Marketing Strategy of TESLA Inc.

This project report analyzes the marketing strategy of TESLA Inc., a leading American car manufacturer. It evaluates the business environment, current marketing strategy, and segmentation of Model S. The report also provides recommendations for an effective marketing strategy.

Marketing Strategy
of TESLA Inc.
1

EXECUTIVE SUMMARY
The following project report includes a case study of the marketing strategy of TESLA Inc,
which is an American car manufacturer and deals with production of high-tech cars and
automobile vehicles. In this project report, it has been evaluated that the business environment of
TESLA provides many opportunities for the company to expand and grow its business. The
report also evaluates the current marketing strategy of the company as a highle effective strategy.
The second part of the report deals with the segmentation, targeting and postioning of Model S
by TESLA Inc and also identifies some SMART objectives and goals of the management. At last
the report provides some suggestions and recommendations for the management of the company
to adopt a better and effective marketing strategy for latest Model S of the company.
2

Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
PART 1............................................................................................................................................4
PESTLE Analysis of TESLA Inc:...............................................................................................4
SWOT Analysis of TESLA Inc:..................................................................................................7
USP of TESLA Inc:.....................................................................................................................8
Evaluation of current marketing strategy of TESLA Inc:...........................................................9
PART 2..........................................................................................................................................10
Segmentation, Targeting & Positioning of Model S by Tesla Inc:............................................10
SMART objectives and goals:...................................................................................................11
Recommendation of marketing strategy:...................................................................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
3

INTRODUCTION
TESLA Inc. is an American car manufacturer company. The company has its headquarters
in California and was founded in the year 2003. The company deals with bringing high-end
technologically equipped automobiles and cars to the marketplace. In this project report, an
attempt has been made to analyse the internal and external environment of TESLA Inc and
identify the unique selling proposition of the compnay (Stobbe Jr, 2019). The report aims to
evaluate the current marketing strategy of the company. Further, the report aims to understand
the segmentation, targeting and positioning for Model S by TESLA Inc. At last, at attempt has
been made to provide some recommendations and suggestions to the management of TESLA
Inc. for better marketing strategy and campaign on the basis of application of marketing mix/
PART 1
TESLA Inc. is an American car manufacturer company. The company has its headquarters
in California and was founded in the year 2003. The company was formed with an objective of
manufacturing an electric sports car and the first car was launched by the company in the year
2008 named Roadster which had the potential of driving up to 245 miles on a single charge.
Since then the company has been dealing in high-tech cars and automobiles. Elon Musk is the
current CEO of the company and was responsible for a large part of initial funding of the
company. The company has operations in many countries worldwide and the revenue of the
company in the year 2019 was $2,457 crores. The company specialises in solar energy
technology and consumption of unconventional sources of energy. A situational analysis of
TESLA Inc. is being done to understand the competitive position of the company and the factors
in the business environment of the company which are working in the favour of the company.
PESTLE Analysis of TESLA Inc:
Pestle analysis is a business tool which is used by the management of any organisation to
understand the impact and implication of the factors present in the business environment of an
organisation and identify the opportunities and threats (Yu, 2015). Factors such as political
factors, economic factors, social factors etcetera have a strong influence on the decision-making
of the management. Here is a pestle analysis of TESLA Inc:
Political factors affecting TESLA Inc:
4

