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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.