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TESLA MODEL S MARKETING PLAN NORWAY

ANA STEFAN KOEN DE ROOIJ ANTHONY BESSIS ASHLEIGH STEINHOBEL COSTANZA INNOCENZI

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In our view, Tesla CEO Elon Musk is strikingly similar to Steve Jobs – a technology visionary also able to manage and create shareholder value." - Steve Mullinovich, Bank of America Merrill Lynch

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I. EXECUTIVE SUMMARY

Norway’s roads have become the cleanest and quietest in the world due to the floods of drivers buying hybrid and

electrical cars. As a result of a scheme of substantial government incentives encouraging the use of alternative engine

vehicles, Norway has become the world’s number largest market for electric vehicles (EVs), a category in which Tesla,

the 10-year-old American all-electric car manufacturer is making headlines for its unique, unconventional business

model and excellent delivery of efficiency and luxury in the form the of the executive all-electric sedan, the Model S.

However, Tesla faces a significant challenge in sustaining this growth in the Norwegian market when the incentive

scheme comes to an end, which it is set to do sooner than expected (within the next 18 months).

A situational analysis of three identified categories of the Norwegian automobile market – the ‘electric cars’ market,

the ‘luxury cars’ market, and the ‘new cars’ market – reveals strengthening demand for luxury goods in Norway as a

result of accelerated post-recession recovery, high average income rates as well as a shift in the focus of carmakers to

the high (luxury) and low (emerging) ends of global markets. Company, competitor and customer analyses reveal a

gap in the market at the intersection of ‘eco’ and ‘luxury,’ a position that fits perfectly with Tesla’s value proposition

and long-term vision. In light of this, the plan that follows serves to provide Tesla with a comprehensive, innovative

marketing plan intended to solidify its occupation of this particular position in the Norwegian market, guided by three

interlinked objectives: build brand image and personality (increase brand equity) by increasing sales value by 10%

and sales volume by 28.5% (within the next year), by attracting profitable new customer segments.

The proposed marketing strategy is united by the overarching concept of The Invisible Car, based on the idea that a

Model S is driven for the driver’s personal experience of quality (subtle luxury that I aligned with Norwegian values

that denounce ostentation), making the car invisible to societal perceptions as well as invisible to the environment.

The strength of the strategy lies in its reconciliation of the individualism that underlies luxury (internal value creation)

with the collective appeal of being part (if not a catalyst) of a greater movement towards responsible driving (external

value creation). Additionally, the strategy filters through the all five ‘P’s’ of the marketing mix through a series of

elaborations – The Invisible Effect, The Invisible Event, The Invisible Dealer, etc. – which will ensure the consistent

delivery of a powerful, unified message.

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TABLE OF CONTENTS

I. THE CHALLENGE 7

II. SITUATIONAL ANALYSIS 8

a. CATEGORY DEFINITION AND ANALYSIS 8

i. ‘New car’ category 8

ii. ‘Electric car’ category 11

iii. ‘Luxury car’ category 12

iv. Competitive situation of the category 13

b. CLIMATE ANALYSIS 17

i. Political factors 17

ii. Environmental factors 17

iii. Social factors 18

iv. Economic factors 19

v. Technological factors 19

vi. Legal factors 20

vii. SWOT analysis 21

c. COMPANY ANALYSIS 22

i. Products 22

ii. Distribution 23

iii. Price 23

iv. Promotion 23

v. Service 24

vi. Financials 24

d. COMPETITOR ANALYSIS 29

i. Perceptual Map 29

ii. Competitor Overview 31

e. CUSTOMER ANALYSIS 32

i. Type of customers 32

ii. Value drivers 33

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iii. Attitudes towards electric vehicles 34

iv. Decision process 35

v. Concentration of customer base for particular products 36

III. OBJECTIVES 38

IV. ALTERNATIVE MARKETING STRATEGY 40

a. NEW PRODUCT LAUNCH 40

b. CHANNELS OF DISTRIBUTION AND SERVICE 40

c. VERTICAL EXPANSION 41

V. SELECTED MARKETING STRATEGY 43

a. JUSTIFICATION 45

b. TARGET MARKET SEGMENT 45

c. DIFFERENTIAL ADVANTAGE 46

d. MARKETING MIX 46

i. Product 46

ii. Price 47

iii. Place 48

iv. Promotion 49

v. Service and staff 49

VI. SHORT AND LONG TERM PROJECTIONS (BUDGET) 51

VII. IMPLEMENTATION, MONITORS AND CONTROL 53

a. EVENTS 53

b. ONLINE 54

c. PRINT 54

VIII. CONTINGENCY PLAN 56

a. BEST CASE SCENARIO 56

b. WORST CASE SCENARIO 57

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“The Tesla Model S is a glimpse into a future where cars and computers coexist in seamless harmony.”

- Consumer Reports, 2013

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I. THE CHALLENGE

A year ago, Norway became the first country in which one in every 100 cars is electric. Today (April 2014), electric cars

have reached a 5.1% penetration rate in the country, the highest in the world. This can be attributed to an extensive

set of government incentives reserved for electric car drivers that was introduced in the 1980s to stoke the fledgling

Norwegian market of electric car manufacturers but only fully taken advantage of within the last few years when the

Tesla Model S, the Nissan Leaf and a number of other high quality all-electric cars were introduced into the market. The

end of the Norwegian ‘love affair’ with electric cars may, however, be imminent: the incentives will be withdrawn

when 50,000 zero emission cars have been registered or by 2018, whichever is reached first. At the current rate of

sales, the 50,000-unit figure could be reached within 18 months.

While the practice of car manufacturers has traditionally been to invest heavily in brand building, editor of Automotive

Industry Data Peter Schmidt believes that the success of electric cars in Europe is entirely dependent on government

subsidies.1 With the latter soon to fall away in Norway, Tesla, the world’s only all-electric car manufacturer, faces a

significant challenge in the form of holding and growing its market share under the uniquely saturated circumstances.

This marketing plan serves to provide a comprehensive strategy for Tesla to become the brand of choice for Norwegian

drivers by occupying a position in the market at the intersection of electric and luxury vehicles.

                                                                                                               1 Doyle, A. &Adomaitis, N. 2013. Norway shows the way with electric cars, but at what cost? 23 March. [Online]. Available: http://mobile.reuters.com/article/topNews/idUSBRE92C0K020130313?i=2&irpc=932 [March 29, 2014].  

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II. SITUATIONAL ANALYSIS

a. CATEGORY DEFINITION AND ANALYSIS

The traditional category into which the Tesla Model S fits can be described as ‘the sale of new cars and light motor

vehicles,’ defined by the SIC code 45111. The Model S is, however, a complex car with an offering that includes electric

drivetrain, sustainable energy usage, high-level safety, comprehensive insurance, direct customer sales, company-

owned stores and service centers as well as a free and expanding network of ‘superchargers’ and battery-swapping

stations in plan. The category into which the product fits is, therefore, far more complex than a single SIC code and can

be divided into three sub-sections: the ‘new car’ market, the ‘electric car’ market and the ‘luxury car’ market. The

reason for this is because Tesla has positioned the Model S in an entirely new category, at the intersection of luxury

and electric cars. It therefore has the opportunity to grab market share from both these categories, which will in the

long term establish the new category as a player in the ‘new car’ market as a whole. The situation in all three

categories therefore needs to be assessed in order to determine the feasibility of this strategy.

i. The ‘New Car’ Category

The automobile industry was one of the hardest hit by the 2008 recession, but after numerous bailouts, acquisitions

and company reorganizations, ‘new car’ markets all over the world are beginning to stabilize, as can be seen below.

0   200   400   600   800   1000   1200   1400   1600  

2012  

2011  

2010  

2009  

2008  

AGGREGATE CONSOLIDATED NET SALES OF ANALYZED COMPANIES (unit: billion Euros)

-13%

+12.9%

+10.8%

+11.1%

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In the aftermath of the recession, carmakers are faced with challenging audiences in developed countries where

markets are saturated, populations are ageing and consumers are moving towards cheaper and more contextual ways

of getting around, such as public transport and car-share platforms. This is particularly true of Europe, which

constitutes 39% of global car ownership, where persistent post-crisis unemployment rates and reduced spending

power have flattened demand, causing people to turn to alternative forms of mobility. Norway, however, is one of the

few countries that emerged from the crisis relatively unscathed (as a result of heavy oil-related industry revenues), and

therefore represents an interesting exception: national car sales dipped by a maximum of 10% between 2008 to

2010, while car markets in North America contracted by more than 40% during the same period.

Cars represent the most important form of transportation for Norwegian citizens – 54% of Norwegians own a car and

around 88% of all travel undertaken in Norway is by road. The number of cars driven in the country has increased by

24% in the last 10 years, with record sales achieved in 2011 with 138,345 units sold, representing an increase of 8.3%

from 2010 sales figures. At the end of 2011, around 2.78 million cars were registered in Norway, and of these cars,

around 2.37 million were private cars and only 411,000 were vans. In total, Norway accounts for 0.9% of the European

new cars market value. The graph below depicts the 4% increase in the number of car registrations in Norway over just

one month, from 13,921 cars in January to 14,469 cars in February of 2014.

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These sales volumes are translates into sales values in the table below, allowing for a more comprehensive picture of

growth in the category. The Norwegian new cars market grew by 32.2% in 2010 to reach a value of $3.7 billion,

representing a compound annual growth rate (CAGR) of 4.6% between 2006 and 2010, and a volume of 127.8

thousand units.In 2015, the Norwegian new cars market is forecast to have a value of $5.4 billion, an increase of

45.9% since 2010, and a volume of 164.2 thousand units, an increase of 28.5% since 2010. The CAGR for the five-year

period is projected, therefore, to be 7.8%.

0!

1!

2!

3!

4!

-30%!

-15%!

0%!

15%!

30%!

45%!

2006! 2007! 2008! 2009! 2010!

$ Billion! % Growth!

