of differentiation, to better identify the product,
to emphasize the product as a specialty product, and to
develop a loyal customer base. Another key finding of the
Sinclair and Seward research was that a number of manu-
facturers failed to place enough emphasis on educating the
intermediaries and end users about the uniqueness of the
brand, and as a result their middlemen did not feel as though
branding was as important as the manufacturers did.
Shipley and Howard (1993) found that companies in the
United Kingdom used brand names widely and that brand
names and brand naming were important to manufacturers
of industrial products. They also found that industrial brand
names were perceived by these manufacturers to be effec-
tive, were important in establishing industrial marketing
positioning, and were especially important for small firms
to overcome what may be perceived as a relative disadvan-
tage. Using the Shipley and Howard research as a point of
departure, Mitchell et al. (2001) set out to examine to what
extent managers in industrial firms (also in the UK) perceive
there to be any unique value to branding their products and
whether or not these branding associations provide any
competitive advantage. Their findings indicate that indus-
trial firms hold very positive views about the benefits of
brand names and feel that branding is valuable to marketing
success and is a major corporate asset. In addition, industrial
firms perceive a number of competitive differential benefits
in the use of manufacturer brands, with quality, reliability,
and performance rated as primary factors by a clear majority
of the respondents.
Other research has attempted to examine the construct of
brand equity of industrial products, with one study defining
it as buyers’ willingness to pay a price premium for a
 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
particular brand, recommend the brand to peers, and give
special consideration to another product with the same
company brand name (Hutton, 1997). A second study
defined brand equity as the set of associations and behaviors
on the part of a brand’s customers and channel members
which allow a brand greater volume and margins than it
could obtain without the brand name (Gordon, Calantone, &
di Benedetto, 1993). In a study in the electrical products in
industry, Gordon et al. (1993) found that brand equity was
highly present in B2B markets. Among their key findings
was because B2B products tend to be branded with firm
names loyalty tends to be more global in nature, extending
across all the firm’s product lines. Second, because this firm
versus brand loyalty exists, efforts to position new products
in a manner different from those existing products may
prove to be difficult if not impossible. Third, loyalty in the
B2B sector encompasses not only the firm and its products,
but also the channel members employed to distribute the
product. Finally, they propose that only limited means are
possible to change existing perceptions outside of establish-
ing or acquiring subsidiary operations.
In another study involving industrial brand equity, Hut-
ton (1997) found brand-building investments in B2B mar-
kets to be worthwhile activities to the extent that these
investments will elicit brand – equity behaviors. He also
found the presence of a strong brand to be a positive factor
and the potential for brand extensions and brand synergy
across somewhat disparate products categories to be high.
However, on the other hand, the potential of an unsuccessful
product harming the reputation of another product with the
same brand name also appears to be high even when the two
products are dissimilar. Another finding was that while the
risk of organizational failure is a concern, the fear of
personal failure may be the bigger factor in brand decisions.
Owing somewhat to this finding, Hutton also found that
brand appeals tend to be more effective with the more
complex products that require greater service and support
with individuals who are pressed for time or resources or
who are concerned about the consequences of product
failure on themselves and/or their organization (Hutton,
1997). This finding is in keeping with a number of studies
that have examined perceived risk in the organizational
buying behavior literature, which has shown that industrial
buyers will choose recognized brand names from estab-
lished companies as a way to reduce both corporate and
personal risk (Henthorne, LaTour, & Williams, 1993;
McQuiston & Dickson, 1991).
While the above research has served as a foundation for
developing an understanding of industrial branding, their
samples included either manufacturers or middlemen and
provide no evidence as to the effectiveness of branding
efforts on industrial customers (Mudambi et al., 1997). In a
comprehensive review of the literature, Mudambi et al.
(1997) propose that intangible factors as well as tangible
factors are important in industrial decision making, and to
understand successful brands, each brand attribute must be
347
analyzed from the perspective of the expected value to the
customer [italics added]. Synthesizing the literature, they
define brand value as having four integral components:
product performance, distribution performance, support serv-
ices performance, and company performance. They go on to
propose a conceptual model of branding, including the
tangible and intangible elements of each of these compo-
nents. In another study, Mudambi (2002) found that indus-
trial buyers consider three bundles of attributes in their
purchasing process: the product, the augmented services,
and the branding. In a study of the purchasing of ball bearings
in the UK, she used cluster analysis to identify three distinct
buyer types: ‘‘highly tangible,’’ who value physical product
properties and price; ‘‘branding receptive,’’ who perceive the
three branding elements of brand name awareness, brand
image or reputation, and brand purchase loyalty to be
important; and ‘‘low interest’’ who generally did not feel
that any of the attributes were more important than the others.
