Principles and Practices of Marketing: Tesla Case Study

This report provides a detailed analysis of Tesla's marketing strategies, focusing on its promotional mix and brand-building tactics. The report begins with an overview of Tesla, including its product lines, revenue, and market position. It then delves into Task One, which examines Tesla's marketing approaches across various channels, including brick-and-mortar locations, advertising campaigns, and digital platforms. The report explores Tesla's use of showrooms, online sales, and the strategic placement of supercharger networks to promote its brand. It also investigates the company's digital marketing efforts, including its website, YouTube channel, Facebook, and Twitter presence, while also addressing customer feedback. Task Two analyzes the marketing theories employed by Tesla. The report concludes by summarizing the key findings and offering insights into Tesla's successful marketing practices. The document is contributed by a student to be published on the website Desklib. Desklib is a platform which provides all the necessary AI based study tools for students.

PRINCIPLES AND
PRACTICES OF
MARKETING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK ONE......................................................................................................................................3
Overview of the company............................................................................................................3
A. Bricks and Mortar Locations..................................................................................................4
B. Away from Store.....................................................................................................................7
C. Digital......................................................................................................................................9
D. Press/ Industry Analysts/ Umbrella groups/ Regulatory bodies...........................................14
TASK 2..........................................................................................................................................16
Theories of marketing used by Tesla.........................................................................................16
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22

INTRODUCTION
Marketing plays the most important role to establish the relationships between the
organisations which offer something to the market and the customers. This gives the companies
the confidence to try something new related to the product in the market. It also helps in shaping
the image of the company and the ways in which people associate with the products and services
of the organisation (). The principles and practices of marketing are Product, Price, Place,
Promotion, People, Packaging, Physical evidence and the Process which are together known as 7
P’s of Marketing. Tesla headquartered in US is a company of electric vehicle and clean energy
dealing in products like electric cars, solar roof tiles and solar panels, battery energy storage and
many more (Tesla, 2021). The report will shed light on the ways Tesla markets and promotes its
products and services by making use of the promotional mix. Various theories will be used to
critically evaluate the ways in which the company applies the promotional mix.
TASK ONE
Overview of the company
Tesla Company was founded on July 1, 2003 by the founders Martin Eberhard and Marc
Tarpenning. It performs its operations in various industries such as Automotive, Energy storage
and Energy Production. The company has produced almost 509,737 vehicles till 2020 and more
than 3000 batteries. The revenue earned by the company till 2020 was more than $31.536 billion
and the operating income was $1,994 million. The company is owned by Elon Musk and more
than 70,757 employees work for the company. Tesla is considered to be the best car
manufacturer in terms of selling plug-in and battery electric passengers having a market of 16%
in the segment of plug in and 23% in terms of sales of battery electric segment (Tesla, 2021).
The company is also considered as the largest global suppliers in terms of battery energy storage
systems as it has supplied more than 3 GWh of battery storage in 2020. The first vehicle of the
company was named as Roadster. The company initially did not believe in the direct
advertisements rather prefers educating the customers through the showrooms which are situated
in the malls and not in the high-traffic areas (Lyyra and Koskinen, 2017). The company preferred
selling its vehicles online instead of selling through the conventional dealer network. The main
purpose of the company is accelerating sustainable energy by allowing the competitors for
licensing its technology.
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A. Bricks and Mortar Locations
Tesla from the time it was founded wanted to prove that the electric vehicles are quicker, far
better and more fun to drive as compared to the gasoline cars. The Tesla does not only build the
electric vehicles but also generates storage products of scalable clean energy. The company
believes that if the people will less rely on the fossil fuels, the future will be better with zero-
emission. Tesla Company sells its vehicles to the customers directly by making use of its
international network by its owned galleries and stores. The stores of Tesla can be found in 27
countries and its key metropolitan cities. The company is also planning to expand its
supercharger network in Asia, Europe, North America and many other markets for enabling the
long distance travel conveniently (Kissinger, 2018). The main reason because of which the
company could not expand itself in more regions was its different concept which made its
services inaccessible for some and second was its prices. The company follows premium pricing
strategy and along with this the brand also focuses on the design and style. The products of Tesla
are not only sustainable but great with respect to quality, design and technology. The company
attracts the particular premium customer segment due to its premium pricing (Thomas and
Maine, 2019).
