6MK517 - Strategic Marketing Management: Tesla Inc. Spring 2019

This report provides a strategic marketing analysis of Tesla Inc., examining customer behavior, marketing audits, and Porter's Five Forces. It identifies threats and opportunities through a SWOT analysis and outlines marketing objectives. The report covers Tesla's history, customer segmentation (geographic, demographic, behavioral, and psychographic), and the macro-environment (PEST analysis). It also analyzes the bargaining power of suppliers and buyers, the threat of new entrants and substitutes, and rivalry among existing firms. The report further details Tesla's value chain, including inbound logistics, operations, outbound logistics, marketing and sales, and service, highlighting key areas for improvement. The document is available on Desklib, a platform providing study tools and past papers for students.

Strategic marketing management 0
Strategic marketing management
TESLA INC. (Coursework- 1)
Student’s name

Strategic Marketing Management 1
Contents
Introduction................................................................................................................................2
Customer behaviour and decision making.................................................................................2
Marketing Audit.........................................................................................................................3
Porter’s five force model............................................................................................................4
Threats and opportunities...........................................................................................................5
Situational Analysis...................................................................................................................6
Marketing Objectives.................................................................................................................7
Conclusion..................................................................................................................................8

Strategic Marketing Management 2
Introduction
(Source: Tesla, 2013)
Tesla Motors is one of the automobile manufacturing industries. This company was started
for the development of the electric sports car. The Elon Musk as CEO of this former
company has launched Tesla in 2003 (Tesla, 2013). The main purpose of the organisation
was to encourage innovation and ethical values. The main goals of the Tesla Company are to
generate an entire ecosystem, and as manufacture, an ideal set of the energy solution, power
wall, power back and the solar roof are maintained and helps in managing the renewable
energy generation, storage and consumption (Tesla, 2013).
History: Tesla was the first and the foremost car company after since Ford Company in
1956. Tesla car stock has turned as the company, which keeps on innovating out the new
features and the models while other than this, they also capture the imagination of the curious
public’ wants and demands. In this, the main mission of the Tesla Company is to accelerate
the worldwide transactions to sustainable energy. In addition, all this can be achieved by
converting their sustainability mission through innovation (Liu, et al, 2014).

Strategic Marketing Management 3
Customer behaviour and decision making
Tesla customers’ segmentation is the most effective approach, which tries to appeal to
everyone by engaging them in the mass marketing campaign. As the different methods for
better understanding of the profile of the customers in each segment highlight how the
customers are attracted and help in analysing their purchasing power.
Geographic segmentation: In this, the segmentation of customers is done on the basis of
similarities and dissimilarities within and across segments. Tesla applies a geographic
segmentation because of the prices which keep on vary by the regions and Tesla can focus on
marketing to those customers that live in those areas which are having a high price (Farley,
2016).
Demographic segmentation: In demographic segmentation, Tesla employs its overall
resources to only to those people who can afford it. Likewise, for example, Tesla is marketing
their new launch the Roadster S to those males, which belong to the late thirties as they have
a higher income group, which can afford to buy the same. Other than this, they also targeted
the occupation sector, which is having the higher income group both males and females
(Buckholtz, 2014).
Behavioural Segmentation: The behavioural segmentation highlights about the customer's
loyalty. In this behaviour of the customers are judged whether they are hard-core loyal, Or
soft core loyal or lastly or they are switchers. In addition, such behavioural pattern among the
customers points towards their non- routine consumption. Other than this, factors such as
status, long term cost effectiveness, the perception of being environmentally friendly.
Alternatively, whether they are potential buyers, first-time buyers, determined or ambitious
all such factors of the buyers seek the experiential and symbolic meaning behind the purchase
of such luxurious cars.
Psychographic Segmentation: In this, the segmentation is done on the basis of lifestyle,
which further comprises of aspirer, succeeder, explorer and reformers’. Moreover, Tesla main
motive behind this segmentation is to know about the people’s interest, their activities and
see whether they are satisfied with their current cars and what all changes need to be done for
their satisfaction and meeting their interest (Buckholtz, 2014).
Analysis

