imc plan - tesla
TRANSCRIPT
TESLA [Brand Paper] [Ananya Gupta, Weihong Chen, Chen Chen, Guangyi Song, Prakarsh Gupta]
FUTURE
IS
ELECTRIC
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1. Current Situation
Market Status:
The US auto market had reached 17 million unit sales per year before the 2008 financial crisis. Whilst since 2008, the US market had dropped significantly to 10.5 million in 2009, it has been recovering gradually to 15.58 million unit sales in 2013.
Within this market, with a price tag ranging from $74,570 to $ 105,670, Model S competes in the large luxury sedan segment. Its main competitors consist of Mercedes Benz S-‐class, Audi A7, BMW 7-‐series, BMW i8, Porsche Panamera e-‐hybrid and Lexus LS1. However, none of the competitors provide a full electric offering, which gives Model S a unique opportunity to create a white space for itself catering to needs of high income eco conscious customers seeking performance and style.
This sub-‐market, including other luxury car brands, roughly adds up to less than 10% of the total US auto sales. Tesla occupies around 1% of this sub-‐market by selling 18,195 Model S in 2013, which leaves Model S a great growth potential.(Exhibit 4). Model S is the leader in the large luxury car segment but there is a clear growth opportunity in crossover/SUV and mid size luxury segment.2 (Exhibit 3)
Brand History and Developing Plan:
Tesla was founded in 2003 by a group of Silicon Valley engineers who set out to prove to the world that electric vehicles could be awesome. It all started with all electric sports car-‐ Roadster in 2008. The company went public in 2010 and introduced the all-‐electric luxury sedan-‐ Model S in 2012. The car has been a huge success and has won several awards since its launch. Tesla has been accelerating its route of building sustainability into the automobile world, by building 100% electric cars with excellent performance that surpass their combustion counterparts. Tesla has been pioneering cutting edge innovation that is going to disrupt the whole auto industry.
“Our goal when we created Tesla a decade ago was the same as it is today: to drive the world’s transition to electric mobility by bringing a full range of increasingly affordable electric cars to market.3” -‐ Elon Musk | CEO
To accomplish this mission, Tesla has a three-‐stage master plan. First is a high price and low sales volume offering, the Roadster, to demonstrate how great the performance a fully electric car can achieve. The second is the medium price and medium volume offerings, the Model S and the upcoming Model X, to prove that fully electric cars can be financially successful even while competing with global renowned auto-‐elites. And the last is low price and mass volume, the Gen III, to realize the transition to the future “electric” mobility. It envisions the world without gas burning cars and making that technology obsolete.
Tesla’s Marketing Challenge and Opportunity:
To achieve the final goal of mass production and sales of Gen III, Tesla needs more cash to expand and more brand communication with the majority of the consumers of automobiles to establish organic brand relationships. These two needs ultimately lead to one marketing challenge: to sell more Model S to generate sustainable cash flow by enhancing target customer engagement.
Financially speaking, despite of the negative operating profit margin, Tesla has been investing heavily in product development and capacity expansion to grow organically. Clearly, as a start-‐up, Tesla is leveraging a growth strategy to seek solid market share growth in the future, which is in line with Tesla’s long-‐term goal. However, this growth strategy requires sustainable cash generation from revenue growth and net profit growth, and therefore demands more sales of Model S.
Within the niche market of large luxury sedans, Model S has a great potential to grow since its market share is only 1%. (Exhibit 4&5) The challenge now is how to convince the other potential customers to switch or try Model S. Here are few challenges and opportunities before the company that needs to be addressed.
• Potential customers are still using concepts from combustion cars to judge Tesla, for example, they would challenge the sales man by saying:” Call me when your range reaches 400 miles.” Whereas in fact, people don’t need this amount of range in the daily use of a car. This indicates Tesla has not successfully addressed this concern by communicating the drastic growth in Tesla’s supercharger network in last one year, which reveals the need for better communication.
• Some customers still don’t know enough about the features of Tesla enough to trigger a purchase. This is hindering customers’ physical and further emotional engagement with Tesla brand. Tesla believes that this product is so awesome that the best way to sell this car is to get a potential customer behind the wheels.