4. Towards a more contemporary view of branding
When one views the literature on branding, what is
noticed is a progression from a more traditional view to a
more contemporary view of how companies should use
branding to create a competitive advantage for themselves.
The traditional view of a brand for both consumer and
industrial products was often limited in its definition to
merely creating an awareness of a product or service. A
company created the name, broadcasted this name to its
target customer segments, and then applied the name to its
corporate identity as well as a set of products. The purpose
of a brand was primarily to make the company, product, or
service recognizable. However, a recent study found that a
majority of brands in a wide range of consumer product
categories are becoming less and less differentiated and
more and more like commodities where price is the primary
factor in the purchase decision. The study goes on to suggest
that the root cause of the recent demise of many brands is
due to the organization not sufficiently developing a distinct
brand identity for their product (Copernicus Marketing
Consulting, 2000).
All of this would suggest that marketers need to reeval-
uate their current branding efforts and work to establish a
strategy that develops truly differentiated products that are
set apart in the minds of their customers. However, another
study found that only 53% of firms have a long-term
branding strategy, and that the brand strategy is rarely
aligned with other functional strategies. Moreover, this same
study found that brand-related internal communications and
training are not provided consistently or thought to be
effective. Finally, the study found that investments in build-
ing brands continue to be focused on traditional marketing
activities and less on areas such as customer service and
human resource training, which help support the brand
strategy (Prophet, 2001).
348 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
For industrial products, Ward et al. (1999) point out that
what is needed is a shift in managerial thinking from a
product-centric approach to a promise-centric approach.
This more contemporary view of an industrial brand is to
position the brand as a promise, as a set of expectations that
the product offers a certain type and level of value. Provid-
ing this real value on a consistent basis is at the heart of
building strong relationships with customers and can no
longer be defined solely in terms of features and perfor-
mance. Customer decisions about products and brands are
based on objective and subjective data, with recent research
showing that subjective data oftentimes have more of an
effect than thought previously (Mudambi, 2002).
For the B2B marketer then, a brand can be defined as
‘‘. . . a distinctive identity that differentiates a relevant,
enduring, and credible promise of value associated with a
product, service, or organization and indicates the source of
that promise . . .’’ (Ward et al., 1999). Not only must the
organization promise this value, but this promise must be of
such a nature that the desired target audience understands,
desires, and is willing to pay for this promise. As has been
discussed above, ‘‘value’’ is a multidimensional construct,
including both the tangible and intangible features of a
product. The four components of product value that
Mudambi et al. (1997) propose (product performance,
distribution performance, support services performance,
and company performance) serve as a appropriate illustra-
tion of this multidimensional nature of value. An under-
standing of the multidimensional nature of and the delivery
of this real value is at the heart of successful industrial
branding. As the customer experiences successful interac-
tions in each of these four areas with a supplier over a period
of time, the customer perceives there to be a real benefit in
continuing with that supplier. As the sense of value in these
interactions continues to grow, customers develop a sense of
trust that the supplier will continue to deliver that value, and
the seeds for a meaningful relationship are sown. It then
becomes incumbent on all members of the supplier organi-
zation to become committed to delivering that value at key
interaction points with the customer. When this happens, the
brand can serve as a catalyst for strengthening that relation-
ship and for forming a bond that competitors will find
difficult to break.
While it is possible to tailor these promises, a firm must
take care not to attempt to be all things to all people. A firm
must be aware of its own capabilities and the desires of its
customer segments before developing its promise of deliv-
ery. A fundamental tenet of marketing strategy is that a firm
must be equal to or better than its competition on all
elements of the marketing mix, with the excellent firms
excelling at one or more of these elements (Bonoma, 1984;
Peters & Waterman, 1982). One has only to pick up a
current issue of any business publication to discover firms
that have ventured into and failed in areas in which they had
little or no expertise or that their customers did not desire.
Thus, having a strategy to continually accumulate and
update the constantly changing needs and demands of the
target customer audiences is critical to the success of a
branding strategy.