Political factors refer to the impact of the government policies and laws on the business
operations of any company and organisation. Factors such as political stability and instability in
a country and business territory have a major impact on the operations of the business. TESLA
Inc. operates in many countries all over the world and hence, the key changes in political
environment of any country is bound to have an impact on the management decision-making.
Government nowadays in providing incentive and support to companies which deal with electric
energy in automobiles. The initiatives which are being taken by the government of many
countries to encourage electric car and automobile industry is a great opportunity for TESLA to
take strengthen its business operations. Moreover, the factors such as developing economies wish
to encourage more investment in their countries and is participating in globalisation is an
additional opportunity for TESLA Inc. to expand its operations to many countries and
international markets.
Economic factors affecting TESLA Inc:
Economic factors refer to the factors such as rate of tax, inflation-deflation, rate of
capital, market conditions etcetera which have a significant impact on the effective demand in
any economy are considered by the management of TESLA Inc. to identify or analyse any
opportunity which might be there for the organisation or prevent the company from any threat
which may arise (Bilbeisi and Kesse, 2017). Global economy and production has improved
significantly over the last few years which has increased the demand for electric and luxury cars
which is a great opportunity for TESLA Inc to capture a greater market share and increase the
spectrum and ambit of its potential customers. There has been a substantial decrease in the price
of electric batteries due to larger production which has helped the company to decrease its cost of
production and increase the profitability of the venture.
Social factors affecting TESLA Inc:
Social factors refer to the changes in taste and preferences of the consumer in a business
territory. The product or cars which are being manufactured by the TESLA Inc. are fascinating to
a large section of people and also the fact that it uses no fuel or petrol adds to the eco-
friendliness of the cars. There has been a recent trends towards eco-friendly consumption which
is a great opportunity for TESLA Inc to market its products along a campaign. TESLA products
are also used a symbol of status due to the premium and richness in the customer experience
which the company has to offer. One of the major opportunity for TESLA Inc. is that people
5

generally prefer automobile with low maintenance cost even if the cost of initial purchase if
higher which is exactly the case with cars being manufactured by TESLA Inc.
Technological factors affecting TESLA Inc:
Technological advancements and developments have the absolute power to affect the
operations in any industry and market situation. TESLA Inc. have both some opportunities and
threats as well when it comes to considering the technological advancements in the field. The
management of TESLA Inc. have visionary technological changes for the company with even an
aim of a fully automatic driving technology and over the years of its existence, the company has
made effective and efficient use of latest key technological changes to maintain the competitive
position in the industry which is huge positive impact of these changes (Musk, 2013). However,
technology is a concept which outdates itself and with each new technology being adopted by the
company, the previous models become obsolete in the market and this is a huge problem for the
company considering the stock level and production charts for each product portfolio and the
management of the company needs to come with a solution to include the provision of updating
to the latest technological changes in each of its car and automobile equipment.
Legal factors affecting TESLA Inc:
TESLA Inc. operates in many countries all over the world and each country has its own
set of rules and regulations which makes it extremely difficult for the company to comply with
the legal provisions of all its business territories. During the recent past, the company has faced
some minor lawsuits as well which signals a huge threat for the management. There is an
immediate need of the management to deploy a team of considerable resources for scanning the
legal horizon and letting the management be aware of what is allowed and what is not allowed
within the business territory in which it operates.
Environmental factors affecting TESLA Inc:
The last decade has witnessed a significant change in the aware of business organisations
and people in generally regarding the impact of activities of business organisations on the nature
and ecological balance which has put the onus on companies to decrease the amount of carbon
footprints and emission of greenhouse gases (Shaw, 2012). This factor presents a huge
opportunity for the company TESLA Inc. since all the cars which are being manufactured by the
company are designed to use unconventional sources of energy such as electric energy which
improves the sustainability standing of the company and eco-friendliness in its operations.
6

The above pestle analysis of the TESLA Inc. shows that there are many opportunities in
the business environment of the company which the management can take leverage of and along
with that, some threats are also existing which needs to taken care of.
SWOT Analysis of TESLA Inc:
SWOT analysis is a business tool which is used by the management to determine and
evaluate the internal capabilities and strengths, weakness, opportunities and threats of an
organisation (Rastogi, and Trivedi, 2016). It is an important business tool for assessment of
internal structure and competency. Here is a SWOT Analysis of TESLA Inc:
Strengths:
One of the most important strength of the company which is working in favour of
TESLA Inc. is the highest level of product differentiation such as an electric power train. The
strong marketing and branding strategy developed by the management of the company has
helped in gaining and improving the customer base over the period of time which is also a major
strength.
Weakness:
TESLA Inc. is currently working with the help of only a single source of supply of cells
for battery powerpacks which is a major weakness in the operations and the supply chain
management of the company (Patrutiu-Baltes, 2016). The experience of the company is limited
when it comes to handling multiple projects at the same time which is a weakness which the
management needs to overcome. The profitability of the operations of the company is also
decreasing somewhat due to an increasing asset acquisition by the management which has also
resulted in increasing debt and interest obligations.
Opportunities:
One of the most profitable opportunity which lies ahead for the management of TESLA
Inc. is the possibility to expand the current ecosystem of the company and exploring for new
market shares (Nobre and Silva, 2014). The attention and awareness towards reducing the
consumption of fossil fuels is also an opportunity to better market the products of the company.
Company has invested in a project in Nevada with the objective of integration of the current
dispersed manufacturing process of battery.
Threats:
7

