Customer Needs And Preferences Assignment

Running head: CUSTOMER NEEDS AND PREFERENCES
CUSTOMER NEEDS AND PREFERENCES
Name of the student
Name of the university
Author note

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Table of Contents
1. Introduction..................................................................................................................................2
1.1 Company Background...........................................................................................................2
2. Problems......................................................................................................................................2
3. Importance of this research..........................................................................................................3
4. Scope............................................................................................................................................3
5. Literature Review........................................................................................................................4
5.1 Fuel price and environmental concerns.................................................................................4
5.2 Luxury....................................................................................................................................4
5.3 Technology............................................................................................................................6
5.4 Pricing factors........................................................................................................................8
5.5 Areas of improvement...........................................................................................................8
5.6 Tesla Motors..........................................................................................................................9
6. Research questions.....................................................................................................................10
7. Conclusion.................................................................................................................................11
References......................................................................................................................................12

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Topic: Customers’ needs and preferences of Tesla electric vehicle
1. Introduction
1.1 Company Background
Tesla is an American automotive and energy company which is headquartered in Palo
Alto, California (Tesla.com., 2019). The venture was established in the year 2003 and developed
a wider range of automotive, specifically electronic vehicles. The major manufacturing facility of
the concerned organization is situated in Fremont, California (Tesla.com., 2019). The strong
R&D based operations of the organization empowered the continuous innovation related
approach while operating in the different markets. It has been noted that the organization
employs 45,000 employees and the revenue of the venture was recorded to be around $1.65
billion by the end of the year 2019 (Tesla.com., 2019). The development of the electronic
vehicles created a competitive edge for the venture in the different automotive markets. On the
other hand, the increasing threat of pollution and environmental concerns supported the
initiatives of the venture in developing the electronic vehicles to suit the needs of the customers.
2. Problems
The growing issues relating to the adoption of electronic vehicles are specifically based
on the high price of the propositions. In this relation, it has been noted that the increased cost of
the vehicles might be attributed to the higher costs of production that are incurred by the
businesses. The major challenge that is being encountered by automotive organizations are due
to their inability of reducing the costs of operations, which affected the market price of the
electronic vehicles (Hardman et al., 2018). The increased price of the propositions have limited
the scope of the organizations while sourcing potential customers for their propositions.
Although, it has been noted that the growing environmental concerns have increased the value of

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the electronic vehicles, but the unaffordable pricing of the propositions affected the buying
power of the customers. Apart from the cost of manufacturing and the price of the propositions,
the mileage hat is provided by the EVs play a major role in the buyer’s decision making criteria.
Therefore, the research will focus of identifying the present needs of the customers relating to the
EVs that are manufactured by Tesla and the manner in which the problem might be resolved by
the organization.
3. Importance of this research
The research will critically evaluate the buying behavior and inclination of the customers
towards Tesla’s EV (Electronic Vehicles). The research will enable the CEO of Tesla, Elon
Musk, in identifying the changing needs of their prospective customers. The report would also
enable the organization in identifying the possible ways through which the pricing might be
regulated in correlation with the manufacturing processes for adhering to the needs of the
customers. Moreover, the research will develop a clear understanding of the buying preferences
of the customers towards the EVs, which would support the future researchers in forecasting the
future developments in the automotive industry.
4. Scope
The research will focus on identifying the preferences and needs of the customers of
Tesla EVs. Many other automotive companies have developed EVs and thereby the different
changes in the organizational operations and thereby the consumer preferences of the other
companies would be highly irrelevant for the present research. The assessment of the needs and
preferences of Tesla’s customers would significantly support the organization in developing
ideas on improvement in the propositions to retain its market position. Therefore, the current
research would strictly develop an understanding of the different preferences and needs of

