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Marketing for Engineers Assignment Help
This marketing for engineers assignment help is prepared to present a comprehensive interpretation of Tesla Motor’s Globalization plan. The report begins with a brief introduction of Tesla- a global and first manufacturer of electric vehicles. The company began its production with premium fully electric sports car and eventually entered into battery electric vehicles. This report contains a detailed situational analysis of Tesla including economic, social, political, and, cultural environment scenarios. It further includes a marketing plan stating Promotional activities and objectives. Budgetary plans for 5 years and one annual budgetary forecast and analysis is also conducted to have a clear vision of objectives and underlying planning and implementation to achieve the set goals and objectives. The entire report highlights Tesla’s new technology centered approach to automobile manufacturing and marketing. An exhaustive study of the case study and profound research of secondary data was done to arrive at the findings and recommendations.
The objective behind preparing this report is to analyze marketing strategies, market dynamics, present a SWOT Analysis, competition overview and comparison and recommend further improvements or modifications which can be adopted to increase chances of success of the entire plan.
In the context of rapid globalization in past decades infrastructural advancements has enabled the automobile industry to go through massive and extraordinary developments. One such aspect is the Battery Electric Vehicles (BEV). And, the burning topic of ‘global warming’ or ‘environmental protection’ has added fuel to fire. There are many established and premium brands who have acted as ‘Early birds’ and entered into the production of BEVs.
TESLA- founded 2003 is a global enterprises that designs and markets electric powered vehicles and components. The company proudly claims itself to be the first among all automobile companies to offer completely emission free vehicles. The signature models like ‘Roadster-first wholly electric sports car’ was successfully sold across the globe. Another Flagship models include Model S, Blue Star and Model X. Model S stands in the list world’s most successfully selling plug-in cars. Sticking to its objective of manufacturing premium segment electric cars and green driving, TESLA is enthusiastically considering to manufacture BEVs. Corresponding to Apple’s philosophy and approach of unique products, initially aimed at most affluent market segmentation, TESLA is all set to adopt “Drive Different” as the underlining concept and motive behind the creation of BEVs.
- Mission- The mission of Tesla states, “To accelerate the advent of sustainable transport by bringing by bringing compelling mass electric cars to market as soon as possible.”(Retrieved from www.teslamotors.com)
- Vision– The vision statement of Tesla is, “To create most compelling car company of the company by driving the world’s transition to electric vehicles.”(Retrieved from the Article by The Mission of Tesla, Elon Musk, Chairman Product Architect and CEO, Nov, 2013, retrieved from www.teslamotors.com/blog/)
Tesla motors manufactures and sells electric vehicles. The two main models are a.)Models S Sedan and, b.) Model X which is a sport utility vehicle. Tesla has sold more than107, 000 Model across the world by the end of April 2106.The Model S can seat adult 5 passenger has an approximate range of 290 miles from a single charge and can reach the speed of 0 miles per to 60 miles/hr in about 2.8 seconds. The Model X has a seating capacity of 7 adults, has a range of 260 miles from single charge etc.… The company has approximately 120 service stations owned and operated by Tesla itself. (Retrieved from www.Reutors.com, May 2106)
Following is a graph showing comparision in terms of sales of tesla and other players for the year 2014-15.
Leading Models of Tesla renowned for their technology and emission free feature
Roadster: Retrieved from http://www.teslamotors.com/roadster/gallery/view/5135.
Model X:Retrieved from www.teslamotors.com
Following is a detailed analysis and interpretation of the business environment for TESLA as it aims to launch its unique BEV product line:
- Economic Environment: The economic environment for TESLA in context of BEVs entails several factors which are to be studied, observed, evaluated and then reflected in businessdecision making.
- BEVs which are a clear contrast to the traditional combustion based engines dependent on gasoline or other fossil fuels are no doubt a better option to count upon in long term. The volatility of crude prices and increasing environmental concerns have pressed on the BEV concept strongly in recent years.
- The high-end BEV offered featuring new technology by Tesla is planned to be sold at a premium price of $100,000+.
