cielo v1.0

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    CIELOA CAR IN TROUBLE

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    Entry Of Daewoo

    Daewoo part of US $65 billion Daewoo

    Group founded in 1967 in Korea In July 1995, Daewoos first vehicle, the

    1500cc Cielo was launched

    Three variants were launched(Cielo,Cielo GLX, Cielo GLE)

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    It was launched in Indian markets in

    1995

    Introduced as a feature-rich, luxuryfamily class

    it came as a competition to maruti

    udyog ltd. trusted formula of providing excellent

    services at low prices.

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    Mistakes.

    Lack of focused approach and inconsistentpolicies.

    It entered the markets with a high importcontent keeping the prices higher than thecompetitors.

    Unable to rectify customer mistakes staff

    was unskilled. Quality defects were ignored.

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    Mistakes contd

    promotional campaign Diwali

    Bonanza Scheme was pushed inspite

    of Indian managers opposed it. This ledto people began to look at car with

    suspicion.

    Offered incentives to dealers andfinancers which resulted in lower finance

    rates

    Failure of Test drive scheme

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    Contd.

    Drastic price reduction in Jan98

    Stopping the delivery of the car to therespective showrooms

    Creating new value benefits

    Substantial increase in advertisingfocusing on brand Daewoo

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    The Biggest Blunder

    Hefty price reduction in jan98

    Stopped the delivery of cars to theshowrooms

    Created new value benefits

    Substantial in advertising budgetfocussing on brand Daewoo

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    Facts & FiguresInitial booking : 114000Cancelled : 70000

    Period EXPECTED SALES ACTUAL SALES

    March 1996 20,000(turnover of Rs 10

    billion)

    9044(turnover of Rs 6.05

    billion)

    April- Dec 1996 52000 13776

    1997 1998 : 9006 Cielo sold,accounting to 41% decline

    1998-1999 : 5500 Cielo sold,accounting to 50% decline

    In the six months,loss of 351.4 million was recorded as sales

    declined from Rs.1.22 billion from 2.7 billion.

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    Graph

    0

    5000

    10000

    15000

    20000

    25000

    30000

    35000

    40000

    45000

    50000

    1995 Mar-96 april- dec 1996 1997 - 98 1998- 1999

    sales

    sales

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    Introduction Of Matiz

    Initial success was

    achieved from MatizNo way near to

    Global Success

    Matiz had 70% marketshare in Korea

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    Analysts Views

    Too ambitious and unrealistic

    Failed to understand the indian market

    Positioning efforts were termedUnmemorabl and Poor

    Daewoo neglected Cielo after the launch

    of Matiz

    Company would never be able to make

    success of Cielo

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    Was company itself responsible for its

    problems?

    Tremendous opportunity to capture the

    Indian market Over ambitious and unrealistic targets

    Unable to avoid the quality defects

    Lack of focus in all their promotionalactivities.

    Confusion over their products positioning.

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    Was the korean parent

    company responsible for the

    debacle Too ambitious and unrealistic targets without

    understanding indian market

    Increased the scale of operations withoutmuch modifications to the plant.

    Diwali Bonanza Scheme

    Test drive scheme

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    Young Tae Chos decision to

    change postion Not agree with it.

    It was promoted as value product and sales

    did increase for a brief period of time. It fell after that because they started focusing

    more on Matiz.

    The company needed to focus on the qualityof the product and modified the car accordingto indian roads.