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Tesla’s customers and the manner in which the organization might bring forth changes in the
offerings.
5. Literature Review
5.1 Fuel price and environmental concerns
The rising price of fuel is one of the primary factors that shifted the consumers’ buying
behavior towards the EVs. Bowermaster, Alexander and Duvall (2017) stated that more than
90% of the US population believes that it is more desirable to buy an Electronic Vehicle with the
rising fuel prices, amounting to about $3.44 or $4.00 per gallon. It has been noted that most of
the EV buyers consider the long term saving son fuel costs rather than the short term high costs
of buying an EV. However, Smith and MacGill (2016) opined that the major concern that is
being escalated by the EV buyers are related to the availability of the charging stations. On the
other hand, Higueras-Castillo et al. (2019) noted that with the rise in the fuel prices the
consumers express their preferences on buying automobiles, which would work on fewer miles
per gallon (MPG).
Moreover, it has been noted that most of the consumers are inclined towards using eco-
friendly vehicles, irrespective of the price of the automobiles or the cost of fuel which is a
driving force for the EV manufacturers like Tesla. Ensslen et al. (2016) stated that the
compelling desire to reduce carbon emissions is one of the major factors that drives the purchase
intent and inclination of the customers towards the EVs. Therefore, the price of the fuel and the
environmental concerns mostly drives the buying intent of the customers towards the EVs.
5.2 Luxury
The consideration of the EVs under the criteria of Luxury is specifically based on the
features and benefits that are being proposed by the organizations. Fincham and Amroziak

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(2017) opined that 77.3% of the customers with an annual income of over $100,000 plans to buy
a EV based on the luxury based features. Moreover, It has been noted that around 83.9% of the
customers of the EVs are mostly men (Choi, 2018). Therefore, the features and privileges of the
EVs mostly drive the purchasing intent of the early adopters in the scenario. On the other hand,
Wittmann (2017) noted that the around 6 -10% of the population, belonging to the middle
income groups, believe that the use of EVs in the practical life for every day driving is not under
their budget. Therefore, most of the automobile organizations, including Tesla, took the initiative
of improvising the marketing operations based on the assessment of the income of their target
customers. It has been noted that the lower affordability of the people while investing large
amount in a short term buying intent made EVs a luxury over social or environmental needs
(Contestabile, Alajaji & Almubarak, 2017).
Figure: EV manufacturers
(Source: Andwari et al., 2017)
Forrest et al. (2016) noted that around 5.7% of the population, with an annual earnings of
$50,000, affords an EV. In this relation, the increased considerations on class buying increased

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the chances of EV being a luxury to people. However, Salman (2019) opined that the increased
population of millennial and their inclination towards experience based propositions have greatly
created opportunities for the EV manufacturers in the different markets. On the other hand,
Rahman et al., (2016) stated that most of the EV manufacturers, including Tesla, took the
initiative of minimizing the operational expenses with the purpose of improving the scope of
potential customers in the markets. On the other hand, it has been noted that most of the
customers are more interested in the features that are being provided by the organizations.
Features relating to the mileage that is being proposed by the organization and the added
software amendments that are made by the organization for adhering to the safety related needs
of the customers. Junquera, Moreno and Álvarez (2016) stated that design and interiors of the
vehicle imposes promotable factors among the EV while drawing the attention of the customers.
Therefore, the price of the EVs being high enough restricted the buying behavior of the
customers, while making the vehicles more affordable for the niche markets, converting the same
into luxury.
5.3 Technology
The electronic vehicles that are manufactured by the automobile organizations are more
focused on the development of green technologies for minimizing the carbon footprints.
Contestabile, Alajaji and Almubarak (2017) opined that the green technologies are specifically
based on the needs of the customers in minimizing their dependence of the non- renewable
sources of energy and reducing the rate of environmental pollution. Therefore, the growth of the
EVs by the different automotive manufacturers critically fueled the sustenance based needs of
the customers. On the other hand, the rising price of the fuel and gasoline created a situation
where the buying motif of the customers moved to more long term sustenance related efforts

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rather than short time price rise. However, Viswanathan et al., (2018) opined that the lack of
proficient technological infusions affected the capability of the automobile manufacturing
organizations increased the operational costs. The increase in the operational costs affected the
potentiality of the organizations in maximizing the scope of sales beyond the niche markets. It
has been noted that the manufacturing process of the EVs are costly which restricted the
capabilities of the organization in maximizing the production rate of the units.
The technological infusions in the organization production process would have helped the
businesses in maximizing the rate of production to cope with the increasing demand for the
propositions. Moreover, Hosseinpour, Chen and Tang (2015) noted that the changing
expectations of the customers to afford high end automobiles are critically resolved though the
development of the technological innovations. It has been noted that most of the customers are
inclined towards the benefits and features that are being offered by the EV manufacturers
through the vehicles. In this relation, the intense competitions in the market might be tackled
through continuous innovations and technological reforms in the automobile manufacturing
organizations. Nilsson and Nykvist (2016) opined that more than 67% of the customers are
more concerned about the mileage that is being provided by the cars and around 49% of the EV
buyers are concerned about the design and performance (de Rubens, Noel & Sovacool, 2018).
The frequent innovations in the technological aspects thereby permits an automobile
organization in adhering to the changing needs of the customers while operating in the different
markets. It has been noted that the EV buyers are more concerned about the availability of the
charging stations. Moe than 54% of the population in the developing countries encountered
significant issues in sourcing a charging station for their EVs (Salman, 2019). The technological
innovations in the automobile companies would enable the same in minimizing their operational

