EXECUTIVE SUMMARY The market of cars is growing as they are including technology to drive the customers. They have become smarter and use various innovations. The PESTEL and SWOT analysis helps in understanding internal and external factors and USP makes the company stronger than competitors. There are SMART objectives to make the strategies of the company and providing them recommendation helps them to grow their business. 2
Table of Contents EXECUTIVE SUMMARY.............................................................................................................2 INTRODUCTION...........................................................................................................................4 1. Internal and external analysis to understand the factors.........................................................4 2. Evaluation of organisation's competitive edge(USP) over other brands.................................7 PART 2............................................................................................................................................9 1. Analyse the segmentation, targeting and positioning.............................................................9 2. Marketing objectives to increase the brand awareness, market share and profitability........11 3. Marketing Strategies based on marketing mix......................................................................12 CONCLUSION..............................................................................................................................13 REFERENCES..............................................................................................................................15 3
INTRODUCTION The market for electric cars is growing and companies are producing best quality electric cars. The new technology, changing government regulations, global market has improved the choices of customers (Alqahtani and Gupta, 2017). Innovation is driving the companies to produce sustainable transportation. For this the chosen company is TESLA, founded in 2003 and considered as the world's best selling electric cars. Its technology and innovation has made it a success and has achieved brand name. Tesla's product line includes cars which are electric an efficient and the prices are attractive. It has achieved a market share and profits are growing with increasing number of customers. This project includes analysis of marketing strategies of the company using internal and external analysis, identifying the competitive advantage and current marketing strategies. Preparing smart objectives help the companies to increase growth and share of volume. 1. Internal and external analysis to understand the factors Pestel analysis It is considered as an important tool that used to evaluate external factors that directly impact on over the company performance. This tool is used by all the companies to know about external factors which influence company performance and uncontrollable by the company. Pestel analysis is also used by Tesla to know about its external factors (Bang, Joshi and Singh, 2016). Political factors –This factors is helpful for the company to know about government policies which can influence their business. In context of Tesla, Government of UK take initiatives to uplift production of electric vehicles by providing incentives. This is beneficial for Tesla as it is already famous for electric cars as they provide environmental friendly vehicles to its customers. This will be helpful for the company if they wanted to expand their business in othercountriesalsoasUKgovernmentalreadysupportingthem(Chanthinok, Ussahawanitichakit and Jhundra-indra, 2015). Today people also try to save environment and spread awareness through organising many play and events. Tesla can easily influence those customers to buy electric vehicles. Economical Factors –Economical Factors are very important for an organisation as they can influence business profitability. This factor include Economic growth, Exchange rate, interest rate etc. In context of Tesla, economical condition is batter for the company as demand 4
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of electronic vehicle increase globally. Government of UK is encouraging investment in electronic vehicles and the price of electric batteries also reduce in past few months which is beneficial for the company. Social Factors –Social factors includes attitude and interest of the population, which are educations level of customer, age , income level, health consciousness, purchase habits etc. This factors influence a business through customers, employees and investors. Demand of low-carbon lifestyle increased which is beneficial for Tesla as they provide environmental friendly vehicles. The customers also give preference for renewable energy products as today they are more aware about environmental issues. Tesla have opportunity to grow internationally as there is great demand for environmental friendly vehicles. Technological Factors– Today technology is very important in every sector so the company can work effectively. This factor influence business as customers are also prefer those products which help them to work easily by using new technology. Tesla is also focus on new technology so they can provide better options in their products (Chiang, 2018). On the other hand their vehicle price is also very high as compare to other company's product. Even so they provide Environment friendly products but customers not prefer high cost product if they can use same facilities in other low cost products. Legal Factors– Legal factors play very important role in a business as it influence business activities. It includes law and rules set by the country government for all the business like Consumer law, Discrimination law, Fraud Law, Import and Export Law etc. Tesla can expand its business internationally by using patent protection policy. The Company can also expand the business by direct sale which is allowed in some states in the US.Through this analysis company can identify there is opportunity to expand the business internationally (Dixon, Martinez and Martin, 2015). Environmental Factors –Environmental factors includes those factors which influence a business due to environmental change like climate, weather, pollution etc. Tesla produce electric cars which is beneficial for the environment so they can spread more awareness among people about climate change to influence more customer to buy their product. The company can also organise environmental programs to increase demand of electric cars. This analysis of Tesla shows company is growing in the market continuously which is also increasing its profitability ratio. The Company can also expand its business internationally 5