Strategic Marketing Management 4
After making use of segmentation method, Tesla motors generate various advantages and the
drawbacks, so by the application and the combination of these segmentation methods tesla
should majorly emphasis on its resources by the use of geographic and demographic
segmentation. Moreover, Tesla should also apply Psychographic segmentation in order to
tailor the product according to the needs, wants and demand of the customers’. The Young
generation is more inclined towards the products, the services, and hence has a greater impact
over the company’s value (Zucchi, 2015).
Marketing Audit
In this aspect, the Tesla macro- environment (PEST Analysis) highlight-
Political Analysis: Political aspects play a vital role in determining Tesla’s long-term
profitability in the market. In this, tesla’s identifies the governmental impacts over the
business. As a government, entities are the main factors, which majorly affect the business
and the industries. Likewise, through Governmental incentives, Tesla has an opportunity to
strengthen its financial performances for the electric automobiles. Alternatively, the
expansion of free trade agreements also opens up opportunities for the company to expand its
operation internationally.
Economic Analysis: In this, factors such as inflation, savings rate, interest rate, foreign
exchange and the economic cycle helps in determining the aggregate demand and investment
in the economy. Tesla Inc. considers the government intervention in the free market and
related customers goods, exchange rates and stability of the host country currency, Education
level in the economy (Kissinger, 2018).
Social Analysis: In this analysis, the depiction of social culture in which the shared beliefs
and attitude of the population play the vital role in making marketers of Tesla understand the
customers’ needs, taste and the preferences. The factors, which are considered, are
demographics and skills of the population, class structure in the society, culture, attitudes and
leisure interests.
Technological Analysis: Technology is both friend and foe for Tesla. Being a friend, it helps
the company to maintain its competitive edge. Moreover, it allows Tesla to be fuel-efficient
and paves the future sustainability and usability. As, Tesla is totally depended on technology
for their vehicles in both a positive and negative way.

Strategic Marketing Management 5
Although each factor is important for the Tesla growth, the most important factor is a social
factor because people loved the innovate idea of an electric car by Tesla. As by originating
the electric car, it is helpful in eliminating the need for much fuel in comparison to a
traditional vehicle. Tesla comprises of all whether it is environmentally sustainable, power or
whether it is luxury. Hence, by doing this, the company is maintaining its place in people’s
mind (Kissinger, 2018).
Porter’s five-force model
(Source: Samuels, 2017)
Bargaining power of Suppliers: In this, the effects of the suppliers are higher which
highlights and relies on the premium materials, components and technology. Moreover, the
suppliers are in a better position to control, manipulate the prices to their advantage and they
are in the position to charge whatever the prices they think of are necessary. This is all
because of the exclusivity of the material that Tesla motors will need to create and generate
its vehicles.
Bargaining power of Buyers: These aspects focus on the influence of the customers, which
are direct, factors that help in determining the company’s sales revenues. Moreover, price
sensitivity, which elaborates that with the increment in the range of electric vehicles, also
affects the mind of the customers, as tesla’s prices are actually very high. By seeing this,
customers choose alternatives.

Strategic Marketing Management 6
The threat of new entrants: In this segment, the threat is very low as Tesla’s business is
very much difficult to compete with; this is all because of the high cost of the brand
development, the strong brand image that highlights the strength of the company. In other
terms, an automobile manufacturing having high costs which act as barriers to new firms.
Moreover, Tesla has technology and innovation by its side, which will always be a
competitive advantage to them (Iberg, 2015).
The threat of Substitutes: Tesla also majorly faces the impact of the substitutes on the
automotive and energy solutions. Likewise, lower switching cost enables substitutes such as
public transportation in order to attract customers. Such low impact of substitutes limits the
influence of suppliers. Moreover, None other company can do such work as it takes lots of
resources, equipment and capital in order to begin with the making vehicles like Tesla
company do (Dudovskiy, 2018).
Rivalry among existing firms: In terms of Tesla, it is highly recognizable brands in terms of
electric vehicles. If we consider other brands likewise, GM, BMW, Porsche, Jaguar all are
working towards the development of mass-market electric vehicles. Moreover, Tesla is
having an aggressive approach towards innovations and generating niche of their electric
vehicle, by this they are setting trends for an automobile company in future (Samuels, 2017).
SWOT Analysis
Strength
 Unique position in the auto market
 Robust sales growth
 Brand recognition
 Sustainable innovation
 Engineering and technological
expertise
 Fastest growing company
 Political and government support
 Monopoly
 Great leadership and team spirit
 Energy efficient
 A strong brand with strong investors
Weaknesses
 Capacity issue
 Poor customer awareness
 The higher cost of vehicles
 Limited presence
 High competition
 Higher production and operation costs
 Low affordability
 Dealership regulations
 Most revenue is reinvested (Dalvagas,
2016).