Norway electric car market size and value

Year 2011 2012 2013 2014 2015 Total reached in 2015:

Market Value ($ billion)

0.08 0.12 0.23 0.59 0.92

Market Volume (thousand units)

2.24 3.95 7.88 20.3 27.9

62.3

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ii. The ‘Electric Car’ Market

After years of struggling to be taken seriously, the electric vehicle (EV) industry is finally gaining ground in the

developed world. According to a report by IHS Automotive, worldwide production of EVs is set to soar by 67% in 2014,

with production units increasing from 242,000 units in 2013 to 403,000 throughout the year. The magnitude of this

growth is demonstrated by comparison with the growth of global manufacturing of conventional motor vehicles for

2014, which is projected to be just 3.6%. This industry acceleration can be attributed to a tightening of emission

standards in Europe as well as the introduction of compelling new EV models into the market by major carmakers.

In July 2013 the leading electric vehicle manufacturer was identified to be the Renault-Nissan Alliance, which has

achieved global sales of 100,000 all-electric vehicles since December 2010, which includes over 71,000 Nissan Leafs,

11,000 Renault Twizy models, almost 10,000 Renault Kangoo utility vans, 5,000 Renault Zoes, and over 3,000

Renault Fluence electric cars. The Nissan Leaf is the world's top selling highway-capable electric car ever, with global

sales reaching 100,000 units in January 2014. Mitsubishi Motors ranks in second place with global sales of around

32,685 electric vehicles, while Tesla Motors is the third best selling all-electric vehicle manufacturer, with more than

27,500 electric cars sold since February 2008, including almost 2,500 Tesla Roadsters and over 25,000 units of the

Model S.

SHARE YTD 2012 Nissan Leaf 58.2% 2298 Mitsubishi i-MiEV 16.8% 665 Citroen C-Zero 13% 513 Peugeot i-On 10.3% 407 Other 1.7% 67

Norway has, in the words of John Vidal of The Guardian, “fallen in love with electric cars.” 21,000 all-electric vehicles

(EVs) are now registered in the country of 5 million people, with sales running at over 1,200 units a month (over 10%

of all total sales). While the Toyota Prius was one of the first hybrid vehicles sold in high volumes in Norway, the range

of electric automobiles now on sale incorporate the battery-only Nissan Leaf, Renault Zoe, VW E-Up, Mercedes Benz

Wise and the Tesla Model S, as well as plug-in hybrids Opel-Vauxhall Ampera, the Mitsubishi Outlander and an electric

SHARE YTD 2013 Nissan Leaf 58.4% 4604 Tesla Model S 25.2% 1983 VW e-Up! 7.4% 580 i-On, C-Zero, i-MiEV 7.0% 550 Other 2.1%% 162

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version of the Volvo S-Series. In the last three months of 2013, the Tesla Model S and the family electric Nissan Leaf

outsold all other petrol powered cars.

iii. The ‘Luxury Car’ Market

Contrary to predictions that the luxury car market would fare better than other automotive categories through the

recession, the segment has, in fact, taken a full five years to recover from the demand starvation it experienced in

2008 and 2009. The UK has been the first European market to return to pre-recession levels, while luxury car sales

throughout the rest of the continent are still lagging the rate of economic recovery. A positive after effect of the

recession, however, can be found in the reconstruction of the car industry in favour of luxury cars. A combination of

depressed growth prospects within middle-income population groups and positive growth potential in emerging

markets is causing carmakers to focus on the top and bottom ends of the scale: while the premium end is attractive

due to higher margins and the growing number of wealthy clients in emerging countries, the entry-level end also

represents a way to gain an early foothold in economies such as Nigeria and Turkey that are demonstrating very

promising economic growth. It is for this reason that the luxury car sales are growing faster than those of the mid-

market segment. Because demand for premium and luxury cars in a certain region can be estimated by the number of

high net worth individuals in that region, the graphic below provides a good indication of where premium car brands

should focus.

0,52m 0,49m 0,14m

North America Asia-Pacific Europe Latin

America Middle East Africa

3,73 million 3,68 million 3,41 million

HIGH NET WORTH INDIVIDUALS BY MAIN PREMIUM MARKETS

2013 growth 2012

+11.5m +9.4m

+7.5m +

4.4m

+ 8.1 m

+ 9.9 m

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While Europe is the region with the third-highest number and predicted rate of growth of high net-worth individuals,

the fact that Norway is the European country with the highest average income positions it as the strongest market for

luxury vehicles in the region. This translates into an opportunity for Tesla to integrate itself as a strong player in the

category and take market share from incumbents, reinforcing the link between the ‘luxury car’ and ‘new car’

categories.

iv. Competitive Situation of the Category

The competitive situation in the categories defined above (primarily that of ‘new cars’ in Norway) can be evaluated

according to Porter’s Five Forces. As depicted below, the strongest forces at play in the industry at the moment include

internal rivalry and the threat of substitute products.

1

2

3

4

5

Buyer power

Internal rivalry

Supplier power

Substitutes New

entrants

Weak Strong

1 2 3 4 5

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RIVALRY WITHIN THE INDUSTRY

Globally, rivalry within the automotive industry is

reaching particularly intense levels. Traditionally,

regional automotive industries have taken the form of

oligopolies, meaning that internal competition has

remained relatively contained. The increased efforts of

major carmakers to achieve multinational penetration,

however, largely as a result of saturation in developed

markets and continually threatened market share by

Japanese and South Korean carmakers (Honda, Toyota

and Hyundai in particular), is intensifying competition

in almost all markets. A wave of consolidation that has

taken place in the industry as a result of the recession

has also contributed to the strengthening of certain

incumbents: today, the top 10 carmakers account for

77% of global production. Consolidation not only

allows carmakers to achieve economies of scale,

streamline distribution, maximize asset efficiency and

enhance technological and R&D capabilities, but also

puts brands in better positions to enter new markets,

and niche markets in particular. All of these

developments apply to the Norwegian car industry,

with the only difference being an intensified playing

field of EV incumbents as a result of spiked, subsidy-

induced demand.

THREAT OF NEW ENTRANTS

While barriers to entry in the automotive industry are

extremely high, the entrance of Tesla itself has

provided the most recent reminder to incumbents that

the threat of new entrants should not be overlooked.

The most powerful manifestation of this force is the

entrance of existing carmakers into competitors’

territories, enabled by the increased industry

consolidated highlighted above and demonstrated by

the entry of typically premium car brands such as

BMW and Mercedes into the market for plug-in

vehicles, which has for its lifetime been dominated by

producers of smaller EVs such as Toyota. In 2014

alone, 13 new EVs are set to enter the market with

incredibly strong propositions such as the BMW i3,

the Volkswagen e-Up! and the Mercedes B-Class

Electric among them. Additionally, as the need for

innovation increases, new actors with highly

specialized know-how, such as Google with its

‘driverless car’ technology, are expected to enter the

market in influential supplier roles, which may put

carmakers in danger of becoming mere platforms for

such technologies. New entrants in the EV market

pose a more serious threat: while subsidies are

coming to an end, newer EV producers will no doubt

attempt to steal market share within a population

geared towards sustainable EV driving.

THREAT OF SUBSTITUTE PRODUCTS

In the European market, the threat of substitute

products is particularly strong. In the wake of the

recession and with oil and ownership prices rising, the

habits of alternative mobility (public transport,

bicycles, walking and car-sharing) adopted by

consumers have stuck, particularly in the context of

intra-city travel. While public transport is highly

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efficient in Norway’s main cities, the country is

characterized by much more inter-city travel than

elsewhere in Europe as a result of its geographical

length. Public transport is less prevalent in the smaller

towns and rural areas due to low population density,

while public inter-city rail transport is therefore

efficient and popular. A survey carried out in the

country in 2011 found that accessibility of public

transport is the most important decision factor for

commuters, and that a lack of time and poor access to

public transport constitute the main reasons for the

usage of alternative modes of transport, such as taxis.

Of the 33 million taxi trips taken in Norway in 2011,

around 5% of those passengers did not consider price

when choosing to travel by taxi. Opting to buy a used

car is also common in Norway – 350,000 used cars are

sold every year, which is more than double the new-

car purchase average of 130,000 units.

BARGAINING POWER OF BUYERS

The new cars market has a large number of buyers

who are, in general, price-sensitive, but because

incumbents have invested so significantly in brand

building over the years, consumer buyer power is

relatively weak. Reduced demand in recent years has,

however, shifted the locus of power more towards

consumers and manufacturers have been forced to

engage in price wars to retain customer loyalty. In the

EV market in Norway, buyer bargaining power is

stronger than elsewhere in Europe because of the

freedom that the tax breaks bring to consumers when

it comes to choosing a model.

BARGAINING POWER OF SUPPLIERS

The supply chain for the automotive industry is made

up of three levels: the first tier constitutes suppliers of

commodities and raw materials, the second

constitutes suppliers that produce subsystems, and

the third consists of producers of whole systems.

Supplier bargaining power, as with any industry,

depends on how strategically important and

specialized their input is to the carmaker. This is

applicable to Tesla, which has a strategic partnership

with Panasonic who is the sole supplier of its batteries.

Given the importance of the battery to the

performance of the Model S, Panasonic can therefore

exercise a relatively strong degree of power. In

addition, Tesla faces several challenges in terms of its

batteries, such as costs and supply, lithium availability

and supply security. With consolidation in the

carmaker industry outpacing the parts industry,

however, suppliers are heavily impacted when major

clients choose to switch which reduces their

bargaining power significantly. As the global

automotive industry moves towards globalization and

standardization (largely via consolidation), the

landscape of suppliers is expected to change from

regional firms offering customizable solutions to a

playing field of international ‘mega-suppliers,’ who

will command significant bargaining power.

