MK9700 Strategic Marketing in the Digital Era

Northumbria University
MK9700 Strategic Marketing in the Digital Era
Tesla Business Report
Promotional Strategy and Branding
Student: Lukas Dolinskis
Student number: 18035289
Words: 2005
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Contents
1. Introduction........................................................................................................................2
2. Target market.....................................................................................................................5
3. Recommendations for the Tesla company.........................................................................6
3.1. Non-direct promotional marketing strategy...............................................................6
3.2. CEO in social media and branding...............................................................................7
3.3. Authenticity.................................................................................................................7
3.4. Importance for the target market...............................................................................8
4. References..........................................................................................................................9
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1. Introduction
Tesla company is relatively young, and it was founded in 2003. This company's
purpose was to start electronic vehicles era and create a sports car, which they did in 2008
with Tesla Roadster. The price of this car started at $109,000, and it was quite an attractive
purchase for sports cars enthusiasts. The biggest secret of this car and later for all Tesla cars
is batteries which are built-in under the floor of every car. This little trick saved many spaces
inside the car, and also it created better stability feeling on the road. Tesla car has big and
heavy batteries which low the centre of gravity. However, model Roadster was not that
successful as company owners expected, which led to the bankruptcy's edge. After this
fiasco, one of the first investor - Elon Musk, took over the company management in 2008.
He had to make several drastic changes to save the company. Firstly, he cut 25% of the
workforce and recalled 75% the roadsters. Later Elon Musk raised 40 million dollars of debt
financing, formed the strategic partnership with Daimler company, more known as
Mercedes-Benz, and borrowed 465 million dollars from the United States government
(Reuters, 2008). After all these decisions Tesla company made 2450 cars of model
Roadsters, and the iconic car became the springboard for the electric vehicles revolution.
This was the beginning of the Tesla company domination in the electric cars market.
Tesla is one of those companies which make exciting and rarely seen solutions in their
company management. Moreover, the second most interesting area after cars production is
how they are dealing with marketing. There are three digital trends which company are
using. Firstly, let us start with the word of mouth trend or more precisely non-direct
promotional marketing strategy. Tesla spends insignificant amounts of money on
advertising. To say that Tesla does not invest in marketing is not quite right, they are
investing, but relatively with other car companies, it is a minimal amount. For example, in
2015, Tesla spent 58.3 million dollars, while companies like AUDI and BMW spent 195 and
196.6 million dollars, respectively (Luck, 2018). However, according to the Brandtotal
research in 2019, they studied companies social advertising costs information from March
26 till April 26.
Automobiles brands paid media mix
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Facebook Twitter Instagram Youtube
Audi 49% <1% 18% 32%
BMW 48% 18% 32% 2%
Tesla 0% 0% 0% 0%
Table 1. Car's manufacturer's digital marketing analysis (Brandtotal, 2019)
These percentages show what piece of advertising budget they assigned to a specific
website. Numbers show that Tesla company more focusing on word of mouth without
investing in the advertisement. For example, based on data from March 13 - March 19 in
2019, Tesla company had approximately 2 million organic engagements on Instagram
without spending money, while Porche reached 2.2 million organic and non-organic
engagements (Brandtotal, 2019).
The second digital trend is the impact of CEO in social media and branding. In this
specific case, Elon Musk activity on Twitter and Youtube. Usually, on Youtube, we can find
interviews or podcasts in the most popular Youtube channels. For example, a viral interview
for Marques Brownlee channel where he explains how Tesla factory works, and what plans
he has for the company. These two videos were viewed between 10 and 12 million times.
Another interview with Joe Rogan in his podcast was viewed approximately 40 million times.
In this podcast, they talked a lot about Elon Musk's future world imagination. There were
many unusual questions with profound answers. However, the more critical impact for the
company does Elon Musk tweets on Twitter. Sometimes some thoughts from Elon Musk can
be controversial and impact companies' value both ways. However, the communication
value he gives for the company is massive, straight from the mouth of the most important
person in the company. "Few things make a brand as irresistible as the top man staying in
touch with the customers" (Chandran, 2015). Elon Musk uses Twitter to announce product
updates and Tesla accomplishments. He is also using it to attack critics, share jokes, or
trigger the occasional stock price spasm. For example, on May 1 2020, Elon Musk tweets
that Tesla stock price is too high and sells all his physical possessions. This move cost £11
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billion for Tesla company value, and after this, he agreed to have all future posts on the
platform pre-checked by lawyers (Hotten, 2020).
The final trend is authenticity. The way how Tesla uses the Instagram platform is also
worth to mention. They are uploading unedited photos which creates authentic feeling for
Tesla followers. Moments from inside the company, production process, car's tests and
crash simulations. They show how vehicle safety systems work during the crash, and in this
way, they educate their potential customers about innovations and achievements.
Moreover, earlier mentioned Elon Musk and his Twitter account, which he is managing by
himself. That creates a close relationship between people and the company. "Tesla's
branding strategy is more "human", relatable, and fun – something that you can emulate for
your own branding" (Khemchandani, 2020). With different kind of funny features, they are
installing into the car operation system they positioning themselves as nonchalant and
mirthful while being one of the most ambitious brands.
2. Target market
There are three Tesla's models in the top 20 best selling electronic cars list. Model S is
in 20th place with 28248 sold cars, Model X with 39497 car in 11th, and Model 3 in the 1st
place with 300075 sales per 2019 (Kane, 2020). It can be assumed that the largest audience
creates Model 3. Also, there is an old fact that Tesla wants to build a more affordable car for
approximately 19600 pounds, it is about 17500 pounds cheaper than starting price of Model
3. According to Elon Musk interview, cheaper Tesla variant will be ready until 2023 (Clayton,
2020). Furthermore, probably the next model target market will have more similarities with
Model 3 than any other.
