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Just last year Daewoo Motor Co. entered the international car market with a campaign introducing it to consumers as "Dae-who?" Now the subsidiary of South Korean industrial conglomerate Daewoo Corp. is determined to become a major global marketer and rank among the world's top 10 carmakers by 2000.

Daewoo is combining an extraordinarily decentralized marketing strategy with a massive manufacturing drive in countries where manufacturing costs are low. By 2000, Daewoo will spend $11 billion-half of it outside South Korea-on new plants.

The goal is to produce 2.2 million vehicles annually, half of them outside South Korea. That's a quantum leap from the current annual capacity of 700,000 cars made at four South Korean plants.

Daewoo, Korean for "the whole universe," is committed to 10 overseas assembly operations, all joint ventures. Spurred on by car sales in Eastern Europe, plants are planned in former Soviet bloc countries, including Uzbekistan, Romania and Poland. Other sites include India, Vietnam, the Philippines, Iran and Indonesia.


The company last made a profit in 1990 but has narrowed its losses to $12.5 million in 1994 from $183 million in 1991. In South Korea, it boosted its market share to 13.7% in 1995 from 5.8% in 1991.

Daewoo is targeting Europe in hopes of capturing 1% of the car sales there by 1997. The company had expected to enter the U.S. with three new models in fall 1997, but those plans could be in jeopardy. The company is having trouble finding a U.S. executive.

Daewoo is finding its greatest success in the U.K., where the 1% share target may be reached a year early, boosted in part by a deal with car rental company Avis.

In each new market, managers develop their own marketing strategy and pick their own agency. In the U.K., Daewoo has set up soft-sell, company-owned outlets instead of conventional dealerships. Cars come with a tank of gas, free delivery to the buyer and free servicing for three years.

"It is terribly innovative and quite exciting," said John Lawson, an auto analyst at DRI/McGraw Hill, London. "Bastions of traditional U.K. car retailing are a little nervous. It could undermine a hell of a lot of investment that has been made in car distribution."

This customer-friendly approach to retailing cars has given Daewoo U.K.'s agency, Duckworth Finn Grubb Waters, an opportunity to go beyond conventional car advertising. The $26 million print and TV campaign introduced customers to the company by helping them pronounce the name ("Day-ew") with the theme, "The biggest car company you've never heard of."

Then, the agency used a car giveaway to generate a database of customers. Lately, ads have focused on Daewoo's warm-and-fuzzy retailing approach.

"They wanted to be a very big player in the marketplace, so we told them, `You have to do something radical,"' said Michael Finn, Duckworth Finn's managing director.


"The Koreans are all adopting a similar strategy," using lower prices than competing cars, Mr. Lawson said. "Customers expect them to come with a price advantage, so the cars have to be priced cheaper by 10% to 15%."

This value approach isn't working in the prestige-conscious market of Germany. A $48 million adspend through von Mannstein, Solingen, gained name recognition for Daewoo but sold just 10,794 cars, for a market share of 0.4%.

Daewoo is finding a warmer welcome in less choosy markets.

Since entering India in fall 1995, Daewoo has upped its sales forecasts to 70,000 cars a year from 25,000. Ads by Ogilvy & Mather, Bombay, play on middle class car-owning aspirations.

Contributing to this story: Mir Maqbool Alam Khan, Bombay; Oles Gadacz, Seoul; Dagmar Mussey, Dusseldorf.

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