- High cost of input, Initial demand only from high end customers will generate lower profits initially. However, like Apple product lines, a gradual increase in demand may result in price lowering, larger customer base and increased margins. This idea gets a support from the world forecast of BEVs to cover 53% of electric vehicle sales and 5% of global automobile sales by 2020.
- The major part of manufacturing BEVs accounts to cost of Lithium ion batteries. Tesla’s lithium ion batteries weighs comparatively less, are of the same size and have a range up to 300 miles.
- The Consumer demand of BEVs will largely depend on the lithium ion batteries and its features. Tesla has already gained score over its battery improvements and is still working to innovate it continuously to decrease cost of production, provide enhanced qualities with every new model offered and keep adding towards contribution to environment conservation.
- The demand may rise gently in the developed economies. However, with income and living standards rising sharply in the developing economies the demand for premium priced BEVs will rise and these markets will serve as the major revenue drivers. Thus for coming years the affluent nations will drive the demand followed by the emerging economies later to become as demand leaders.
- Breakthroughs in advance battery technologies will eventually lead to cost reductions in long term.
- The limited non-renewable energy resources like gasoline will encourage the demand to shift to eco-friendly and electrically operated BEVs.
- Political Environment: The governments across the nations are supportive of the concept of Battery Electric Vehicles. Initiatives and programs to promote BEV as an alternate transport mediums are adopted and run through various countries. The governments along with setting carbon emission standards are now considering to encourage BEVs due to alarming global warming rates and environmental concerns. Following is a list of parameters that highlights key points in context of political environment for BEVs:
- 57% of all environmentally damaging greenhouse gases and 70% of gasoline consumptions is from the gasoline or other fossil fuel run transportation sector. These figures are constantly forcing the governments to review and find alternate transportation technology.
- Various steps in form of government subsidies for electric vehicle producers, consumer price incentives, tax credits for producers and consumers and, sponsorship of technological research and development etc. are drafted and implemented to promote the concept of BEVs.
- Global initiatives like withdrawal of subsidies amounting to more than $300 million to fossil fuel companies by the group of G20 Nations (Week in Review 2010), is quite encouraging for electric vehicle manufactures.
- Some governments in order to encourage investment in this sector have gone for loan guarantees, grants and public-private partnerships. For e.g. China is committed to provide supportive policies and an annual investment of $150 into the clean energy sector.
- Many countries like USA, Japan and China has set near-term electric vehicle production targets to drive focus in this industry.
- Some countries on the other hand are trying to stick to stringent vehicle emission standards.
- Social Environment: As stated by TESLA “Drive different” and “Drive Green”, the growing emphasis on environment conservation, energy efficient transportation is directly addressed. Many customers agreeing to environmental benefits offered by BEVs are considering these vehicles superior to gasoline run or hybrid plug in vehicles. BEVs not only save harmful emissions but also give an option to use renewable energy sources like wind, solar, geothermal etc... The overall idea is complete wow for eco-friendly individuals aiming to drive with fun and class along with environment responsibility.?
- Cultural Environment: The initial offerings in line with Apple’s strategy of premium branding, segmenting and penetration will serve the very rich customers. Some of the celebrities like Leonardo-Di-caprio not only purchased this car as a personification of class and status but also, a contribution towards going green. Moreover TESLA through its entire product idea has placed itself as “forward thinking corporate leader.”
The above mentioned facts advocates a rising trend in the adoption and sales of BEV technology vehicles. Similar bright prospects are also forecasted by different agencies like Goldman Sachs, Pricewaterhouse Coopers, and Strategy Analytics etc.
Considering a favorable business environment in general, Tesla will have to be ready to exploit immense growth opportunities lying worldwide, especially in the developing or emerging economies. As, battery electric vehicles will experience explosive growth in the coming decades, the proposer of Electric vehicles i.e. Tesla, will have to formulate effectual business plans and strategic decisions to exploit the opportunities and growth potential upheld by the minor but alluring electric vehicle segment of the global automobile industry. Along with strategic planning, calculated implementation of the plans, decisions and goals will be needed to tap larger and larger market segments and, achieve persistent competitive edge through continuous innovation of technologies being used. Promotional tactics plays a crucial role in achievement of the overall business goals and objectives.