Strategic Marketing Management 7
 Stronger and experienced company
Threats
 Competition
 Legal and regulatory troubles
 Fluctuations in material prices
 Dealership regulations
 Resistance to change
 Additional cost beside cars
 Maintenance on cars
 Other experienced company as
competitors
Opportunities
 Global sales expansion
 Global supply chain
expansion
 Business diversification
 Preferences for new
technologies
 Growing demand for
sustainable products
 Mobility services
 Increased environmental
concerns (Bhasin, 2018)
Situational Analysis
Primary objectives of Tesla highlights about generating demand and drive sales of electric
cars. Secondly, building long term brand awareness and manage corporate reputation.
Moreover, Tesla’s main aim is also to manage their existing customers’ base by generating
loyalty and customers referrals. Along with this, educate their customers about Tesla’s goals
to improve the future. Lastly, they want their customers to be educated, inspiring and
empowering them.
Current marketing strategies are:

Strategic Marketing Management 8
Source: (Li, 2018)
Product
 In this, the company should start the
new product line to its product mix.
 Tesla also expands itself into solar
panels and related installation
services
 Tesla is also majorly focusing on
growth and expanding its
multinational business.
 It also supports profitability because
of these strategies.
Price
 In this Tesla, the company supports a
premium pricing strategy This is
because of the differentiation and
uniqueness of the product
 In addition, another is market-
oriented pricing
Promotion
 In this, they are using various
techniques such as viral marketing,
sales promotion, personal selling,
public relations and lastly direct
marketing.
Place
 Tesla due to an increment in their
product line, also focusing on adding
places, venues and ventures
 Likewise, company-owned stores and
galleries, official company websites,
company-owned services centre and
lastly, charging stations (Li, 2018).

Strategic Marketing Management 9
Tesla Value Chain Analysis
(Source: Marah, 2016)
Inbound
Logistics
Operations Outbound
logistics
Marketing and
sales
Services
In this, the main
aspect of Tesla
is to generate
and create or
establish a long-
term strategic
relationship with
the suppliers.
Moreover, they
are primarily
working on
bottleneck parts,
which are the
big headaches
In this, the
operation is in
two segments,
Automotive and
energy
generation and
storage.
In this, the high
level of
integration of
robots into the
manufacturing
processes is one
of the major
In this, in order
to face the
higher demand
for electric
vehicles
decreases the
time delivery of
vehicles to
consumers
Furthermore,
direct sales
affect the costs
of Tesla for
further
Tesla marketing
and sales
practices in
comparison to
other electric
automakers are
unconventional.
Moreover, Tesla
does not make
use of dealership
networks to sell
out their
products.
In this concern,
the company
effectively and
efficiently deals
with the
customer's
issues and
complaints as
the company
allow its
customers to
escalate their
problems
directly to the

Strategic Marketing Management 10
for them. sources of value
creation for
Tesla.
increments company
executive. They
also provide
post-sale
services plus
locations
(Marah, 2016)
Marketing Objectives
Tesla’s main marketing objective is to tap or target the millennials for that they started
innovating more for the millennials world. Elon Musk thinks of the future, which states that
one element which people will buy in future. That is sleek, environmentally friendly electric
cars, smart solar panels, smart batteries and lastly private space exploration (McKay, 2016).
Another marketing objective on which they are a focus on is the maintenance of their
competitive advantage for this Tesla is more driven by the technology, as they are focusing
on more of new technology. Likewise, they are building networks of superchargers, battery
swap stations and service stations.
Thirdly, now they are focusing on diversifying their business by entering into the market of
solar roof tiles with the rechargeable lithium-ion battery with the storage of solar captured
energy.
Lastly, tesla’s reputation, they are considering more in intangible strength of the company.
They are blindingly moving towards the fast vehicles of desire. Moreover, Tesla generated a
cheaper model, which ended up winning the big auto award. With this reputation of
excellence, they have generated an impressive brand image.
SMART marketing objectives:
In specific terms, their main objective is to increase the advertising budget by 20% so that
they can easily penetrate in the luxury automobile market. Moreover, leverage Russia large
tesla fans base to increase awareness of Tesla’s automobile market.

