Tesla Motors Marketing Plan for Australian Market
Tesla Motors Inc., aims at transforming world’s transportation. The company is not just a car manufacturer but also an innovator in the car industry. Tesla’s point of differentiation is that the owners can charge their cars at home and hence they have zero gasoline expenses. Their tagline is, “burn rubber not gasoline” hence they focus on green marketing. This marketing plan gives feasibility of Tesla Motors Inc. in the Australian market. The demand of electric cars is determined by number of factors including social attributes of the area, cost of energy, customer preferences, legal and political system. The demand in the Australian market is high for electric cars as indicated in the plan. The marketing plan further gives SWOT analysis of Tesla Motors, it identifies Tesla as pioneer in launching full electric sports car, and it is hence an innovator. That is why the company enjoys first mover advantage. The automobiles manufactured by them are unique and perform well. Their biggest strength is hence the cars manufactured by them.
Tesla Motors Inc., an electric vehicle manufacturer, was incorporated in year 2003 with an aim to transform world’s transportation (About Tesla, 2016). The company is not just a car manufacturer but also an innovator in the car industry. Although Tesla Motors is young compared to other car manufacturers but it focuses on innovation and that makes it innovator in the industry. The mission of the company is to transform transportation and to ensure sustainability in transportation. The company was established with an idea that electric cars would be better as they can ensure sustainability in transportation through unbelievable power and almost zero releases. The company further aimed at making each new model affordable for the customers. The company is now a global manufacturer of electric vehicles and parts (About Tesla, 2016). It is a silicon-valley based company.
The name of the company is based on, “Nikola Tesla”, as they first developed “powertrain” based on “AC induction motor”. The first brand hence was Tesla Roadster and was introduced in the market in 2008. After four years i.e. in 2012 another brand i.e. Model S was launched. This model was 100 percent electric and had seating capacity of seven people still it had acceleration of a sports car. Later on in 2014 further variations were introduced to improve performance of the car. Tesla Model X was also introduced in 2015, which had incredible acceleration, and three row seating.
Tesla’s point of differentiation is that the owners can charge their cars at home and hence they have zero gasoline expenses (About Tesla, 2016). In the same way for long journey Tesla has developed “supercharger network” which offers convenience to customers and the battery is charged within twenty minutes. These cars are manufactured in California in a factory and it has production capacity of one thousand cars per week. Their tagline is, “burn rubber not gasoline” hence they focus on green marketing.
Over the past few years a new technology i.e. fully electric cars in automobile sector have gained popularity. The major focus now is no several variations such as, “gas electric hybrid cars” and “battery operated electric cars” (Mintzer, 2009). In the past ten years significant growth have been witnessed in electric vehicles segment. According to Dijk and Yarime (2010) this growth is remarkable considering the automobile industry where innovation in engine has not been witnessed. The traditional engine i.e. “internal combustion engine” is popular as it exists for more than hundred years now. Dijk and Yarime (2010) examined the growth of electric motors, and concluded that initially these engines failed, and many companies failed to market them however after 2000 this technology started gaining popularity. Tesla Motors Inc. focus on fully electric cars and as mentioned was launched in 2003, this marketing plan aims at evaluating attractiveness of Australian market.
- Tesla Motors Inc. are the pioneer in launching full electric sports car, it is hence an innovator. That is why the company enjoys first mover advantage. The automobiles manufactured by them are unique and perform well. Their biggest strength is hence the cars manufactured by them. From the beginning they aim at developing 100 percent electric cars that are comfortable and safe to use (Cyclical, 2013). They focus on green manufacturing. Additionally the cars are manufactured on innovative technology, both software and hardware are able to perform best and the car is able to accelerate up to 60 mph in less than just four second, hence its unique technology is the strength. They have strong experience and expertise in “electric car transmission technology”.
- Apart from the technology, Tesla cars have the best design, as their “Model S” was awarded “car of the year” award in 2013 (Motors, 2010). Additionally Tesla electric cars do not produce a lot of noise and hence is comfortable.
- Tesla Motors Inc. is an important supplier for other automobile manufacturers such as Toyota hence other competitors are dependent on it for the parts. They have the ability of developing automobiles in house hence they are not dependent upon any other manufacturer.