Tesla’s present models are aimed at catering individuals with high monthly income of more than $100,000.The retired part of the population which has good amounts of saving and are willing to experience the privilege of driving premium segment cars along with environment friendly features, also share a good part of Tesla’s customer base. Another segment is car fanatics who like to be trend setters and are environment sensible too.
Tesla faces a good competition which will tend to increase in coming years. Though the list is long, he major competitors include BMW, Daimler, General Motors and Toyota.
The target market of Tesla is basically males in the age-group of 25-60 and who have strong preference for advent driving while being environmentally conscious. These are High Net worth Individuals who are willing to adopt new technologies for the all new benefits and experience provided.
Tesla S Base Model
Battery plus charge function
Long distance battery
Tesla S Luxury
Promotional Strategy:The primary goal of TESLA is to increase the number of electric vehicles available to mainstream consumers via expanded company-owned distribution network, sale of patented products to other auto makers and, serve as a catalyst example combining ‘fun’ and ‘social responsibility’ driving. Basis Apple’s marketing approach that new technology is often too expensive and the most affluent customers are the first to adopt it.
- Increase sales by generating demand and attracting sales lead.
- Create increased and long-term brand awareness
- Generate customer life-time values to further enhance customer-referrals.
- Involve customers and gain inputs in the product development process
As stated in the case study (Pg. 292 M.E. Mangram), Tesla will need to focus primarily on the BEV market drivers namely technology, energy economics, infrastructure and public policies. All decisions and plans should be formulated in harmony with these drivers.
The corporate strategy as mentioned (on Pg. 296 M.E. Mangram) is to pass increasing number of electric vehicles to ordinary or mainstream customers in three ways:
- Increased sales through expansion of company-owned and online stores.
- Strategic alliance with other competent automakers for sale of Tesla’s patented products so as to rouse general interest in BEVs to ultimately increase sales.
- Serve as a channel linking ‘fun and, ‘social responsibility’, as mutually compatible features of driving.
Priced at $59000 , range 300 with single refueling which will take around 5 minutes, has an 8 year/100,000 miles warranty, seating capacity-4 passengers
Four wheel steering, estimated price to same as of Tesla's model S , 310 miles range per charge
Price-$50000 to $60000, 5 seater, range 0f 200 miles from a single charge
Price$300,000- $500,000,powered by hydrogen fueled battery electric engine
- Brand Product/ Positioning:Tesla’s product carry the unique feature as high-tech, reliable, attractive and eco –friendly. Considering these features the BEVs can be positioned and targeted towards the customer segment who believe in a futuristic and overall well-being approach.
- Market Segmentation: The market segmentation will follow a pattern namely premium/affluent customer class, luxury sedan markets and ultimately mainstream consumer vehicles to go for mass production and market penetration
- Product Design: The designing of the product must be such that it meets customer’s expectation of feel, functionality and look.
- Product Pricing: Owing to the use of new technology the BEVs can be launched at premium prices. And, with time increase in demand and decrease in cost of production, the products to be added further can be made broadly affordable.
- Branding: Following the remarkably successful Apple’s branding style, Tesla will be creating innovative product line whereby the preliminary models or products will set the ground for the upcoming technologies or products.
- Sales and Service: The sales are accelerated through Tesla owned retail stores and distribution centers. These stores are located in the premium shopping destinations which can serve as tool for making the brand popular and renowned. In the beginning sales and service will be conducted through the retail stores. However, gradually the service stations will be separated from the sales centers. Convenient ‘Tesla Mobile Service Vans’ will be part of this effective plan to reach to remote locations.
- Marketing Communications Plan: In order to increase the sales of electric vehicles tesla will need to consistently and effectively communicate marketing messages through all media and channels. The messages must educate the targeted customer about the benefits of electric vehicles over other options and should convince them that the product features meet their needs.
- Advertising: The approach adopted by Tesla is not to spend millions of money on running ad campaigns. Rather a standardized approach towards advertisement will be followed so as to reach customers in different countries. Specialized events or conferences can be used to market product features, upcoming products announced as surprise addition to product line corresponding to Apple’s popular ad campaign ‘Think different.’
