Tesla Marketing plan - part 1

Lord Ashcroft International Business School
Marketing Planning
Department: Marketing Enterprise and Tourism
Module Code: MOD004454
Level: 7
Academic Year: 2015/6
Semester/Trimester/Session: SEM1
Module leader: Dr Nektarios Tzempelikos
Student: Danilo Valentino
SID: 1500554

Contents
Introduction............................................................................................................................................3
1. Situation analysis ...............................................................................................................................3
1.1 Tesla’s Mission ..............................................................................................................................3
1.2 Core competencies and Sustainable competitive advantage.......................................................4
1.3 Financial and non-financial goals..................................................................................................5
2. Industry and environmental analysis ................................................................................................8
2.1 PESTEL analysis..............................................................................................................................8
2.2 Sector trends.................................................................................................................................9
2.3 Segmentation and Positioning....................................................................................................10
2.4 Key Drivers for change................................................................................................................11
3. Competitor analysis..........................................................................................................................12
3.1 Tesla S.W.O.T. Analysis ...............................................................................................................12
3.2 Tesla’s Portfolio and Customer analysis .....................................................................................13
3.3 Analysis of competitors...............................................................................................................14
3.3.1 BMW S.W.O.T. Analysis........................................................................................................17
3.3.2 Audi S.W.O.T. Analysis .........................................................................................................18
Conclusion ............................................................................................................................................19
Appendix 1............................................................................................................................................19
References............................................................................................................................................21

Introduction
This work is going to analyse how Tesla Motors Inc, an American automotive and
energy storage company, approaches the Market nowadays. Being just the first part
of an entire Marketing plan, this work is aimed to show Tesla’s objectives, core
competencies, environmental (uncontrollable variables) and competitor analysis.
Figure 1, Company’s Logo, (TeslaMotors, 2015)
1. Situation analysis
Given that innovation is a key factor for producers to survive in the market, this does
not necessarily requires the introduction of new products and brands. This concept is
even more important if contextualized in the car industry, where innovation and new
entrants could represent a threat to the big companies already existing. Tesla has
managed to overcome these barriers and create a top-selling luxury car in the US,
with the innovative characteristic of being full-electric (Stringham, et al., 2015).
1.1 Tesla’s Mission
The Mission statement for a Company is like an ID card, which tells to managers,
employees and also customers Who the Company is, What it does, in what business
it is placed and so on (Kotler, et al., 2012).

According to Tesla Motors Inc (2015), “Tesla’s mission is to accelerate the world’s
transition to sustainable transport.” Moreover, the company’s aim is to “offer a
compelling customer experience while gathering rapid customer feedback and
achieving operating efficiencies, better control over the costs of inventory, warranty
service, pricing, and the development of the Tesla brand”. (TeslaMotors, 2015)
As a consequence, the company is focused on two main issues: the first is to sustain
the change towards a sustainable transport, due to the scarcity of resources like oil
and the environmental pollution; the second is to focus on customers in order to
deliver a great experience and rapidly collect the feedbacks to better manage the
brand development and other controllable variables such as the price.
1.2 Core competencies and Sustainable competitive advantage
According to Porter (1985), “the only competitive global business strategies would be
based on differentiation by unique specialization in terms of quality, product, service
technology or cost leadership”. Tesla shows how on a monopolistic, turbulent and
crowded market, as the automobiles’ is, it is possible to stand out and offer a unique
value, even being a smaller company.
In the annual report for 2012 released by Tesla Motors Inc (2013), the company
points out its core competencies, which are Powertrain and vehicle engineering.
Therefore, Shahan (2015) precises some key factors and gives some examples of
which are the company’s advantages:

Table 1, Tesla’s competitive advantage, (Shahan, 2015)
Moreover, the Top Down approach (which will be further analysed in the second
part of this marketing plan) adopted by the company, allowed a better Market
penetration, not registering low revenues for the first sales. (Badkar, 2013)
1.3 Financial and non-financial goals
Farzad (2013), reports the great results obtained by the Company in 2013, adding
$3 billion market value and being the leader in North America among the
rechargeable-vehicle sellers like Nissan and General Motors.
After a few months, Tesla has started facing some problems because of two main
factors:
 Increasing competition among the low/zero-emissions car producers
 Lower price of the oil, that pulls those who want to save on the gas’s costs
towards the classic alimented vehicles
The battery
supply chain is
built for itself:
Tesla works on
the production
of batteries for
its own cars
Wonderful
Supercharger
network: Tesla
builds its own
charging points
that offer a
super-fast
recharge
Internal
Software that
is several
leagues above
the
competition

