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 RY A N A LY S T, 2 0 0 0

Daewoo Motors

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 groupIn 2001 had its operations in 123 countries Basically a company which exported readymade garments

to US Later diversified into trading, construction, automotive,

etcAutomotive 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 ltdOverseas investment on borrowed fundsIn 2000, co’s labor union refused to accept a restructuring plan

for the companyDaewoo was declared bankrupt

Models

Strategies

They borrowed foreign debts for further expansionIntroduced the concept of direct sellingPrice 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.Daewoo's 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.Daewoo's 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 complaintsTried to tackle this problem through its sales staff but they were

also not properly trained

The Bad Part

70000 customers cancelled there bookingPredicted 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.

Graph

Market Share

Where Was Daewoo ?????

Dumped Without A Funeral Ceremony

SWOT ANALYSIS

STRENGTHS•Strong brand portfolio•Huge market share•Quality products•Technology potential•State of art plant

WEAKNESSES•Huge debts•Aggressive expansion•No training to sales staff•Lack of proper marketing strategies•Huge discounts

OPPORTUNITIES•Few players in mid-size segment •Regional Tie Ups•Tapping untapped market

THREATS•Well established competitors•Fluctuation in price of fuel and raw materials•Government policies

MARKETING MIXBRAND IMAGE/CUSTOMER SATISFACTION

SEGMENTATIONDISTRIBUTION CHANNEL

PRICING

Our recommendations

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

Short and Effective

Attract Dealership

Prove –not a Price Tag.

Small – 3 to 4 LacsSedan – 4.2 to 5

Lacs.

Any Questions????

Thank you