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Tesla Motors By: Carl Bruinsma Date: 04/26/2015 Course: Marketing Channels Marketing Channels Solutions Project

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Page 1: Tesla motors project

Tesla MotorsBy: Carl Bruinsma

Date: 04/26/2015Course: Marketing Channels

Marketing Channels Solutions Project

Page 2: Tesla motors project

Executive SummaryIntroduction

In 2003, Elon Musk a billionaire and founder of PayPal combined with engineers Martin Eberhard and Marc

Tarpenning to found Tesla Motors.

Tesla Motors has created a trio lineup of vehicles. These three zero emission

cars consist of the Model S, Model X and Roadster. Also, Tesla has made

several first time initiatives including; first car manufacturer to sell directly to consumers, first to pay off government

loans as well as first to create an all zero emission line-up of vehicles.

These innovations combined with their sporty & luxurious designs of make them a huge contender in the auto

industry.

Page 3: Tesla motors project

Situational AnalysisInternal Assessment

Major StrengthFirst to enter the all electric

sports car market

Major WeaknessesExtremely High cost of

production

Major OpportunitiesOpening a whole new

world of environmentally friendly vehicles

Major ThreatsTechnology has been

around for many years

Page 4: Tesla motors project

Situational AnalysisInternal Assessment

Strengths• Developed the first all electric sports car• Strong supplier to manufacturers like Toyota• Strong technological knowledge of electric

transmissions and drive train• Ability to be completely vertically integrated• Their current Model S has extreme popularity

and serves as a brand moving forward

Page 5: Tesla motors project

Situational AnalysisInternal Assessment

Weaknesses• Since these vehicles are all electric and yet

focus on the sporty aspect they tend to be very expensive

• The prices of their products being offered are higher than similarly powerful vehicles with internal combustion engines from other companies

Page 6: Tesla motors project

Situational AnalysisInternal Assessment

Opportunities• Growing support across the globe for

environmentally friendly vehicles• Improvements in the quality control process

can reduce costs• Governments are beginning to offer tax

incentives to people with environmentally friendly vehicles

Page 7: Tesla motors project

Situational AnalysisInternal Assessment

Threats• Tesla Motors wants to sell to the average end

user which seems difficult to do using their current business model

• Their current strategy has never been used in the car industry before. However, it seems to be working fairly well.

• They are competing against a technology that has been around for many years.

Page 8: Tesla motors project

Situational AnalysisInternal Assessment

Tesla Motors positions themselves as a company that sells pure electric vehicles that are yet sporty & luxurious

• Tesla Motors serves a multipurpose role just like many other car manufactures

• Tesla Motors manufactures their own cars

• Unlike every other car manufacturer, they also serve as a retailer selling their own cars across the globe

Firms Position

Page 9: Tesla motors project

Situational AnalysisExternal Analysis

Regulatory Factors• Just like any other car

manufacturer, Tesla is subject to the same rules such as California’s Low-Emission Vehicle Regulations

• They must provide the consumer with safe and reliable vehicles

Tesla Motors Motto

~ Burn rubber, not gasoline ~

Page 10: Tesla motors project

Economic Factors• Tesla Motors uses global

warming to their advantage showing off their zero emission vehicles

• Tesla is replacing oil which is a exhaustible energy source with electricity/battery power which can be a renewable energy source

Situational AnalysisExternal Analysis

Page 11: Tesla motors project

External Analysis

• Tesla has been in the media as of lately because of their fast growing market and company

• They currently have the first mover initiative. However, their sales are limited due to their expensive cars

• In recent social news, Tesla is expected to come out with a more affordable model priced around $65,000 in 2017.

Social Factors

Situational AnalysisExternal Analysis

Page 12: Tesla motors project

• Tesla Motors recently opened up their patents to other auto makers in order to inspire and encourage innovation in regards to battery powered vehicles

• Tesla utilizes cylindrical battery cell technology which allows for greater distances between charge-ups

• Telsa also has an integrated system which analyzes wind speeds, driving conditions and weather to calculate an exact range on the battery life.

Technological Factors

Situational AnalysisExternal Analysis

Page 13: Tesla motors project

Situational AnalysisCompetitive Analysis

Target Market• Tesla Motors Primarily targets the

affluent and particularly those who are concerned about global warming and being environmentally friendly

• However, more recently Tesla plans to create a car that is more affordable to capture a larger target market since their current market is less than 1% of automobile total market

Page 14: Tesla motors project

Tesla Motors has established much success in targeting

their market

•This may primarily be due to the fact that they are currently the only ones in the market that manufacture these types of cars

•They have established themselves in the market as a luxurious, rare and sought after brand

Page 15: Tesla motors project

Situational AnalysisMarket Analysis

Market Leaders• Interesting enough, Tesla Motors is

considered the market leader in their niche market

• That being said, Ford, GM, Chevy, Nissan, Mercedes and some other car manufacturers have come out with electric vehicles or are coming out with a version in the near future

• These other car manufacturers are attempting to create an affordable electric car first

• Whereas Tesla created their luxury model first which allowed them to develop the brand they were going after

Page 16: Tesla motors project

Competitive Advantage• One major competitive

advantage that Tesla has is the fact they are the first into the market that they are in

• They set the industry standard in regards to electric powered sports and luxurious cars

• They are currently the only ones in the market, but not for long

Situational AnalysisMarket Analysis

Page 17: Tesla motors project

The Mission of Tesla

• The objective and goal of Tesla remains the same from the beginning• Tesla wants to accelerate the production and consumer use of sustainable transport or in

other words battery powered vehicles• Tesla started production with a sports car knowing that their first car would be very

expensive with the technology they are using• In the future, they plan to roll out more affordable all electric cars to the general public

Objectives & Target MarketObjectives/Mission Statement

Page 18: Tesla motors project

Objectives & Target MarketStakeholders

• Many of the shares are held by Telsa employees and top management within the firm• However, there are significant shareholders worldwide

• Particularly in investment institutions **Refer to chart**

Objectives & Stakeholders

Page 19: Tesla motors project

Objectives & Target MarketTarget Market

Target Market

Tesla Motors targets the affluent business minded individuals who are looking for environmentally

friendly vehicles

This poses a problem to their industry since it is entirely dependent on such a small

market.

