*DAEWOO CIELO’s DECLINE IN INDIA

Presentation By:GROUP 8

JAGAT MISHRA1321118NIRAJ AGARWAL1321128NAMIT SAHAI1321127K.T.BOPANNA1321121SIKTA MISHRA1321164ARCHANA BHAT1321146

ABOUT DAEWOO Largest conglomerate after Hyundai Group in Korea

followed by LG group and Samsung group.

Daewoo Group was founded by Kim Woo-jung in March 1967.

Daewoo initially concentrated on labor-intensive clothing and textile industries that provided high profit margins because of South Korea's large and relatively inexpensive workforce.

Later diversified into trading, construction, automotive, etc- 20 divisions.

 Expanded efforts in the automotive industry and was ranked as the seventh largest car exporter and the sixth largest car manufacturer in the world. Automotive became one the most important venture.

In 2001 had its operations in 123 countries.

DAEWOO VENTURES

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, company’s labor union refused to accept a restructuring plan for the company

Daewoo was declared bankrupt

SUMMARY * Daewoo entered in Indian market with Cielo in

1995 followed by Nexia and Matiz.

* Projected to become the 100bn company by 1998-99

* Implemented strategies to increase sales with poor market research

* 70000 customers cancelled their booking

* Recorded a loss of 351.4 million in 6 months as sales also declined to 1.22 billion from 2.7

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

*It has around 110 dealers all over India.

*Over 100 Authorized Service Centres to cover the entire country.

*Appointed 14 exclusive LCV dealers across the country to take care of sales and service requirements.

DAEWOO CIELO

ENTRY OF CIELO IN INDIAN MARKET

Daewoo was a multinational to challenge the Market leader Maruti Udyog Ltd

Cielo entered in Indian market to compete with Maruti Esteem.

Consumers who had no option besides Maruti Esteem in the mid size segment rushed to buy Cielo

Cielo was introduced in three models

The bookings for three models reached 114000 in short span of time and was set to give serious competition to MUL .

PROMOTIONAL ACTIVITIES

* Diwali bonanza scheme for the corporates.

* Lottery schemes for individuals

* Test drive scheme

* Hefty price cut

* Val you Campaign

Launch of operations in extremely hurried manner.

Inefficient Production Plant

Over estimation of the market demand

Scheme Failures

Changes in positioning (rich luxury car to premium family car to value for money car).

DECLINE OF CIELO

DAEWOO CIELO

ADVERTISEMENT/PROMOTIONS

1994

1999

Focus on Cielo not Daewoo as a Brand

Focus on Daewoo as a Brand not on a particular Product

DAEWOO MATIZ

CHANGE IN MARKET SEGMENT

Oct 1998- MATIZ was launched.23,265 units in Apr-Dec 1999, demand increased by

52.2 % to 35,398 units Apr-Dec 2000Further Cielo took a back seat after MATIZ success

globally Replaced Cielo, GLE and GLX with EXECUTIVE and

NEXIA but customers failed to see any differenceAdvertising of CIELO stoppedMATIZ was operating in 114 countriesFailure in INDIA due to SANTRO

DAEWOO NEXIA

SWOT ANALYSIS

STRENGTHS

• Strong brand portfolio

• Technology potential

• State of art plant

WEAKNESS

•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

THREATHS• Well established

competitors

• Fluctuation in price of fuel and raw materials

• Government policies

Post DAEWOO In India* Merger with General Motors in 2001

* General motors took control over daewoo motors in 2002

* Matiz was restructured as Chevrolet Spark

* It went into new models since then

* Now the latest model is known as Chevrolet Beat

*The DAEWOO commercial vehicle division was sold to TATA MOTORS.

MARKETING MIX-4P’sPRODUCT

Daewoo had a good feature rich product, which was more advanced than its direct competitor(The Esteem), but it was let down by poor fuel efficiency.

PLACE

Although Daewoo was not as far spread as Maruti Udyog Limited, it had a fairly good reach for a new entrant.

 

PROMOTION

Ineffective marketing was the most probable cause for the fall of Daewoo in India.

It confused Customers with its constantly changing promotional strategies ranging from positioning the car as a premium product to offering unheard discounts on the same.

PRICE

Initially the company introduced the car as a premium product, pricing it above competition. However when things did not pan out in their favor, the price cuts that followed were very drastic, and ironically accelerated the company’s downfall.

SUGGESTIONS

*Globally successful strategies may not always work in certain geographies, careful customization is a must for success.

*Price cuts should not appear to be a desperate attempt to survive, instead must be done subtly enough to boost sales without tarnishing the product’s image.

*Stick to your strategies- A complete overhaul is not always the best option, the emphasis should be on making plans work, not changing plans.

*Daewoo could have also benefitted from showcasing its strength’s rather than justifying it’s weaknesses.(poor fuel)

THANK YOU..