The huge competition in the automobile industry is a major threat for TESLA Inc. Due to
the attractiveness of the industry, many new firms are becoming a part of the industry with new
innovations and customer value propositions. The limited supplier base network is also a major
threat for the management of TESLA Inc in ensuring smooth operations. Recently, the company
has faced a lot of potential loss of business opportunity due to the exit of UK from European
Union. The management needs to plan and formulate policies to minimise the impact of these
threats on the profitability of the company.
USP of TESLA Inc:
Unique Selling Proposition of a company refers to those features or characteristics of a
product or a service which makes it different from the other services or products of similar nature
in the marketplace and makes the product more appealing and attracting. The Unique Selling
Proposition of TESLA Inc. is that it is not only focusing on selling cars but it brings to its
customers new technologies and deals majorly in selling technologies. Every car or automobile
which has been built by the company till date is unique with a new and attractive innovation in
terms of a technological change. TESLA Inc. has created a market for luxury, high-end
technologically advanced, electric cars which is entirely different from both the less expensive
cars segment as well as luxurious high-gas powered vehicles. Being a sole player in the industry
is the unique feature of TESLA Inc. Though on the surface it may seem that TESLA has many
competitors but the reality is the company faces no competition in the product differentiation
which it has enabled with the help of technological changes in the last few years. Each TESLA
automobile provides the user a luxurious driving experience with the best technology which
probably the user has never experienced before. The eco-friendliness element of the cars
manufactured by the company which runs on electric power consumption also adds to the
uniqueness of the company and its products (Morgan, Katsikeas and Vorhies, 2012). In a recent
discussion, Elon Musk, CEO of the company shed light on the latest project by the company
which aims at developing and manufacturing a fully automatic driverless car technology which
shows that the company is sincere in its efforts to enhance its unique selling proposition which is
high-end technologically built electric cars and automobiles.
8

Evaluation of current marketing strategy of TESLA Inc:
TESLA Inc. is a highly reputed company and generally focuses on word of mouth epidemics
to tip the sale and doesn’t need to perform any paid form of advertisements of marketing
campaigns.
Product: When it comes to the product differentiation and marketing strategy, TESLA Inc.
believes in bringing high-end technological changes and developments in the automobile
industry which is the USP of the company as well. It increases the attractiveness of the product
which is being manufactured by the company and also fascinates more and more people. TESLA
Inc. deals with automobiles which are based on green consumption that implies no use of fossil
fuels and completely electric power driven vehicles.
Price: TESLA Inc. wishes to retain its position in the industry as the premium segment
automobile manufacturer with latest technological advancements and thus thru pricing strategy
of the company is based on deriving the maximum profitability out of its products (Gafarov,
2019). The company doesn’t intend to keep the prices in the budget segment and wishes to
appeal to a particular set of people in the society who can relate with the social status and symbol
of the automobile.
Place: The place strategy of TESLA Inc. reveals that the company doesn’t involve itself in
distribution of the products by giving out distributorships and franchises (Mangram, 2012). All
the products of the company are being distributed to the end customer by the company managed
stores and outlets in different countries all over the world.
Promotion: The promotional and marketing strategy of the company is perfectly in
alignment with the campaign that says ‘We don’t inherit the Earth from our ancestors, we borrow
it from our children”. Company uses advertisement in various print media forms which is
associated with the target market of the company (Eisler, 2016). Use of sales promotional tool is
not necessary for the company as the customers of the company are highly price insensitive and
more focused on the quality and tech-experience associated with the car. The company recently
used a road trip as an advertising tool which was highly interactive and the potential customers
could interact in real time on platforms such as Facebook, Instagram etcetera.
It can be evaluated that the marketing strategies being adopted by the company are highly
effective considering the company’s market position and product segment.
9

