The entry of DAEWOO

Heralded as the milestone for the industry Challenged Maruti Udyog Ltd., Cielo was the first vehicle launched in 3 versions Bookings reached astonishing 114000 number

Had plans to become a 100bn company by 199899

THE FAILURE OF DAEWOO CIELO IN INDIA

70000 customers cancelled their bookings

Predicted a annual turnover of 10bn and sales of 20000 cars but managed 6.05 billion and 9044 cars April-dec 1996 pnly 13,776 cielos sold
April 1997 feb 1997 only 9006 sold a decline of 41% 1998-99 sales reduced by 50% onlly 5500 cielos sold

Strengths
Size and market share Quality products Technology potential Early movers advantage

Mistakes that Daewoo did:

Lack of focused approach and inconsistent policies Launch of the car to the Indian market in extremely hurried manner High import content making the prices high Launch of their car Cielo without any detailed market survey Poor fuel effiiency due to the lack of the modification in the engine No proper understanding of the Indian market

Contd..

Did not react properly to the customer complaints No proper training to the sales staff about the product and to react to the complaints Daewoo assumed that there was demand for the midsize cars without any market study People tried to postpone their need due to the recession in the economy The company focused only on numbers and not on the after sales service

Promotional campaign failure

In 1995, Daewoo came up with a Diwali Bonanza Scheme damaged image of Daewoo Reduced the finance rates to 14.33% and discounts of 10% given - against MRTP act Test drive scheme in April 1997 damaged the image of Cielo among the buyers

Criticism for promotions:

Free scheme made people think company had substantial non-moving Cielo stock Lost its image as feature rich, luxury family car

Termed unmemorable and poor due to constant change in the positioning

Positioning error:

The positioning of Cielo was continuously changed The different positioning:

Technology and aesthetics Premium family car Value benefits

One of the biggest reason for Cielos failure

The Biggest Blunder

A hefty price cut of 1.5lakh on all models Eroded the customer confidence and wiped out the cars credibility in the market

The launch of the Valyou campaign to salvage the cars image to educate on new positioning and highlighting features

ISSUES
Pricing decisions and price cuts

Positioning of a product Managing product portfolio Importance of product quality

Suggestions

Consultancy Service

Market Research McKinsey Consultancy / Boston Consultancy Group

Time for entry in the Indian markets Target Segment Positioning

Positioning

Positioning as Luxury Car

Focus on features Technology Promotion should be based on emotional Appeal Promote to Corporate Customers Better Opinion Leaders Marketing Activities should be lead by an Indian Head

Be a Follower
Position same as MULs Esteem Competitive pricing Advertise in National Media Reduce Risk Test Marketing

CRM
Feedback from existing customers Training of Sales and Customer Interaction teams and Individuals Customized CRM package for customers Extended warranty / service

Spare Parts
Better availability quality and pricing of spare parts Manufacture of Spare Parts in India Inventory Management at Service Level Local Suppliers Control cost for Carrying and Holding Inventory

Thank You..!