Company Overview
(Source: Tesla, 2013)
Tesla Motors is one of the automobile manufacturing industries. This company was started for the development of the electric sports car. The Elon Musk as CEO of this former company has launched Tesla in 2003 (Tesla, 2013). The main purpose of the organisation was to encourage innovation and ethical values. The main goals of the Tesla Company are to generate an entire ecosystem, and as manufacture, an ideal set of the energy solution, power wall, power back and the solar roof are maintained and helps in managing the renewable energy generation, storage and consumption (Tesla, 2013).
History: Tesla was the first and the foremost car company after since Ford Company in 1956. Tesla car stock has turned as the company, which keeps on innovating out the new features and the models while other than this, they also capture the imagination of the curious public’ wants and demands. In this, the main mission of the Tesla Company is to accelerate the worldwide transactions to sustainable energy. In addition, all this can be achieved by converting their sustainability mission through innovation (Liu, et al, 2014).
Tesla customers’ segmentation is the most effective approach, which tries to appeal to everyone by engaging them in the mass marketing campaign. As the different methods for better understanding of the profile of the customers in each segment highlight how the customers are attracted and help in analysing their purchasing power.
Geographic segmentation: In this, the segmentation of customers is done on the basis of similarities and dissimilarities within and across segments. Tesla applies a geographic segmentation because of the prices which keep on vary by the regions and Tesla can focus on marketing to those customers that live in those areas which are having a high price (Farley, 2016).
Demographic segmentation: In demographic segmentation, Tesla employs its overall resources to only to those people who can afford it. Likewise, for example, Tesla is marketing their new launch the Roadster S to those males, which belong to the late thirties as they have a higher income group, which can afford to buy the same. Other than this, they also targeted the occupation sector, which is having the higher income group both males and females (Buckholtz, 2014).
Behavioural Segmentation: The behavioural segmentation highlights about the customer’s loyalty. In this behaviour of the customers are judged whether they are hard-core loyal, Or soft core loyal or lastly or they are switchers. In addition, such behavioural pattern among the customers points towards their non- routine consumption. Other than this, factors such as status, long term cost effectiveness, the perception of being environmentally friendly. Alternatively, whether they are potential buyers, first-time buyers, determined or ambitious all such factors of the buyers seek the experiential and symbolic meaning behind the purchase of such luxurious cars.
Customer Segmentation
Psychographic Segmentation: In this, the segmentation is done on the basis of lifestyle, which further comprises of aspirer, succeeder, explorer and reformers’. Moreover, Tesla main motive behind this segmentation is to know about the people’s interest, their activities and see whether they are satisfied with their current cars and what all changes need to be done for their satisfaction and meeting their interest (Buckholtz, 2014).
After making use of segmentation method, Tesla motors generate various advantages and the drawbacks, so by the application and the combination of these segmentation methods tesla should majorly emphasis on its resources by the use of geographic and demographic segmentation. Moreover, Tesla should also apply Psychographic segmentation in order to tailor the product according to the needs, wants and demand of the customers’. The Young generation is more inclined towards the products, the services, and hence has a greater impact over the company’s value (Zucchi, 2015).
In this aspect, the Tesla macro- environment (PEST Analysis) highlight-
Political Analysis: Political aspects play a vital role in determining Tesla’s long-term profitability in the market. In this, tesla’s identifies the governmental impacts over the business. As a government, entities are the main factors, which majorly affect the business and the industries. Likewise, through Governmental incentives, Tesla has an opportunity to strengthen its financial performances for the electric automobiles. Alternatively, the expansion of free trade agreements also opens up opportunities for the company to expand its operation internationally.
Economic Analysis: In this, factors such as inflation, savings rate, interest rate, foreign exchange and the economic cycle helps in determining the aggregate demand and investment in the economy. Tesla Inc. considers the government intervention in the free market and related customers goods, exchange rates and stability of the host country currency, Education level in the economy (Kissinger, 2018).
Social Analysis: In this analysis, the depiction of social culture in which the shared beliefs and attitude of the population play the vital role in making marketers of Tesla understand the customers’ needs, taste and the preferences. The factors, which are considered, are demographics and skills of the population, class structure in the society, culture, attitudes and leisure interests.
Technological Analysis: Technology is both friend and foe for Tesla. Being a friend, it helps the company to maintain its competitive edge. Moreover, it allows Tesla to be fuel-efficient and paves the future sustainability and usability. As, Tesla is totally depended on technology for their vehicles in both a positive and negative way.
Geographic Segmentation
Although each factor is important for the Tesla growth, the most important factor is a social factor because people loved the innovate idea of an electric car by Tesla. As by originating the electric car, it is helpful in eliminating the need for much fuel in comparison to a traditional vehicle. Tesla comprises of all whether it is environmentally sustainable, power or whether it is luxury. Hence, by doing this, the company is maintaining its place in people’s mind (Kissinger, 2018).