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b. CLIMATE ANALYSIS

POLITICAL FACTORS

Governments around the world, and particularly in

Europe, are strategically involved in their automobile

industries because of the number of jobs these sectors

provide. This was demonstrated during the financial

crisis not only by the number of jobs that were lost

when car manufacturers downsized, but also by the

degree of EU bailout intervention in the French,

German, Spanish and British car industries. The ability

of governments to stimulate demand for cars is

particularly applicable to the EV market: in fact,

consensus has been reached that the rate of adoption

of EV is almost entirely dependent on the willingness

of governments to facilitate and encourage it. In order

for alternative engines to be viable in any country, a

sufficient recharging infrastructure must be built

which can only be done with the help of the public

sector. Norway has indeed set the benchmark in this

regard. Prime Minster Erna Solberg (who is one of

only three of the 18 members of Parliament over the

age of 50, half of whom are women) has, like her

predecessors, prioritized the environment in the

political agenda.

In terms of the car market, however, the incentive

scheme that the government introduced to encourage

EV driving was, indeed, comprehensive: subsidies of

up to NOR8200 ($8000) are provided to drivers every

year in the form of free toll roads, no vehicle purchase

tax, access to bus lanes, free parking, low annual road

fees, free charging facilities and free ferry transport.

The ownership of electric vehicles is fairly well spread

throughout the geographically sparse country rather

than concentrated in only a few larger cities, which

works well for the infrastructure of Tesla’s charging

stations, which the government has also subsidized to

an extent. 446 parking places with free recharging

already exist in Oslo, and another 800 are part of the

municipality’s plans for the next 4 years, with costs

around 7 million Euros. Local governments are also

set to subsidize installations of charging points at

homes.

ENVIRONMENTAL FACTORS

The Norwegian government is not the only

supranational authority prioritizing the environment:

the European Commission is pushing for cleaner

transportation while the European Union has

tightened regulatory controls around emissions. The

aim of EU member states is to have 10% of transport

in the EU run on renewable fuels, such as bio-fuels

and green electricity, by 2020, which would be a 4.7%

increase from 2010. In addition, a penetration goal of

9 million electric cars has been set for the same frame,

which is significant when compared to less than

100,000 now. While this leaves carmakers with

effectively very little choice about whether or not

invest in alternative engine technology, it also opens

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up entire markets of people wishing to take

advantage of government incentives.

Norway is indeed a leading nation in the area of

environmental consciousness. Because the country is

endowed with such beautiful natural features, an

environmental awareness and respect for nature is

deeply engrained in the Norwegian lifestyle and

mindset. Ecological habits are a part of everyday life:

cycling is a primary mode of transport and children

are taught how to recycle from a young age.

Norwegian architecture follows the motto of “Cities in

nature, not nature in the city,” visible in the

integration of building aesthetics with low-energy

performance and the natural landscape. The country

has set itself a target of being carbon-neutral by 2030,

and is well on its way to achieving that goal.

A study conducted on the country, however, showed

that the production of EVs and other factors related to

their components can actually be more harmful to the

environment than the conventional cars. Thus, there

are certain conditions that electric cars need to meet in

order for them to be a relevant alternative to diesel

and fuel-powered cars: the source of electricity to

power these cars needs to be low-carbon based, and

longer warranties are required to compensate for the

pollution generated during the production process.

Because almost 100% of Norway’s electricity is

generated through hydropower and other clean

sources, the country fits these criteria too.

SOCIAL FACTORS

Norwegian society is underpinned by values of

democracy, respect, freedom of expression,

egalitarianism and fairness. Norwegian people are

modest and sincere, are not prone to ostentation and

frown upon those who flaunt their achievements or

wealth. The society is highly individualistic, rotates

around the ‘nuclear’ family and emphasizes the role of

women. The most serious social problems that the

country currently faces include increasing divorce

rates, an ageing population, an inflow of refugees

neglected by the government and instances of sexual

abuse.

Given that Norwegians are generally modest people,

one would initially consider Norway an ill-fitting

market for an expensive luxury car. However, given

that Norway tops the list of European countries in

terms of monthly earnings, it is not difficult to believe

that the average Norwegian, who is naturally

environmentally conscious, quality-driven and

individualistic, would find the Tesla Model S

appealing, as it successfully combines subtle luxury

with environmental awareness. In addition, while the

Model S is positioned as a luxury car, it is low enough

on the spectrum of luxury (far below the very ‘flashy’

Porsche, Bentley or Lamborghini brands) to avoid

being rejected by the ‘status-averse’ Norwegian

consumer.

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ECONOMIC FACTORS

The economy of Norway is mature and prosperous

with a large public sector, a vibrant private sector and

an extensive social safety net. It is an oil-producing

nation with 20% of government revenue coming from

the export of petroleum (it is the world's third-largest

natural gas exporter and seventh largest oil exporter,

having made one of its largest offshore oil funds in

2011). Because of rising prices of fuel, Norway is also

the country with the highest taxes on petrol cars,

which is why the government introduced economic

incentives in 2013 to stimulate the purchase, import

and production of electric vehicles. This is what

allowed Tesla to penetrate the Norwegian market with

more speed and enthusiasm than any other European

countries. However, some cars dealers have been

manipulating the EV market in Norway by importing

new and used plug-in electric cars from Sweden,

Denmark, Belgium, Netherlands, Germany, France,

Italy and Spain. The new cars are bought at lower

prices than Norway's retail prices and resold them in

Norway at prices up to 30,000 NOK (around $5,000)

cheaper than Norway's dealerships, representing a

threat to the fair sales of Tesla. In the broader

automotive industry, which is cyclical by nature,

economic conditions are most definitely improving,

although Europe remains the one region in which car

sales have not recovered to pre-recession levels.

TECHNOLOGICAL FACTORS

Technology is becoming the single factor that will

differentiate car brands in the future. While the most

important function of a car has always been to

transport individuals from point A to point B, the

development of technologies that enhance the

driver’s ability and experience may lead to shifts in

this perception: in the future, the most important role

of cars may be as platforms for external technologies

such as drive-automation and connectivity, which

provide the real value for the driver. This would force

carmakers to shift their focus and expertise drastically

because it would transform the perception of cars as

products to cars as part of a greater service: mobility as

a whole.

While this situation may be a while away still,

carmakers are certainly prioritizing technological

innovation in the form of enhanced in-car

connectivity, mobility applications, driving

automation (self-parking, driver drowsiness

monitoring, etc.) and, of course, alternative engine

technologies. It is in the latter category that the

influence of technology plays the most imminent role:

the technological limitations of electric cars, such as

their restricted range, push car makers towards

different forms of hybrids, with gasoline engines

backed by an electric motor that traps energy when

the brakes are applied. This is, indeed, where Tesla

has excelled: through extensive investment in

technology, the company has extended the range and

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capabilities of its vehicles (by, for example, placing the

battery on the floor to shift the car’s centre of gravity,

producing a lighter chassis, etc.). Investments

continue to be made also in the area of further

improving fuel efficiency and using bio-fuels or green

electricity. Partnerships with technologic parties, such

as Google Map Street View, facilitate the planning,

constructing and accessing of plug-in stations – Tesla

did just this in Norway in order to get an impression of

the area and to locate potential sources of electricity.

Further innovations will revolve around the type of

batteries used for electric cars, which not only require

consistent improvement to be able to function better

under certain weather and driving conditions but also

need to become cheaper to help drive down the prices

of EVs over the next few years.

LEGAL FACTORS

In 2008, the Norwegian government signed the

Agreement on Climate Policy (Klimaforliket), which

committed the country to a greenhouse gas reduction

target of 44 gigatonnes (Gt) of CO2 emissions per year

by 2020. This represents a reduction of 17%

compared to Norway's emissions in 2011. The

legislation highlights reduced carbon emissions in the

transportation sector, which currently accounts for

19% of all emissions in Norway, as key to achieving

the target.

The European Union has also, as previously

mentioned, increased its focus on reducing the

emissions in the transportation sector by

strengthening regulations for European car

manufacturers to improve efficiency of petrol engines

and speed up development of alternatively fuelled

vehicles. This has not been received well by certain

countries: the German government in particular,

whose automobile industry accounts for 59% of its

trade surplus, fears that its premium car industry will

not be able to adapt to such strict legislation over such

a short period of time, which will harm it in the long

term. This response highlights the importance and

influence that legislation can have on the car industry

because of the degree of interconnectedness between

governments and automotive sectors.

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SWOT ANALYSIS

STRENGTHS WEAKNESSES

• Quickest, most energy efficient EV on the market

• High, continuous energy uploading

• Superior safety, quality, technology

• High profile client base

• Unique business model

• Low sales volume

• Unclear positioning

• Low sales volume

• High retail price

OPPORTUNITIES THREATS

• Collaborations and strategic partnerships with

companies and governments

• Expansion of European market

• Growth of EV adoption

• Limited charging infrastructure

• New entrants with competitive products

• Restricted target market

• Luxury brands investing in EV

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c. COMPANY ANALYSIS

Tesla Motors is the only carmaker that designs and produces high-performance electric cars only, as opposed to as an

extension of an existing line of petrol cars. Founded in 2003 by two Silicon Valley engineers, Martin Eberhard and

Marc Tarpenning, the company is currently under the leadership of business mogul Elon Musk. It is based in Palo Alto,

California, listed on the NASDAQ and employs around 2000 people worldwide. The company’s vision is to “accelerate

the world’s transition to electric mobility with a full range of increasingly affordable electric cars.” Tesla cars are on the

road in 37 countries, with 31 store and service locations worldwide and more on the way.

As a company and a brand, Tesla is a highly unique case. It has taken on an industry that is still in its infancy, and

operates according to a business model that upends traditional norms. According to Musk, “Our technology is

different, our car is different, our stores are intentionally different – at Tesla, we continue to focus on the future and

hope to change the 100-year old car-buying experience.”

a. PRODUCTS

Tesla experienced early operational difficulties with delayed production of the Tesla Roadster, the first fully electric

sports car to be offered on the market, which became available in 2009, three years after prototypes were released.

