Daewoo has primarily 3 brands competing in the Indian market; Matiz, Cielo and Nexia. TheMatiz is available in four models: Standard (SS), Deluxe (SD), Executive (SE) and Premium(SP).Daewoo's first vehicle, the 1500 cc Cielo was launched in three versions (Cielo, Cielo GLX and Cielo GLE) in July 1995. Consumers who until now had no other option besides the Maruti Esteem in the mid-size segment, rushed to buy the Cielo.
In March 1999, Daewoo managed to sell just 255 cars while newcomer Honda sold 1,359Cities and Maruti sold 1,616 Esteems.Daewoo's tinkering with pricing and products had not only confused the consumer,its 110 distributors too are unable to tell what the company will do next. But that wassynonymous with the Daewoo culture.The auto major read the market wrong. Since the small segment in the initial yearswas dominated by MUL with a market-share of 96 per cent, Daewoo could not visualize thatthe small sized segment would grow at a faster pace than the segment it decided to enter in. Itdid not consider it worth while to challenge Maruti in small car segment. With tried-and-testedmid-size models in its boots, Daewoo found the mid size market more alluring. Daewoomisjudged the growth potential of the small segment that grew faster than the mid-size one,driven by the price-sensitive customer.Within 24 months after the launch, Daewoo found the ride into the Indian automobilesmarket difficult. Its flagship product, the 1,498-cc Cielo, was hit hard by the recession in theluxury segment. Cielo's market-share had slumped from 35 per cent to just about 16 per cent.positioning was hit by the launch of General Motors' Opel Astra and the Ford Escort.Daewoo's dealers began offering discounts on the Cielo: between Rs 30,000 and Rs 1.10 lakh per car.overnight, from a premium car, the Cielo became a discount brand.the Cielo'smarketshare in the mid-size segment has come down from a high of 29 per cent in 1996-97 to 13 percent in 1998-99.Daewoo's misadventures had created a “perception problem”.Within 24 months after the launch, Daewoo found the ride into the Indian automobiles market difficult. Its flagship product, the 1,498-cc Cielo, was hit hard by the recession in theluxury segment. Cielo's market-share had slumped from 35 per cent to just about 16 per cent.Daewoo could not visualize thatthe small sized segment would grow at a faster pace than the segment it decided to enter in.Issues: » Pricing decisions and price cuts » Positioning of a product » Managing product portfolio » Importance of product quality
PRODUCTDaewoo will provide services using innovative techniques and modern technologies with a friendly and gentle environment. PLACEThe company will make sure that service is available throughout the country at all the suitable locations. PROMOTIONEffective marketing remains the hallmark of Daewoo as a company involved in supplying services with a great emphasis on effective long-term strategies. Its services will be promoted through out the country.It will ensure consistent and balanced growth, despite adverse market conditions. As a result, Daewoo will enjoy an extremely high degree of recognition and reliability, which has earned leadership positions for most of its services. Its more and more branches will be initiated in other cities where demanded.PRICEAfter developing their pricing structures and strategies, companies often face situations in which they must initiate price changes or respond to price changed by competitors. In some cases, the company may find it desirable to initiate either a price cut or a price increase. In both cases, it must anticipate possible customers and competitor reactions.
Add emotional Value- Be Asian Buy Asian.Creating the Buzz – Back With a Bang.
Daewoo Motors D A E W O O I S G O O D AT M A K I N G C A R S , B U T R O T T E N AT M A R K E T I N G T H E M .- A N A U T O M O B I L E I N D U S T R Y A N A LY S T, 2 0 0 0
Contents Background of the Company Daewoo Overseas Models Strategies Segmentation & Positioning Distribution Channel Promotional Activities Reasons for Failure The Bad Part Graph Market Share SWOT Analysis Marketing Mix Our Recommendations
Background to the Company Founded in 1967 in Korea it was a part of Daewoo group In 2001 had its operations in 123 countries Basically a company which exported readymade garments to US Later diversified into trading, construction, automotive, etc Automotive became one the most important ventures In 1977 entered into joint venture with General motors but conflicts arouse
Daewoo Overseas In 1991 Daewoo bought out 50% stake in the venture for 50 billion Faced tough competition in European and US market it looked to diversify it into eastern Europe, Latin America and Asia Took over 50% equity held by Japans Toyota in DCM- TOYOTA Renamed it as Daewoo motors India ltd Overseas investment on borrowed funds In 2000, co’s labor union refused to accept a restructuring plan for the company Daewoo was declared bankrupt
Strategies They borrowed foreign debts for further expansion Introduced the concept of direct selling Price competitiveness and attractive servicing and warranty offers gave rise to good demand in the international market. They also introduced heavy discount to attract global customers Entered the small car segment to attract more customers with Matiz.