Strategic Marketing Management 11
In achievable concern, their major focus is on increasing the production in five-fold in
upcoming next years which will be very challenging and will likely to require some of the
additional capital and for all this Tesla is working harder in order to achieve these set goals
for future (Rowland, 2018).
Conclusion
From the above report, we can conclude that Tesla is one of the well-renounced company not
only one basis on their reputation among general people due to its profit sales than the other
brands. Nevertheless, due to the services, which they render, the product, which they sell, are
differentiated from the other brands whether in looks, services, models and much more.
References
Bhasin, H. (2018) SWOT Analysis of TESLA [Online] Available from
https://www.marketing91.com/marketing-strategy-of-tesla/ [Accessed 17/02/2019]
Buckholtz, D.(2014) Tesla motors- environmental scan &segmentation/ targeting [Online]
Available from: https://prezi.com/jmmjrujjjhei/tesla-motors-environmental-scan-
segmentation-targeting/ [Accessed 17/02/2019]
Dalvagas, L.(2016) SWOT Analysis: Tesla motors INC. [Online] Available from:
http://www.valueline.com/Stocks/Highlights/SWOT_Analysis__Tesla_Motors,_Inc_.aspx#.
XGkc8lwzbIV [Accessed 17/02/2019]
Dudovskiy, J.(2018) Tesla segmentation, targeting and positioning overview [Online]
Available from https://research-methodology.net/tesla-segmentation-targeting-and-
positioning-overview/ [Accessed 17/02/2019]
Farley, E. (2016) Tesla model 3 market segment analysis [Online] Available from:
https://prezi.com/heayt7uy-miy/tesla-model-3-market-segment-analysis/ [Accessed
17/02/2019]
Iberg, A.E., (2015) Creating Competitive Advantage in the Premium Market Segment
through a Sustainability Strategy.

Strategic Marketing Management 12
Kissinger, D. (2018a) Tesla Inc. PESTEL/PESTLE ANALYSIS & RECOMMENDATIONS
[Online] Available from: http://panmore.com/tesla-motors-inc-pestel-pestle-analysis-
recommendations [Accessed 17/02/2019]
Kissinger, D. (2018b) Tesla Inc. SWOT ANALYSIS & RECOMMENDATIONS [Online]
Available from: http://panmore.com/tesla-motors-inc-pestel-pestle-analysis-recommendations
[Accessed 17/02/2019]
Li, Zitong, "Strategic Audit on Tesla" (2018) Honors Theses, University of Nebraska-
Lincoln. 20
Liu, Y.E., Kang, Y., Wu, H., Chen, C. and Hon, E., (2014) Tesla Motors Inc. Case
Synopsis. Burnaby BC: Simon Fraser University. Retrieved, 10(18), p.2014.
Marah, K. (2016) Tesla and the 21st century supply chain [Online] Available from
https://www.forbes.com/sites/kevinomarah/2016/04/07/tesla-and-the-21st-century-supply-
chain/#181991922584 [Accessed 17/02/2019]
McKay, J., (2016) Off Like a Rocket: A Media Discourse Analysis of Tesla Motor
Corporation.
Rowland, C. (2018) Tesla Inc. mission statement and vision statement (an analysis) [Online]
Available from http://panmore.com/tesla-motors-inc-vision-statement-mission-statement-
analysis [Accessed 17/02/2019]
Samuels, R. (2017) Tesla: five force analysis [Online] Available from
https://prezi.com/7rm5rx7ffpsd/tesla-five-forces-analysis/ [Accessed 17/02/2019]
Tesla. (2013) the mission of Tesla [Online] Available from:
https://www.tesla.com/blog/mission-tesla [Accessed 17/02/2019]
Zucchi, K. (2015) what drives consumers demand for Tesla? [Online] Available from:
https://research-methodology.net/tesla-segmentation-targeting-and-positioning-overview/
[Accessed 17/02/2019]

Strategic Marketing Management 13