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costs while setting up charging stations in the different accessible locations for adhering to the
needs of the customers. Therefore, technology play an important role in the developments of the
automobile industry that are primarily focused on manufacturing EVs, while correlating the
propositions with the preferences and needs of the customers.
5.4 Pricing factors
The pricing factors of an EV are mostly based on the operational expenses that are being
incurred by the EV manufacturing organizations. The increase in the operational costs are
specifically based on the semi- automated processes that are being infested by the organizations
while manufacturing the EVs. The increasing cost of operations while manufacturing the
vehicles have greatly contributed to the rising price of the propositions hat are made by the
ventures. Wittmann (2017) stated that more than 34% of the population in US and respective
other economies expects to buy EVs in response to their environmental concerns and rising fuel
price, but the increased cost of the short term purchasing intent of the customers restricted the
ventures in empowering sales. As noted in a survey that more than 56% of the business
executives with an annual income of over $100,000 affords the EVs while the remaining
percentile of people still have to bear the increasing cost of fuel due to their unaffordability
(Hardman et al., 2018). The EV manufacturers specifically aims at targeting the niche market.
Therefore, the rising price of the propositions might be considered as a hindering factor for
increasing the scope of sales of EVs in the different markets.
5.5 Areas of improvement
The major areas of improvement will be specifically based on the reduction of price and
improvement in quality of the EVs. In this relation, the EV manufacturing organizations might
take the initiative of inducing human workforce. It has been noted that most of the EV

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manufacturing organizations rests 78% of their operations on the semi- automated machineries
which contributed heavily to the rising operational costs of the same (Fincham & Amroziak,
2017). Moreover, Choi (2018) stated that the lack of sufficient human intervention in the
manufacturing process also restricts the capability of the organization in improving the quality of
the propositions due to lack of quality checks in the real time. The insufficiency of the human
labor force in the manufacturing units of the EV manufacturers also restricted the capability of
the organizations in customizing the vehicles in accordance to the changing needs and
preferences of the customers. Therefore, the EV manufacturing automobile firms must take the
initiative of balancing the use of semi- automated machinery with the skilled human workforce
for improving the quality of the propositions along with reducing the operational costs.
5.6 Tesla Motors
The research specifically aimed at developing an idea on the generic issues that might be
encountered by Tesla due to the growing emphasis on the semi- automated technologies rather
than the human workforce (Tesla.com., 2019). The research critically examined the different
shortcomings in the operations of the organization and the manner in which the same might
affect the customer buying intent. The customer buying intent is specifically based on the
features, design and price related factors that are being provided by the organizations. In this
relation, the major areas of improvement in the organizational operations will be critically based
on the induction of human based workforce and balancing the operational aspects with semi
automated technologies.

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Figure: Tesla Sales
(Source: Tesla.com., 2019)
6. Research questions
The research questions that will be administered during the study are:
 What are the different factors that might influence the purchase intent of the customers
while considering an EV?
 How is quality and price of the propositions correlated to the preferences and needs of the
customers?
 What are the issues that are being faced by Tesla in achieving their targets while adhering
to the changing needs and preferences of the customers?

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 What are the recommended activities that might be considered by the organization for
improving their market position while adhering to the changing needs and preferences of
the customers?
7. Conclusion
Therefore, from the above analysis it might be stated that the price of the EVs, the
environmental concerns and features like mileage are the driving forces that might drive the
purchase intent of the customers. In this relation, the research specifically developed a coherent
argumentation on the issues that are being faced by the EV manufacturing organizations,
specifically Tesla, in adhering to the preferences and needs of the customers. Therefore, the
research also developed areas of improvement while focusing on the relevant literature for
improving the rate of operations and maximizing market scope.

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References
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