Strategic Marketing of Tesla Inc.: Analysis of New Zealand Operations

This report provides a comprehensive strategic marketing analysis of Tesla Inc.'s operations in New Zealand, following their establishment of a direct distribution channel. It begins with an overview of Tesla, highlighting its mission and evolution, followed by a detailed market analysis revealing a...Read More

Running head: STRATEGIC MARKETING 1
Strategic Marketing of Tesla Inc.
Name
University

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Strategic Marketing of Tesla Inc.
Overview of the organization
Tesla Inc. has this year opened its first distribution store in Auckland, New Zealand. This is
after servicing the New Zealand market under the kiwi distribution based in Australia. Tesla
Inc. is a silicon valley, American multinational that was established in 2003 by Martin
Eberhard and Marc Tarpenning. It was started as a motor vehicle company that specialized in
the making electric vehicles. However, it was restructured to Tesla Inc. in 2010 after the then
Tesla Motors filled for an initial public offering (IPO). After that it incepted the making of
solar power accessories and storage devices. Tesla Inc. mission since its inception was to
accelerate and power the world by the use of eco-friendly and sustainable energy. Since the
joining of Elon Musk, in 2004 has the chairman of Tesla Inc.it has had a tremendous market
success. However in 2008 they survived bankruptcy amid the economic austerity globally
and dwindling of the company’s financial reserves. This report mainly highlights on market
analysis, macro-environment analysis and competitive analysis of Tesla Inc. operations in
New Zealand. Moreover it tries to embark on a SWOT analysis and a customer positioning in
regards to Tesla Inc. and there implications on the marketing strategies.
Marketing analysis
Over the past decade the demand for electric cars has been on a rise amid to the
fluctuating of oil prices due to the inflationary pressure on oil prices in New Zealand. Due to
this the market size of Tesla Inc. has been growing globally apart from its best market in the
US. New markets have been emerging such as the New Zealand market. This has been
attributed to the success of its model S electric car. Through the market analysis it is clear
that Tesla Inc. New Zealand has an oligopoly market structure. Teslas characteristics greatly
conform to that of an oligopoly market. Firstly it has few competitors in the New Zealand

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automotive market such as Ford motor company and Honda motor company. Secondly, Tesla
has few major buyers in the market (King, 2014). Thirdly Tesla Inc. is an independent firm
and its products can be easily differentiated from the rest in the automotive industry. To gain
more insights on the market of Tesla an industry analysis is done so as to understand the
market position of Tesla against its main competitors. Industry analysis is essential in
knowing the driving forces of Tesla in the New Zealand market. Moreover it aids in strategic
market planning. In regards to Tesla it has five main driving forces: competition, power of
customers, power of suppliers, business threat form new startups and threat of new
substitution (Kissinger, 2018). The market trends in New Zealand in regards to the
automotive industry has been the increase in demand of electric cars. Tesla has
overwhelmingly benefited from this than its competitors in the industry contributing to its
market success. According to (Steinbuch, 2017)some of the key factors that have facilitated
Teslas success is possession of up-to-date technology, good timing of external factors,
durability of its cars and having a hardworking and devoted team.
Macro-environment analysis
As Tesla is growing so as the attention it gets from the business macro-environment.
By employing a PEST analysis on Tesla Inc. we are able to note the political, economic,
social and technological impacts on its operations. Politically, tesla has gained attention from
the political scene particularly form the New Zealand government. According to (ZHU, 2016)
New Zealand government has rolled out policies primarily meant to increase the uptake of
electric cars in New Zealand. This is as New Zealand aims to cut on greenhouse gases
emission. Economically there has been an increase in Tesla Inc. deliveries made in New
Zealand, describing the high demand of Tesla electric cars In New Zealand. On a social
perspective a bigger part of the global population are in support with the mission of Tesla of
achieving zero green emission. Technologically Tesla has been investing huge budgets in