Figure 1: Tesla Stores
Source: Dow, 2020
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The strategic locations of its stores help in promoting the brand as well as its products. The
company deals in two vehicles which are highly efficient and superb looking which are also
available at its brick and mortar locations. The first vehicle is Sedan and the other one is SUV as
they are superb in terms of efficiency, customer experience and functionality. The stores of the
company are located in the key metropolitan markets strategically which helps in marketing its
brand and also connecting with the customers. The locations are chosen such that the high end
customers arrive there frequently for purchasing the high end products (Koskinen and et.al.,
2019). Furthermore, the super charger networks also helps in promoting the brand as they are
located at key points such as inside the restaurants, malls, resorts etc. Partnership with these
facilities helps in attracting the prospective customers who visit these places frequently. This also
helps in increasing the brand awareness as well as attracts and retains maximum customers.
Figure 2: Service centre at Tesla
Source: Bonnici, 2016
STP of Tesla
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The company has chosen the segment of the lower volume but the price insensitive performance
car which can help the company in creating brand identity, earning significant unit gross margin
through making the rich and affluent the targets who will to spend more as that of vehicles and
also helps in premium pricing. The biggest strength of the company is its unique positioning in
the car market as it does not only sell the cars but also the technology. Tesla’s positioning
statement is “The only stylish care that can go from 0 to 100 in 3 seconds without a drop of oil”
(Bhasin, 2019).
The company do not use the cost strategy of the Porter’s Generic Strategies but make use of
focus strategy in which the main focus of the company is on the sustainability. Its vehicle stores
and the service centres also focus on transition towards the system of sustainable transport. This
increased the popularity of the business of Tesla as people understood the value of sustainability
and prefers adopting those products which has less environmental impact. The company also
follows the differentiation strategy by its engineering expertise, vehicles and the intense focus
towards sustainability. The premium pricing of the company also differentiates the company
from its competitors. The company is trying to change its premium pricing strategy, so that it can
attract people of all the class. This can help in adapting to the expectations of the customers
(Kim, 2020). This is why, the company plans to make its Model 3 less expensive as compared to
Model 1 and 2.
Figure 3: Model 3 of Tesla
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Source: Holland, 2019
Furthermore, the CRM which is the Customer-Relationship-Management is used by the Tesla.
The company is striving hard to abandon the Salesforce for a proprietary CRM. The electric-care
maker has already started using this system.
B. Away from Store
Apart from the stores, Tesla also makes use of advertising campaigns to promote its
products and services. The vehicles by Tesla are designed such that the safety can be maximized
which can lead to higher customer satisfaction and convenience. This is also considered as the
first marketing strategy by Tesla in which it promises of driver safety, customer satisfaction and
quality which can also help in creating the brand equity of high level. These all things kept the
company in the eye of media which also helped in generating high level publicity. The CEO of
the company also attends various media events and other public events for publicising the new
release by the brand and the future plans (Fisher and McCabe, 2019). These events also include
motor shows and the media events become the great method to generate brand awareness and
publicity. The company also uses direct marketing like selling power train components and the
batteries to the other businesses. The viral marketing helps the company to promote its brand and
the products. The company also prefers promoting its products and the new and innovative
inventions through the billboards.
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Figure 4: Billboards ad by Tesla
Source: Tesla Billboard Advertisement, 2021
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Figure 5: Ad campaign by Tesla
Source: Tesla Ad campaign, 2020
The main aim behind promoting the products through the billboards is that the people can be
aware of the innovations which the company is bringing and also helps in broadcasting the
business to as many people as possible. These can have highest number of impressions and views
as compared to other marketing ways. The main target of the company is the males of the age
group 40 to 60 and also owns their own along with having high household income (Manna,
2017).