Segmentation & Positioning Did not consider itself worthy to challenge Maruti in small car segment There were not enough players in the mid-size segment, Daewoo thought that it would stand a fair chance in capturing this segment. Daewoo found the mid size market more alluring. Daewoo could not visualize that the small sized segment would grow at a faster pace than the segment it decided to enter in. The mid-sized segment got crowded with players like Opel, Maruti, Honda and Daewoo itself.
Distribution Channel Introduced the concept of direct selling It has around 110 dealers all over india. Over 100 Authorized Service Centers to cover the entire country. Appointed 14 exclusive LCV dealers across the country to take care of sales and service requirements.
Promotional Activities In 1995 Daewoo came up with Diwali bonanza scheme Reduced the finance rates to 14.33% Discount of 10% was given Test drive scheme in April 1997 VAL-YOU Campaign
Reasons for failure Positioning was hit by the stiff competitors. Daewoos dealers began offering discounts & became a discount brand. Its Marketshare in the mid-size segment came down from a high of 29 per cent in 1996-97 to 13 percent in 1998-99. Daewoos had created a “perception problem”. Lack of Vision and proper market survey. Took huge debts to expand the automobile business. Did not react to customer complaints Tried to tackle this problem through its sales staff but they were also not properly trained
The Bad Part 70000 customers cancelled there booking Predicted an annual turnover of 10 billion and 20000 cars but managed 6.05 billion and 9044 cars. Feb 1998, 9006 cars were sold again a decline of 41% Next year reduced by 50 % Recorded a loss of 351.4 million in 6 months as sales also declined to 1.22 billion from 2.7 It is not necessary that tried and trusted formula in one country will work in every country.
Where Was Daewoo ?????Dumped Without A Funeral Ceremony
SWOT ANALYSISSTRENGTHS WEAKNESSES•Strong brand portfolio •Huge debts•Huge market share •Aggressive expansion•Quality products •No training to sales staff•Technology potential •Lack of proper marketing•State of art plant strategies •Huge discountsOPPORTUNITIES THREATS•Few players in mid-size segment •Well established competitors•Regional Tie Ups •Fluctuation in price of fuel and raw•Tapping untapped market materials •Government policies
MARKETING MIX PRODUCT Provide services using innovative techniques and modern technologies with a friendly and gentle environment. PLACE Make sure that service is available throughout the country at all locations. PROMOTION Effective marketing remains the hallmark Involved in supplying services with a great emphasis on effective long- term strategies. Services should be promoted through out the country. Consistent and balanced growth, despite adverse market conditions. Enjoy an extremely high degree of recognition and reliability, Leadership positions for most of its services. PRICE The company may find it desirable to initiate either a price cut or a price increase. It must anticipate possible customers and competitor reactions.
Brand Image/Customer Satisfaction What is Brand Image? Rebuilding the Image.(Add Emotional Value) Creating the Buzz. Specialised technical Support Team. Customisation of Cars. Get the People Involved.(Your Company Your Car). Proposed Name Phoenix- Rise From Ashes.
Segmentation What is Segmentation? Targeting Youth & working Class. Primary Targets should Be the Metro Cities. Cautious & One Step Approach.
Distribution Channel Pricing Localisation Prove –not a Price Tag. Small – 3 to 4 Lacs Short and Effective Sedan – 4.2 to 5 Lacs. Attract Dealership