(Source: Samuels, 2017)
Bargaining power of Suppliers: In this, the effects of the suppliers are higher which highlights and relies on the premium materials, components and technology. Moreover, the suppliers are in a better position to control, manipulate the prices to their advantage and they are in the position to charge whatever the prices they think of are necessary. This is all because of the exclusivity of the material that Tesla motors will need to create and generate its vehicles.
Bargaining power of Buyers: These aspects focus on the influence of the customers, which are direct, factors that help in determining the company’s sales revenues. Moreover, price sensitivity, which elaborates that with the increment in the range of electric vehicles, also affects the mind of the customers, as tesla’s prices are actually very high. By seeing this, customers choose alternatives.
The threat of new entrants: In this segment, the threat is very low as Tesla’s business is very much difficult to compete with; this is all because of the high cost of the brand development, the strong brand image that highlights the strength of the company. In other terms, an automobile manufacturing having high costs which act as barriers to new firms. Moreover, Tesla has technology and innovation by its side, which will always be a competitive advantage to them (Iberg, 2015).
The threat of Substitutes: Tesla also majorly faces the impact of the substitutes on the automotive and energy solutions. Likewise, lower switching cost enables substitutes such as public transportation in order to attract customers. Such low impact of substitutes limits the influence of suppliers. Moreover, None other company can do such work as it takes lots of resources, equipment and capital in order to begin with the making vehicles like Tesla company do (Dudovskiy, 2018).
Rivalry among existing firms: In terms of Tesla, it is highly recognizable brands in terms of electric vehicles. If we consider other brands likewise, GM, BMW, Porsche, Jaguar all are working towards the development of mass-market electric vehicles. Moreover, Tesla is having an aggressive approach towards innovations and generating niche of their electric vehicle, by this they are setting trends for an automobile company in future (Samuels, 2017).
Demographic Segmentation
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Strength · Unique position in the auto market · Robust sales growth · Brand recognition · Sustainable innovation · Engineering and technological expertise · Fastest growing company · Political and government support · Monopoly · Great leadership and team spirit · Energy efficient · A strong brand with strong investors · Stronger and experienced company |
Weaknesses · Capacity issue · Poor customer awareness · The higher cost of vehicles · Limited presence · High competition · Higher production and operation costs · Low affordability · Dealership regulations · Most revenue is reinvested (Dalvagas, 2016). |
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Threats · Competition · Legal and regulatory troubles · Fluctuations in material prices · Dealership regulations · Resistance to change · Additional cost beside cars · Maintenance on cars · Other experienced company as competitors |
Opportunities · Global sales expansion · Global supply chain expansion · Business diversification · Preferences for new technologies · Growing demand for sustainable products · Mobility services · Increased environmental concerns (Bhasin, 2018) |
Primary objectives of Tesla highlights about generating demand and drive sales of electric cars. Secondly, building long term brand awareness and manage corporate reputation. Moreover, Tesla’s main aim is also to manage their existing customers’ base by generating loyalty and customers referrals. Along with this, educate their customers about Tesla’s goals to improve the future. Lastly, they want their customers to be educated, inspiring and empowering them.
Source: (Li, 2018)
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Product · In this, the company should start the new product line to its product mix. · Tesla also expands itself into solar panels and related installation services · Tesla is also majorly focusing on growth and expanding its multinational business. · It also supports profitability because of these strategies. |
Price · In this Tesla, the company supports a premium pricing strategy This is because of the differentiation and uniqueness of the product · In addition, another is market-oriented pricing |
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Promotion · In this, they are using various techniques such as viral marketing, sales promotion, personal selling, public relations and lastly direct marketing. |
Place · Tesla due to an increment in their product line, also focusing on adding places, venues and ventures · Likewise, company-owned stores and galleries, official company websites, company-owned services centre and lastly, charging stations (Li, 2018). |
Tesla Value Chain Analysis
(Source: Marah, 2016)
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Inbound Logistics |
Operations |
Outbound logistics |
Marketing and sales |
Services |
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In this, the main aspect of Tesla is to generate and create or establish a long-term strategic relationship with the suppliers. Moreover, they are primarily working on bottleneck parts, which are the big headaches for them. |
In this, the operation is in two segments, Automotive and energy generation and storage. In this, the high level of integration of robots into the manufacturing processes is one of the major sources of value creation for Tesla. |
In this, in order to face the higher demand for electric vehicles decreases the time delivery of vehicles to consumers Furthermore, direct sales affect the costs of Tesla for further increments |
Tesla marketing and sales practices in comparison to other electric automakers are unconventional. Moreover, Tesla does not make use of dealership networks to sell out their products. |
In this concern, the company effectively and efficiently deals with the customer’s issues and complaints as the company allow its customers to escalate their problems directly to the company executive. They also provide post-sale services plus locations (Marah, 2016) |
Tesla’s main marketing objective is to tap or target the millennials for that they started innovating more for the millennials world. Elon Musk thinks of the future, which states that one element which people will buy in future. That is sleek, environmentally friendly electric cars, smart solar panels, smart batteries and lastly private space exploration (McKay, 2016).
