Tesla Motors Marketing Analysis - Essay Example

? Tesla Motors Marketing Analysis Table of Contents Introduction 3 SWOT Analysis 3 Strength 3 Weakness 3 Opportunities 4 Threats 4 PESTEL analysis 5 Political factors 5 Economical factors 5 Social factors 5 Technological factors 6 Environmental factors 6 PORTER’S FIVE FORCES analysis 6 Bargaining Power of Suppliers 6 Bargaining Power of Buyers 7 Threat of New Entrants 7 Intensity of Competitive Rivalry 7 Threat of Substitute Products or Services 7 MARKETING MIX (7PS) analysis 8 Product 8 Price 8 Promotion 8 Place 8 Physical evidence 9 People 9 MARKETING ACTION PLAN 9 References 10 Tesla Motors Marketing Analysis Introduction Tesla Motors is a company that specializes in manufacturing of electric vehicles, designing, developing and selling high-performance electric vehicles. It also sells advanced electric vehicles powers train component, and operates in North America, Europe and Asia through subsidiaries. The company has its headquarters based in California, U.S.A, and it has principles aimed at facilitating development of Models in order to attain its objective of first customer delivery (Tesla Motors, 2010, p. 4). This will facilitate the efforts of pursuing new electric power train opportunities and automobile manufactures. In fact, the paper will focus on conducting SWOT, PESTEL, porter’s five forces, marketing mix and marketing action plan analysis on Tesla Company. SWOT ANALYSIS Strength Tesla signed a licensing deal with lotus cars in order to convert one of their sport models in to an electric car, which was lightweight, small car with all the external body panels made of plastic. On the other hand, the Tesla Roadster has become the first mainstream electric vehicle enquired by celebrities, thus bringing a more desirable model S to the market. The company has managed to develop their first electric sport car “The Roadster”, and supplied to other manufactures like Toyota with more technological expertise in the field of electric transmission and train drive (GlobalData, 2012, p. 1). The company has also developed a vehicle, which is entirely in house, whereby sub-assemblies are required. The platform developed for Model S has facilitates the application of the crossover model and any other model. In fact, Tesla was the first company to produce electric vehicle and they have stood by the business model to collaborate zero emissions with quality performance design. Weakness The development of the vehicles and sub-assemblies has resulted to an increment of production cost, hence they do not achieve economic of scale. Products have a higher price than their competitors who sell combustion engine powered vehicles. The Roadster has phased out and the sales have reduced, and this is an indication that revenues will come from the Model S. The models have low brand recognition; hence, there will be difficulties in convincing the customers concerning the superiority of their preferred options of the brand. The other weakness of Model S is that it may not be available until 2012, hence giving a chance to competitors to produce and market their electric vehicles before the release of Model S by Tesla, thus they will take up the market share (Binkiewicz, Chen & Czubakowski, 2008, p. 5). Opportunity The company has been benefiting from support by the government across the globe, since their products are environmentally friendly, thus they have been exempted from duties. The company has also been offered support by the Mercedes Smart car, which has results to leaning the way they can launch in near future. Tesla has a chance to improve the quality control process in order to reduce their cost, hence increasing enthusiasm. The other opportunity relates to the rise of gas prices, whereby people are seeking alternative ways of travelling. In this case, the company acquires a prime opportunity to depict the benefits associated to their products and the cost friendliness to customers. Threats There are difficulties involved in production, distribution and selling of the cars to customers due to their current business, and their pricing strategy has not been applied in the auto industry. Tesla is competing against technology of combustion engine that has been applied over hundred years; hence, it will take time for people to their products. The other threat relates to the date for launching Model S being pushed further, hence allowing their competitors such as General motors and Audi to have a chance for advertising, and marketing their products. PESTEL ANALYSIS Political Factors There are antitrust regulations for preventing the auto manufactures form domineering markets via vertical integration, which causes stagnation in the technological growth.  In terms of environmental protection, products from Tesla Company are associated with environmental conservation by reducing pollution caused by cars using combustion engines. However, tax policies are political and environmental laws are entailed in the American and Canadian governments, leading to substantial influence on with holding products to the public.   Special incentives are facilitating the effort to produce electric vehicles has been dispelled in North America, and the hybrid vehicles are making a push in the market and electric vehicles are gaining tractions provincial and Canadian federal government legislation. Nevertheless, Tesla has maintained good attitudes toward foreign companies, which is evident through their association with a company like Toyota. Moreover, they are always adhered to the laws on hiring and firing, hence there have been no cases of employee disputes in the company.  Lastly, stability of government is facilitating the debut of the electric car to Toronto market, whereby the political factors are related to the extent of government intervention and economy.   