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research and development. This efforts have flourished since tesla has improved the
efficiency of its batteries and improved rolling resistance. Possessing of the latest technology
has played a central role in ensuring that Tesla offsets its close competitors in the New
Zealand market. Environmentally, Tesla has been criticized of being a victim of its own
mission by making use of electricity generated from coal. This has prompted Tesla to invest
in the production of long life batteries and solar power to convince the public.
Competitive analysis
The automotive industry in New Zealand is a vast industry this translates to the
market competition that Tesla gets. However the main competitors of Tesla Inc. are ford
motor company and Honda Motors Company. According to (Petri, 2015) Tesla Inc. is a
disruptive innovation and it’s very challenging to compete with because of the competitive
advantages it has. One of the competitive advantages that Tesla possess is that it boast of
having up to date technology. Tesla has always invested in research and development in a bid
to make their electrical cars more efficient, reliable and durable secondly Tesla is the chief
campaigner of a renewable energy. This has made Tesla a different brand from the other
players in the automotive industry of New Zealand and enable it to garner support from the
society and developed economy governments. Grants and tax reliefs from developed
countries has tremendously contributed to the success of Tesla Inc.
SWOT Analysis
Apart from its New Zealand, Auckland store Tesla Inc. traverses over a vast market
globally thus describing the essence of carrying out a SWOT analysis. SWOT analysis
primarily focuses on the strengths and weaknesses of an organization. In regards to Tesla one
of its notable strengths is that it engages in the manufacture of electric cars a field populated
by few firms in New Zealand. Moreover, it has invested heavily in expanding their

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supercharging system in most urban places of New Zealand. This is mainly because of their
future forecasting of an increase in demand of electric cars. The field of making electric cars
is not yet populated thus allowing Tesla to sell their electric cars at relatively high prices.
Second is that Tesla has one of the most talented and dedicated workforce in the automotive
industry. Talented and motivated team has enabled Tesla to succeed in its technological
advancements in regards to battery power and durability of their cars. This implies that Tesla
are making high performance electric cars which translates to an increased demand in New
Zealand. Thirdly, is that they manage their own New Zealand market distribution making
sure that all the customers are fully satisfied. These translates to more customer loyalty and
cutting on overhead costs that could have been used in paying third party logistical
companies managing their stores. To the weaknesses part, firstly Tesla Inc. has ventured in to
a new New Zealand market. Tesla has had a short operation time in New Zealand thus it
possess a slim market experiencing of designing cars and carrying out business in New
Zealand. The lack of market experience has been attributed to the delays of car deliveries in
New Zealand. Secondly is that Tesla has been saddled by heavy debts. Tesla have been
extending this investments in their operational activities mainly because the company lacks a
healthy cash flow. According to (Chinta, 2018) as of 2016 Tesla had a staggering debt of $2.5
million in its books of accounts compared to the $1.4 billion of cash at hand. Economists
have predicted hard financial times for the business in the near future that could cripple the
organization. Thirdly, according to (Káin, 2016) Tesla has not been able to achieve their
annual projected productions of 500000 electrical vehicles. This indicates that Tesla has not
fully exploited it production capability despite of hefty budgets allocated to development and
research. The important elements in the SWOT analysis of Tesla is that it has a market
strength of being among the few automotive companies in New Zealand specializing in the
sale of electric cars, thus enabling it to sell their cars at relatively high prices. However the