C. Digital
Tesla does not also promote its products and brand at the stores and through the media
but also makes use of digital channels. The website of the company is proved to be the efficient
channel for marketing and sales. This also helps the company for showcasing its products to the
customers who do not prefer visiting the stores (Bhasin, 2019). The company tries to give each
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and every update on its website regarding the new products, new stores etc. The website is
complemented by the YouTube channel where the company has posted more than 150 videos
and having more than 364k followers. These videos help in showcasing the beautiful models of
Tesla along with their great features (Toumi, 2018). The company is also having more than 2.2
million followers on its Facebook page which helps in igniting the decision about the technology
and the products. Tesla not only uses these platforms for connecting with large fan base and
followers but also uses Twitter where it has more than 1.73 million followers. These channels of
social media also help in getting the feedbacks and the reviews of the customers which helps in
making improvements as well as promotes the brand and the products.
Figure 6: Tesla Motors' Twitter Page
Source: Digital marketing audit: Tesla Motors, 2021
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Figure 7: Tesla Motors' Google+ page
Source: Digital marketing audit: Tesla Motors, 2021
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Figure 8: Tesla Motors' YouTube page
Source: Digital marketing audit: Tesla Motors, 2021
Figure 9: Tesla Motors' Company Website
Source: Digital marketing audit: Tesla Motors, 2021
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Overall, Tesco is having a great presence on the social media but there is a need to improve itself
in the way the company handles its social media pages and the content which is posted regularly.
They must actively interact with the users potential or current. There are many times when the
company does not respond towards the enquiries of the customers. So, this is how, the company
can attract more customers as well as build its good rapport.
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Figure 10: Customer Inquiries going unanswered on Tesla Motors' Facebook Page
Source: Digital marketing audit: Tesla Motors, 2021
D. Press/ Industry Analysts/ Umbrella groups/ Regulatory bodies
The other agencies and the press say regarding Tesla that the company is one of the most
innovative companies in the world which is the main reason for winning the support of its
stakeholders. The innovation strategy of the company helps in transforming the auto industry
completely which offers enduring lessons to the innovators and also is becoming the main reason
for its growing revenues. The industry analysts always expect innovations and the good changes
from Tesla but there are also some complaints regarding the failure of giant touch screens of
Tesla (Musonera and Cagle, 2019). This led to losing of the rear camera display and also causes
reduced visibility. This is how, the press and the other people not only highlight the success and
achievement of the company but also criticise it for the bad thing done. The company strives
hard to improve itself in all its weaker areas to remain the market and the industry leader in
various countries.
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Figure 11: Investigating touch-screen failures in Tesla
Source: NHTSA investigates Tesla touch screen failures, 2020
a. It can be discovered that quality of the products and the satisfaction of the customers play a
major role in the success of any company but along with that marketing and promoting those
quality products to the company is equally important in order to make the customers aware of the
changes and the innovations brought in the company. Tesla does not rely on one medium to
promote its products and services but do the same through many ways. The company do not use
direct marketing but make the customers the medium to promote the products for them. This can
also be analysed from the push and pull strategies of marketing that the company do not use
push strategies in which they need to take the product to the customers through any means (Shen
and et.al., 2020). Instead the company motivates its customers to seek out the brand and also
make the customers the marketers which not only gives them an amazing experience but also
helps in managing the relationship between customers and the management. Moreover, Tesla
also makes use of the media and all the digital platforms such as Facebook, Twitter, YouTube,
Google+ etc. to advertise its products so that large customer base can be created and brand
equity can be increased.
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b. This is done by the company as it is not possible for the company to reach to each and
every customer and also a customer can motivate the other customer in better way than the
marketer of the company does. The customers can share their positive experiences with the other
people to convince them. The social media platforms are also used by Tesla as the people prefer
searching about the automobiles on their mobile phones and desktops. This way the company
can increase its presence on the social media thereby increasing the customer base (GS and LS,
2020). This way, the company makes use of communication process of marketing theory by
building effective relationship with their current as well as potential customers. Tesla can
respond to the queries of the customers and can also update them each and every time they make
changes in the process or products of the company. This is how, relationship between the
management and the customers is well managed. Also, it was noted that after facing many
failures, Elon Musk considered it an opportunity to bring more innovation in the company.
TASK 2
Theories of marketing used by Tesla
There are various theories of marketing like AIDA, Push and Pull strategies,
communication process, above / below the line and many more. The major two theories will be
described below in context of the company Tesla and its effectiveness will also be highlighted.