- It is also expanding the Supercharger stations (Sparks, 2015) so as to satisfy needs and wants of the customers.
- The leadership of the company is strong that has a good history with other companies.
- The major weakness of Tesla Motors is that they have high cost of production (Sparks, 2015), as mentioned above Tesla Motors have full in-house production hence they do not outsource and the costs of production is high.
- In comparison to other competitors in the market, Tesla Motors Inc. cars are expensive.
- Tesla Motors have a limited market share and a market niche, it focuses on a narrow market segment and hence the company has small market share compared to other competitors in the market. It focuses on selling only electric cars and does not focus on launching variations hence it has not diversified the risk.
- Tesla Motors Inc. focus on green marketing (Sparks, 2015) and various countries globally are also supporting these cars that focus on efficient use of resources. Globally various countries are offering exemptions in taxes and duties to these electric cars.
- They can manage their costs by controlling certain operations and by focusing on the quality.
- Tesla Motors Inc. can expand in other markets where demand of customers is high.
- They can further launch new models with innovative technology. They also launched variations such as “home battery system” to capture more customers.
- The mission of Tesla Motors Inc. is to ensure affordability of cars, however considering their current market scenario where high costs are associated with cars and economies of scale is not achieved. Their business model is not sustainable (Sparks, 2015).
- Their pricing system i.e. “price skimming” is not popular in the automobile sector and no evidence is available that depicts its success in the industry.
- Tesla focuses on electric cars however this technology is new and adaptation rate of customers is slow. On the other hand their competitors are well settled and have a strong market share, their technology is popular and Tesla Motors technology is new and people are not aware about it. Other well established players in the industry are giant and capture major market share.
- Other competitors with focus on electric cars are also entering the market hence it focuses strong competition.
Electric cars are manufactured by number of companies, and with the increase in popularity of these cars competition among the players has increased significantly. Following are some of the major players in the segment.
- Renault Nissan
- General Motors
- The Geely Group
Renault Nissan is the major competitor in the electric vehicle segment, it is the leading player among the electric vehicles in US market. In 2015 the total sales were of 241,714 electric cars. Mitsubishi is yet another significant player and with its brand i-MiEV has become a major competitor in the electric vehicle segment, and was able to sell 100,242 electric cars in 2015. General Motors with Chevrolet is another major market player with sales of 95,293 electric cars. Toyota with its Prius is also another major competitor, with sales of 76,028 electric cars in US. Ford with its brands “Focus Electric, C-Max Energi and Fusion Energi” was able to capture huge market share with total sales of 48,658 electric cars in 2015. BYD another major competition that sells electric cars. BMW with its brand i3 and i8 PHEV was able to sell 25,795 electric cars in the US market. The Geely group is another important player that sells under various brand names. Lastly Volkswagen has gained popularity and sold over 24,000 electric cars in 2015 in United States (Sachal, 2015).
Electric cars in Australia however are in the entry stage and only three companies have entered the market however there is huge potential in the market. All the brands launched have kept high prices and hence early adopters are not able to take the advantage.
The target market of Tesla Motors Inc. include people that need “upscale vehicle”, these people consider their responsibility towards environment and also look for safe automobile as well. Initially the focus was only on the high income group however with the introduction of affordable models now middle class is also the target market. People looking for high performing electric cars are the target market. Furthermore young professionals are also the target market that are looking for luxury cars. The profile of the target market would be as follows:
- Age: 25-45years
- Gender: Both (more emphasis on male)
- Income: Middle and upper income class
- Education level: higher
- Social class: Middle
- Occupation: Professionals looking for affordable transportation, and retirees who find gasoline prices volatile.
- People looking for innovation and are oriented towards achieving more in life
- Technology savvy people
While entering the Australian market this section gives the marketing objectives for Tesla Motors for 2016 and 2017. Primarily three promotional objectives are identified that must be achieved within these two years in order to ensure successful penetration in the market. As mentioned already automobile industry is highly competitive where traditional combustion engine cars dominate and hence attracting customers for fully electric car is a challenge.