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weakness that could hinder Tesla from achieving its business objective is the low experience
in the New Zealand market. Factors such a delayed deliveries could scare away customers.
One of the greatest opportunities of Tesla is that due to increased levels of education In New
Zealand there will be great technological knowhow leading to increased demand of electric
cars. However, a key threat to Tesla is that the petrol-reliant car manufacturers such as Ford
Motors and Honda Motors are making also advanced technological developments to their
cars. This implies that eventually they could lure customers away from Tesla.
Summary
From my analysis I have been able to conclude on certain key outcomes. In regards to
marketing analysis is that Tesla Inc. has an oligopoly market structure and marketing trends
are changing in favor of Tesla Inc. Moreover the Key success factors of Tesla are technology,
correct timing and having dedicated and experienced team. I regards to the PEST analysis I
was able to realize that Tesla gets attention from the political scene to the extent of New
Zealand government putting in policies to increase uptake of electric vehicles. This is mainly
because of its campaign on the use sustainable eco-friendly technology to run the world. In
regards to competitive analysis I realized that Tesla has a competitive advantage of
manufacturing quality electric cars over its main competitors ford motors company and
Honda motors company. Lastly on the SWOT analysis perspective I realized that Tesla has
the strength of being among the few automotive companies selling electric cars in New
Zealand this is implies that Tesla can make their cars relatively expensive in order to generate
more revenue from increased car sales.
Customers and market Positioning
Tesla Inc. has two customers segments in New Zealand: environmentalists and
individuals sitting in the upper middle to upper class. The current customer segment are

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environmentalists who are mainly supporting the missions of Tesla of running the world with
renewable energy. This segment of environmentalists are quit sustainable since their biggest
concerns is owning electric cars which Tesla manufactures. They are highly viable since they
are also in the campaign of reducing green emission. Moreover, they are attractive to Tesla
since they are loyal. The future segment of customers are the upper middle and upper class
who are highly explorative. To sustain them Tesla will be prompted to make good looking
appearance and luxurious cars. The upper middle and upper class segment are attractive
because of their huge amounts of disposable income. The main difference between the
current environmentalists segment and future upper middle and upper class is that the
environmentalists are mainly focused on the performance of the car while the future upper
middle upper class are primarily focused on the exploring new cars and the outlook
appearance of the car. This implies that by making high performance electric cars Tesla is
going to make tremendous sales to the current environmentalists segment regardless of the
prices. Moreover this also implicates that even at high prices the upper middle and upper
class are able to purchase luxurious electric cars. To position appropriately position its
operations in the New Zealand market Tesla Inc. will have to invest in manufacturing high
performing cars so attract more environmentalists and improve on the outlooks of future car
models. Moreover they can provide customization services in order to attract the upper
middle and upper class customer segment.

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References
Daniel Kissinger (2018). Tesla Inc. Five Forces Analysis (Porter’s Model) &
Recommendations. Panmore Institution. Retrieved from:
http://panmore.com/tesla-motors-inc-five-forces-analysis-recommendations-
porters-model
Jiayi Zhu (2016). Analysis of New Zealand specific electric vehicle adoption Barriers and
government Policy. Victoria University of wellington. Retrieved from:
https://researcharchive.vuw.ac.nz/xmlui/bitstream/handle/10063/6190/paper.pdf?
sequence=1
Lehtinen, Petri (2015). The Advancement of Electric Vehicles – Case: Tesla Motors.
Disruptive Technology Requiring Systemic Innovating. University Of Tampere.
Retrieved from: http://tampub.uta.fi/bitstream/handle/10024/97521/GRADU-
1435294550.pdf;sequence=1
Michael King (2014). Understanding Markets. Understanding Markets. Retrieved from:
https://www.tcd.ie/Economics/assets/pdf/MScEPS/UnderstandingMkts/EC8005%
20-%20L8%20-%20Market%20Structure.pdf
Naga Rakesh Chinta (2018). Tesla PESTEL Analysis – Harvard Strategic Management.
University of Michigan: ResearchGate. Retrieved from:
https://www.researchgate.net/publication/325746549
Naga Rakesh Chinta (2018). SWOT ANALYSIS_ Tesla _ Harvard Strategic Management.
University of Michigan: ResearchGate. Retrieved from:
https://www.researchgate.net/publication/325746360

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Norbert Káin (2016). Valuation Of Tesla Motors, Inc. TESLA. Retrievd From:
http://studenttheses.cbs.dk/bitstream/handle/10417/6007/norbert_kain.pdf?
sequence=1
Steinbuch (2017). 7 Reasons Why Tesla Has Been So Successful. Retrieved from:
https://steinbuch.wordpress.com/2015/01/22/7-reasons-why-tesla-has-been-so-
successful/