The first “Signature One Hundred” Roadsters sold out in three weeks, while a more developed model was sold in 31

countries in 2012. The latest generation Roadster is expected to hit the market in late 2014. Tesla announced its

Model S, the first full-sized 5-door lift-back electric sedan, in 2008 and had received 6500 reservation requests for the

vehicle by October 2011. Retail deliveries began in 2012 in the US, a year later in Europe and two years later in China

and right-hand drive countries. In 2012 the Model X was revealed, a small SUV that will go on sale in 2014, while

plans for the ‘Model E’ are in the pipeline. While the company has revealed no indications of the nature (or even

official name) of the ‘Model E,’ industry experts expect it to be a scaled-down and stylistically more distinctive version

of the Model S, the production of which will be financed by the sales of the Roadster and Model S. The Model E will be

priced between $30,000 and $40,000, making it the most affordable model offered by Tesla thus far. The most

impressive aspect of Tesla cars, and that in which the company invests the most money, is the performance and

driving range that they offer, which far outperform any other EV on the market.

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b. DISTRIBUTION

For as long as the automobile industry has been around, dealers have assumed the bulk of the distribution system.

Tesla, conversely, has no dealers or commissioned sales people, but rather conducts sales transactions online and has

a network of company-owned stores (which are more like galleries than dealerships) in central locations such as malls

and shopping streets with high foot-traffic and visibility. The reason for this approach to sales, according to Musk, is

because by the time a customer enters a dealership, he or she has effectively already made the decision about which

car to buy and is, at that stage, only entering a negotiation on price with the dealer. This system would not allow Tesla

to educate consumers about the world of electric mobility, which is a highly important part of their strategy and vision.

Thus, Tesla has replaced the traditional function of physical locations – pure sales procurement – with the goal of

facilitating interaction between consumers and product specialists, who are not on commission and will therefore not

pressure consumer to buy, and will also educate consumers about EVs in general rather than just Tesla. Additionally,

the store locations carry no inventory because all cars are built to order.

c. PRICE

While most cars can be customized to fit a customer’s budget, Tesla vehicles are available at one price only, without

negotiation. The company has done this in order to eliminate what has always been a serious pain point for consumers

in the car-buying process: comparing models, dealerships and packages in order to pay as little as possible. By

offering customers the ability to custom-design their Model S (in terms of colour, interior, materials, etc.) without

having to worry about how much each addition is costing them, Tesla is simplifying the process to make the

customer’s experience easier and more enjoyable.

d. PROMOTION

Tesla’s approach to marketing, at the moment, it’s a “$0 marketing budget.” While the budget is, indeed, not

completely void, Musk has from the start steered clear of aggressive marketing campaigns in order to emphasize the

company’s focus on groundbreaking technology, research and engineering. He believes that any promotional budget

is better off spent refining production, which will lead to a better product, which will in itself provide the best

marketing possible – consumers are drawn to products that truly create value, rather than just communicate it.

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e. SERVICE

Tesla has prioritized the delivery of excellent customer service since it opened shop in 2003. Roadster owners benefit

from ‘house calls’ that involve the Tesla Mobile Service Team coming to an owner’s home to service the car or address

a query. Pre-purchase service quality is offered in the way that Tesla customers don’t even need to enter a store to

order, custom design or pay for a Model S: it can all be done online, in the comfort of their own homes. Before it opens

stores or galleries in a new location, it opens a service centre where Tesla customers have access to certified

technicians, product specialists and EV advisors. According to Musk, the most important goal of any Tesla location

(stores, galleries or service centres) is “for every person who entered the store to leave smiling.” This encompasses

Tesla’s approach to selling cars, which is anchored in humanity and being truly on the side of the consumer: according

to the VP of sales, George Blankenship, “We don’t want to sell anybody a car; we want people to buy our car because

they want it.”

As a result of these factors, as well as the quality of the company’s value proposition, Tesla has invigorated an industry

that was almost dead upon arrival (that of the electric vehicle), and is succeeding in increasing awareness and

changing people’s mindsets about electric mobility. The company’s innovative approach to price, promotion and

distribution, as outlined above, do however present a number of challenges: the company is not only evangelizing an

entirely new type of transport but is building a ’luxury’ brand from scratch, all under an entirely new and

unconventional sales strategy.

f. FINANCIALS

Tesla is 10 years old, which is considered relatively mature in some industries. In the electric vehicle market however,

which is such a new and consistently evolving playing field itself, the company is still relatively young. It reported a

profit for the first time in its history at the end of Q1 2013, during which quarter the company sold 4900 vehicles and

generated $562 million in revenue, representing an incredible 83% increase from the previous quarter’s $306

million.

The company’s share price for the period of March 2011 to March 2014 is depicted below, showing a dramatic

increase in early 2013 and continuing into 2014:

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Tesla does not publish financial statements but rather shareholders letters as a result of the company’s ‘youth.’ The

information below represents financial highlights extracted from the shareholders letters of 2012 and 2013.

2012 2013

Q4 REVENUE $306 million $761 million

REVENUE GROWTH (Q3 TO Q4) 500% 26%

ANNUAL REVENUE $2.5 billion

Q4 GROSS MARGIN 8% 25.2%

Q4 R&D EXPENSES $62 million $58 million

Q4 SG&A EXPENSES $40 million $87 million

ANNUAL FREE CASH FLOW ($102 million) $40 million

ANNUAL PROFIT/(LOSS) ($75 million)

ANNUALIZED PRODUCTION 20,000 units 22,477 units

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“The Model S is the car that proves that the EV isn't just viable, but truly desirable.” - Road Track, 2013

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d. COMPETITOR ANALYSIS

In the Norwegian market, Tesla faces competition from a number of well-established car brands. In the electric car

market, the largest threat comes from the Nissan Leaf, a 5-door all-electric hatchback that was named the world’s best-

selling highway-capable EV when global sales hit 50 000 units in February 2013. The table below shows the total

registrations and market shares for the top 10 electric vehicles for the Norwegian market.

The Tesla Model S is, however, a fundamentally different type of car to the electric competitors listed above: it is a

spacious sedan capable of long-distance driving while every other model (with the exception, perhaps, of the Toyota

Prius) is compact, much cheaper and designed for short city trips. Thus, while the Tesla is certainly competing in the

market for environmentally friendly cars, it is debatable whether an individual who is about to spend $80 000 on a

new car is considering the miniature Mitsubishi i-MiEV as an alternative to the Model S. This leads us to consider in

more depth the consideration set of a Model S buyer, which would more likely consist of petrol-powered sedans

similar to the Model S, such as the BMW 7-Series or the Mercedes S-Class: luxury cars. Because data on the luxury car

market of any country is particularly difficult to find (as a result of the fact that car manufacturers do not list sales

values for individual models), a list of the top 10 commercial car brands in Norway appears below, ranked in order of

sales volume for the month of December 2013.

MODEL

TOTAL REGISTRATIONS

BETWEEN 2008 AND

2013

MARKET

SHARE 2013 2012 2011

NISSAN LEAF 9080 44.3% 6212 2487 381

MITSUBISHI I-MIEV 2176 10.6% 455 671 1050

TESLA MODEL S 1991 9.7% 1991

TH!NK CITY 1121 5.5% 12 22 331

PEUGEOT ION 1084 5.3% 425 442 217

KEWET/BUDDY 1013 4.9% 15 24 125

CITROEN C-ZERO 981 4.8% 214 557 210

VOLKSWAGEN E-UP! 580 2.8% 580

TOYOTA PRIUS 355 1.7% 184 171

REVAI 299 1.5% 299

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While this data is not representative of the luxury car market, it gives an indication of the relative popularity of car

brands in Norway. Tesla is in 7th position ahead of Audi and BMW but behind Volvo and Mercedes, which is already a

considerable achievement considering that Tesla sells only one model. A consumer survey conducted in Europe that

assesses consumer perceptions of car brands in 7 categories – safety, quality, value, performance, design/style,

technology/innovation and environmentally friendly – helps to identify more closely the position Tesla occupies in the

car market. Tesla is the best performing newcomer to the list: the article states, “In looking at how the brands rank, it is

clear that it takes more than a single ad campaign or new product for most brands to connect with consumers and earn

their favor. The exception is Tesla, [which] has made a notable splash in this latest survey.” Despite this being only the

second year Tesla has featured in the survey, it occupies the 10th position on the list of ‘best overall perception,’

suggesting that the brand has made a good impression in the minds of consumers with no advertising budget and a

limited range of vehicles. Tesla’s strongest competitors in the electric car market (innovation and environmental

‘friendliness’) in terms of brand perception are Toyota (the ‘Prius’), Chevrolet (the ‘Volt’ series) and Smart. In the

market for higher-end luxury vehicles (quality and performance), the strongest competitors of brands prevalent in

Norway are BMW, Mercedes and Toyota. The overall awareness of both BMW and Nissan have declined, although

BMW retains a position in the overall top 10 alongside with Mercedes-Benz, Volvo, Chevrolet and Toyota. With the

help of this survey, a perceptual map of the competitive field for cars in Europe (for all cars, not only luxury or only

RANK: DEC RANK: 2013 BRAND SALES:

DEC

SALES:

2013

MARKET

SHARE:

2012

MARKET

SHARE:

2013

1 3 Volvo 1884 11863 8.4% 8.3%

2 1 Volkswagen 1481 19128 15.3% 13.5%

3 2 Toyota 906 17909 12.6% 12.6%

4 7 Skoda 786 6948 5.1% 4.9%

5 4 Ford 756 9997 8.2% 7%

6 10 Mercedes 663 6091 4.2% 4.3%

7 20 Tesla 553 1984 0% 4.3%

8 5 Nissan 512 8202 5% 1.4%

9 6 Audi 475 7511 6.2% 5.8%

10 8 BMW 437 6876 5.5% 5.3%

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electric) has been constructed below, using ‘degree of luxury’ and ‘environmental friendliness,’ Tesla’s two main

selling points, as the criteria.

a. PERCEPTUAL MAP

The perceptual map reveals several interesting insights, the most profound of which is that there is currently no brand

that occupies a position of high luxuriousness and high eco-friendliness. This is, presumably, because of the inherent

mismatch between these two concepts: ‘green’ living expounds principles that go strongly against ideas of excess,

spectacle and wastefulness that are associated with luxury. This marketing plan will aim to position Tesla in the top

right hand corner of the perceptual map. While this is indeed a significant challenge, it will guarantee success in terms

of differentiation and brand image if Tesla is able to successfully unite the two concepts of luxury and eco-friendliness.