5. Towards development of a successful industrial brand
The literature on industrial branding clearly indicates that
branding is alive and well in industrial products and when
accomplished strategically can serve as a viable competitive
advantage for industrial firms. While branding on both the
consumer and industrial sides basically represents a promise
to the customers, the B2B marketer must realize and account
for the key differences in industrial brands from consumer
brands. On the consumer side, once the product has met the
necessary physical requirements for the consumer, the
promise of the brand tends to be more intangible in nature,
offering consumers the emotional security of being able to
recall and deal with a recognized brand name. However, on
the industrial side, a brand represents a multidimensional
promise of value that includes more factors than simply the
performance of the physical product. In addition to the
performance of the physical product, a second factor inte-
gral to the success of a brand is the ability of the manufac-
turer to deliver the needed products and services in a timely
manner, often through an intermediary. However, interme-
diaries on their own will not necessarily understand the
manufacturer’s strategy to differentiate the product or to
create a unique identity for that brand in the desired
customer segment and therefore often are unable to com-
municate the benefits of that product to the end user. The
manufacturer therefore must take special measures to com-
municate their reasoning behind the brand strategy and the
value created by this brand to ensure that the intermediaries
understand and communicate this value to the end users.
The third factor that is important in industrial branding is
company support services. All members of the organization
must realize that their customers may define the value of the
product by the way a company representative responds to
their specific need at a specific point in time. Thus, a
pervasive strategy throughout the organization should be
that all members of the organization must respond to
customers in a reliable, timely, and efficient manner, en-
hancing the promise of the brand’s value in the customer’s
mind and endeavoring to deliver this value in key inter-
actions with the customer. Finally, because loyalty is often
directed more towards the entire company rather than a
specific brand, the company’s standing in the industry and
their overall reputation are also considered part of the brand.
This is often the intangible or emotional side of the brand,
which recent research has shown to have more of an impact
than was thought previously. This may be due in part to the
increased perceived risk industrial customers feel as a result
of dealing with an ever-increasing number of technically
complex product choices. Perceived risk is often a factor in
organizational buying behavior and the promise of value
 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
that the reputation a supplier company has can serve to
reduce this risk. The company then must endeavor to create
that positive intangible image for this brand through pro-
motions, public relations, and in every interaction with their
customers.
The case study of how the Finnish steel company
Rautaruukki Oyj (RR) went about creating a brand identity
for their RAEX LASER steel provides an excellent example
of how an industrial firm can implement the four compo-
nents of product, logistics, customer service, and company
image to create a viable brand identity for their product. As
will be seen, successfully applying these concepts allowed
Rautaruukki to create a differential advantage in the mar-
ketplace, which in turn has resulted in a profitable market
position for this product.
6. RR and the steel market in Europe
The worldwide steel market has been plagued by over-
capacity in recent years, only averaging an annual operating
return on assets of around 4%—roughly half the rate of
industries such as aluminum and paper. This is due largely
to the entry of a number of new players around the globe,
with the result being that almost 30% of the world’s steel
production comes from new plants belonging to companies
that did not exist 25 years ago. Since 1980, the global steel
market has grown by less than 1% per year (Ahlberg,
Pitkanen, & Schorsch, 1999). Therefore, the purchase of
steel is viewed largely as the purchase of a commodity
product by many of its customers, with the lowest price
often being the deciding factor.
Because of these new entrants, steel production in plants
in Europe, North America, and Japan have averaged only
80% of capacity, which has most of these plants hovering
around the breakeven point and constantly searching for
ways to cut costs. Many companies have chosen to cut costs
by eliminating production bottlenecks, improving operating
capacity, or investing in incremental improvements. While
such efforts do provide economies of scale, they also
increase capacity by approximately 1.5%, compounding
the overcapacity problem. In order to compete in this
environment, industry analysts have recommended that the
smaller steel companies pursue a course of market special-
ization either in products, technical processes, or functional
capabilities to create an opportunity for differentiation and
to avoid commoditization (Ahlberg et al., 1999). If a smaller
company wishes to pursue this specialization strategy, it
becomes incumbent upon them to understand the needs of
their customer, create a product that meets these needs better
than the offerings of their competition, and differentiate that
product in the minds of that customer. It is this market that
RR has been forced to operate in and in an attempt to
compete has increasingly chosen this path of specialization
with some of their products. This paper will profile one of
those products, RAEX LASER steel.