1 Marketrealist.com, Sizing up the competition: Is Tesla’s product unique? William Lowry, Jun 19, 2014 2 www.goodcarbadcar.net 3 Investor Presentation, Tesla, Jan 2014
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• Some perceive Tesla as a technical gadget rather than an automobile. Others say Tesla is a toy of the
wealthy in the Silicon Valley. These comments reflect the chaos in delivering the right message to the target audience.
To meet the challenge above and to gain more traction in the luxury car market Tesla needs a strategic IMC plan to communicate Tesla values by maximizing both physical and emotional interactions between Tesla and the target customers.
2. Market/Consumer Research
We conducted an in-‐depth interview with a customer advisor at a Tesla store and also took a test drive to understand the brand and its customers more deeply, and we generated several key insights out of it. People are buying Tesla more for its high performance, design uniqueness and cool quotient than for social consciousness, efficiency and environmental reasons. A lot of people buy it for the reliability reasons, simple mechanics zero periodic maintenance and running cost and ease and convenience of never having to go to a gas station anymore. The car therefore alleviates a paint point or tension in their busy lives. Tesla is an American car company. Consumers like the idea of supporting a brand new American car company, which is born out Silicon Valley’s innovative culture. Tesla is a high-‐tech gadget that has the form of a car, instead of a car built with new technology. People resonate with the “technology”, not the car; it is the most expensive piece of gadget that one can buy. Some of the customers are informed about the car, they have heard about it in their social circles but the final buying decision is highly influenced by the feeling the customer gets when they get into the car and by experiencing the product first hand. The instantaneous torque the car delivers once they set their foot on the pedal and the exhilaration of driving a Tesla transcends them into the future. Based upon other primary and secondary research we also arrived at a conclusion that a lot of people are not really aware of the true benefits and features the car can offer and there is a knowledge gap that needs to be filled.
3. Marketing Objective
Increase the market share in the US luxury car market from 1% to 2% and double the revenue by December 2015. Tesla is a high growth company and is investing heavily in new products; capacity expansion and gaining market share are pivotal to its growth strategy.
4. Segmentation
In the short term, Innovators are the most important market segment for Tesla. They have social resource, which means affordability. They are also open to changes and possibilities in life. Innovators are successful, take-‐charge people with high self-‐esteem. Because they have such abundant resources, they exhibit all three primary motivations in varying degrees. Being change leaders, they are the most receptive to new ideas and technologies. Innovators are very active consumers, and their purchases reflect cultivated tastes for upscale, niche products and services. Image is important to innovators, not as evidence of status or power but as an expression of their taste, independence, and personality. Innovators are among the established and emerging leaders in business and government, yet they continue to seek challenges. Their lives are characterized by variety. Experiencers, Achievers and Thinkers are also segments that we consider in the long term.
For Experiencers, their purchases reflect the emphasis that they place on looking good and having "cool" stuff. They seek variety and excitement, savoring the new and the offbeat. Experiencers are people who are heavily motivated by self-‐expression, are sociable and trendsetters. They seek variety and quickly become enthusiastic about new opportunities but are quick to cool off too. 4
For Achievers, image is important. They favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in products that make their lives convenient and easy. For thinkers, although their incomes allow them many choices, they are conservative, practical consumers; they look for durability, functionality, and value in the products that they buy.
Besides the four segments we mentioned above, there are also four other market segments, which are believers, strivers, makers and survivors. Because of the income level is comparatively low for these four segments, they are beyond the company’s consideration. For them a car is a utility item that enables them to move around and the current product line at Tesla brand will not resonate with them. But to them the cost saving of driving an electric car is an attractive proposition and they could be potential targets for future products.
4 http://www.strategicbusinessinsights.com/vals/ustypes.shtml
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5. Targeting
Our priority targets are Innovators and Experiencers. Innovators are successful people with high self-‐esteem and a Tesla product may be the apt one for them as it can be seen as a reward and validation of the success and heights that they have achieved. They are change leaders and receptive to new technology which makes them the perfect target for a futuristic product like an all-‐electric car.
Experiencers are a relevant segment for Tesla not just because they can afford and potentially be satisfied by the superior technology and cutting edge product but have the capacity to influence people in their network to positively change their attitudes towards electric cars. These people are well established and have a social media following and targeting them can help Tesla achieve the long-‐term goal of being perceived as an electric car delivering a superior driving experience. Innovators and Experiencers share many features. They are both innovative and have high-‐income level (innovators have even higher) and they have an open attitude towards new opportunities and the positivity to embrace change.