PART 2
TESLA Inc. recently launched a new model S car for which a marketing strategy and plan is
being developed in the following section after considering various models such as segmentation,
target and positioning and SMART objectives for the plan.
Segmentation, Targeting & Positioning of Model S by Tesla Inc:
STP is a business model and a framework which helps the management of any organisation
to simplify the complete process of market segmentation. Here is an implication of this model for
TESLA Inc:
Segmentation:
Segmentation refers to the process of division of a market into different groups or
segments based on various factors such as demographics, income groups etcetera. The
segmentation for TESLA Inc. includes group of people who are looking for a high-tech sports
and luxury car with an essence of status and social symbol as well (Chen and Perez, 2018). For
Model S in particular, the segmentation process also includes groups of people who are highly
aware and concerned with the environmental impact of their consumption and fall within the
spectrum of potential customers. The majority of the segment of this product is predominantly
male and people who belong to high income groups with an income above $1,00,000.
Targeting:
For Model S, TESLA Inc. should target people who are highly successful businessmen
and entrepreneurs. Individuals belonging to the upper middle class segment are being targeted.
These individuals are highly wealthy and have a particular interest in technology and
developments. Eco-friendliness consumption behaviour is also another aspect of the target
market for Model S by TESLA Inc. Model S has high appealing and attraction power to people
who are willing to spend a fortune on the latest technologically equipped cars along with electric
power consumption to mitigate the ill-impacts on nature and ecological balance by removing the
provision of using fossil fuels (Baker, 2014). Model S is designed to run on completely electric
power consumption which is in harmony with eco-friendliness consumption behaviours.
Positioning:
As per the current industrial position of the company and future vision of the
management for the organisation, Model S by TESLA Inc. is proposed to be positioned as the
one of its type image, service and product leader in the industry. The Model S is expected to
10

have a significant lead in the image sector as it is the only completely electric power
consumption based car in the sedan segment which is available today in the entire of the
marketplace. For its 40kwh battery option, the Model S after a corporate and federal tax of
approximately $7,500 is expected to be launched in the market at a price of about $50,000 which
is highly competitive considering its competitors. The reason or the rationale behind positioning
the Model S at a lower price point in the market with similar or greater features is to attract more
customers and increase the spectrum. The company is suggested to provide high quality
distinguished service to its customers by making provision of scheduling home-based services
etcetera.
SMART objectives and goals:
SMART objectives refer to the goals and objectives which have five elements or features
in them such as Specific, Measurable, Attainable, Relevant and Time based (Ayala, 2016). It lays
emphasis on the need for development of an objective or goal which is clearly defined along
these lines by the management to create no future confusion and problems. Some of the
recommended objectives and goals for TESLA Inc along the SMART guidelines are:
 Capture a minimum of 40% market share in the American luxury automobile market
within population-dense by December 2021.
 Achieve a minimum of 20% increase in the sales of Model S with the use of
marketing strategies and segmentation by December 2020.
Recommendation of marketing strategy:
On the basis of above analysis of the market segmentation, targeting and positioning for
Model S by Tesla Inc and after a consideration of the smart objectives of the management
(Afonso, 2018), here are some recommendations for marketing strategies and policy which can
be used by the company to achieve those objectives:
 The management of the company is advised to price the Model S on the basis of
utilisation of a price-value strategy with a clear objective of maximising profit and
demand. With the prices of gas and other fuels on a constant rise in the markets of
U.S., even a higher price of Model S would be justifiable since the users and
customers are highly price insensitive and care more about low-maintenance cars.
 As far as the distribution strategy for Model S is concerned, the company is
currently following its conventional module of not allowing dealerships and
11