Economic Factors The rate of unemployment has been falling at a fast rate and the measure of Gross national product is rising at a modest rate. The government has made the relevant effort to lower the interest rates in order to facilitate borrowing of by customers, hence increasing their purchasing power. Nevertheless, the inflation is being controlled by the government through the relevant fiscal policies aimed at regulating money supply into the economy. The economic factor has influenced the operations and decision-making process of the company manufacturing electric cars. There has been an increase in the operating cost of the vehicles due to many economic factors like cost of fuel and insurance, whereby there was a rise in the consumer Price Index, the price of transportation in Canada. The prices rose by four percent in a period of one year to May 2010, after an increase of six percent in April. Social Factors Tesla products are changing lifestyles, whereby the consumers are using electricity as a substitute for the fuel, which is highly expensive. Therefore, electric cars are contributing to increased living standards among the consumers since they have reduced transport expenses. The company is also contributing generation of employment due to the advancement in technology that is increasing career expectations among those in the field of technology. The company is interested on consumer activism, since they focus on purchasing products that are environmentally friendly, though this is finite since the prices are playing a substantial role in decision of the consumer. Growth rate of population has influenced trend has an influence on demand for the electric cars, for instance, the company has offered product that has zero emissions, with an approximate cost of $129,000, and limits to viable alternatives of gasoline cars.  There is a relation of the political and economic circumstances and this entails the cultural aspect and the rise in environmental consciousness, emphasis and attitudes on environmentally friendly products such as electric cars. Technological Factors The company has invested on intensifying their Research and development in order to facilitate the advancement of technology for producing better products in the future. The company has a patent protection since their products have certified the relevant criteria of electrical cars. Moreover, the company is focusing on applying the new developments in technology in order to produce new products that will enable them attain the required market share. These factors entail the incentives that are mentioned in electric technology that powers the Tesla line-up, though the problem is where the owners are planning to go away beyond 400 kilometres range. However, a Charging station has been created in California by the department of Transport and they have been listed on publicly accessible website. The stations are also helpful for providing a place for plugging in hybrid electric cars, and this would assist the company to avert the need for extensive infrastructure. Environmental Factors The company operations are affected by the environmental factors like the growing awareness of the climatic change, and the electric cars offered by the company. These factors are also affecting the consumers due to the increase in awareness of the environmental impacts on production of electric cars. Events like the BP oil spills are creating an influence that can change people’s perception concerning reliance on petroleum, hence strengthening the environmentalism as an ideology, which is prevalent in the society, thus promoting good attitudes towards electric cars. PORTER’S FIVE FORCES Bargaining Power of Suppliers During the manufacture of the electric car, suppliers of components like cooling system, electrical system, braking systems and fuel supply system have low bargaining power. Nevertheless, vehicle manufactures has owned numerous interchangeable suppliers with an ability to produce components in a short time, and in this situation, the suppliers lack the liberty to alter the prices of their products. Bargaining Power of Buyers The buyers of the electric car are having a high bargaining power, whereby they have acquired lot of information from source such as internet concerning the places where they can find proper vehicles. There is significance in indentifying the preference of private consumer; hence, the electric cars company has been increasing one type or cheaper types, thus making buyers to find substitutes of electric cars easily. Threat of New Entrants There is no ease in entry to the business of selling electric cars, since there is involvement of special products requiring large amount of funds for designs, electronic functions. However, there are relatively low barriers involved in entering the market of selling electric cars, due to the high demand for environmentally friendly vehicles. Therefore, this can pose to be a potential threat to the company, since they use technology that can easily be imitated by competitors. Intensity of Competitive Rivalry The fact that Tesla Company is the only company manufacturing electric vehicles does not stop other companies from establishing as manufacturers with an aim of catching up with lithium battery technology. In fact, the company is seeking to extend their patents of electrical power train components to Daimler and Toyota, thus making it easy to be replicate by their competitors for their advantage. Threat of Substitute Products or Services The electric cars do not have direct substitutes, though there are common products that are increase propensity of customer to switch to combustion engine vehicles. Nevertheless, the costs associated with buyers’ propensity to substitute relative to price performance for switching to the other products is high. MARKETING MIX ANALYSIS (7PS) Product The company has offered a top line of products such as Model S and electric-powered luxury sport sedan with limitless