These factors led the Company in 2014, to lower the target for units sold from 35.000
to 34.000. At the end of the year they fell short on even on the revised target,
reporting a total number of 31.655 Model S cars sold. (Assis, 2015)
Since 2011, Tesla has registered the following trend of revenues:
Figure 2, Tesla Revenues, (Bloomberg, 2015)
Additionally the Company is opening its first factory in Europe with the goal of
reaching half a million cars sold globally by 2020 (Stothard, 2015).
On the other hand, Tesla is really focused on its non-financial goals and this is also
what permits the Company to achieve a better differentiation:
204.2 413.3
2,013.50
3,198.40
0.00
500.00
1,000.00
1,500.00
2,000.00
2,500.00
3,000.00
3,500.00
2011 2011.5 2012 2012.5 2013 2013.5 2014
Tesla Revenues (USD mil)

Figure 3, Non-financial Goals, (TeslaMotors, 2015)
Brand Insider (2012) points out Tesla’s goal to engage with customers through
selling points in shopping centers. The aim is that “everybody who leaves, is
smiling”, and even though they are not willing to purchase at that moment, when it
will come to buy a new car, they will think about Tesla.
Moreover, Tesla’s long term goal consist in creating a mass market of affordable
electric cars. This objective will be achieved in three steps:
Figure 4, Long term goals, (Fuente, 2013)
Non financial
Goals
Eco-friendly
Technologically
up to date
Customers
Engagement
Being different
First step
Achieve 20K Model S
production
Second Step
-Partnership with big
companies like Toyota
-Standardize electric
part for a more
efficient mass
production
Third step
Reach a broader
utilization of the
battery pack

2. Industry and environmental analysis
2.1 PESTEL analysis
Table 2, Pestel analysis, Sources: (Millingan, 2015) (Gov.uk, 2015) (Smmt.co.uk, 2015)
•Government incentives for hybrid/electric
vehicles
•Improvement of infrastructures dedicated to
electric vehicles (EV) (Millingan, 2015)
Political &
legal
•The society, both consumers and producers, are
nowadays really concerned about preserving the
environment, from the productio to the diposal of a
certain product/service. According to Gov.uk (2015),
"The government is working to protect our environment
by reducing pollution, reducing the amount of waste
sent to landfill, protecting areas of parkland, wildlife
reserves and marine biodiversity, and enforcing
regulations that keep our water and air clean. We also
help communities avoid or recover from flooding and
other weather-related hazard""
Environmental
& Social
•The initial so called "Range axiety", stopped
consumers from buying a fully electric car,
beacuse of the impossibility to plan a long range
trip. Now the company manages to provide a
vehicle (Model S) able to make more than 300
miles without being charged
•A progressive improvement is expected in the next
years in the battery pack production (Millingan,
2015)
Technological
• The level of GDP based on the PPP (purchasing-
power-parity) has been increasing from 1980 until
today in the UK. This positive economic situation can
potentially support the sales of luxury cars, especially
for those brands that offer added values such as eco-
friendly products and technological innovation
•2,476,435 new cars registered in the UK in 2014 – the
most in a calendar year since 2004
•2014 market grew 9.3% over the previous year, ahead
of the EU average of 5.7%
•Huge growth for plug-in car market, which saw
volumes quadruple from 3,586 in 2013 to 14,498 in
2014.
Economic

2.2 Sector trends
Due to one of the biggest financial crisis that Europe has faced in the last years,
there has been a decrease in the number of cars sold of 10 million. From 2014, this
negative trend has been inverted with a growth rate of 5%, and it is expected to keep
growing and reach peak level in the early 2020s (Euromonitor, 2014).
Figure 5, GVA from Sale, Maintenance and Repair of Motor Vehicles and Motorcycles; Retail Sale of
Automotive Fuel in UK, (Euromonitor, 2014)
0.00
5,000.00
10,000.00
15,000.00
20,000.00
25,000.00
30,000.00
35,000.00
40,000.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
UK trend
UK trend

Figure 6, UK car registrations, (Thisismoney.co.uk, 2015)
As the charts above show, the UK market is a mirror of what has been happening in
Europe for the last ten years, with a drop of sales from 2008 and a slow and
progressive recovery from 2010 until today.
2.3 Segmentation and Positioning
Tesla’s segmentation and targeting strategy are characterized by both points of
flexibility and stability. This because the different models of car offered by the
company present some key features (full-electric, innovative software), but at the
same time are differentiated in dimensions, shape, style and price (TeslaMotors,
2015):
Segmentation  Male customers
 Customers looking for a premium luxury
car
 Customers looking for a sport/luxury
car
 Eco-friendly consumers
 Tech savvy
Targeting  Upper class business executives (70-
100K)
 Sport car lovers
 Young professionals willing to start
using a luxury car (30k)
Table 3, Segmentation and targeting, (TeslaMotors, 2015)

