Buying Behaviour of Indians

•
 Cielo : Entry in India
• Daewoo challenged the market leader
Maruti Udyog Ltd.
• 1500 cc Cielo in 3 versions – Cielo, Cielo
GLX, Cielo GLE (1995)
• 70,000 customers cancelled bookings
within few months
• 1996 – Turnover of 6.05 billion and sales
9,044 cars
• Competition from GM, Ford and general
downturn in mid-size car segment
• 1998- Sales declined to 1.22 billion from
2.7 billion
• Tried and trusted formula failed: Providing
excellent service with low prices
• Family car segment: preferred price range
( 4-5 lakhs)
• Competitors : Maruti Esteem, Condosa
 MISTAKES
• Lack of focused approach and inconsistent policies :
failure
• Daewoo launched Cielo hurriedly 1995
– Without detailed market survey
• Entered the market with high import content – unable to
keep the prices lower than the competitors
• Production at Surajpur factory,
– lack of modification to the plant
– quality defects could not be avoided
• Lack of training to sales staff
– Could not react to customer complaints
• Assumed: huge demand for cars priced above
0.5 million
: demand from the taxi/hotel car
fleet and corporate segments
• Business India Report: Prospective already
owned an Esteem
• 1995 – ‘Diwali Bonanza Scheme for corporate
– One Cielo free on purchase of every ten cars
– Lottery scheme followed
– Damage to the brand equity
– Projected as non-moving Cielo stocks, turning off
the status conscious buyers
• Monopolies & Restrictive trade practices queries
– Finance rate low as 14.33%, while prevailing was 23%
– Explained was offering discounts up to 10%
• April 1997- Test drive scheme to lure the buyers
– 200 Cielo given to the winners for 18 months
– On completion either buy @ 70% of original road price
or return it to Daewoo
– Intended to enhance Cielo’s credibility
• Positioning effort termed as “ unmemorable and
poor”, biggest reason for failure
– At first: technology with aesthetics plank
– Premium car positioning
• Jan 98 – Price cut of Rs. 0.15 million
– GLE : 0.49 million as compared to 0.62 million
– GLX : 0.57 million as compared to 0.68 million
• Delivery of Cielo stopped
– wrote individually to each customer
– offered first bookings for the forthcoming cars
• After price cut : Sales increased to 906 per month in Jan & Feb
‘98 as compared to 314 units
– Became the cheapest mid-size car , but wiped out its credibility
• New positioning: Technology valyou, comfort valyou and
safety valyou emphasized
• Mar 98- sales went up to 1102 cars
– double page advertisements
– Focused on Daewoo brand
• Feb ‘99 – sales fell to a low of 148 cars per month
 Focus shift to Matiz
• 1998 launched Matiz
– seemed neglecting Cielo
• Stopped production of GLE & GLX versions
– Replaced by Cielo executive & Nexia
• Nexia promoted as an upgraded version of Cielo
– customers failed to see any worthwhile additions
– engine and interiors changed, exterior similar
– stopped advertising for Cielo
• Matiz had 70% market share and good response in 114 countries
– India it ran into losses
– poor marketing skills, poor legacy of Cielo
– Loss of Rs.1.16 billion on gross sales of Rs.12.78 billion
– worked towards enhancing dealership and sales and servicing network, cost cutting
on staff strength
– 2001-02 : net loss of 1.21 billion
 Buying Behaviour of Americans
• Affect & Cognition: Rely on their experiences
– Marketing stimuli: ads 7 websites , activates and
influences consumer’s affect and cognition.
– 80% dislike red color : hot and flashy
– Prefers black and white colour
• Behaviour : Conducts extensive automobile
research
• Environment: Buyers not concerned about
automobile prices(Income)
• Psychological factor : As a status symbol
 Daewoo Lanos: Entry in U.S.
• Outclassed in almost every regard:
– Uncomfortable for anyone 6 feet tall
– Safety features didn’t go beyond the basics
– Dash looked positively low grade
– Reliability and parts availability were pretty
spotty
 DAEWOO LANOS IN U.S.
• 1997-2002
• Subcompact car :never a brisk seller in the U.S.
• Ceased to be sold in the country after 2002.
• Several problems: mechanical electrical and
cosmetic defects
• Two main problems regardless of the model year
– Melting camshaft
– Airbag failed to conform to the requirements of
Federal Motor Vehicle Safety Standard No.201
• 1999 Model Year:
– Weak side doors to withstand impact in the
event of a crash
– Door pad placed to the rear of the door
assembly than the middle
– Fails to comply with FMVSS No.214
• 2000 Model Year:
– Damaged wiring harnesses due to constant
rubbing against a body seam in the floor panel
– Engine stalling
• 2001 & 2002 Model Years:
– Electrical system wiring problem
• Better choices available in market :
– Toyota Corolla, Honda Civic & Mazda3
• 2001 Wiring Harness
– Recall took place on 27,884
– Problem : Wiring harness underneath the front passenger
carpeted floor
: Affecting the ability of the vehicle to be driven
• 2002 Air Bags
– Over 56, 000 recalls
– Failure to comply with FMVS Standard No.201
– Unable to deploy during a crash
– Dangerous to front passenger
• 2004 Engine Cooling
– A recall of 4,305
– Defective camshaft sensors
– Significant risk of fire