Another marketing objective on which they are a focus on is the maintenance of their competitive advantage for this Tesla is more driven by the technology, as they are focusing on more of new technology. Likewise, they are building networks of superchargers, battery swap stations and service stations.
Thirdly, now they are focusing on diversifying their business by entering into the market of solar roof tiles with the rechargeable lithium-ion battery with the storage of solar captured energy.
Lastly, tesla’s reputation, they are considering more in intangible strength of the company. They are blindingly moving towards the fast vehicles of desire. Moreover, Tesla generated a cheaper model, which ended up winning the big auto award. With this reputation of excellence, they have generated an impressive brand image.
SMART marketing objectives:
In specific terms, their main objective is to increase the advertising budget by 20% so that they can easily penetrate in the luxury automobile market. Moreover, leverage Russia large tesla fans base to increase awareness of Tesla’s automobile market.
In achievable concern, their major focus is on increasing the production in five-fold in upcoming next years which will be very challenging and will likely to require some of the additional capital and for all this Tesla is working harder in order to achieve these set goals for future (Rowland, 2018).
Conclusion
From the above report, we can conclude that Tesla is one of the well-renounced company not only one basis on their reputation among general people due to its profit sales than the other brands. Nevertheless, due to the services, which they render, the product, which they sell, are differentiated from the other brands whether in looks, services, models and much more.
References
Bhasin, H. (2018) SWOT Analysis of TESLA [Online] Available from https://www.marketing91.com/marketing-strategy-of-tesla/ [Accessed 17/02/2019]
Buckholtz, D.(2014) Tesla motors- environmental scan &segmentation/ targeting [Online] Available from: https://prezi.com/jmmjrujjjhei/tesla-motors-environmental-scan-segmentation-targeting/ [Accessed 17/02/2019]
Dalvagas, L.(2016) SWOT Analysis: Tesla motors INC. [Online] Available from: https://www.valueline.com/Stocks/Highlights/SWOT_Analysis__Tesla_Motors,_Inc_.aspx#.XGkc8lwzbIV [Accessed 17/02/2019]
Dudovskiy, J.(2018) Tesla segmentation, targeting and positioning overview [Online] Available from https://research-methodology.net/tesla-segmentation-targeting-and-positioning-overview/ [Accessed 17/02/2019]
Farley, E. (2016) Tesla model 3 market segment analysis [Online] Available from: https://prezi.com/heayt7uy-miy/tesla-model-3-market-segment-analysis/ [Accessed 17/02/2019]
Iberg, A.E., (2015) Creating Competitive Advantage in the Premium Market Segment through a Sustainability Strategy.
Kissinger, D. (2018a) Tesla Inc. PESTEL/PESTLE ANALYSIS & RECOMMENDATIONS [Online] Available from: https://panmore.com/tesla-motors-inc-pestel-pestle-analysis-recommendations [Accessed 17/02/2019]
Kissinger, D. (2018b) Tesla Inc. SWOT ANALYSIS & RECOMMENDATIONS [Online] Available from: https://panmore.com/tesla-motors-inc-pestel-pestle-analysis-recommendations [Accessed 17/02/2019]
Li, Zitong, “Strategic Audit on Tesla” (2018) Honors Theses, University of Nebraska-Lincoln. 20
Liu, Y.E., Kang, Y., Wu, H., Chen, C. and Hon, E., (2014) Tesla Motors Inc. Case Synopsis. Burnaby BC: Simon Fraser University. Retrieved, 10(18), p.2014.
Marah, K. (2016) Tesla and the 21st century supply chain [Online] Available from https://www.forbes.com/sites/kevinomarah/2016/04/07/tesla-and-the-21st-century-supply-chain/#181991922584 [Accessed 17/02/2019]
McKay, J., (2016) Off Like a Rocket: A Media Discourse Analysis of Tesla Motor Corporation.
Rowland, C. (2018) Tesla Inc. mission statement and vision statement (an analysis) [Online] Available from https://panmore.com/tesla-motors-inc-vision-statement-mission-statement-analysis [Accessed 17/02/2019]
Samuels, R. (2017) Tesla: five force analysis [Online] Available from https://prezi.com/7rm5rx7ffpsd/tesla-five-forces-analysis/ [Accessed 17/02/2019]
Tesla. (2013) the mission of Tesla [Online] Available from: https://www.tesla.com/blog/mission-tesla [Accessed 17/02/2019]
Zucchi, K. (2015) what drives consumers demand for Tesla? [Online] Available from: https://research-methodology.net/tesla-segmentation-targeting-and-positioning-overview/ [Accessed 17/02/2019]
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