innovation and unprecedented teamwork and aerodynamics. These products have efficiency in aspects of design and technology, while their body has repeated evaluation of design and technology (Kotler & Armstrong, 2004, p.8). The evaluations are conducted by computer simulations and wind tunnel testing for ensuring quality aerodynamics. Pricing There is a definite advantage in pricing related to market entry as the first electric vehicle to be produced, whereby there is a need to communicate value and prestige through prices. The Model S is set to compete with BMW 5 series, Audi 6, Mercedes E, which are more competitive than luxury sedan. The prices of the company products are higher, since they are environmentally responsible, and the products save money for the drives on gas each year. Promotional Tesla Motors has successful promotional strategies that are significant for engaging prospective customers, through campaigns for their products to a diverse target market (Lamb, Hair & McDaniel, 2011, p. 4). There are other promotional strategies such as events, websites and advertising, with a focus of efficient and benefits of car purchases. There are events that are held in electric atmospheres, where prospective owners gather in a relaxing environment while making their purchasing decisions. Place The company is internationally selling their electric cars to mainstream customers, whereby they are growing at a rapid pace reaching over thirty-one countries with a mission to increase their output of electric cars and varieties. They are focusing on influencing the automobile industry, through the stores in North America, Europe and Asia. Physical Evidence The physical evidence is an element of material parts of the services offered by the company, and since the consumers tend to depend on the material cues. There are numerous examples of physical evidence offered by Tesla Company, which include, buildings signs, logos, annul accounts, business reports, brochures, websites and business cards. People This is a component of services provided to customers through recruitment and training appropriate staffs that are expected to establish competitive advantage. Therefore, customers make judgment concerning the services provided by Tesla based on people representing the company. COMPETITOR ANALYSIS Tesla Company has acquired a position of a high-tech auto manufacturer specializing in selling luxurious EVs and electric power trains. Tesla has a competitive differentiation by concentrating on delivery of environmentally conscious products on the market with the benefits of premium car. The company ensures that the car has comfort, speed and handling, while Silicon Valley culture and Apple retail has assisted in company positioning through independence and innovation. Moreover, Tesla competes within the automobile market, while producing products like EVs PHEVs and hybrid vehicles. Some of the primary competitors in the market include Audi, BMW and Toyota as manufactures who have gained a significant market share and they have set standards for the green vehicles. In this case, major automakers are launching and preparing to launch electric and hybrid vehicles in a wide range of prices, in fact, there are expectations of market becoming highly competitive in the next five years. CUSTOMER SEGMENTS There are numerous in which Tesla has segmented its market, whereby they focus on appealing to everyone by engaging in mass marketing campaign. The segmentation strategy of Tesla involves employing limited recourses in an efficient way. In fact, Tesla has focused on studying the methods of segmentation in order to understand the customer’s profile, hence allowing them to focus on their similarities within the segments and dissimilarities in the segments. One of the methods is geographic segmentation, whereby the company uses their products that satisfy customers in a certain region. Therefore, Tesla uses geographic segmentation since the gas prices are varying from one region to the other. The other method is demographic segmentation, whereby the company focuses on understanding the characteristics such as gender, age, education and income. In this case, Tesla allocates resources to people who can afford their products, for example, the target customer for Roadster S are males in late thirties, since they have high income. The other method is psychographic segmentation, whereby they use conducted survey and customers are grouped according to their lifestyles. MARKETING ACTION PLAN Tesla has a marketing action aimed at highlighting features of their products from production to distribution, whereby focusing on displaying the quality, luxury and benefits of their products. They are also focusing on marketing the brand of their products as their main objective, thus creating a need for consumer awareness concerning the Tesla Brand with an effort to sell Model S. Moreover, their product roadster contributed to Tesla Motors entering into the market, while Model S is exemplifying the name and products of the company. In conclusion, the paper has conducted a SWOT, PESTEL, porter’s five forces, marketing mix and marketing action plan analysis on the Tesla Company. There are numerous ideas explored in the paper related to success of the company, hence through this analysis, a substantial basis for understanding the company functionality and performance is developed. References Binkiewicz, N. Chen, J. & Czubakowski, M, (2008), Tesla Motors, Retrieved on 7 October 2012 from GlobalData, (2012), Tesla Motors, Inc. (TSLA) - Financial and Strategic SWOT Analysis Review, Retrieved on 7 October 2012 from Kotler, P. & Armstrong, G. (2004), Principles of Marketing, (10 ed). Upper Saddle Rivers, NJ: Prentice Hall, Print Lamb C., Hair F. & McDaniel C., (2011), Essentials of Marketing, (ed7), New York: Cengage Learning Tesla Motors, (2010), Report, Retrieved on 7 October 2012 from     Read More