Marketing Strategy of Tesla

The marketing mix used by Tesla Inc. is a unique one, even in an industry where there are some brilliant marketing strategists. The marketing strategy is also known as the marketing mix or the 4P’s (Product, Place, Price and Promotion). Sometimes in the marketing of services an extended mix of 7P’s (Process, People and Process) is used. It is a set of marketing tools used by an enterprise to pursue its marketing goals and refers to the levels of marketing decision; the 4P’s.

Tesla has a noteworthy managerial control in all aspects of its marketing strategy. This height of control is what allows the company to make full use of its efficiency in reaching its intended customer base and increasing profits. Being one of the main producers of electric cars in the United States and some other developed countries, Tesla does not hold back and uses its marketing mix to facilitate market infiltration and potential growth in international markets. The marketing mix of Tesla encourages strong competition against other car manufacturers like Mercedes Ben, Ford Motors, Toyota Motors, Honda Bavarian Motor Works (BMW), Nissan Motor Company, etc.

These companies also engage designed marketing mixes to tackle that of Tesla in the automobile market. In the engagement of the marketing mix, the reputation of the Tesla brand grows alongside its increase in market penetration. The name Elon Musk, C.E.O of tesla is another factor that grows the brand. His popularity is an effective tool. In the analysis of Tesla, its brand is acknowledged as its major strength, playing the role of an important factor. The 4P’s strategy of Tesla is known to be quite an unusual one in the automobile industry.

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TESLA’S PRODUCT MIX

As an Independent automobile producer that provides a broad collection of products made from cutting edge technology, Tesla follows a business to business (B2B) model which promotes and builds a network with other companies. The B2B model allows the supply of products as well as services.

Tesla is a well known distributor, manufacturer, developer and designer of eco-friendly products as well as offering eco-friendly related services to other automobile companies. Product development is strategically used to achieve its corporate goals in the product variable of the mix. As an international business, Tesla has many products, but the main product manufactured is the E.V. (Sedan) powered by a lithium-ion battery.

Tesla is famous for its electric cars. Tesla launched its first car, The Roadster followed by the Tesla Model S with first class features like auto-pilot self driving, adaptive lighting, a strong engine and a “defence mode” to protect passengers in case there is an attack. The Tesla Model 3 was introduced as the third generation car. With customers very expectant, the company registered a record maximum number of bookings. Its one of Tesla’s great works with its maximum safety standards.

A crossover SUV bodied in aluminium was unveiled as the Tesla Model X. It’s cutting edge Clean-air Tech offers passengers a level of protection from polluted air. It is also one of the quickest cars around, doing 0mph - 60mph in less than 3 seconds. It is also one of the safest. Nevertheless, in addition to the production of electric cars, the company produces parts for electric cars that other companies produce as this is a step in achieving the mission and vision of facilitating the movement of the world towards Electric vehicles and renewable energy.

Also Tesla produces batteries that store energy for both domestic and industrial use. In line with this, SolarCity Corp, producers of solar panels and providers of installation services was bought out by Tesla so they could broaden their product mix. As much as much as Tesla’s main focus is on Electric cars, it also looks to develop and broaden its international business and product base. This particular product mix strategy supports the maximization of profit by the company.

TESLA’S PLACE/DISTRIBUTION MIX

The geographical location and infrastructural venues where the demands of customers are met is an integral part of marketing. All organizations supply their products and services at these locations. For Tesla, all organizational, strategic and developmental decisions are made at the headquarters in Palo Alto, United States. Alongside is a widespread sales and distribution complex.

Tesla has distribution stores in Asia, Europe, Australia, South Korea, Dubai and North America. In May of 2018 Tesla had opened more than 5 outlets in the Canadian cities of Ontario, Quebec and Montreal. China is the largest market (both domestic and international) for Tesla’s electric vehicles, so much so that Tesla announced in 2018 that a production plant is to be constructed in Shanghai and is to produce 500,000 vehicles in a p of 5 years.

In the 4th quarter of 2018 it was announced that partial production will begin in mid 2019 (FINANCIAL TIMES, 2018). Tesla is also the only foreign automobile company in China that did not have to enter a 50:50 agreement with the Chinese government in order to set up and start production. Tesla started operations in San Carlos California and later expanded its domestic reach buy opening distribution centres in LA and New York.

Tesla had opened 260 distribution centres in only the United states by the end of 2016. Most of the stores are built in and around large shopping malls, giving the Tesla brand the ultimate maximum exposure. There is even a website where customers can go and pick a Tesla model of their choice to their specifications.

Tesla’s sales approach is designed in a way that customers come in direct contact with the brand and all the experience it comes with such as repair and maintenance services. This is achieved through the service centres and stores. Also Tesla vehicle owners can charge their cars at the various charging stations provided by Tesla. In China alone Tesla says it has more than 3000 charging stations. All three of their largest fast charging stations are found in China.

Most of the manufacturing is done at its facility in Fremont, California. Other plants are assembly plants. Examples are the Gigafactory 1 & 2 in Nevada and New York respectively. Instead of selling through dealerships Tesla advertises, promotes and sells its cars through online portals and company showrooms.

It is worth noting that one if Tesla’s Research and Development division is located in Athens, Greece, an example of the p of Tesla. The place/distribution mix underlines noteworthy corporate management control in the manufacturing, distribution and sale of vehicles.

TESLA’S PRICE MIX

Pricing is an important factor of marketing strategies. It is what supports the brand. In the case of Tesla, price is what backs their premium brand as well as maximization of profits despite a limited production level. Pricing is what affects profits as well as what customers perceive the company to be. Tesla comes of with the following pricing strategies:

• Premium pricing strategy
• Market oriented pricing strategy

From the onset, Tesla has used a premium pricing strategy. This comprises of various high price points according to the uniqueness or valued given to its products. It is evident in the willingness of customers to pay high prices for Tesla products as they are considered to be high technology and eco-friendly.

This also means that pricing depends on the level of innovation and design. At the end of the 2017 financial year, Tesla declared it had revenues of 11.75 billion dollars($) and a net income of (-)2.23 billion dollars($), clear evidence of Tesla’s effort to target wealthy buyers from the get go. Their products were meant for a target group of customers who are more concerned with quality, high tech plus eco-friendly products.

Irrespective of the price level, this group of customers would be able to make purchases. Subsequently, a line of affordable mid range products was launched for the middle-income target market. Prof. Clayton Christensen suggested that Tesla is creating a new mode of disruption, in which products start at the high end and move down (HBR, MAY 2015, P.22-23). In order to achieve this Tesla had to adopt the Market oriented pricing strategy.

Products greatly affected by this apart from its vehicle inventory were products from its acquired subsidiary SolarCity; solar panels and related product turned in great numbers. It was very successful and eventuated in high revenues and profit margins. Tesla expects to change or add to its pricing mix strategy when they come out with new products for different markets.

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