We chose to target these two segments because they would find highest resonance with the Tesla brand and they are thought leaders in their social circles, their peers admire them for where they are and where they are heading in life. They could be great brand advocates for Tesla and influence people in their network to transition to electric vehicles. They value efficiency and environment but not willing to compromise on aesthetics and performance. Tesla offers the perfect product that matches the taste and aspirations of this segment. Following are the typical profile of our prime prospects:
a) Our primary target segments are people in the age group of 40-‐50 who are self-‐driven, entrepreneurial and tech savvy with a preference towards cool and stylish lifestyle. They really value the efforts of high technology and design of Tesla cars. They look at owning Tesla as an affirmation of them doing well and being on the right professional path. They mainly buy the car for it's excellent performance and beautiful artistic outlook and to reward themselves for the hard work they put in life.
b) Affluent City Dwelling DINK (Dual Income No kids.) They are young professionals in their mid 30s and have just stepped into a high-‐income job. They have a promising future without too many financial liabilities. They are tech savvy early adopters who need to own the latest piece technology. They want to tell the world that they have arrived and have made it big. They may seek to upgrade their car to meet their raised social status.
c) HNI (High Net worth Individuals) group. They are people above the age of 50 have a great focus on self-‐esteem and social status, which they try to communicate through the objects they possess. They care about the environment and drive Tesla as a statement and symbol of their eco consciousness.
6. Behavioral Objective
Increase test-‐drives by 15% and the social media engagement measured by positive social mention score by 10% in the US market by December 2015. The focus here is to get the innovators and experiencers to test-‐drive the car to educate the them about the product and increase positive word of mouth publicity by sharing of these experiences in their social network.
7. Mental Objective
We aim to increase the customer acceptance of electric vehicles to 10% by 2015(measured by consumer perception studies) for Tesla to be perceived as the future of mobility and the preferred choice of people who are seeking technologically superior products.
8. Brand Positioning
Classic Positioning: To the tech savvy innovators Tesla is a technology company that makes 100% electric cars, one that offers highest level of style, performance and efficiency in its category because of its cutting edge technology, design and its innovation driven culture.
Brand Positioning using Ladder Model
Value: Stand out from the crowd by embracing the change over status quo.
Emotional Benefit: The feeling of being environmentally responsible and part of greater purpose-‐ driving a social change-‐ without having to compromise on social status, aesthetics and performance.
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Functional Benefit: Not only cleaner and efficient but also has stunning looks, is faster and more fun to drive than conventional cars, all this with the convenience of never having to go to a gas station.
Attributes:
• Stylish yet minimalistic design and 17” touch screen dashboard renders it a sleek and futuristic look. • Cutting edge battery and supercharging technology that offers highest range in the electric car segment
and lowest charging time. • Low centre of gravity enables better handling and control on turns; Instantaneous motor torque delivers
silent yet quick acceleration. • Lightweight aluminum body, aerodynamic design and regenerative braking maximize efficiency.
9. Key Consumer Insight
There is a general perception that Tesla is a car for elites who use the product as an expression of their social status and eco consciousness. Tesla has revolutionized the entire industry by challenging the established mindset that electric cars are clean but dorky and low performance. By designing a car that is 100% electric they have proven it to the world that electric is not only cleaner but a better than the existing technology. From the moment you enter the car and set your foot on the pedal every thing about the car is futuristic and it beats a gasoline car on every performance metric. This is the car not for a few technology enthusiasts but it is the future of mobility. The product is so awesome that it sells itself as long as we are able to get the target customer behind the wheels.
10. Creative Idea
In line with our mental objective, our communication strategy is based on the tagline – “Future is Electric.” We want our target audience to believe the world would drive only fully electric cars in the future. Tesla is the car for those seeking change and thinking that they need to be on the cutting edge of technology. We need to get these people into our stores and behind the wheels.
The print ad creative (Exhibit 7) symbolically compares conventional internal combustion engine technology with obsolete products, such as CRT television, alarm clock and black and white desktop computers. Driving gasoline cars would be a thing of the past while driving Tesla is the future. The copy would also emphasize that Tesla is a 100% electric car with no tradeoffs or compromises that make it unique, which differentiates it from the other plug in hybrids available in the market today. The call to action would be -‐ Text the word “DRIVE THE FUTURE” at 56565 to test-‐drive the car.