LUXURIOUSNESS

ENVIRONMENTAL FRIENDLINESS

High

Weak Strong

Low

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The carmaker that has come closest to this position thus far is Audi with its elegant and highly eco-aware A8, although

BMW and Mercedes will no doubt shift to the right on the perceptual map with the launches of their respective all-

electric i8 and B-Class models, to be released in 2014. These three brands are therefore Tesla’s biggest competitors

because, while Toyota, Smart and Honda are leaders in the environmental car category, the models that have put them

there are too dissimilar to the nature of the Model S.

Now that the category in which the Tesla Model S competes has been more narrowly (luxury sedans), and the position

it should aim to occupy has been identified (the intersection of luxury and environmental friendliness), it is important

to look more deeply at the different levels of competition the car manufacturer faces. If we segment the competition

according to product form, product category, generic and budget competition, the following matrix can be assembled.

Tesla Model S Mercedes S

Class BMW 7-Series

Audi A8

Porsche

Cadillac

Jaguar

Rolls Royce

Lexus Infiniti

Bentley

Equus

Chevrolet

Hyundai

Peugeot

Jeep

Daimler- Chrysler

Ford

Honda

Toyota

Subaru Mazda

Nissan

Harley- Davidson

Land-Rover

Renault

Citroen

Air Travel

Sea Travel Chauffeur-

Driven transport

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Using the price of a Tesla Model S (around $80,00 at Manufacturer’s Suggested Retail Price) as a guideline, the major

competitors that we have identified for the car include the Mercedes S-Class, the Audi A8, the BMW 7-Series and the

Volvo S80. While there are more expensive luxury models offered by each brand on the market, each of these cars falls

into the category of luxury sedan as well as a similar price bracket as the Model S. In order to avoid defining the

category too narrowly and alienating the very important ‘all-electric’ aspect of the Model S, however, we have included

the Infiniti 2014 Q5o Hybrid into the consideration set. Even in a market like Norway where all-electric cars are trusted,

the appeal of a hybrid remains powerful, not only because of the assurance that the petrol switchover function

provides, but also because of the quality and value that most hybrids have earned in the market. The Q50 debuted in

2013 and went on sale in early 2014.

The table below provides a quick comparison of the important metrics of the five cars:

MANUFACTURER MODEL MSRP 0-60

MPH

ENGINE/BATTERY

TYPE

MAX MOTIVE

POWER

FUEL ECONOMY

Mercedes S-Class $92,900 4.8 sec Diesel/hybrid 306 bhp

(228 kW)

15 city;

25 highway

Tesla Model S $80,000 3.9 sec 60-80 kW/h

battery

Range: 265-

320 miles

94 city;

97 highway

Audi A8 $75,100 4.2 sec Petrol/clean

diesel 380 bhp

24 city;

38 highway

BMW 7-Series $74,000 6.4 sec Petrol/hybrid 438 bhp 19 city;

28 highway

Volvo S80 $51,100 6.8 sec Diesel 161 bhp 20 city;

29 highway

Infiniti Q50

Hybrid $48,500 4.9 sec Electric hybrid 269 bhp

27 city;

31 highway

Tesla Model S $80,000 3.9 sec 60-80 kW/h

battery

Range: 265-

320 miles

94 city;

97 highway

Audi A8 $75,100 4.2 sec Petrol/clean

diesel 380 bhp

24 city;

38 highway

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e. CUSTOMER ANALYSIS

In this section, a deeper insight in the customers of the Tesla Model S is presented through an in-depth analysis of the

specific market segments at which the product is aimed and the values that drive them; the decision processes

experienced by these groups of consumers; as well as the concentration of the customer base defined for the Model S.

According to the Scandinavian newspaper Telen, Norwegians are buying more luxury (or premium) cars than ever: in

June 2011, one in four sales was a premium car. According to the European Automobile Manufacturers Association,

only Germany and Sweden have a higher percentage of sales of luxury and premium brands cars.

a. TYPE OF CUSTOMERS

The Norwegian market is well informed about the fully electrical car thanks to the governmental incentives that have

pushed this innovative automobile to become a Norwegian norm. Because the Tesla Model S is priced as a premium

car, it is not a car that is easily available to the entire market of buyers. Certain segments must therefore be identified

at whom a comprehensive marketing strategy will be targeted.

Market segmentation can be conducted traditionally (based on demographic, socioeconomic, psychographic or

behavioral bases) or based on the ‘jobs-to-be-done’ approach. In the wealthy Nordic society, there is little

differentiation between people (masculinity versus femininity or high versus low income, for example), which makes it

harder to identify segments solely on traditional bases. It is for this reason that this report categorizes Norwegian

customers according to ‘jobs-to-be-done’ approach initially, and then goes on to identify more traditional

characteristics of each group that would allow for effective targeting in a marketing strategy.

SUBSIDY DRIVER CONSCIOUS PROFESSIONAL HIGH-TECH PROFESSIONAL

JOBS DONE Avoid traffic jams; drive in

the free bus lanes; benefit Achieve a certain status enhanced by an

Have new gadgets to show off to peers

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from other governmental incentives

environmentally friendly character.

WHO ARE THEY? Males with good jobs; typically 30 - 39 years old

Mostly women between the ages of 35 and 45 with high-powered, jobs in managerial positions

Mostly males, aged 25-35

WHAT DO THEY BUY?

A car that brings them quickly from A to B at a relatively low cost (no fuel and low taxes, etc.)

A business car that brings them from A to B in style (status, comfort, quality), without too much show off (reserved culture) and a focus on environmentally friendliness that shows their high level of civilization

A car that is equipped with the latest technology and has good design to feel good when driving and ‘playing’ with it (‘a toy’).

b. VALUE DRIVERS

Norwegians have traditionally tended to look down on others who flaunt their wealth or status too openly. “Don’t think

you are anything special” is the first rule of Jante’s Law (janteloven), the concept which is often used to describe the

conservative tendencies in Nordic countries. Norway’s strong economy, however, has made buying luxury goods more

socially acceptable, according to Karl-Fredrik Tangen, associate professor at the Oslo School of Management

(Markedshøyskolen). “High prosperity gives the illusion that status cars are within the reach of everyone,” Tangen told

the Aftenpostennewspaper.

Associate Professor Tangen, who has studied car choices among different groups in society, said that cars are still

important status symbols, but that people just don’t talk about it. “The car is a very visible marker of the difference

between people. But in Norway, you’re supposed to downplay those differences. So that’s why there are very few

people who would give the reason for their choice of car as a desire to impress,” he said. Besides this general

conception in Norwegian society, the three segments identified above still place value on different factors:

Subsidy Driver Conscious Professional Tech Professional Value Drivers - Price

- Additional benefits (non-car) - Fuel consumption

- Elegance - Design - Quality - Safety - Comfort

- Ride and handle - Additional technology (gadgets) - Personal configuration

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c. ATTITUDES TOWARDS ELECTRIC VEHICLES

Since Tesla Model S stands out as a premium car by being fully electrical, it is important to understand the consensus

on the current state and future of electric cars in Norway. Due to several external factors, the penetration of electric cars

in the Norwegian car market has made it part of the society now.

Early research into the use of electric cars in Norway showed that EVs were being perceived as a replacement for the

traditional car. Reasons for switching to an electrical car can be observed in the figure below, and many of the factors

identified are applicable to external events (such as government incentives) that offer an advantage for only a limited

amount of time. This highlights how important it is, and will increasingly become, for electric car producers to find

ways to ensure that EVs stay relevant in Norway, even when the incentives are abandoned.

The figures below also provide insight into the adjustments that would need to be made to cause more people to buy

electric cars. Two key factors, “longer range” and an increased number of “fast chargers” could be internally addressed

by electric car producers like Tesla, while the more predictable EV policy is unfortunately a political discussion which is

hard or impossible for producers to influence.

0.0%! 7.5%! 15.0%! 22.5%! 30.0%!

Low fuel cost!Access to bus lanes!

Free Charging!Free toll road!

Free Feries!Charging Network!

Low Annual road fee!No Purchase tax!

0.0%! 7.5%! 15.0%! 22.5%! 30.0%! 37.5%!

Other!More information ...!

Predictable EV policy!More parkinglots!

More fast chargers!Lower price!

Longer range!More Models!

WHAT ARE THE MOST IMPORTANT EV INCENTIVES?

EV RATE OF REPLACEMENT OF TRADITIONAL CARS:

 

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d. DECISION PROCESS

In case of purchasing a car, the buyer is practically always also the end user of the product. In contrast to low-

involvement decision-making processes which rely heavily on routine response behavior (such as buying milk or toilet

paper), high-involvement decision-making processes such as buying a car cause the user to take many more factors,

such as risk and financial implications, into account. When buying a car, consumers engage in the so-called ‘extended

problem solving’ where a lot of time is spent on comparing different aspects of the car, such as its features, price,

service delivered and warranties.

The consideration set for buying a luxury car is, however, often quite narrow and consists of a limited set of brands. In

the 1970s, for example, American-made cars had a very poor reputation for quality, which created to the general

public perception of “not Jap is crap”. Nowadays, this issue is no longer relevant but being seen as a luxury/premium

brand in the consumer’s mind is essential in this market.

A 2011 survey under 1,485 U.S. buyers of six luxury manufacturers showed that the top-5 reasons for a premium car

buyer purchasing a new car from the same brand are as follows:

TOP 5: BRAND LOYAL TOP 5: BRAND SWITCH

1. Brand Affinity (cited by 44 %)

2. Quality/Reliability (33 %)

3. Driving Performance (24 %)

4. Price/Finance/Value (16 %)

5. Styling/Design (16 %)

1. Price/Finance/Value (quoted by 24 %)

2. Size/Body Style (20 %)

3. Brand Affinity (17 %)

4. Time to Change (14 %)

5.Driving Performance and

Styling/Design (13 % each)

0!

