Case Study Solution and Lecture Notes about Tesla Motor Inc

Question: Case Study onTesla Motor Inc. Answer: Executive Summary: In the Electric Vehicles market, Tesla Company has established itself as the market leader. The main reason for it to lead the market is due to the intense innovation and updated technology. In order to control the market of EV the company has brought some luxury design cars in the market so that it helps in the development of the core values, which would be helping them to compete them with the hybrid vehicles and electronic market. The strategy that is deployed by the company Tesla would be helpful in gaining a wide market share, gaining of brand loyalty and earning of the profit through the new program in Australia. The company Tesla wants to develop a car of the entry level that us affordable by the customers. The name of the car model is Model 3. This electric powered car company is designed for the younger generation of Australia during 2016-2017. The company should be keeping in mind the budget when making decision to cover the target market. This will help in getting more num ber of customers who are able to purchase the electricity-enabled vehicle. To promote brand loyalty, a number of programs have been designed. This type of programs will be helpful in providing the option to purchase for the through Amplify your Ride and Test Drive Campaigns. The marketing campaigns have been based on the advertising through the websites, magazines, public relation and through the direct form of marketing. In the coming half a decade, the demand for Model 3 is going to rise with the rise in the market. The company Tesla wants to explore the Australian market and earn the maximum level of profit. Background of the Company: About Tesla Motors: Martin Eberhard and Marc Tarpenning founded the company Tesla in 2003. After this, there was massive expansion by the company. The revenue increased by almost 2.44 billion dollars and the gross profit of the company is 456.26 million dollars when the company went public in the year 2010. The name of the company pays homage to the inventor Nikola Tesla who has created the induction motor and the alternating current power. It was only through the intelligence and the brilliance of Nikola Tesla that the company was able to bring about quality products. The company believes that the customers will increasingly prefer stylish transportation and eco friendly products. Figure: Logo of Tesla Motors Products that are sold by Tesla Motors: Some premium models are sold under the brand name of Tesla Motors. The car that is leading in sells is the Model S. The other models that are in demand are Roadster and Model X. The company Tesla Motors is trying to capture the market of Australia through the sale of Model 3, which is going to be on sale in the 2016-2017 (Kotler Keller, 2012). Figure: Electric Vehicle by Tesla Motors Mission and Vision of Tesla Motors: The mission of the company Tesla is that they wants to offer the most extraordinary experience while also gathering the feedback from the customers so that this would help in achieving operational efficiency , control over the inventory cost , warranty services and development of the brand of Tesla Motors. Tesla Motors must not treat the use of the electric cars as the sacrificial mode of transport. There is a good coordination of the automotive world and technology, which helps in describing the car image as step towards the performance and efficiency. The company Tesla Motor visions that there should be 100% electric enabled cars which would be helpful in reflecting a strong future as is would be creating an eco friendly environment. They are trying to propagate the message that the electric cars are the best alternative to the fuel enabled cars. Objectives of marketing by Tesla Motors: The marketing objectives that are followed by Tesla Motors are as follows: Generation of a greater demand needs to be made by the company Tesla and also helps in the generation of leads for the marketing team The company Tesla wants to make brand image and also wants to make the brand awareness among the new group of customers There is a need for the management of the customers through the loyalty and the customer referrals Encouraging the input of the customers through the development of the products Figure: Milestones of Tesla Motors Situational Analysis: Demand Analysis and Demographic structure in the Market: The male population is seen to demand more of the Tesla products than that of the female. The demand for the Roaster collection of Tesla is by the upper class business executives who are generally looking for the luxury form of cars. The down payment for this type of cars is 100000 dollars, which cannot be afforded by the common person. There is a huge demand for the electricity-enabled cars in Australia as they are getting more eco friendly (Lamb, Hair, McDaniel, 2013). The model S of the company is priced at 70k dollars. The customers are the tech savvy individuals who prefer eco friendly products. They are the ones with the higher levels of income. SWOT Analysis: Strength Weakness The cost will be low with the outsourcing of the secondary component, which would help in keeping the cost low and helps in the advancement of technology. This will help in developing a strong R and D. There is a lean management system where the workers they are able to work in the small and decorated offices. This would make the decision making more simplified and helps in the building of trust between the employees and the managers There is a strategic relationship of the company with the with the companies like Panasonic , Toyota Motors and Daimler which is seen to benefit both the companies The company Tesla faces the problem of liquidity. Even though there has been a huge sales of Model S in 2013 but there has been a a significant loss due to high amount of debt , low demand from the clients and lack of controlling the costs. The capacity of manufacturing is limited, which is a reason that it would not be able to meet the customer demand in the future. There is shortage of lithium cell batteries. There is no strong history of company Tesla unlike that of the Ford and GM company. Opportunities Threats The most important change involves the benefits from the use of the electric cars and the growing concerns related to the environment. The company Tesla would be able to grow with additional subsidy from the government There are a number of sellers of electric vehicles who are seen to provide quality cars at a much affordable rate. The competitors they are able to provide the hydrogen technology based powered vehicles. Competitiveness in the Australian Market: The following table reveals the four competitors in the Australian Electric Vehicle Car market: General Motors Toyota General Motors provide a significant threat to the company Tesla Motors. The company they have planned to enter the small premium market through the price range of 30000 dollars Volt Car, which is introduced by GM, is not completely an electric car but it is planning to enter the market of Electric Vehicles. The car design would be including 40 miles of the battery powered driving before there is recharge of the battery by 1.0L turbo gas charged engine. In the high way , the range of volt would increase by 640 miles. There is the availability of the hybrid technology that would help in the entry into the electric car market and the plug in hybrid. The company is already based in Japan and has entered into the Australian market with the hybrid technology The company offers a