franchises for the distribution of the car to the end users. However, the management
is advised to used various channels of distribution for advertising, selling and
marketing this model. The company can also undertake extension of its own
distribution networks but that requires a significant amount of time and effort and
creating a hindrance in the distribution network solely because of rigid
distributional policies is not advisable for the company. The management should
aim to attract larger groups of consumer and people by increasing the viability and
accessibility with the help of various channels of distributions.
 Using sales promotional tools is of no use and benefit for the company since the
customers or potential customers are more likely to be influenced in their decision-
making process by the quality and features and are highly insensitive to price so the
management is advised to discontinue using any sales promotional tool.
 The management of the company is advised to use print media for running
advertisements and promotion of the latest model S. The target segment of
consumers for TESLA includes people from high income groups and highly
successful businessmen and entrepreneurs which effectively makes the television
advertisements much more costly and of no use and significance at all. A this point
of time, print media is considered to be a more effective form of advertisement with
a low cost and a higher target reach. Running advertisements in magazines such as
Forbes and BusinessWeek is suggested to be a highly effective marketing tool for
the company since it will be directly targeting the customer segment of the
company which is businessmen and wealthy people who generally associate
themselves with these kind of magazines. Average audience of Forbes magazine is
around 5.1 million people with around 3 million men which is the exact customer
demographic for the company.
The above mentioned recommendation for the marketing strategy of the company for
Model S are considered to be highly effective and the management of the company should take
measures to adopt these programme and campaigns.
CONCLUSION
It can be concluded from the above report that TESLA is an American automobile company
which focuses extremely only bringing the best technology to the automobile industry with an
12

aim to create product differentiation. The macro and micro environment of TESLA provides
many opportunities for the company in terms of prospected business growth along with a few
threats as well. It can aslo be observed that the company has a unique selling proposition of high-
tech equipped automobile with electric power consumption and the current marekting strategy
beind adopted by the management is highly effective. It can be analysed that the target market
for TESLA Inc. includes people from high-income groups and who are early adopters for tech-
savvy cars and automobiles (Abbott, 2015). At last, various recommendations and suggestions
are being provided to the company to effectively adopt better marketing strategy for Model S by
TESLA Inc.
13

REFERENCES
Books a.nd Journals
Abbott, R.J., 2015. Pestle Analysis for Students.
Afonso, N.A., 2018. Project of the implementation of driverless technology in vehicles of Tesla
company (Doctoral dissertation, Instytut Organizacji Systemów Produkcyjnych).
Ayala, R., 2016. Lowering global consumption of petroleum, while increasing profit: Tesla
Motors ridesharing.
Baker, M.J., 2014. Marketing strategy and management. Macmillan International Higher
Education.
Bilbeisi, K.M. and Kesse, M., 2017. Tesla: A successful entrepreneurship strategy. Morrow, GA:
Clayton State University.
Chen, Y. and Perez, Y., 2018. Business model design: lessons learned from Tesla Motors.
In Towards a Sustainable Economy (pp. 53-69). Springer, Cham.
Eisler, M.N., 2016. A Tesla in every garage?. IEEE Spectrum. 53(2). pp.34-55.
Gafarov, R., 2019. Evaluation of the financial position and the performance of Tesla,
Inc (Doctoral dissertation, Masarykova univerzita, Ekonomicko-správní fakulta).
Mangram, M.E., 2012. The globalization of Tesla Motors: a strategic marketing plan
analysis. Journal of Strategic Marketing. 20(4). pp.289-312.
Morgan, N.A., Katsikeas, C.S. and Vorhies, D.W., 2012. Export marketing strategy
implementation, export marketing capabilities, and export venture performance. Journal
of the Academy of Marketing Science. 40(2). pp.271-289.
Musk, E., 2013. The mission of Tesla. Tesla Blog.
Nobre, H. and Silva, D., 2014. Social network marketing strategy and SME strategy
benefits. Journal of Transnational Management. 19(2). pp.138-151.
Patrutiu-Baltes, L., 2016. Inbound Marketing-the most important digital marketing
strategy. Bulletin of the Transilvania University of Brasov. Economic Sciences. Series
V. 9(2). p.61.
Rastogi, N.I.T.A.N.K. and Trivedi, M.K., 2016. PESTLE technique–a tool to identify external
risks in construction projects. International Research Journal of Engineering and
Technology (IRJET). 3(1). pp.384-388.
Shaw, E.H., 2012. Marketing strategy. Journal of Historical Research in Marketing. 4(1). pp.30-
55.
Stobbe Jr, J.J., 2019. A Strategic Audit of Tesla.
Yu, C.J., 2015. Competitive Analysis on Battery Electricc Vehicle (BEV) Market: A Case Study
of Tesla Motor.
14