349
Rautaruukki is the primary steel company in Finland,
with their main manufacturing operations located in Fin-
land, Sweden, and Norway with secondary manufacturing
locations in parts of the former Soviet Union and Eastern
Europe. Their product lines encompass those of many steel
companies—hot- and cold-rolled plates and sheets, zinc-
and color-coated sheets, and building products, as well as
one division that focuses on tubes and pipes. Rautaruukki
was founded in 1960 and at its inception was owned
entirely by the Finnish government. The company was
listed on the Helsinki Stock Exchange in 1989 and is now
owned approximately 60% publicly and 40% by the
Finnish government. With annual steel production of just
over 4 million tons RR is one of the smaller players in the
European steel market.
Rautaruukki realized early on that given their size
relative to the other players in their market (they are roughly
one tenth the size of their largest competitor) that a strategy
of market specialization, of carving out niches for them-
selves and serving the needs of those niches, would be the
most preferred way to compete in this market. Therefore, the
driving force behind their marketing strategy in recent years
has become one of what they have termed the ‘‘Total
Service Concept’’—having an in-depth knowledge of their
customer base and then using this knowledge to focus their
product offerings around customer needs with fast, flexible,
and reliable deliveries to customers within a reasonably
close geographical proximity to cut down on shipping costs
and delivery time.
7. The emergence of a market opportunity
In the early 1990s, Rautaruukki’s distributors in Ger-
many began to notice an increasing dissatisfaction from
many of their customers who were seeking steel to use
with their laser cutting machines. Laser cutters had been
around since the mid-1970s, but the cost of the early
machines was beyond the reach of many job shops, which
constituted a significant portion of the users of steel used
for this purpose. However, as the cost of the machines
began to decrease somewhat and their range of their
applications began to expand during the late 1980s and
early 1990s, more and more of these job shops began to
acquire these cutters. Another change that was taking place
was in the nature of the jobs for which the laser cutters
were used. When laser cutters were first introduced, laser
cutting was a process used for special applications where
the need for accuracy in the cutting process was not very
precise. However, as these job shops began to test the
abilities of these machines, it was soon noticed that laser
cutting gave the advantages of good dimensional accuracy
as well as a higher cutting speed than could be accom-
plished by more traditional cutting methods. Thus, the
market for laser cutters began to expand, especially on
the continent of Europe.
350 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
Even though the cost for laser cutters had decreased
somewhat, they were still fairly expensive, often costing
upwards of US$200,000. Therefore, many manufacturers
could not justify purchasing such an expensive machine
to use on a part-time basis, so as a result laser cutting
was often outsourced to job shops specializing in this
procedure. Orders to these shops could range anywhere
from cutting a single plate to cutting to several tons.
Laser cutting had become especially popular in Germany,
and it was here that the Rautaruukki distributors first
became aware of an opportunity to relieve the dissatis-
faction customers were having with the current sources of
steel supply. When laser cutters first began to be used,
steel was only available in a few thickness in one grade.
There were a number of producers of this steel so there
was a fairly wide variation in the properties of this steel
from one producer to another. However, as the use and
application of laser cutters expanded and the need for
different thickness and grades of steel began to rise, these
job shops became increasingly dissatisfied with the avail-
able product offerings. The German distributors noticed
this dissatisfaction and reported back to Rautaruukki the
need for a product customized to the specific needs of
this market.
Rather than simply charging into the market with a
predetermined idea of what their customers would want,
Rautaruukki was careful to listen to the ‘‘voice of the
customer’’ to gain insight into what their customers’ needs
were and become ‘‘hardwired’’ (Whiteley & Hessan,
1996)—having a direct, permanent connection—into those
customers. Rautaruukki conducted a series of discussions
with distributors, current customers, and past customers to
gain a better understanding of what each groups’ dissat-
isfactions were. What they discovered was that customers
were looking not only for a better grade of steel but a host of
support services to go with the physical product. It was then
that Rautaruukki began to give serious consideration as to
how they might determine what their entire product offering
might look like and how they might be able to meet all these
customer needs in one package with a single identifiable
brand.