by using free trade agreements as it is already have government support due to its environmental friendly product. SWOT analysis – Swot analysis is used by the company to know about its internal factors which effect business performance. This analysis help Tesla to know about all the internal factors like strength, weakness, opportunities and threats of the company (Hollensen, 2019). Strength of Tesla Automotive Company –Despite its high cost electric cars Tesla is able to increase its sales ratio and became one of the leading Automotive company. Focus on Employee satisfaction- Tesla is increasing its sales and profitability day by day on the other hand the company is also focusing on employee satisfaction. Employee play very important role in the company to achieve its target. Tesla take care of employeesrequirementwhichhelpcompanytoachieveitsgoalseffectively.The company also received best employer 2019 in Forbes. Best class electric Car- Tesla is famous for environment friendly cars and it left many big brand behind because of producing best electric cars in the market. They also prove that their cars can cover maximum distance in single battery charge. Weaknesses of Tesla Unable to fulfil product demand –Tesla always do experiments with the product and its manufacturing process is also complicated which increase unbalance between demand and supply of the product. Limited supply of batteries –Tesla business is affected by shortage of batteries as there is limited supply of batteries. Due to this issues company have to face many difficulties in production process and fulfil customer demand on time. Opportunities of Tesla Less Expensive Car –Tesla always focus on innovation in their product which also increase product cost. This is an opportunity for the company by reducing product cost so the company can attract new customers (Khan, Dongping and Wahab, 2016). Start Battery production –Although Tesla is a leading company in electric cars still the company face issues to fulfil customer's demand due to limited supply of battery. Tesla 6
can plan to produce its own battery cells which can help to fulfil customer demand on time. Threats for Tesla Extensive Competition -Tesla provide electric car and self- driving technology, on the other hand many other companies also providing electric cars which are Mercedes, BMW, Audi etc. Many other brands are also planing to launch electric cars on low price which is threat for company like Tesla because of its extremely expensive product and uneconomic for many customers. Product defects –Due to complicated manufacturing process, many time customers have to face issues regarding the product (Liu and Chou, 2016). There are some incidents where customer receive defected product which is a threat for the company as it can harm Company's image. SWOT analysis of Tesla helps to study about all the internal factors which affect the company. Tesla is growing organisation despite of that there are many opportunities for the company. If the Company can focus on those opportunity they can take competitive advantages from the market and also expand the business internationally. 2. Evaluation of organisation's competitive edge(USP) over other brands Tesla has always satisfied it customers by providing them cars which are trendy in the market. Their business strategy is different from the competitors which makes them have a wider market share. They have formed the brand loyalty and focuses on proving best experience to its customers. The USP of Tesla is to provide customers with best quality cars with affordable prices and have an emotional connect with its customers. The USP has factors which are included in the business strategies of Tesla. Innovation-Tesla has used technology and innovation which is its USP as they have sustainable battery options like stations are available at each stop and have a fast charging. They can charge at the speed of mobile phones and have a good quality (Micu and et.al., 2017). The phones can be connected to cars where you can instruct it. Customer loyalty-Tesla makes the best product and customers like them. They give a customer experience which makes them feel that the company is making products for them and increases customer loyalty (Mothersbaugh and Hawkins, 2016). 7
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Trend-There are many competitors for Tesla in the market but their share is not affected by change in market. They always innovate products which makes competitors design strategies. They always are market attractive and provide trendy cars. Organisation's effectiveness over its competitors Tesla has accepted that its can be effective over its competitors when they are building the brand and its electric market segment has made it achievable for the company. It is having many competitors but the growth of the company is increasing. There best marketing strategy is that they do not promote its products and do not spend money in advertisement. The promotions are through customer experience. Market growth-The company has achieved a level of success where they grow faster than industry and when the sales of industry decline Tesla's share gets reduced with a smaller share. The industry is having sales of electric cars as 15% declining which Tesla has a growth of 2% (Tesla Inc Growth Comparisons,2020). Profitability-Tesla has achieved a growth of 25% as the market is growing and increasing profitability when customers are buying cars from them. They are profitable as they do not invest in promotions and invest the money in innovation. They have launched a app where you can find where your car is. They are increasing their profitability by creating products which are efficient. Sales Trends-The sales of Tesla has increased 107% and have grown in volumes. The operating profit of the company is always increasing as marketing strategies are effective. The sales of the company are ever increasing and the market is growing which makes the competitors design their strategies to meet the sales of their companies. Their electric cars are best in the market and current strategies to make it better are included in the business strategies of Tesla. The sales are increasing because they are increasing their trends of their products. 8
