Tesla Inc. Marketing Analysis
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Tesla Inc. Marketing Analysis
Suppose you are a person who cares about the environment or what you consume. In that case, you must have heard about Elon Musk and Tesla Inc. Situated in Juan Carlos, California, and once known as Tesla Motors, the automobile manufacturer’s business focuses on the design, assembly, and distribution of electric cars that are marketed as safe for the environment. The car manufacturer was founded by Martin Eberhard and Marc Tarpenning in 2003 before Elon Musk became the biggest shareholder in 2004. Tesla Inc. is the ultimate leader in the electric car segment, having a wide range of electric vehicles, from short-distance sedans to long-haul trucks. Despite the electric car market segment exploding in recent years, no other company truly rivals Tesla Inc. The company went public in 2010, branding itself as the solution to the automobile’s industry contribution to global carbon emissions and climate change. However, Tesla’s vehicles represent a luxury brand, with the middle and lower classes mostly unable to access its product. The attached report provides a marketing analysis that seeks to determine how Tesla Inc. will survive and can grow in the future of the automotive industry despite its various challenges.
Marketing Environment
Competitor Analysis
The growth and development of the electric car segments continue to be facilitated by traditional car manufacturers and market leaders, including Mercedes, BMW, Volkswagen, Nio, BYD, and Daimler. Among the listed companies, Tesla, BYD, Nio, and Volkswagen represent the market leaders (Liu, 2021). The four organizations employ different marketing tactics. However, given that they compete for the same market share, it is difficult to alter investor mindset over the feasibility of alternatives in the EV market (Liu, 2021). Tesla is increasingly being forced to depend on alternative profit models as the EV industry becomes flooded with new entrants. With a specific look at the EV industry, Nio, a Chinese-based firm, is becoming Tesla’s main rival in the biggest EV market (Liu, 2021). The company’s stock grew by 35% in sales (5000 electric vehicles) from 2014-2020 (Liu, 2021). Concerning the traditional automotive industry. Volkswagen represents the biggest car manufacturer in the world. Despite the market changes, Tesla remains the biggest player in the EV market due to its innovations and strategic market control.
Macro Environment
Tesla has been benefiting largely from the political stability of its main EV markets. The company also benefits from the stability of its source of raw materials. For instance, the batteries for the Tesla Model S use cobalt. Over sixty percent of the world’s cobalt deposits are in the Democratic Republic of Congo. Amnesty International (2016) reports that the cobalt trade has increased the rate of civil conflicts in the region, putting EV manufacturers liable for the loss of life and social hardships. Tesla is bound to experience new growth with the passage of international agreements targeting the reduction of global carbon emissions. With governments offering tax credits for each electric car purchased and putting caps on engine sizes for petroleum-based cars, more and more people will purchase Tesla vehicles.
Marketing Planning
| Strengths | Weaknesses |
| Strong brand value and early market capitalization Unique brand positioning and superior marketing strategy Impressive rate of internal innovation Impressive hiring and recruitment strategy | High employee turnover rate Elon Musk is a controversial figure High cost of production Known to have production delays Source supply delays due to political strife and a general lack of natural resources |
| Opportunities | Threats |
| Growth of the EV market as more economies adopt environmental targets and environmentally friendly policies Lowering the pricing of its EV vehicles In-house battery production | Increased competition from top traditional automotive manufacturers Increased innovation rate by EV-based companies, such as Nio Elon Musk can become distracted as he manages his other companies Changing government legislation on batteries |
The SWOT analysis helps determines Tesla Inc.’s current positioning and assesses its potential for growth given changes in external market factors. The assessment tool highlights that Tesla remains dominant in many business classes. The company’s main strength is that it continues to be the most valuable EV manufacturer. The organization’s sales revenue was $53.2 billion (2021), which is the same as 936172 units sold (Zandt, 2023). The sales volume translated into a $5.6 profit margin, pushing the firm’s market capitalization to over $1 trillion (Zandt, 2023). The high market capitalization makes it difficult for any brand to penetrate Tesla’s main markets, including China, The United States, and the United Kingdom. One substantial reason for Tesla being the leader is its innovative capacity for electric vehicles. The company leads in the main market factor, which is range (Zandt, 2023). Tesla Model S can take the driver past 600 kilometers on a single battery charge. However, the company needs to address its manufacturing complications. Frequent delivery delays negate its public image as an innovator (Zandt, 2023). The company needs to address its raw material problem to address its shortage of batteries.