Tesla audience changed after every new model launches. However, Automobile
Association research in 2017 shows that younger people aged 18-24 are most likely to own
EV (electronic vehicle), 24-34 are the second most likely to own EV while those who are 55
or above are the least likely (The AA, 2017). That means that Tesla has perfect conditions to
grow their future target market. However, these younger age groups earn less money,
which means they have the weakest spending power index, while people aged 41-45 are the
highest-earning group in the UK, while 36-40 is the second one (Experian, 2019).
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Tesla company are using two social network platforms to communicate with the
audience - Twitter and Instagram. People aged 35-49 are the second-largest Twitter group of
users (28.2%) (Statista, 2020a). A different situation is on Instagram: similar age group, 30-
49, is the third most active (Chen, 2020). According to the information mentioned before,
looks like the Millennials and Generation X are the most potential target markets. Especially
millennials who are becoming more substantial purchasing power. They are also concerned
about the environment, are digital natives, tech-savvy, prefer word of mouth, and love high
standards and quality (Wright, 2006).
Overall, Tesla audience is relatively young and less able to afford purchases like cars.
However, they are precious for the company as future buyers. As for the next 5 or 10 years
period, Tesla should focus on the Millennials generation, which is now aged 25-40 and will
become the most substantial purchasing power group. They grew up together with
technologies and are fast adaptive. Also, millennials are the largest generation, with about
30% of all population and are the most concerned generation for environmental
sustainability (SUMAS, 2019). To sum all these facts, the next Tesla target market should be
the largest millennials generation with the most potent purchasing power, caring about
environmental sustainability and knowing the technologies.
3. Recommendations for the Tesla company
3.1. Non-direct promotional marketing strategy
Word of mouth trend creates a massive impact on Tesla. Firstly, in the last ten years, a
large increase can be observed between content creators. Especially on Youtube, where
people can film and upload their videos about anything. Interesting, that Tesla cars owners
enjoy sharing their experience on Youtube. People like Tesla because of innovations they
represent, and they talk about it and introduce in their way.
Tesla company should not change the word of mouth strategy. On the contrary, they
should push the audience to create more. Especially when they know that the next
Generation Z is more involved in technologies; this generation is called an influencers
generation (Francis & Hoefel, 2020). They want to share their opinions and wants to be
heard.
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Recommendation for Tesla's marketing department would be to create a marketing
campaign and offer a car for the creator of the best-created video about the Tesla company
or upcoming car. This kind of campaign would push all creators to upload more content and
reach extensive engagement. Also, the media would share this contest all around the World
without Tesla intervention.
3.2. CEO in social media and branding
The attention which Tesla gets is highly depended by Elon Musk. His activity and
charisma attract attention from media and the public. The large audience of approximately
41.3 million followers on Twitter receives the latest news and updates straight from the
company's owner. These followers can retweet a post and spread it to much more people.
Also, the biggest media companies write articles about every Tesla and Elon Musk move.
Elon Musk's impact on the Tesla company is hard to measure, but with the audience and
character, it has a massive impact on company popularity and value.
Tesla company is lucky to have a CEO like Elon Musk. They should not stop putting
Elon Musk at the forefront. The board of the company should try to keep Elon Musk in the
CEO's position in any way, but also they should consider and prepare a plan for Elon Musk
resignation scenario.
Recommendation for Tesla's marketing department would be to consider Elon Musk
on LinkedIn as there are more than twice users (700 million) than on Twitter (Bump, 2020).
Also, Millennials, aged 25-39, accounts for 59.9% of all LinkedIn users, while on Twitter, the
same age group accounts 28.9% (Statista, 2020a; 2020b). Moreover, 50% of LinkedIn users
have a college or higher education degree, that means higher incomes and more potential
customers (Aslam, 2020).
3.3. Authenticity
Authenticity opens reality for Tesla fans, especially when Tesla enthusiasts are
interested in production and company management. Also, authenticity impacts company
positioning in the market as a company that cares about the environment and nature
changes, especially when the mission is to accelerate the world's transition to sustainable
energy (Tesla, n.d.).
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Being authentic is one of the primary trends in today's business. People appreciate
companies that are honest with them. Tesla should stay more open for people. Tesla
accounts authenticity on social networks can increase engagement and interest in the
company by showing the production processes.
Recommendation for Tesla's marketing department would be not to lose an authentic
way they are going. They could also hire some of the most talented Tesla fans to work for
them on brand development. It would show the audience that the company values its loyal
fans and allows them to have a dream job.
3.4. Importance for the target market
All three trends mentioned before are precious for the target market. Word of mouth
is significant for the millennials as they like to talk and recommend good services and
products to others. They trust in the product more when receiving a recommendation from
the people or other sources which already are experienced.
Elon Musk activity on a social network is one of the key points that engage people
more, especially when it comes from an interesting person. Millennials use social networks a
lot, and they appreciate exciting and valuable content.
Millennials are one of those generations which seek authenticity. "They want to know
what is in the products they buy and where they come from" (Daneshkhu, 2018). Another
authenticity specification which millennials value is compatibility; they want to see similar
values and beliefs in the company as they have (Purani et al., 2019, p. 217).
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4. References
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Facts. Omnicore. https://www.omnicoreagency.com/linkedin-statistics/
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strategy in 2020. Sprout Social. https://sproutsocial.com/insights/new-social-media-
demographics/#IG-demos
6. Clayton, B. J. (2020, September 23). Musk: Cheaper Tesla ready "in about three
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