PART 2 1. Analyse the segmentation, targeting and positioning STP of the company helps them in understanding customers and their behaviours towards products. They provide the understanding of needs and wants of market. When market is segmented on the basis of demographics, behaviours and psychographics factors then companies target customers and position their products to them (Palmatier and Crecelius, 2019). Segmentingisamarketingstrategywheremarketisformedintosegmentsof heterogeneous or homogeneous customers. Segmentation of Tesla- Geographic segmentation-It is important for companies to segment its customers based on geography because companies are operating in many countries and the external factors affecting the businesses are different for them. Tesla's segmentation is based on religion where they have western culture and density where they have products for rural and urban people. Demographic segmentation-In this segmentation, customers are formed on the bases of age, gender, lifestyle and occupation. Tesla has customers of young generation and male and females are its customers where they are working professionals at good positions in the companies. Behavioural segmentation-There are factors which helps in building strategies for an organisation like degree of loyalty, benefits sought, user status. Tesla make strategies to attract the customers who are loyal to company and who can be loyal and who are switchers. They provide sustainable cars and customers who want cost effective car with best quality. They want customers to use their products so they innovate them so that they can get the sale from non-users also which is a market for them. Targeting involve taking the segment of customers which company wants to provide its products to. It is the strategy of companies where they keep the needs and wants of customers in their business goals and making plans to meet their demand (Palmatier and Sridhar, 2017). Tesla has a good market and it has a growing market share. They keep products which are liked by males and provide them that they are driving a car which is made for them. Their cars are expensive and customers having a good salary and position in companies can afford it. They meet the socio economic need of customers and provides them efficient cars. Tesla has targeted 9
its customers where they trust that they will like the product and innovate them so that they gets attracted. Their target segment is rich customers who can afford technology so they made it its business strategy. Positioning is giving an identity to your products to customers. It is difficult for companies to position products to all the members of the segment, understanding their need and make products for them. The effectiveness of products depends on marketing strategy and their plans to make products achieve profits. Tesla has positioned it products uniquely. Innovative-Tesla focuses on innovation where they believe that they are not selling cars they are selling technology. They have positioned themselves as the best quality cars where their focus is on maintaining efficient products. The are increasing their share because of its innovation in electric cars. Disposable income-Tesla has products for rich customers with good disposable income and can afford expensive cars. They position their products as luxury as they are expensive and meet the needs of rich customers. They have electric cars for customers who want effectiveness (Peterson and Crittenden, 2020). They have stores on the markets near Zara or brands where customers can be attracted to it. Brand Name-They have positioned its products as better than its competitors where they believe that they want to buy Tesla because it is Tesla. They have a good image in market and have a good market share in countries. Their price and quality is helping themj in maintaining brand name. 10
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As compared to its competitors, Tesla is in the quadrant of innovative and modern products. It has achieved a level where its competitors are not able to innovate its products. 2. Marketing objectives to increase the brand awareness, market share and profitability. The car manufacturers have understood that customers who purchase cars which are expensive wants a good customer experience. They do not focus on cost but on the services provided by them to customers. Tesla has products which are good quality and can meet the needs of customers. SMART objective: (Specific, Measurable, Achievable, Relevant and Time Bound) These are objectives which provides direction and govern the strategies of companies. They helps them make the strategies which make them increase their operations in market. To introduce electric cars within 3 months in markets of Africa to expand market with desired increase in profitability by 15% Recommendation to increase market of Tesla To give the best customer experience-The businesses should make the strategies to attract customers. They need to understand that customers experience helps them in building strong relationships with customers. Tesla is successful because it has a good relationship with customers. Their customers are satisfied because they get a good experience. Tesla maintains a good relationship with customers and provide them with 11 Illustration1: Target Market Segmentation: How Tesla Pulled off a Billion Dollar Pricing Strategy in the Automotive Industry. 2020.