Market Segmentation, Targeting, and Positioning
Market Segmentation
Tesla started with a roadster version of a car priced at $109000 in 2007. In 2012, the company introduced the world to the Model S, which was priced at $85000. In 2016, the company launched the Model 3, whose price is $35000 (Ghuari & Cateora, 2021). There has been a steep decline in the average pricing of its vehicles. It is evident that its former segmentation strategy prioritized high-end affluent individuals seeking the thrill of an electric sports car (Ghuari & Cateora, 2021). However, with the Model 3, there is a clear change in the target consumer base. The current segmentation strategy is based on region and population density. In this analytic approach, gender, age, occupation, and life cycle are included. The result is median to upper-middle-class young adults. The behavioural segment will examine the degree of loyalty, consumption rate, personality traits, and eco-product support (Ghuari & Cateora, 2021). Social class and lifestyle remain the main segmentation criteria.
Targeting
It is no secret that Tesla builds high-end electric vehicles for high-income upper-middle-class individuals. The class of consumers comprises business executives, entrepreneurs, and millionaire’ family heirs’. However, these individuals are not just about money because they acknowledge the green movement. They are also trendy, social, fashionable, and tech-savvy (Ghuari & Cateora, 2021). Such complicated individuals are not bothered about the price tag. The median age for such consumers is 48-54, but younger people are also known to purchase Tesla vehicles. Tesla will have to expand its target market in the near future if it is to keep growing and keeping its competitors at bay.
Positioning
Tesla’s brand positioning is highly unique because the manufacturer sells cars, batteries, and software. The car manufacturer has positioned itself as the market leader in high-performing and high-end electric cars, meaning their products are pricey and used for their reputation (Ghuari & Cateora, 2021). Currently, the company is only vested in meeting the transportation needs of consumers who are frustrated with the environmental implications of the oil and gas business. Such consumers address their concerns by acquiring renewables. Tesla is moving into the middle class, but it has to acknowledge its difficulties due to high production costs (Ghuari & Cateora, 2021). The reduced cost of raw materials and changes in government policies will determine Tesla’s ability to change its position to enter new markets.
The Marketing Mix
Product Strategy
While Tesla is known mainly for its electric vehicles, the company also produces other sustainable energy products. The company’s product strategy can be broken down into three categories. (1) The electric vehicle category offers a range of electric vehicles designed to be stylish, safe, high performing, and environmentally friendly. Products in this category include the Tesla Model S, Tesla Model 3, Tesla Model X, Tesla Model Y, Tesla Cybertruck, and Tesla Roadster (Ghuari & Cateora, 2021). (2) The second category is energy storage solutions. Examples of products in this class include the Tesla Powerpack, Tesla Megapack, and Tesla Powerwall (Ghuari & Cateora, 2021). (3) The third category is clean energy products. Examples include the Tesla Solar Roof and the Tesla Supercharger Network.
Pricing Strategy
Tesla uses various pricing strategies to achieve the highest possible price for its products. The car manufacturer adopts premium pricing to market its products as high-performance luxury vehicles (Ghuari & Cateora, 2021). The Tesla models fetch considerably higher pricing than the average car to outline its unique features and cutting-edge software. Tesla also adopts cost leadership. Introducing the Tesla Model 3 was a message of intent, as the company now pursues a broader audience with its cheaper alternatives (Ghuari & Cateora, 2021). Tesla also charges based on the value it offers its customers. The company’s unique technological features and range justify its price points, denoting the use of value-based pricing. Lastly, there is dynamic pricing. Tesla’s price per unit will change depending on demand, manufacturing costs, and inflation.
References
Amnesty International. (2016). This is what we die for. Amnesty International. https://www.amnesty.org/en/wp-content/uploads/2021/05/AFR6231832016ENGLISH.pdf
Cateora, P., Ghauri, P. (2021). EBOOK: International Marketing. McGraw-Hill Education.
Liu, S. (2021). Competition and valuation: A case study of Tesla Motors. IOP Conference Series: Earth and Environmental Science, 692, 1-10. https://iopscience.iop.org/article/10.1088/1755-1315/692/2/022103/pdf
Zandt, F. (2023, January 26). Tesla’s race toward profitability. Statista, https://www.statista.com/chart/26705/yearly-net-income-and-revenue-of-tesla/