0.15!

0.3!

0.45!

0.6!

Completely! High Degree! Certain Degree! Low Degree! Not at all!

WHAT IS NECESSARY TO GET MORE PEOPLE TO BUY EVS?

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Consumers are more likely to consult ratings and information as perceived risk increases on any type of purchase.

Buying a car is no different, with consumers devoting multiple hours to collecting information from multiple sources

and considering numerous criteria. The car buying process may involve the following steps:

Besides this, for the business car market (the conscious professional), it is good to understand that premium cars for

executives are often part of their contracts with their employers. The decision process for these situations is different

from a private decision process. The success of the electric car in Norway is not based on this model (rather based

entirely on private consumers) but it might be of interest in the future.

e. CONCENTRATION OF CUSTOMER BASE FOR PARTICULAR PRODUCTS

As mentioned before, Norway is a fairly wealthy country where the price of a premium car brand is within the reach of

a large percentage of the population. This means that there is a varied audience that can be reached in different ways

and locations. Tesla Model S is already a very well known car model in Norway so targeting specific consumer

segments will be more efficient. Potential customers are the upper-middle class.

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III. OBJECTIVES

Industry data and projections for years 2014 and 2015 show trends of rapid growth in Norway’s EV market: over a

period of five years the number of units sold annually jumped from 2240 in 2011 to 27900 units in 2015. Given the

rhythm of growth identified from the second half of the year 2013 onwards, the government’s goal of total EV

registrations (or 2018, whichever arrives first) could easily be reached by early 2015, meaning that incentives will be

removed and sales negatively impacted.

As this represents the key challenge to Tesla’s survival in Norway, we take it into careful consideration in our marketing

plan. In order to sidestep the negative impact of reversed incentives, we believe that Tesla must focus on building

brand equity by developing and communicating a strong, sustainable brand image; as well as by expanding the

consumer base, which involves attracting new consumer segments while strengthening loyalty with existing

consumers who can further expand our customer reach through referrals. This combination of building long-term

brand awareness, attracting new consumer segments and fostering relationships with existing consumers will allow

Tesla to keep market share growth stable without consumers needing to be motivated by government subsidies,

which in itself represents the overall objective. It is also important to consider these objectives in line with the broader

objective of positioning, which is for Tesla to occupy a position in the market and minds of consumers at the

intersection of ‘eco’ and luxury.

Table 1: Norway new cars market valus: $ Billion, 2006-2010

Year 2006 2007 2008 2009 2010 CAGR: 2006-2010 Source: Datamonitor

Thousandunits

114.5 129.5 110.6

98.7 127.8

% Growth

12.9% (14.4%) (10.8%)

29.5%

2.8%

DATAMONITOR

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Our objective for market share growth in 2014 and 2015 has been based on the market share of Tesla in the new cars

market in 2013, which was 1.4% from the second half of the year (Tesla started selling in Norway in August only).

From a volume around 1990 units at the end of 2013, Tesla maintained a steady growth during the first months of

2014, with around 700-800 units sold each month. In March 2014, however, record sales were achieved with a

volume of 1493 units sold in 1 month. Thus, in order to predict future growth possibilities for Tesla and the amount of

market share we can gain, we considered the new cars market situation, trends and growth opportunities in the period

2011-2015, as well as the growth rate for EV cars.

Considering these trends, management (basic), best and worst scenarios were developed to forecast the market share

of Tesla in the new car market for 2014 and 2015, as the graph shows:

0!

1.5!

3!

4.5!

6!

-6%!

0%!

6%!

13%!

19%!

25%!

2011! 2012! 2013! 2014! 2015!

$ Billion! % Growth!

0.00%  0.50%  1.00%  1.50%  2.00%  2.50%  3.00%  3.50%  4.00%  

1   2   3   4   5   6   7   8  

Basic   Best   Worst  

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IV. ALTERNATIVE MARKETING STRATEGY

To retain the strength of its current position as well as increase its market share in all three of the identified categories

(the electric, new car and luxury car markets), Tesla could take different directions in setting up a strategy. The

common goal in any strategy chosen, however, is to resist a decrease in sales after the government incentives are

removed – in other words, when free toll roads, no vehicle purchase tax, access to bus lanes, free parking, low annual

road fee, free charging & the EV charging network and free ferries transport are no longer available to the EV driver.

a. NEW PRODUCT LAUNCH

High current sales can help finance the production of the planned Tesla BlueStar concept, generically referred to as

Model E, which is intended for the mass market within a price category of under $40,000. The car was originally

scheduled to be released for sale in 2017, but the advantageous situation in Norway could definitely speed up this

process, as the cash injections from increased sales of Tesla S could be recycled into the development of the battery

and electric drivetrain technology. This new, more affordable model which is aimed at a larger audience could

represent an excellent way to diversify the product offering and value proposition of Tesla as a brand in a moment

when a large part of the population might decide against an expensive Tesla Model S car as a result of the increased

expenses caused by the lack of government subsidies.

b. CHANNELS OF DISTRIBUTION AND SERVICE

A faster expansion of the supercharger network on the back of current revenues from Tesla Model S sales could

represent another way to compensate customers for the missing governmental incentives in a couple of years. The

supercharger network is something uniquely specific to the Tesla brand that offers free, fast charging to all Tesla

drivers: by making stations more widely available, Tesla would build customer trust by providing assurance that

drivers will never run out of battery in the middle of the road. The stations could also be used as hubs where Tesla

consultants could sell new cars, conduct software upgrades for owners, provide service and battery swap opportunities

as well as offer test drives with new models or upgraded versions while consumers wait to have their cars charged.

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The existing model of online sales can also be enhanced through investment in the human resources available for a

virtual consultancy before making a deposit online. Bringing people into the virtual environment to be in contact with

potential customers can increase sales and also decrease costs without having to open more flagship stores where

people can buy in person. Software that would simulate the vehicle usage patterns of different customers (such as

distances driven, frequency etc) and the geographical spread of charging stations could be a convenient way for the

company to alleviate the consumer’s stress of limited driving range for an all-electric car. Test drives could be booked

in person or through a virtual programme that would demonstrate the car’s interior and power driving capabilities in a

game-like experience.

c. VERTICAL EXPANSION

An opportunity for Tesla to take the leading edge in changing the world’s mindset around electric vehicles, which is

very much in line with the brand’s vision, could be to sell batteries, powertrain technologies and chassis to car

manufacturers such as BMW, Audi, Nissan and others, or to create partnerships for the development of better

technologies in order to help advance the adoption of EVs and their presence on the roads. A further opportunity

would be to adopt a B2B approach by selling Tesla cars to large green companies that want to promote to the public

an environmentally friendly image. Such companies would be willing to invest in replacing their entire fleets of cars

used for business purposes with luxury premium sedans like Tesla Model S that do not harm the environment. Lastly,

there would be the chance for Tesla to provide reassurance for customers about to buy a Model S as well as increase

the presence of EVs on the roads, by giving customers the opportunity to rent any model they prefer without having to

buy it. A rental service offering can be an opportunity to tap into a new product category with huge potential that

already competes strongly against new car sales.

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“We are witnessing the biggest revolution in motoring in the last 100 years.”

- Paul Clarke,MotorTrend, 2013

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V. SELECTED MARKETING STRATEGY

As a result of the insights that emerged in the situational analysis, it has become clear that the most profitable position

for the Tesla Model S to occupy in the Norwegian market is at the intersection of ‘green’ and luxury. This position is,

intuitively, a self-contained paradox, because the concept of environmental awareness negates the values upon which

the luxury industry has been built: excess, individualism, ostentation. In order for Tesla’s subsidy-driven success to be

sustainable when the incentives are removed, therefore, the company needs to communicate a powerful message that

unites these two contradictory concepts in a way that resonates with consumers, both existing and potential. This

message, which will form the basis and backbone of the marketing strategy to follow, is captured in the concept of

“The Invisible Car.”

The concept of “The Invisible Car” is built on two pillars of meaning. The first intends to clarify Tesla’s definition of

luxury. Beyond a desire to feel good and enjoy the quality of well-designed products, the category of luxury is

associated with a desire to project a certain image to the external world – when an individual chooses to own an

expensive sports car, the statement he is making about his social standing is arguably more powerful than that of his

driving preferences. The marketing plan to follow intends to frame the luxury provided by Tesla as a catalyst for

personal, rather than social, affirmation – a person who drives a Model S drives it because they appreciate superior

quality and design, and gain pleasure from driving the car rather than telling people about it. This forms the first pillar

of the marketing plan: the car is ‘invisible’ to societal perceptions. The second pillar relates to the electric powertrain:

because the Model S leaves no carbon footprint, it is also ‘invisible’ to the environment. These two pillars unite to

communicate a message of sophisticated, quiet class: an individual who drives a Model S does so not to make a social

statement but rather because he/she is financially able, and emotionally inclined, to make a positive difference to the

environment.

a. JUSTIFICATION OF STRATEGY SELECTION

The overarching concept of The Invisible Car has been chosen as the marketing strategy for the Model S in Norway for

two reasons. The first is conceptual. In order to achieve our objective of building a strong brand image for Tesla in

Norway, it is essential that we leverage on the aspects of Tesla that make it unique. Beyond the many noteworthy

qualities of the physical product, the unique selling point of the car comes out when one considers what it represents:

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the ability to appease oneself of the guilt associated with spending a lot of money on a material object with the

reassurance that the purchase is in fact the more responsible option. The concept of The Invisible Car is also excellently

aligned with the nature of the target market it is aimed at: the idea that the luxury of a Model S is to be enjoyed in the

solitude of the driving experience (i.e., alone, for personal value) appeals to the individualism of Norwegian society, as

well as the population’s aversion to overt, flashy behavior. At the same time, however, the idea that by driving a Model

S, an individual is part of a much larger movement and is contributing towards a greater long-term good appeals to

his collectivist inclination, and allows for the creation, in a broader marketing sense, of a community. Furthermore, the

concept of The Invisible Car has the furnishings for success because, if communicated correctly, it will appeal to every

consumers’ desire for self-actualization: by purchasing a Model S, an individual is (quietly) demonstrating a level of

sophistication, education and security that says, “I am confident enough, and respect myself enough, to buy a car that

brings me joy, but I am choosing a Tesla (as opposed to a brand that would communicate my wealth first and

foremost) because I am significantly compassionate and informed to realize that change does not take place on its

own.” It is at this intersection of internal and external value creation that a state above self-actualization can be reached

(in a marketer’s language). This approach would not be relevant in most other countries where economic hardships or

cultural discrepancies render the highly ideal act of ‘self-actualization’ rather low in the list of broader social priorities,

but in a society like Norway which is advanced, sophisticated and relatively isolated, the strategy will be well-received.