The banner ad creative (Exhibit 8) would have dynamic GIF images of products such as floppy disks, computers, and cars evolving over time and ending up with a question – "Wondering what next?" There will be a clickable button that says – "Drive the future." That would redirect the target audience to test drive registration page of Tesla website. We would like to integrate social media with this campaign by asking people to share their favorite Tesla feature on social media, such as Twitter, for a chance to win a free tech/premium interior package upgrade on their Model S, once they have test driven the car.
11. Media plan and Measurement
Tesla’s target audience is Internet savvy and reads a lot of business, lifestyle and technology magazine. The media plan would include print ads and banner ads on digital apps and websites such as Tech Crunch, Business Insider, Fast Company, Wall Street Journal, Economist. We also plan to encourage current owners and bloggers to share their Tesla road trip stories which could later be published as advertorials on auto magazines and the Tesla website. We also plan to measure the effectiveness of the different creative using A/B Testing on digital platforms.
We also plan to display Model S and to have billboards at all major domestic business airports to spread the word and get people to test-‐drive Model S. The efficacy of twitter #DriveTheFuture hash tag campaign would be measured by social media tools such as Twitalyser and Social Mentions. We plan to measure banner ads through Click Through Rate (CTR) and conversion rates in terms of test-‐drive registrations. The effectiveness of our print ads will be measured by amount of test drive requests received via text messages.
The overall success would eventually be tracked on the basis of conversion rates of the test drives and how it impact sales during the campaigns. Tesla would have to periodically invest in similar campaigns to reinforce the positioning so competition cannot stake a claim to it. This positioning would play a critical role in the success of its future products and will help to achieve its long-‐term mission to accelerate the world’s transition to electric mobility with a full range of increasingly affordable electric cars.
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Appendix
Exhibit 1: SWOT
Strength
• Strong Management/Celebrity CEO • Brand loyalty & Equity • Blue Ocean strategy • Vertical integration of Channel • Innovative culture • Earned media and PR buzz •
Weakness
• Production constraint • Lack of economies of scale • Financial strength • Limited to early adopters. • Skepticism about the range of full
electric vehicle
Opportunities
• New segments –Fleet, company car • Growing eco consciousness globally. • New products-‐midsize sedan, SUV,
Trucks • New Markets -‐International,
emerging markets
Threats
• Competition from hybrids • Political regulations in states. • Discontinuation of government
incentives could impact cost. • Dealer lobbying against direct
distribution model
Exhibit 2: PEST
Political
• Department of energy has huge grants and incentives to promote sustainable mobility
• Several states have imposed ban on Tesla from directly selling its cars to its customers.
Economic
• Recovery in macro economic factors has boosted consumer confidence.
• Easing of inflation and interested rates and easier leasing options.
• Low maintenance and running cost and tax rebates make it attractive.
Socio-‐cultural
• Tesla brand is perceived as a driver of a social change.
• Increasing environmental consciousness and demand for fuel-‐efficient cars.
Technical
• Tesla offers highest range in the electric vehicle segment.
• Need to develop a huge infrastructure network of charging stations.
• Instantaneous torque is unique.
Exhibit 3: 2013 Market share – Large Luxury Segment
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Exhibit 4: 2014 US Luxury Auto Market Share
Exhibit 5: 2013 US Electric Car Market Share
Exhibit 6: Twitalyser Status
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Exhibit 7: Print Ad
STILL LIVING IN THIS AGE? WHY LIVE IN THE PAST WHEN FUTURE IS HERE
TEXT “DRIVE THE FUTURE” AT 56565 TO TAKE THE MODEL S FOR A SPIN TODAY*.
ZERO EMISSIONS | ZERO COMPROMISE | 100% ELECTRIC
*Tweet you favorite Model S feature with #DriveTheFuture for a chance to win tech/interior package upgrade.
Other print creative would use following products:
Future is Electric
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Exhibit 8: Banner Ad
Other banner creative:
Waiting for what next?
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Exhibit 9: Twitter buzz
Here are a couple of other ideas that can be considered for future.
• Product placement in the movie Iron Man 4 • Youtube video contest to create user generated content for next Tesla TVC. • Instagram photo contest -‐ Tesla Smile is Infectious. Share it with #LoveAtFirstDrive • Create Formula –E racing event property with annual calendar of events all over the world. • Electric car rally from coast to coast using the nationwide network of Tesla super chargers.