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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