- Public Relations: Maximum media coverage in order to position Tesla as the early adopter of manufacturing electric vehicles, meeting all federal guidelines, completely environment friendly will be a key step to strengthen public relations. This will help to promote Tesla as a brand through word of mouth and media coverage and save advertisements cost. Another measure taken can be accredit the team involved in production of these superior electric vehicles, launch exclusive magazines etc...
- Sales Promotion Tactics: This plan will include measures that will generate immediate or short term sales effect. Initiatives such as joining hands with popular automobile magazines, non-profit organizations promoting clean energy, government initiatives for environment protection and organizing annual events similar to ‘Apple Expo.’
- Promotional Objective:The Promotional objectives should be in line with the primary objective of Tesla and are listed below:
- Create demand for Tesla’s electric vehicles and attract sales lead.
- Create and maintain a loyal customer base to generate customer lifetime value and customer referrals.
- Build strong corporate image and goodwill.
- Collect customer feedback and input to be incorporated in the process of product development.
- Encourage customers to understand the immense environmental benefits from electric vehicles and serve as a promoter of the idea that transportation and environment can be taken care together.
Tesla’s CEO has recently announced to enter the Australian market and the projected sales of the introductory model S will be 20000 units. The current price of Model S is $76000(www.kbb.com, Kelly Blue Book, 2015). Hence, Tesla will achieve a turnover of $15.2 million. The Promotional budget is $1 billion which will include product positioning in appropriate Medias like movies, documentaries or internal events. It can also sign most popular celebrities in Australia to advertising through driving the Model S.
5 Years Plan: With an average of 20,000 cars sold per year, there will be around 1 lakh Model S running on the road. The revenues assuming a price of $76000 (current market price) will be around $15 million dollars per year. From studies conducted, it is evident that the cost of production constitutes 90% of the price set. Hence, from the remaining 10%, a major amount will have to be employed on R&D in order to maintain the strategic market position and beat competition. Though several competing models are offered as alternatives to Model S, Tesla however, scores much above in terms of range, acceleration rate, seating capacity and price.
Analysis of the Budgetary Plans and forecast:
- The Unit Sales will increase over a period of time as preference for eco-friendly vehicles will gain momentum globally.
- The cost of production in long term will decrease with gradual rise in demand, fall in price of lithium ion batteries and improved efficiency in production process.
- Due to immense competition, expenditure on Research and Development will have to increased in order to continuously innovate and delight the targeted and prospective customers.
- With the growth of Infrastructure required for increased use of BEVs like Charging Stations, Smart grids, the consumption of BEVs will start shifting from a small but elite customer segment to large mass average class customer segment.
- Overall, the sales trend for BEVs shows a steady increase in long term with more and more customers shifting to electric vehicles as in case of Apple’s Macintosh.
Recommendations for Strategies in the year 2016-17: On the basis of the above mentioned facts and figures, recommendations to strengthen Tesla’s overall objective of manufacturing premium segments vehicles to ultimately manufacture electric vehicles for mass consumption are listed as below:
- Continuous improvements and innovation in existing products as well as additions of new models to serve the purpose of green driving.
- With the goal of selling 20000 Model S cars, Tesla should try to tap customers who views electric vehicles as a symbol of performance and a way to fulfill their commitments to the environment. Tesla should try to target a large market or customer segment including the other than premium sedan classes.
- Keep limited products but of the best quality in its domain to maintain customer loyalty.
- Memorable ad campaigns, conferences and programs.
- Fervently market the benefits of driving emission free, trendy and unique electric vehicle models.
- Use the revenue generated from premium priced models to further produce affordable electric vehicles aimed at mass consumption.
- Tesla should continue to challenge itself, be disruptive and adventure into innovations.
- The major technological challenge to develop powerful as well as cost effective batteries should be confronted through staunch Research and development.
Tesla must keep updating its strategies and plans to fit into an adaptive sequence. Investments must be made into Research and Developments, new and different methods of productions should be adopted, different and new market segments should be tapped and the advantage of “first mover” in the electric vehicle industry must be encashed to attain sustainability and profitability in long term.
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Procedia Technology, Vol.19, 2015, Andrea Aurora Racz, Ionut Muntean, “A Look into Electric/Hybrid Cars from an Ecological Perspective.”
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