Tesla has recently announced that it will be coming out with a more affordable vehicle in order

that they expand their target market to include the middle

class consumer as well.

Page 20: Tesla motors project

Objectives & Target MarketTarget Market

Target Market

DemographicAs I stated before, Tesla targets the

affluent or rich class citizens because they are the only ones that can afford

their expensive luxury models.

GeographicGeographically, they target people

living within big cities. This is because they don’t have an extensive network

of super fast charging stations.

BehavioristicBehaviorally, they are targeting people who are worried about global warming or other such negative environmental

impacts that gasoline powered vehicles have. They are ultimately concerned

about their footprint.

PsychographicThis is very similar to ones behavior yet

psychographics have to do with ones interests , attitudes and opinions. This

is a very difficult thing to market to. However, typically if you market to the

other three areas you will be marketing to their psychographics as

well.

Page 21: Tesla motors project

Objectives & Target MarketTarget Market

Market ShiftTesla knew this going into the

market that they would eventually have to make the shirt to produce

cheaper vehicles in order to expand their market and to increase sales. This is exactly where the market is taking them and in 2017 they plan to unveil a new Tesla at nearly half

the cost of the current Model S.

Page 22: Tesla motors project

Marketing Channel StrategyMembers

Page 23: Tesla motors project

Outsourci

ng

• As you can see from the previous slide, Tesla Outsources many of their parts because they currently do not have the plant capacity to manufacture every part of the Tesla car.

• While Tesla outsources many of their parts, they cut out dealerships of which every other car manufacturer has to deal with in their marketing channels.

• By cutting out dealerships their marketing channels are much different than a normal car manufacturer. Like other car manufacturer they outsource parts yet unlike other car manufacturers, they sell directly to the end user.

Marketing Channel StrategyMembers

Page 24: Tesla motors project

Marketing Channel StrategyMembers Function

Members FunctionTesla’s channel member functions

simply as a suppliers to Tesla Motors in which they manufacture the

entire car and sell directly to the end user.

Every channel member of Tesla has experience in building innovative

top quality products to existing car manufacturers and therefore serve

Tesla’s Target Market.

Page 25: Tesla motors project

Marketing Channel StrategyConflict

ConflictThere is always potential conflict between channel members and Tesla as there would be in any other situation. Any problem with Tesla and the vehicles

they produce could potentially ruin the reputation of these channel members that supply the parts to Tesla.

Also, in order to become more vertically integrated, Tesla will most likely start producing more of their own

parts in order to reduce costs. This may also be a major source of conflict between channel members

and Tesla.

Page 26: Tesla motors project

Marketing Channel StrategyEfficiencies

Efficiencies

Tesla could become more vertically integrated in order

to cut costs and become more efficient by controlling all

aspects of the manufacturing process.

Tesla has shown that they are very innovative in regards to

new technology. In the future, this may be a way in

which to make their cars more affordable to the general public by becoming more

energy efficient.

Over time, companies learn about their ever changing

target market. Doing some serious R&D Tesla will be able

to improve overall effeciencies.

Since Tesla is a fairly new company, they haven’t

perfected their manufacturing and therefore this could be a

significant area of improvement in order to

improve efficiencies.

Page 27: Tesla motors project

Interesting Facts

Tesla markets their cars to the weaknesses of

their combustion engine

competitors.

Page 28: Tesla motors project

Conclusion

In conclusion, Tesla Motors remains a very innovative company and perhaps the

most in the industrySome even compare Tesla

Motors to Apple INC in how they are dominating

their target markets.

Page 29: Tesla motors project

Conclusion Cont…

In studying Tesla Motors the have come up with a success story that many car manufactures have been trying to do for years.First they started with a great product. An all electric luxurious sports car unlike no other in the market.Secondly, they started high and are working their way down. This way they develop a luxury brand from the start in hopes of eventually expanding their target market to the every day customer.Thirdly, they turn auto industries weaknesses into strengths. They do this by showing the simpleness of an all electric drive train and the fact that the don’t need oil and the many parts that a combustion engine requires.Fourthly, they created a new multi-channel model. This model is a model in which the end user buys directly from the manufactures website.Fifthly, they build the community & focus on the experience. This is evident from their website which focuses highly on the experience.Finally, they leverage the media and traditional press. This was especially the case when there was recent talks of Tesla cars starting on fire.

Page 30: Tesla motors project

Bibliography

(1) N.p.: n.p., n.d. Web. 3 May 2015. <http://sites.psu.edu/teslammportfolio/executive-summary/>.

(2) N.p.: n.p., n.d. Web. 3 May 2015. <http://www.mbaskool.com/brandguide/automobiles/4475-tesla-motors.html>.

(3) N.p.: n.p., n.d. Web. 3 May 2015. http://www.latimes.com/business/autos/la-fi-tesla-open-source-20140613-story.html#page=1

(4) N.p.: n.p., n.d. Web. 3 May 2015. <http://www.teslamotors.com/blog/mission-tesla>.

(5) N.p.: n.p., n.d. Web. 3 May 2015. <http://scienceofrevenue.com/tag/tesla-marketing-strategy/>.

(6) N.p.: n.p., n.d. Web. 3 May 2015. <http://www.autonews.com/assets/PDF/CA843311210.PDF>.