According to the product development and to the changes in the Market that led the
company to adapt its strategy, this is the evolution of Tesla’s positioning:
Table 4, Tesla’s Positioning, (TeslaMotors, 2015)
2.4 Key Drivers for change
Surely Tesla and its products, represent the innovation and the need of change in
the market, in terms of using and consuming products and services. Several key
factors for change are identified in this analysis:
1. The competitive market in which the company plays, requires innovation and
good performances of the products
2. More competitors are threatening Tesla because they saw an opportunity in
the plug-in car market
3. Tesla already set its objective to increase the production and sales. In order to
do so, they are introducing changes in the manufacturing area
4. Governments, such as the English one, have started to improve the
infrastructures and propose incentives in order to sustain the eco-friendly
vehicle sales. (IBISWorld, 2015)
Tesla Roadster
(2008-2011)
•High end luxury sport car
•Two-seats sport car
•not cheap, but cheaper than other luxury sport cars
Model S
(2011-2013)
•High end luxury car
•Does not sacrifice comfort and performances
Model S
(2014-today)
•Entry level luxury car
•Attractive for price, performances and zero emissions

3. Competitor analysis
In order to compare Tesla to its competitors, it is important to perform a S.W.O.T.
analysis of the company and describe its portfolio in terms of products offered.
3.1 Tesla S.W.O.T. Analysis
Table 5, Tesla Swot analysis, Sources: (TeslaMotors, 2015) (Assis, 2015) (Millingan, 2015)
(Dyer, et al., 2015) (Forbes/Business, 2015)

According to Forbes/Business (2015), Tesla is the most innovative company in 2015:
Rank Name Country
1 TESLA MOTORS INC USA
2 SALESFORCE.COM INC USA
3
ALEXION PHARMACEUTICALS
INC USA
4
REGENERON
PHARMACEUTICALS USA
5 ARM HOLDINGS PLC GBR
6 UNILEVER INDONESIA TBK PT IDN
7 INCYTE CORP USA
8 AMAZON.COM INC USA
9 UNDER ARMOUR INC USA
10
BIOMARIN PHARMACEUTICAL
INC USA
Moreover the company has undertaken a brand strategy focused on customer
engagement (BrandInsider, 2012). These strengths help to better evaluate the
opportunities offered by the increasing concern of the society toward the
environmental protection and the globalization of the market, which creates a wider
range of potential consumers.
On the other hand, the company is not organized to produce cars for a mass market,
even though the price of the latest “Model S” is now lower, in order to be affordable
for more consumers. In addition, due to the general environmental concern, more
companies are now focusing on the Electric Vehicles Market. This factor, together
with the decreased price of the oil, could represent a threat for Tesla.
3.2 Tesla’s Portfolio and Customer analysis
The American automotive company presents a limited product portfolio in terms of
quantity, but important in terms of quality of the products offered and the impact on
segmentation and positioning strategy:

Table 6, Tesla portfolio, (O'Hara, 2015) (TeslaMotors, 2015)
In terms of “who is buying Tesla cars”, Hirsch (2014) identifies two types of
purchasers: Toyota Prius owners and wealthy people. The first group of buyers
wants to keep using an eco-friendly car, but they want to switch to a luxury one;
while the second group buys Tesla Model S because it is a luxury car, but it also
offers the comfort of five seats vehicle, for example more suitable for families.
3.3 Analysis of competitors
As mentioned before, the plug-in vehicle market is becoming more and more
attractive every day, as a result, many companies are introducing a hybrid/full
electric car in their product portfolio. In fact, General Motors Vice Chairman Steve
Girsky told Bloomberg that Akerson (CEO at General Motors) "thinks Tesla could be
a big disrupter if we're not careful". Moreover, he argues: “All I know is if we ignore it
and say it's a bunch of laptop batteries, then shame on us” (AutomotiveNews,
2013).Therefore Tesla has to compete with two main categories of car producers:
luxury car companies and companies that provide a hybrid or full electric car:
Tesla roadster: launched on the market in 2008, it was the really
first model for the company. Roadster is a two-seats sport car with
competitive performances (0-60 mph in 3.7 seconds). Tesla sold
approximately 2.400 units of this model in more than 30 different
countries.
Tesla model S: the second Tesla car to hit the road on 2012. It has
sold more than 50.000 units so far. This model is classified as a
luxury high end car.
Tesla model X: is the latest model provided by the Company and it
is expected to be launched between the end on 2015 and early
2016. Still annovered among the luxury-sport cars, it also offers the
comfort of a seven seats vehicle.