As was mentioned above, the primary market for this
steel was mainly job shops who not only needed to
provide a good quality product but one that was delivered
in a relatively short time frame to allow them to meet the
needs of their customers. The job shop business tends to
be largely transactional in nature—a customer contacts a
job shop with a need that usually must be handled quickly
and expediently. If the job shop handles the transaction
with minimal difficulty, the chance of receiving a repeat
order is increased. As these job shops would purchase this
steel from their distributors primarily on an as-needed
basis, it was critical for Rautaruukki to have the complete
and total cooperation of their distributors to not only
process and deliver orders quickly, but to share inventory
when possible. These job shops also needed Rautaruukki
to understand the nuances of the laser cutting process and
offer technical support when needed, which was a bit
unusual in the steel industry. Finally, they needed all of
this done with a supplier with a recognized corporate name
that could be relied upon for an extended period of time
and who also would take the opportunity and initiative to
build the trust necessary to consummate these transactions.
To make this happen, all of Rautaruukki’s employees had
to be committed to a common operating standard and be
willing to assist either the distributor or end user with
whatever needs they might have. In short, Rautaruukki’s
distributors were looking for a complete package—all of
these features wrapped up in an identifiable branded
product that could meet all these needs.
8. Developing the brand
The challenge for Rautaruukki then became one of not
only how to develop a product with the physical properties
desired by both the distributors and the job shops, but to
include all the other desired services at a price that would
allow them to make a profit. They also had to have enough
product differentiation to avoid being viewed as a com-
modity in a market saturated with competitors. In consid-
ering the needs of both the distributor and the job shops
discussed above, it became clear to the Rautaruukki
management that they needed to concentrate on developing
a brand identity that provided a total solution to these
customer groups that would encompass the product, logis-
tical, customer support, and corporate image dimensions—
the same dimensions that the new conceptualization of
industrial brands promotes. Rautaruukki carefully con-
structed their total solution around four key components:
a technical (product) solution, a logistical solution, a
customer support solution, and a corporate image and
policy solution. If they could provide this total solution
successfully and identify it by a brand name that was well
known and respected in the industry, the stage would be
set for providing the customers that promise of a consistent
brand that has become so important in this competitive
environment. For the brand they chose, the name of RAEX
LASER—RAEX (RYE-x) for the manufacturing division
and LASER for the specific application of the steel. A
diagram of this process is shown in Fig. 1, and how they
developed and provided each component of this brand will
be discussed individually.
8.1. The technical solution
The technical solution centered around making the
physical properties of the steel fit the specific needs of
both the distributors and the job shops. In laser cutting,
product consistency both within an order and from one
order to the next is very important. Laser cutter machine
operators first need to enter all the cutting parameters for
 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
Fig. 1. Components of the RAEX LASER steel brand.
a certain job into the machine and then store these
parameters in the machine’s memory, which can be a
very time-consuming process. Then, should the same or
even a different customer have the same cutting need at
some time in the future, the machine operator has only to
call up the stored parameters and begin the cutting
process. Being able to call up the stored parameters
saves valuable time for both the operator and the ma-
chine by eliminating what can be very time-consuming
set-up procedures.
However, this technical solution only works if the
properties of the steel are consistent for every order.
Thus, it became important for Rautaruukki to manufac-
ture the steel with the right chemical composition, the
desired surface quality and structural flatness, as well has
having low residual stresses with good weldability and
flangeability. These properties are also important in
processes the steel may go through after the laser cutting
such as bending, joining, assembling, and so forth. It also
became very important that variations from batch to batch
be minimized in order to improve the productivity and
subsequent satisfaction of the customer. Rautaruukki
realized this very early on and has worked very hard
351
to keep the production consistently turning out high-
quality products. Also, to keep the product quality
consistent, it was decided to keep the production in-
house and not subcontract to any outside vendors, further
ensuring quality control.
8.2. The logistical solution
The logistical solution came in two parts—the first
concentrating on fast, efficient deliveries, and the second
in turning a spirit of competition into a spirit of cooperation
among the distributors in Germany in an effort to share
inventory and minimize out-of-stock situations.
Regarding the first part, recall that users of the steel are
job shops who would purchase any amount of steel from a
few plates to several tons in one order. Given the largely
transactional nature of the business of these job shops,
completing the desired cutting task quickly and efficiently
can mean the difference between getting and not getting an
order. Thus, having the right steel plates delivered quickly
and efficiently allows these job shops to serve their cus-
tomers better. Rautaruukki therefore focused on meeting
these requirements by being willing to accept smaller orders
352 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
from the distributors than their competition would and
concentrating on being fast and flexible with their delivery
times. Because of being smaller and more flexible, they
were able to promise a 2-week delivery (as compared to 6
weeks for their competition), with all the steel made to
order. This not only helped ensure the consistency men-
tioned above but also significantly reduced the inventory
needs of their distributors.
