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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


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 DCMTOYOTA Renamed it as Daewoo motors India ltd Overseas investment on borrowed funds In 2000, cos labor union refused to accept a restructuring plan for the company Daewoo was declared bankrupt


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 it worth while 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

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 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.


Market Share

Where Was daewoo ?????

Dumped Without A Funeral Ceremony

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

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

Our recommendations

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 of Daewoo Involved in supplying services with a great emphasis on effective longterm strategies. Services will 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


Distribution Channel


Any Questions????

Thank you
Avi Shah Chintan Barucha Komal Naik Krisha Bhagat Nidhi Shah Sanket P. Shah