AIDA MODEL
This model helps in tracing the journey of the customer through the four major factors
which are Awareness, Interest, Desire and Action.
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Figure 12: AIDA model
Source: Hanlon, 2020
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It helps in identifying the cognitive stages a person goes through during the process of buying for
the product and service. This does not purely relate to the relationship between the customer and
the company because at each stage, the information is added through the social networks and the
communities. The four major pillars which make the AIDA Model the most effective model for
marketing are as described below:
Awareness: This deals in creating the brand awareness or affiliation with the product or service.
Interest: This generates the interest regarding the benefits of the product which can encourage
the buyer to start researching about the same.
Desire: In this step, the person starts wanting the thing instead of liking it. There is some sort of
emotional connection generated between the product and customer which can show the brand
personality.
Action: This is the time when the buyer is called to the company for interaction and also
motivates them to have further details.
The model can be applied to Tesco as follows:
The company aware the customers through brand awareness campaigns, through the billboards
and many other methods. The social media platforms are also used by the company to make the
people aware of the products and the service of the company. After making them aware of the
company and its products, the next step is to gain their interest. This is done by Tesla by making
use of its well organised and highly attractive website and also through the customer ratings on
various sites. Here, the company also comes to know about the taste and choices of the
customers. Then, the company needs to deliver the information of the things which makes its
product and service desirable (Matthews and et.al., 2020). Tesla strives hard to make emotional
connection with the customers through giving the response immediately on the digital platforms
like Twitter feeds etc. After all this, the last step is to take action to call the person for the further
process of buying. It can be through the inbound phone call, landing pages, emails, websites etc.
Tesla also makes use of this strategy in order to convince the people to make a purchase with
them instead of finding its not worthy to buy. Its effectiveness can be evaluated by getting the
customers who visited the online platforms and searched on the same regarding the company and
its products. The comments and shares on the social media will help in evaluating the
effectiveness of the marketing strategy.
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ABOVE / BELOW LINE STRATGIES
This theory deals in the approaches to marketing which are different from each other in
some contexts while similar in the other. The line in this strategy is basically a partition which
divides the targeted audience from the generalised one. This line divides the approaches into two
major approaches which are above the line (ATL) and below the line (BTL). ATL helps in
establishing goodwill and building the brand awareness. These are the widespread campaigns
which do not have particular target (Gali, 2020). On the other hand, BTL has a clear target and
focus who are actually the potential customers.
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Figure 13: Above/ below the line
Source: Difference between ATL and BTL advertising, 2021
Tesla make use of both the approaches as ATL is used in the form of print media, radio
broadcasts etc. and the BTL strategies used by Tesla are bill boards, making use of social media
and emails etc. This helps in creating the direct customers by focussing on their demands and
wants (Kissinger, 2018).
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The efficiency of the ATL is difficult to measure as it is for the general audience but
effectiveness of the BTL strategies can be evaluated by return on investment.
CONCLUSION
The above report concluded about the ways in which Tesla promotes its products and
services. This was concluded that the company is not depended on the promotion through its well
established stores but Tesla also make use of the various social media platforms and media to
attract the customers and to increase the brand awareness. Various models like AIDA,
Above/Below line etc. were used to analyse the marketing strategies applied by Tesla.
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REFERENCES
Books and Journals
Fisher, M. and McCabe, M.B., 2019. Tesla: Accelerating to Market. Journal of Strategic
Management Education. 15.
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Entrepreneurship Planning, Development and Management, pp.10-23.
GS, D. and LS, M.R., 2020. Customer perception towards tesla electric car’s innovative
features. Journal of Contemporary Issues in Business and Government. 26(2). pp.521-
527.
Kim, H., 2020. Analysis of how Tesla Creating Core Innovation Capability. International
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Musonera, E. and Cagle, C., 2019. Electric Car Brand Positioning in the Automotive Industry:
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Shen, C.W. and et.al., 2020. Social media marketing of IT service companies: analysis using a
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Thomas, V.J. and Maine, E., 2019. Market entry strategies for electric vehicle start-ups in the
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Toumi, I., 2018. Exploring the success of tesla, Inc. ББК 65.290-2 я 73 П 78, p.319.
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