The second part, replacing the spirit of competition with
a spirit of cooperation among their distributors proved to be
a bit more of a challenge. In order to serve their customers
more efficiently, Rautaruukki organized a network of dis-
tributors around Germany. As these distributors were of all
sizes, one might carry some inventory that another might be
able to use in an emergency situation. However, the distrib-
utors had traditionally viewed each other as competitors and
were hesitant to share inventory. Knowing it was important
to the success of the brand to present a unified face to the
customers as well as the practical aspect of sharing inven-
tory, Rautaruukki went about instituting a comprehensive
educational program with these distributors. Through a
series of introductory and on-going seminars, Rautaruukki
was able to show the distributors all the benefits of coop-
erating and to instill a cooperative spirit among them. The
program was not only able to educate the distributors as to
the importance and purpose of the brand, but also to foster
the cooperative spirit. Thus, for this particular situation for
this product, distributors who were typically competitors
found themselves cooperating. This spirit of cooperation is
reinforced through the annual RAEX LASER seminar,
which the distributors attend, share ideas, and discuss ways
to serve the customer even better. Such continuing educa-
tion is important because industrial customers often associ-
ate the value of the brand with the intermediary who
delivers it, and if the intermediary not only delivers but
also educates the final customer about the product, the value
of the brand is increased in the customers’ eyes.
8.3. The customer support solution
Rautaruukki realized early on that with the technical
nature of this product, many of the job shops could be
unfamiliar with the specific properties and applications of
this product. They also realized that having knowledgeable
and responsive customer support personnel was critical to
the success of providing their total solution. Traditionally,
customer support personnel in the steel industry know the
properties of their own products but have little or no idea
of how this product fits into their customers’ products or
processes. However, in the case of the RAEX LASER
steel, great care and effort was taken by Rautaruukki to
ensure that these support personnel understood their pro-
duct’s place in the customer’s supply chain, and they
trained their personnel to understand not only the process
of laser cutting but the role the job shop played in the
supply chain. Rautaruukki conducted a series of technical
seminars on laser cutting for their employees, and the
company also maintains a very close cooperation with the
producers of the laser cutters and universities to keep
abreast of the latest technological developments. They also
were trained to provide assistance in steel and nonsteel
issues that did cost more, but the added value provided to
the customer made it well worth it. All of this information
has helped the customer support staff to provide the
customer with whatever information they might need
should a problem arise.
8.4. The corporate image and policy solution
Rautaruukki was already very well known and respected
in the steel industry so they had this reputation to build on.
However, they needed to transfer this positive image to a
specific brand and then take measures to manage this brand
so it was perceived as providing the customer with the
desired total solution. All of this, however, could not take
place unless all departments involved with the production,
marketing, and distribution of the RAEX LASER brand
came together and agreed to present a unified customer-
focused method of operation. Thus, people from a number
of different departments were brought together to discuss
and standardize methods for working together as well as
determining how to proceed in the market to ensure coop-
eration with the distributors. The end result of these con-
versations was positioning the RAEX LASER brand as a
total solution and Rautaruukki as the company that could
meet all the needs of the job shops as well as the end users.
Having a recognized reliable brand has enabled Rautaruukki
to lessen the perceived risk often associated with industrial
purchases and in turn to reduce some of the cognitive
dissonance of the decision-making unit. This idea of a total
solution was then communicated outwardly to the relevant
audiences through personal, printed, and electronic promo-
tions, as well as inwardly through a series of educational
seminars to their employees. Recall that successful brand
management requires that in order to create a relationship
with the customer, all people in the organization must be
equipped to handle key interactions with the customer.
Rautaruukki has consistently worked to do this since the
very inception of RAEX LASER brand and still continues
to present this brand as a total solution to both the channel
of distribution and the end users.
9. The results
The total solution provided by the RAEX LASER brand
has been an unqualified success for Rautaruukki. Shipments
have steadily increased from below 10,000 tons in 1994 to
85,000 tons in 2002. Also, being able to provide this total
solution has resulted in many repeat customers and has
allowed Rautaruukki to charge a premium price for this
package, making it a profitable product for the company.