larger battery pack and home charging stations for Prius . Prius model is a full electronic version of Prius The above strategy would be helpful in providing the electric version of the sedan at the different possible prices BMW Daimler Ad The main competitors of Tesla include the BMW that helps in providing a continuous effect in the luxury, low consumption, high performance, and low emission in the auto market (Moutinho Huarng, 2013). There would be electric sales in the years to come in the market at a very competitive rate. The version of i3 is the product that will be fully enabled electronic vehicles so that there is individual mobility The models of BMW would be having structure and design with electronic motor designed by the company (Lee Carter, 2012). The product Mercedes Benz B class will be on sale in the Australian market (Mullins Walker, 2013). The system that charge and run the B class will be shared by SLS AMG Coupe E cell The vehicles that are manufactured by the company Mercedes Benz would not require any type of fuel cost and along it covers longer distance The company has collaborated with Tesla for sharing the battery technology and electric motor (Paliwoda, Andrews, Chen, 2012). Promotional marketing Budget: Types of Marketing Amount devoted for marketing (total 1 billion USD) Advertising 30,00,00,000 USD Sales Promotion 20,00,00,0300 USD Public Relations 10,00,00,000USD Direct Marketing 40,00,00,000USD Analysis of Sales: The sales of the electric cars of Tesla Motors increased from 100% to 360% in the previous year. With the technology advancement, there will be batteries that are more efficient and there will be more stations for charging the cars (Scholz, 2014). The demand for the electric car has increased s there has been a rise in the price of the petroleum products (Paliwoda, Andrews, Chen, 2013). With the greater demand for the electric products as it is environmentally safe as no pollution is emitted through it. There is a need for the company to segregate the customers, as there is a greater demand for the products of electric cars. The cars did not appeal the younger generation as this was based on the poor level of performance (Peter Donnelly, 2013). The figure below helps in showing the trends of the vehicle sales , electric car sales and hybrid car sales in the market. Target marketing: The company Tesla Motors to grow at present and the near future must be to expand in the target market in Australia so that it can reach more number of customers in the market. The customer that is of the main target by the company is younger generation of Australian i.e. the age group of mid 20s to the early 40s, the working adult population who belong to the middle class. The facility of the company increased with the increased level of production. The main target market is the younger professionals who are looking for cars that are luxury base but within a sufficient budget. The data by NADA has shown that the average sell price is around 30000 dollars, which would help in reflecting the customers who would not want to spend on the cars (Weinstein, 2014). Marketing Position Analysis: The company Tesla Motors wants to sell the car models at the entry level, which would include luxury and added benefits from the electric model while the performance is not lost. There is lower level of design and performance by the electric cars as it is not deemed to be perfect by the younger buyers. With the entry of the company, Tesla Motors in the Australian market the focus would be to change the design and technology (Jolibert, 2012). The luxury car price is fixed at the range of 30000 dollars, which would help in the development of a full electric car system, which would be attracting more number of buyers who would looking for luxury cars of the entry levels. The zero emissions is the added advantage of electric cars. The customers they would also be saving more amount of money. Marketing promotion objectives and the strategies for 2016-2017: The marketing plan of Tesla Motors involves capturing of a large amount of market share in Australia in 2016-2017. The company wants to increase the market share by more than 20%. It wants the brand to be recognised by the younger generation of Australia, which would also increase the loyalty of the brand. The primary and the secondary researches by the company have shown that there is a greater demand for the affordable luxury cars by the younger professionals (Hutt Speh, 2014). The surveys have shown that electric cars quoted at the price of 40000 dollars with a rebate tax would be reducing the price of the cars to around 32500 dollars. The consumers they will be able to reduce their cost of the fuel with the purchase of electric enabled vehicles. Promotional Strategies: Loyalty Programs: The company Tesla Motors wants its customers to be safe and comfortable in their vehicles. The aim of the company is to provide a safe and comfortable driving through the reliable vehicle. The loyalty program of the company Tesla will make the customers family to enjoy the added bonus while being the customer of Tesla. With the special promotion of the product, the customers who already own a car under Tesla will be buying another one for the family so that it can receive an instant off 2000 dollars in a car, a year of free service, which also includes the unlimited service ranger appointments. The four-year program will be applicable for the promotion by the company, which would be applicable after the end of the first year, which would be giving coverage of 5 years. Test Drive Campaigns: The company Tesla wants to spread the awareness of the brand through the Test Drive Campaigns. The test drives will be conducted in the selected cities of Australia. The cities that would be targeted are Brisbane, Perth , Queensland and Melbourne. The sales would be heavy in the selected cities. There would be teams who would be promoting the vehicles in the selected cities (Hutt Speh, 2013). The company would be bearing the cost of lodging and food through the entire campaign. Social Media and Websites: The websites and the social media sites would be used for the campaigning of the upcoming model. The use of social would help in the promotion of the events through the websites (Zimmerman Blythe, 2013). The advertisement will be displayed in the home page so that there is maximum exposure of the model on the website. Google Advertising: The company Tesla Motors to promote the products through the use Google Ad words. This type of advertising will help in target advertising. The company advertises with the pay per click model. This will ensure higher traffic in the websites. Each click that is made by the customers will be leading to the official website of the company. This would be creating a secondary affect on Tesla. With the each customer visiting the website there would be brand awareness which would lead to increasing sales. There will be tracking of the conversion rate which will be helpful in determining effectiveness of the program (Homburg, Krohmer, Kuester, 2013). With the specific goals in mind, defining the keywords that the company Tesla is associated to and setting up of the budget for conversion. There will be higher conversion rates with Good Ad Words. Conclusion: The company Tesla Motors after entering into the market of Australia has to face a very competitive market as there are many sellers in the in the market of the electric vehicles . The companies General Motors, Mercedes, BMW and Ford will dominate the electric vehicle market. 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