Figure 7, Tesla’s Competitors, (TeslaMotors, 2015)
1. Performanc
e vehicles
2. Premium
vehicles
Full electric
vehicles
Premium vehicles which provide
good performance and hybrid
characteristic (BMW i8)

Stothard (2015) argues that Tesla has just opened its first European factory with the
double goal to make its product more accessible in Europe and reach half a million
of cars sold globally by 2020. On this Market, its major competitors will be BMW,
Audi and Porsche, according to the author, while Volkswagen (as a brand but not as
a Company) is left behind because of the internal problems that the Company is now
facing due to the recent emissions scandal. Thus, for this analysis, it has been
decided to consider “European” competitors, rather than just focusing on the UK,
because the particular type of vehicle provided by Tesla involves comparisons with
similar cars which have to be electric or at least hybrid. The Companies in Europe
that now are focusing more on this type of Market are BMW and Audi, as mentioned
before.

3.3.1 BMW S.W.O.T. Analysis
Table 7, BMW Swot analysis, (Marketing91, 2015)

3.3.2 Audi S.W.O.T. Analysis
Table 8, Audi Swot Analysis, (Marketing91, 2015)

Conclusion
In conclusion of this first part of the Marketing plan for Tesla, it is possible to argue
that the company has set some important objectives for the next years. Thus, its high
potential coming from its innovative and sustainable product, will allow Tesla to hit its
targets if the company manages to consistently undertake all of those actions
identified as key drivers for change. In this way it will able to properly grow as a
Company and face all the strong international competitors without fear.
Appendix 1
Government incentives
This appendix is going to look at the numbers of the plug-in vehicle market, trying to
further explore the key factors for the growth recorded in the last years.
As the figure below shows, there has been a relevant increase in the number of
hybrid/electric cars sold in 2015 in the UK:
Figure 8, EVs sales percentage, (Millingan, 2015)
Basically, this growing trend can be explained in three main points:
1. Several new models of hybrid and electric cars are now available on the
market, thus they are attracting more consumers (Millingan, 2015);
2. The network of charging points has now been expanded: there are now 3000
places in the UK where EVs can be plugged in (Millingan, 2015). Moreover

the Government is working to improve the infrastructures dedicated to this
type of vehicles (Chester, 2015);
Figure 9, UK charging lane, (Chester, 2015)
This lane is just a trial for now, utilized from the Enghlish Government on part
of the highway to test the functioning of the recharge for EVs. (Chester, 2015)
3. Government incentives:

Figure 10, UK incentives, (TeslaMotors, 2015)
Not only the Government is proposing good incentives for EVs, it is also going
to introduce a Road Tax reform that will mainly hit drivers of luxury cars. As
Massey (2015) argues, “From April 2017 people who buy the dirtiest gas
guzzlers will see the road tax they pay in the first year nearly double from
£1,100 to £2,000”. Moreover, this reform will also it the hybrid vehicles, in fact
“…in future, only drivers who buy a car that emits no CO2 emissions, such as
those that run purely on electricity or hydrogen, will enjoy a zero rate of VED”
(Massey, 2015). This policy will definitely benefit Tesla Mortors Inc, which is,
among the zero emissions cars producers, problably the most powerful.
References
Assis, C., 2015. Tesla must sell 11,000 cars to meet its delivery goal. [Online]
Available at: http://www.marketwatch.com/story/tesla-stock-may-plunge-if-car-maker-misses-
delivery-goals-2015-02-10
[Accessed 2 11 2015].
AutomotiveNews, 2013. Tiny Tesla a threat to GM? Akerson takes no chances, assigns study team.
Automotive News, 22 7, 87(6578), p. 34.
Badkar, M., 2013. AMERICA'S 4TH AUTOMAKER HAS ARRIVED: Tesla Now Has The World's Biggest
Automakers Watching With Anxiety. [Online]
Available at: http://www.businessinsider.com/tesla-americas-fourth-automaker-2013-5?IR=T
[Accessed 30 10 2015].
Bloomberg, 2015. Tesla Motors Inc (TSLA:NASDAQ GS). [Online]
Available at: http://www.bloomberg.com/research/stocks/financials/financials.asp?ticker=TSLA
[Accessed 6 11 2015].
BrandInsider, 2012. Tesla Motors Spotlight: Brand Strategy & Marketing. [Online]
Available at: https://www.youtube.com/watch?v=xLOpuXNrBmI
[Accessed 3 11 2015].
Chester, T., 2015. The UK is testing out roads that charge electric cars as they go. [Online]
Available at: http://mashable.com/2015/08/17/electric-car-charging-uk/#Cf62nO56O8qn
[Accessed 6 11 2015].
Dyer, J., Gregersen, H. & Furr, N., 2015. TESLA’S SECRET FORMULA. Forbes, 196(3), pp. 90-118.
Euromonitor, 2014. Trends Impacting the European Automotive Market. [Online]
Available at: http://www.portal.euromonitor.com/portal/analysis/tab
[Accessed 3 11 2015].
Farzad, R., 2013. Tesla: The Stuff of Short-Seller Heartburn.. Bloomberg.com, 16 5, p. 3.