 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
The added benefit of having so many repeat customers is
that Rautaruukki now can gain an intimate knowledge of
these customers’ particular needs and wants, which allows
them to build the relationship so critical to creating a
positive brand experience. The product has become so
successful that the largest manufacturer of laser cutters
recommends purchasing the RAEX LASER brand to new
purchasers of their products. The success of RAEX LASER
has lead to greater recognition of the brand to where the
RAEX product family now consists of the cold rolled steel
RACOLD LASER, with a hot dipped galvanized product
RAGEL LASER entering the market soon.
10. Managerial implications
The implications for industrial marketing managers are
clear: the branding of an industrial product can be successful
if the process is carried out in a logical manner that is
focused around the brand being perceived as providing a
total solution to the customer. A more contemporary view of
the industrial brand is one of moving from a product-centric
approach to a promise-centric approach and fulfilling this
promise through providing that total solution to the custom-
er. By concentrating on having an in-depth knowledge of
their customers and translating that knowledge into a total
solution based on customer needs, Rautaruukki was able to
carve out a niche for themselves in the highly competitive
European steel market.
To change to a more ‘‘total solution’’ branding approach,
industrial marketing managers should consider taking the
following steps:
 Determine exactly what the promise of the brand’s value,
this ‘‘total solution’’ should look like. This is certainly no
easy task and one that many companies overlook or
assume they know. Here, the company needs to endeavor
to discover the answer to such questions as, What is
‘‘value’’ to our customers? Can our brand provide that
value? Do our customers really see the brand as a ‘‘total
solution’’ such as Rautaruukki was able to create, or as
simply as another product on the marketplace? The
company needs to question, probe, and most importantly
listen to what the customers are looking for in the
product and how these customers really feel about their
total experience with the product.
 Realize that value is a multidimensional construct. Gone
are the days when a customer will purchase a product
merely because it is well made and has a reputation for
quality. Value for the industrial customer often has four
dimensions: the product side, the logistics side, the
customer support side, and the company reputation side.
There may be other components of the value as well.
Managers must define exactly what the customers are
looking for in each of these dimensions and create a brand
that delivers them in reliable, fast, and profitable manner.
353
 Where does your product fit in the customer’s con-
sumption or supply chain, and at what points can your
company enter in and create a unique value for them?
The more unique the value created, the better the chances
for success. Or, alternatively, are there any new values
that could be created that the customer or a competitor
has not thought of?
 Always seek to understand and continually refine the
promise of value. Customer needs are constantly
changing, and the promise of value that a company
offers must change as well. Employing such measures as
customer panels, user groups, and the like can help
managers to stay on the leading edge of what values
customers are looking for.
 Realize that the equity created by a brand can extend
across product categories as well as channel intermedia-
ries. Thus, educating any employee who will interact
with the customer as well as channel members on the
unique value of the brand is critical for its success.
 Monitor measures of brand performance. Managers need
to monitor how customers perceive this brand over time.
They also need to see if any of the dimensions of the
construct have increased or decreased in value or if they
have been replaced by a new dimension.
11. Conclusion
An increasing amount of research has espoused the
benefits of branding an industrial product, and the case
study of the RAEX LASER brand of steel has shown how
a company can take a basic commodity product and
through an in-depth knowledge of customer needs and
employing an innovative marketing strategy can create a
brand for the product that is perceived as offering a total
solution for their customers. Companies who endeavor to
create and effectively manage their brands stand to gain
both market share and profits. Also, when the promise of a
brand is articulated across the company, it becomes much
easier for management to allocate resources in a way that
they have faith that these resources will be used in the best
manner. Internally, branding can have the impact of helping
people from various functions understand what values the
customer is looking for and provide a common ground
upon which to provide those values. Externally, having a
strong brand that consistently provides a total solution to
the customer helps build a strong relationship between the
company and that customer. This is increasingly important
in today’s environment where the plethora of products has
left many customers confused as to which product is best
for which application. Having a strong brand provides the
customer the confidence that they will be making the right
decision and will lessen the risk of a bad decision.
Ultimately, customers want to purchase a product from a
supplier they can trust, and a strong brand allows them to
do just that.
354 D.H. McQuiston / Industrial Marketing Management 33 (2004) 345–354
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