Initially there are three basic promotional objectives of Tesla Motors i.e. to increase the demand, to increase customer awareness and to differentiate the brand. Before the launch of the brand it is important to create awareness and hype about the brand, as mentioned fully electric cars are demanded in the Australian market however customer awareness must be increased as automobile is high involvement brand and customer confidence will play an important role in increasing sales.
The first objective is to increase the demand, which will be done through promotions and marketing. The strength of Tesla Motors is their product hence the demand can be increased with the product itself. Tesla Motors do not spend heavily in marketing in other markets and same can be adopted in the Australian market, the product electric car will promote itself. However the most important thing is to increase customer awareness, considering the already established automobile market and competitive market landscape it is extremely important to increase awareness about Tesla Motors and electric cars. Even if some people want to purchase Tesla Motors electric car they might be reluctant due to high risks associated with the brand, hence providing information to the current and potential customers is the priority for Tesla Motors. It is important the customers understand the product, considering electric cars is a new technology and hence people do not fully understand the usage of the brand, it is hence important that information about usage must be provided to the customers. Hence the second marketing objective is to provide information to the customer about the brand and to increase awareness. It has been seen that Tesla does this in other markets and has a strong supercharger network, similarly in Australian market same mechanism can be used to provide information to the customers and the will help in increasing market share and to increase sales of Tesla Motors.
The third promotional objective is to differentiate the brand form other competitors in the market. Creating a unique position in the mind of the customer is important particularly if you are selling an innovative luxury brand for such high price. Tesla Motors vehicles are fully electric, produced in-house and hence they are expensive. They are ahead of competition in terms of technology used and several other attributes hence it is important that these differences must be recognized and communicated to the identified target market. The differences must be recognized by the customers and only then they will be willing to pay high price for innovative technology and high performing automobile. Tesla Motors are innovative and that innovation must be understood by customers hence differentiating among other competitors is important for Tesla Motors Inc.
The media budget is reflection of media strategy and promotional objectives highlighted above. It is important that initially in the launch year (2016) effective media must be used to ensure that the three promotional objectives are achieved. For effective marketing plan it is important to choose the right medium and only then it will be possible to sell 20,000 units in Australian market. In order to reach to the customers, effective medium plays an important role and this section describes the media that will be used to market Tesla Motors in Australian market. It has been identified that Tesla Motors have best technology and performing electric cars hence they must be marketed properly through effective medium to ensure that customers are reached effectively. The most important marketing tool for Tesla Motors is its brand, and customers will be able to use the brand (test drive) that will help in increasing awareness and in differentiating the brand in the mind of the customers. Furthermore seminars will be arranged to ensure that people understand the basic technology of Tesla Motors and its usage, otherwise people won’t be willing to spend heavily on vehicle for which they are unable to apprehend the benefit. In this way the major tool of marketing is the brand and it will be promoted through word of mouth marketing where users will further market and promote the brand.
Apart from actual usage of the brand broadly two other mediums have also been selected for promotion of Tesla Motors in Australia i.e. mass media and online medium. These media must be used in initial years to create market hype and to further attract customers and overall to increase the sales. Mass media i.e. TV advertisement, Radio advertisement, Billboard and Newspaper advertisement will be effective in getting customers. The advertisement must highlight the innovative technology of Tesla Motors, its usage and benefits. Tesla Motors run without gasoline and hence green marketing will be used to market the brand. Mass media will help in reaching masses and since customer must be informed about the product since it is new technology hence mass media is important and must be used. However at the same time it is important to ensure that effective channels are used in mass media as it is expensive. Newspaper will be effective to reach professionals and executives. Online media is also identified as a potential media for effective marketing of Tesla Motors. Social media has gained popularity over past few years, now it is extensively used to market products. Tesla Motors will be use social media in order to increase customer demand be increasing awareness among potential customers about its innovative technology. It will be highlighted that how innovative fuel efficient technology Tesla has which is also affordable for customers and is also comfortable. Customer reviews will also be posted on social media to increase customer confidence because when a new technology is launched people are not confident about the product however customer reviews will help in increasing demand for electric cars. Overall mass media and online/interactive media will be used in the Australian market.
The Australian market has the potential for electric cars and Tesla motors have the innovative technology through which it can capture the market hence Tesla motors should enter the market and should focus on highlighted media to achieve the three promotional objective and eventually to increase the overall sales.
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