Furthermore, the strategy is sustainable because it is foundational: Tesla has up until now employed very discreet

direct marketing techniques, which has left people’s perception of the brand to be formed by what they read in the

newspapers. Because this strategy is comprehensively communicating a new way of thinking and looking at things, it

is striving to change certain mindsets and behaviors, which is the only true way for a brand to leave a meaningful

impact on the life of a consumer.

The second reason for the choice of this strategy is practical. Because the concept appeals to conscious professionals of

all ages (older corporate executives with families who may have already reached this state of mind, as well as younger

businesspeople who strive to project this image of themselves), it does not limit the strategy to a segment (within

Norway) that is too niche. This is in line with our objective of attracting new consumer segments. Furthermore, it

allows a powerful message to permeate the entire strategy and unite all the four P’s: in other words, ‘invisibleness’

does not need to be the focus of promotion only, but can emerge in the way the product is distributed, serviced and

priced. This will take place through the implementation, which will be entirely environmentally friendly: alternative

energy sources will be used in the production of all promotional material, as an example. This creates a sense of

consistency and credibility through a direct translation of words into actions (this will be elaborated on in the

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‘Marketing Mix’ section, where the translation of the concept into an operational plan will be discussed). The strategy

is viable from a practical point of view because it builds on the existing strengths of Tesla – the supercharger network,

the online and direct selling infrastructure, the superior technological capability, etc. – and therefore does not require

a) extreme diversion from the existing values of Tesla, which makes it believable, or b) the allocation of budget to the

construction of new facilities, channels, etc., meaning that more money can be spent on delivering the strategy in an

environmentally conscious way. Lastly, the strategy should provide an effective way to tackle the competition that has

been identified in the plan because, by emphasizing the ‘unpretentiousness’ of the car rather than appealing to the

typical luxury consumers’ desire for outward ostentation, it is approaching the same target market from an entirely

different position. This should generate the impression that Tesla is creating an entirely new category, which will cause

the consumer to separate the product from that of competition on bases other than simply price, features, brand

reputation, etc.

b. TARGET MARKET SEGMENT

Because the Model S has been introduced in Norway as one of the first fully electric cars available, it has a strong

position in the electrical car market among the three identified consumer segments: the subsidy driver, the conscious

professional and the high-tech professional. This position is, however, biased by the governmental incentives to

promote electrical cars. In order to achieve sustainable growth for the future, Tesla needs to identify the segments that

will remain the most interested in the car when these incentives end. The Model S is considered a premium car (as a

result of its price and luxuriousness) and should be appreciated for its invisible luxury: the design of the car doesn’t

show off but does have the class that is requested by the conscious professional, and is in line with Norwegian culture

of reserved expression of wealth. The conscious professional is, therefore, the chosen market segment. This, however,

does not exclude the other two identified segments from Tesla’s long-term vision: the introduction of the Model X,

which is more geared towards the mass-market, will appeal highly to both segments as well as many more, if Tesla

succeeds in its goal of making EV driving the way of the future. Thus, while the High Tech Professional and the Subsidy

Driver have been excluded from this plan for segmentation purposes, it is not to say that the exposure to Tesla that this

strategy will bring them is to be built on in the future.

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c. DIFFERENTIAL ADVANTAGE

The most significant advantage of the Tesla cars is the expertise it has gained in successfully developing the

technology of electric powertrains, battery capabilities and chassis structure in order to produce a much higher driving

range of 550 km in one charge, compared to any model currently available on the market. Even for a young brand, the

success Tesla achieved in a category categorized by scepticism and previous failures is a massive accomplishment,

which generates the trust of consumers more and more.

Furthermore, the Tesla business model, which excludes sales through dealers and offers direct customer services

through its own stores and service centres, is extremely well received and noticeable as a differential advantage. Since

Tesla competes with large car manufactures with strong histories, reputations and long-standing traditions that offer

good quality products and excellent customer and after-sales service, the only way for Tesla to stand out is to change

the rules of the category and form its own combination of value proposition. It is this mix that answers successfully the

challenge of this highly competitive situation: electric drivetrain, sustainable energy use, highest safety, insurance,

direct customer sales, company-owned stores and service centres, fast charging free Supercharger stations as well as

battery swapping stations in the pipeline.

d. MARKETING MIX

d. Product

For the purposes of this marketing plan, no changes will be made to the actual product which is, of course, the Tesla

Model S. At its core, the product represents a way of getting from point A to point B for individuals and families. At the

next level, the Model S provides the superior driving experience that can be expected of a luxury sedan: the long

wheelbase, stiff structure and air-spring suspension makes the ride effortlessly smooth, the interior materials and

advanced technological display and connectivity system create incredible comfort for the driver, and its many

performance features provide the thrill of speed and superior handling. Where the product exceeds expectations,

however, is when it is considered in the category of electric vehicles. Its range is more than three times the length of

that of any existing electric vehicle, and the position of the battery beneath the car (rather than at the front or back as

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has been prior practice for EVs) shifts the centre of gravity to allow for a lighter, faster and more spacious drive. In

terms of the augmented product, Tesla outperforms its electric rivals through its integration of a supercharger network

into the driving infrastructure of the countries where it is driven. Unique services such as direct selling, relationship

marketing and pre-ordering are augmented aspects of the Model S that differentiate it from rivals.

e. Price

Because the Model S is an existing product already being sold in the market, the pricing strategy for the product will

remain largely as is. Tesla’s pricing strategy varies by region. In Europe, prices for the Model S in Europe fluctuate

between €65,000 and €80,000, depending on the country and its local VAT rates, and are typically around 30% higher

(in dollar terms) than in the US, which is where the cars are manufactured. The price of a Model S in Norway is

calculated roughly as the US price plus shipping costs, plus an import tax of 10% and VAT of 19%. Tesla certainly uses

pricing as a strategic tool – an aggressive pricing strategy has, for example, been employed for the Chinese market to

align the brand with product tailoring suited to the specific needs to the Chinese consumer – but remains aware of the

damage that excessively high prices can inflict on the process of building brand loyalty. As an example, Tesla set a

gross margin target of 28% for Q4 2014, which is conservative considering that the company exceeded its 25% target

in 2013. To justify this, Tesla emphasized publicly that it is not trying to achieve the highest possible gross margin as

this would require “following industry practice of charging excessive prices to customers,” which does not align with

the company’s goal of building long term loyalty. For this marketing plan, therefore, the price will remain at the MSRP

of €57,000 ($80,000), but we will include a 10-year warranty as well as the free leasing of an internal combustion

vehicle once every second month during the first years after purchase.

THE INVISIBLE EFFECT

A minor premium of €250 will be taken from the revenue on each Tesla sold in Norway, which will go towards a Tesla

initiative to implements alternative energy sources (wind turbines, solar panels, hydro-plants) in rural areas where

electricity is unavailable to the population. Although the majority of the programme will be financed from the

marketing budget, this strategy, The Invisible Effect, will communicate a powerful message around the car Tesla is

taking to replace the energy it uses in the production of its vehicles.

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f. Place

Distribution is an area of the marketing mix through which Tesla has defied industry norms and achieved successful

differentiation: it has no dealership network, no commissioned salespeople and a system of ordering and purchasing

that takes place only online. We propose the extension of this strategy in two main areas, The Invisible Dealer and the

expansion of the existing supercharger network in Norway.

THE INVISIBLE DEALER

In order to fit our targeted segment, the conscious professional, a new kind of distribution system will be piloted.

Under the assumption that working professionals generally do not have a lot of time to shop around, go to dealers,

find out the differences between brands, Tesla should aim at bringing the dealership to the customer. Since Tesla is a

relatively unfamiliar brand with many potential customers, a test drive in Model S will have the highest likelihood of

turning them into (potential) buyers. In order to get potential customers in our cars, a test drive during office hours

can be booked via the website of Tesla. At the appointment a salesmen will drive to the office with a Tesla Model S,

which is equipped with all additional features. After the test drive, people generally need time to think about their

purchase decision. Nevertheless, the salesmen will intend to find out what features and additions the customer would

be willing to take and give the customer an offer (calculated via tablet application) that is valid for two weeks.

In addition, the supercharger network in Norway will be expanded significantly to ensure that it becomes the

backbone of the Tesla network: customers can always rest assured that there will be a charging station close by.

Further investment will be made in continuously upgrading the online experience to facilitate an easy and highly

enjoyable browsing, customizing and purchasing experience for consumers.

g. Promotion

THE INVISIBLE TEST-CAR

A small number or Model S cars equipped with optical camouflage technology (cameras hat reflect outwards, making

the car truly invisible) will drive around Oslo, creating conversation and offering citizens the opportunity to interact

with and test drive the car.

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THE INVISIBLE EVENT

This will encompass a two-day promotional event intended to solidify existing customers, to present value proposition

to potential customers through an experience of the car and all that it represents, and to generate media coverage,

positive PR and conversations on social media.

h. Service and Staff

In order to control for the quality of sales, two weeks after a consumer has encountered or driven a Model S (through

the Invisible Dealer, for example), that customer will be approached by customer services to determine whether there

was a purchase decision or not. The goal of this evaluation is to determine an NPS-score for the salesman. This will be,

in combination with his sales target, the bonus he will receive on top of his base salary.