services which are making them believe that they are buying good products from good company. When they will market their products in Africa, customers will increase and will get the best customer experience. Brand Exposure-The brands should always make customers aware of its internal processes. It increases the brand awareness of customers and helps in increasing sales. The customers need brands to be attractive in market as it give them that brands are the best and they have a good quality. Tesla has a good brand name in market because it is connected to customers. The companies will expand to Africa which will give them exposure. The brand awareness will increase and which will increase their profits. E-commerce-The market on e-commerce has increased. It gives them opportunity to target wider market and increase their brands (Taoketao and et.al., 2018). The brands should focus on making strategies to sell its products on them. They help companies to understand behaviour of customers. The customers gets to compare company's products with its competitors. The business strategies should be made to increase customers on e- commerce. Tesla should focus on this strategy and have good share in market. They have products which are sold directly by them. Tesla can have its customers in Africa where they can provide products and it will increase customers. It is important that Tesla understands their market and then make products for them. 3. Marketing Strategies based on marketing mix Marketing strategies are based on the marketing mix of companies. They make strategies to build products to meet demand. Tesla has a marketing strategy which focuses on product quality and innovation. The success of products of companies depends on its marketing strategies. Product-The product is what companies focus on. The quality of product gives customers opinion about the brand. The companies sell its products to achieve profits and to be successful it is important that products should be good to increase the profits. Tesla has products to meet the needs of customers. It products are different from its competitors and have achieved success as they have the best quality. It is recommended that Tesla should increase products and it will give options to customers to choose. They should differentiate its products. 12
Place-It is important to make products available to customers. They should place it in the area where their customer segments can use it. The brands should identify the best places as it is an important part of the sales. The Sales managers should understand market and sell products to the right customers. Tesla places products in company's stores and they are located at best places. They are placed near luxury stores or in places where rich customers can be served. They have their service centres where customers can come and get the services. It is recommended that Tesla should have portable charging stations where its is convenient for customers to take it. They can charge higher prices to customers for this service and should provide a facility where they can be attracted towards their services. Price and promotion-The factors which helps in making decision about product is price. The companies should keep the price of products matching the industry price and the disposable income of customers. It is important that customers should connect price of product with quality it provides (West, Ford and Ibrahim, 2015). The promotions help brands to direct products to customers who will give profits to them. Tesla has focussed on innovating its products and it has kept the products expensive than the price of its competitors. The products are price high still their demand is increasing and customers are satisfied with products. They do not promote products and focus more on innovation which promotes products for them. It is recommended that Tesla can make products with are affordable to more people as there are countries which cannot afford and to increase in markets globally it is important that they have products with better prices to customers. They should promote the products on e-commerce which will help customers. CONCLUSION The markets are now moving to sustainable options when it comes to making products for customers. The companies are focusing on giving quality cars which are affordable to customers and gives them options. The electric car is in demand and customers want to have them. The market for it is wide but they there are less effective because they have less charging and companies should have technology to make them available at many areas. The external and internal analysis helps brands and the segmentation of customers help them to understand 13
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market. The marketing strategies help brands to make the business goals and the success of business depends on them. The brands should help customers and satisfy them. 14
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Target Market Segmentation: How Tesla Pulled off a Billion Dollar Pricing Strategy in the AutomotiveIndustry.2020.[Online].Available through:<https://taylorwells.com.au/target-market-segmentation/>. 16