Forbes/Business, 2015. Forbes Announces Fifth Annual List Of The World's Most Innovative
Companies. [Online]
Available at: http://www.forbes.com/sites/forbespr/2015/08/19/forbes-announces-fifth-annual-list-
of-the-worlds-most-innovative-companies/
[Accessed 5 11 2015].
Fuente, J., 2013. Darden School of Business Tesla Strategic Analysis. [Online]
Available at: http://www.slideshare.net/joseangeldf/darden-school-of-business-tesla-strategic-
analysis
[Accessed 3 11 2015].
Gov.uk, 2015. Environment. [Online]
Available at: https://www.gov.uk/government/topics/environment
[Accessed 5 11 2015].
Hirsch, J., 2014. Los Angeles Times. [Online]
Available at: http://www.latimes.com/business/autos/la-fi-hy-who-buys-tesla-model-s-20140210-
story.html
[Accessed 6 11 2015].
IBISWorld, 2015. Competitive landscape, s.l.: s.n.
Kotler, P. et al., 2012. Marketing Management. 2nd ed. Harlow: Pearson.
Marketing91, 2015. BMW SWOT analysis – SWOT analysis of BMW. [Online]
Available at: http://www.marketing91.com/swot-analysis-of-bmw/
[Accessed 6 11 2015].
Marketing91, 2015. SWOT analysis of Audi. [Online]
Available at: http://www.marketing91.com/swot-analysis-of-audi/
[Accessed 6 11 2015].
Massey, R., 2015. Road tax reform will hit drivers of luxury and greenest cars hardest: Families attack
'madness' of £900 annual bill for two cars. [Online]
Available at: http://www.dailymail.co.uk/news/article-3154201/Road-tax-reform-hit-drivers-luxury-
greenest-cars-hardest-Osborne-says-money-raised-used-improve-roads.html
[Accessed 8 11 2015].
Millingan, B., 2015. If you want to buy an electric car, you may need to be speedy. [Online]
Available at: http://www.bbc.co.uk/news/business-32217969
[Accessed 5 11 2015].
O'Hara, M., 2015. An Investor’s Guide to Tesla Motors. [Online]
Available at: http://marketrealist.com/2015/08/investors-guide-tesla-motors/
[Accessed 5 11 2015].
Porter, M., 1985. Competitive advantage: creating and sustaining superior performance. New York:
Free Press.
Shahan, Z., 2015. Tesla’s 3 Huge Competitive Advantages. [Online]
Available at: http://cleantechnica.com/2015/05/03/teslas-3-huge-competitive-advantages/
[Accessed 10 30 2015].

Smmt.co.uk, 2015. UK new car registrations reach 10-year high in 2014. [Online]
Available at: http://www.smmt.co.uk/2015/01/uk-new-car-registrations-december-2014/
[Accessed 5 11 2015].
Stothard, M., 2015. Tesla opens first European plant on road to 500,000 car target. [Online]
Available at: http://www.ft.com/cms/s/0/6fe66c54-6394-11e5-a28b-
50226830d644.html#axzz3qiAAi8JO
[Accessed 6 11 2015].
Stringham, E., Miller, J. & Clark, J., 2015. Overcoming Barriers to Entry in an Established Industry:
Tesla Motors. California Management Review, 57(4), pp. 85-103.
TeslaMotors, 2015. TeslaMotors. [Online]
Available at: http://www.teslamotors.com/en_GB/
[Accessed 30 10 2015].
TeslaMotorsInc, 2013. TESLA MOTORS INC, Palo Alto: EdgarOnline.
Thisismoney.co.uk, 2015. Cars and motoring. [Online]
Available at: http://www.thisismoney.co.uk/money/index.html
[Accessed 5 11 2015].

Tesla Marketing plan - part 1

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Tesla Marketing plan - part 1

Similar to Tesla Marketing plan - part 1 (19)

Recently uploaded

Recently uploaded (20)

Tesla Marketing plan - part 1