In terms of after-sales support, Tesla will aim to provide the best possible customer service. Not only will the company

continue to take full responsibility for replacing a car’s battery for free when it fails in an unlikely situation (even when

it is improper maintenance or leaving the car at a low charge for years), but will also reinvent the car servicing

experience with the customers’ true needs in mind. When a Model S goes in for a service, a replacement car will be

offered which is at least equal in features and power to the owners current car, if not superior. By offering a better car,

the frustration of the whole service procedure is minimized. The car park of replacements is kept very up-to-date as

well and if the customer likes the replacement car more than his/her own car, they can trade in their current car and

keep the replacement car by paying the difference between the value of both cars.

Also in the after-sales process, after completion of the process the customer will be asked the question, “Would you

recommend Tesla to other people?” upon which to base an NPS-score. In the case of negative feedback, a qualitative

question will be asked in order to understand the problem and try to solve the issue on a one-to-one basis with

customer services and find a personalized solution. Additionally, the ‘house call’ service available to Roadster owners

will be extended to owners of the Model S as well. The service will be extended to a bi-annual ‘pit stop’ service,

whereby a Tesla Team will call check in on customers cars at their homes or offices, at times convenient for the

customer, to provide personal advice and support, perform software upgrades as well as make any aesthetic changes

the customer might want.

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VI. SHORT AND LONG TERM PROJECTIONS

The elements of the proposed marketing strategy need certain financial injections to be executed in a way that fits with

Tesla’s long-term brand image.

Carmakers spent on average 2,5-3,5% of their sales revenue on marketing2. From Tesla’s forecast, it can be derived

that the marketing budget for 2014 then will be $7 million. This is based on the scenario that Tesla Model S will sell

2,880 times at an average price of $81,000 (worst case scenario) and taking the marketing budget at 3% of sales

revenue. However the risk is relatively low, marketing budget will initially be set on the worst case scenario.

Management might consider to increasing the budget once Q1 has shown very successful and forecasts are positive as

well.

These numbers are justified by the expected growth in car sales for the coming years and are necessary to adsorb the

impact of the termination of supporting governmental incentives. It will prevent Tesla from becoming a financially

unattractive choice and not being in the consideration set of potential consumers for the right reasons.

                                                                                                               2 http://www.businessweek.com/smallbiz/content/feb2009/sb20090210_165498.htm

FORECAST TESLA MODEL S 2013-2015, INCLUDING MARKETING BUDGET  

YEAR SCENARIO VOLUME VALUE ($MILLION) MARKET SHARE MARKETING BUDGET

($MILLION)

2013 Historic 1,990 161,03 1,4% 4,83

Worst 2,880 233,26 1,7% 7,00

Normal 3,380 274,42 2,0% 8,23

2014

Best 4,060 329,30 2,4% 9,88

Worst 3,610 292,86 2,2% 8,79

Normal 4,600 372,73 2,8% 11,18

2015

Best 6,240 505,84 3,8% 15,18

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Given the marketing strategy explained before, the following budgets will be allocated to the different events.

MARKETING BUDGET TESLA MODEL S (2014)

ACTIVITY BUDGET ($THS) %OF BUDGET

Event 800 11%

Invisible Effect 2,000 29%

Invisible Dealer 2,000 29%

Invisible Test Drive 1,000 14%

Invisible Store No budget ---

Advertisements 450 6%

Online (banners, SEO) 750 11%

---TOTAL--- 7,000 100%

In the short-term, the expectations are that sales of Tesla cars will continue to grow as being shown by historic data and

forecasts. Besides this, brand image will be further deployed and impact on the conscious professional. He/she will be

able to associate him/herself better with Tesla and its philosophy of sustainable luxury.

In the long-term, Tesla should be able to leverage on its marketing investments by being part of the initial

consideration set of its target customers. The challenge is mainly to get rid of the ‘promotion-driven’ sales that have

been part of Tesla’s success in Norway. The reach of this marketing plan is to cover the period with no changes in

benefits for electrical cars and shortly thereafter. Market conditions and the response of Norwegian customers after

this change have to be incorporated in an updated marketing plan.

Another factor for the long-term is to extend the product assortment with new models. Tesla Model X (SUV) will be

launched end of 2015 and Tesla Model E (a cheaper version) is announced for the future. By aiming at a broad

acceptance as a prestigious car brand, both new models will benefit from the marketing investments of this marketing

plan and build opportunities to further expand the share of Tesla in the Norwegian market.

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VII. IMPLEMENTATION, MONITORS AND CONTROL

Tesla’s objective to reach a market share of 2% at the end of 2014, and generate sales revenue of $233.26 million will

be done by means of the marketing strategy that has been elaborated on before. Checking all bullet points requires

good planning, a clear structure and division of tasks. Below is a general overview of when elements of the marketing

strategy are planned over 2014:

Promotion Launch Monitoring Monitoring/Evaluating Evaluating

Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

EVENTS

EVENT

INVISIBLE EFFECT

INVISIBLE DEALER

INVISIBLE TEST DRIVE

PRINT

ADVERTISEMENTS

ONLINE

SEO/SEA

SOCIAL NETWORK

BLOGS

The marketing budget of the previous section will be prioritized and explained hereafter. Note that the planning for a

new ecofriendly flagship store are not included in this planning since they cover large investments and are not

considered marketing expenses over a single year.

a. EVENTS

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The goals of the events are to redirect the brand image and make the brand as a part of the initial consideration set

with the ‘conscious professional’. To make sure that the event that is being planned in March will be a success, the

marketing department in cooperation with management should be intensely involved to make sure that the right

people will attend the event and that the message (goal) will be delivered efficiently.

The Invisible Effect promotion requires excellent monitoring and communication towards the press. All arrangements

for the delivery of alternative energy are made as a part of the preparations but it is important that Tesla can guarantee

the accuracy of this project. It will have a very positive impact on the brand image, but any external issues that result in

not delivering the promise might harm the brand image twice as hard.

The Invisible Dealer service as a pilot project will need to be executed with cooperation between the marketing

department, the sales department, management and the sales force. Since it is a marketing initiative, responsibility

and monitoring should be taken care of by marketing department.

The Invisible Test Drive can be arranged mainly by the marketing department itself. Nevertheless, cooperation with

the ad agency (who further develops the idea, provides the campaign website and makes short videos of the

happening) is essential and the PR department needs to make sure that this guerilla campaign idea is communicated

in the right places (especially social media).

b. ONLINE

Online is becoming a more and more important channel for the car industry. Since Tesla is a high-tech car brand, it is

perfectly suitable to leverage on this on social networks. The recently created social team will be mainly responsible for

creating engagement with everyone who feels attracted to Tesla or wants to join the community.

Another task is buying bannering and advertisements on the right websites. The social team (part of the marketing

department) has expertise in this and they will be in charge of selecting the right spots. The ad agency will then

provide the material to be shown.

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c. PRINT

The planned advertisements need to be briefed and created to the ad agency. This can be created and tested before

the start of the year, although monitoring and evaluating by the marketing department in the meantime is important

so changes in the delivered message can still be done if necessary.

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VIII. CONTINGENCY PLAN

In order to evaluate possible changes or implementations that might be necessary in the marketing strategy due to

positive or negative responses, best and worse scenarios must be considered. The intention with a contingency plan is

to be able to react quickly and effectively if reactions are negative, as well as improve activities if the scenario becomes

feasible.

a. BEST CASE SCENARIO

If everything proceeds without complication (we succeed to gain our targeted market share, receive positive responses

surrounding The Invisible Car campaign, increase loyalty and attract new focus targets, the next stage in the strategy

would be to expand the strategy to other European countries. The first target would be France because a plan to

establish recharge stations is already in planning stages and there is a high penetration rate of EVs. In addition, the

country is similar to Norway in terms of average population and wealth, which are essential characteristics for a target

willing to buy Tesla Model S. Additionally, in order to make The Invisible Car campaign an inclusive trend, we would

aim to run more events with higher margins and impact, involving Europe in environmental activities sponsored by

Tesla to the degree that Norway currently does, in order to expand Tesla awareness’s in all Europe.

Another important and additional step could also be to introduce part of the alternative marketing strategy which

would allow Tesla to increase its impact on the car market but as well as environmental changes. In the best case

scenario, the success of the Model S in terms of both increased brand awareness and a significant injection of cash,

would allow for the launch of BlueStar, the Model X, at a lower a price category ($40.000). This product will aimed at a

much larger audience (who is not necessarily interested in luxury cars) and will allow for diversification of the product

offering. Tesla could also decide to increase its investment in service, in term of human resources, the online

purchasing process, post-purchase service and market research.

b. WORST CASE SCENARIO

If a negative response is received and we do not meet our targets in term of growth in the market share, the

contingency plan will involve increasing the budget for promotion in pop-up events, advertising, app and press. Our

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plan is to reduce the number of events, cut the budget and do just one unique event trying to maximise the majority

of possible costumers, already highlight in our previous segment’s research.

As an alternative plan for the one-shot event, we are going to save margin in term of location choice to pre-existing

public locations, such as square sand public buildings, which could significantly reduce the budget. We would

implement press advertising in specialized magazines, focusing more in the tech professional and ‘working women’

categories. Looking at our research, we found out that the female segment is looking to buy luxury car as much as

men due to salary equity and characteristics of ultimate decision-making and environmental responsibility. This

element could be an important driver in Norway and in all North Europe countries. Another option, linked to the

alternative marketing strategy, is increase free charging stations to establish Tesla’s name and build trust for the

brand, physically, without the use of strongly communication and promotion plans. Intensifying that Tesla will also be

able to be part of important partnerships, for the development of better technologies, but also selling their own

battery to car manufactures such as BMW, Audi and Mercedes.