Strategic Marketing: Tesla Motors Inc. (Research Paper Sample)

Strategic Marketing: Tesla Motors Inc.
By Student’s Name
Course
Instructor
Institution
Date
Strategic Marketing
UGB335
Tesla Motors Inc. Strategic Marketing Analysis and Marketing Strategy
Part A
1.0 Purpose of the report
The auto manufacturing market is very competitive, especially for alternative fuel vehicles that has become more popular with the rise of environmental concerns. This report will elaborate the electric vehicle manufacturing company Tesla Motors, and how it can manage the extreme competition from large and premium manufactures.
An auto manufacturing industry is a challenging and competitive market mainly for those who are involved with alternative fuel vehicles which have become a trend especially with the increasing environmental factors and concerns. This report is designed to assist Tesla Motors in developing an effective marketing strategy to enhance its success. A market analysis is used to focus on key issues affecting the industry and theoretical tools and frame work which are related to the module with detailed quotes, stats, graphs, and tables included.
2.0 Brief Introduction
Tesla Motors Inc. is one out of a few known companies that creates, manufactures and sells electric cars and vehicle powertrain machineries. The name Tesla comes from an inventor, futurist, electrical engineer and mechanical engineer who was mostly known for his contributions to design of a modern altering current (AC) electricity supply system Nikola Tesla (Laplante, 1999).
The company first got global attention and recognition when they produced the Tesla Roadster which therefore was the first known electric sport car. The company later than produced other vehicle such as the model S which was a complete electric luxury sedan and the Models 3 and X similarly. (Teslamotors, 2014).
Tesla Motors is not only known to manufacture vehicle, they also markets electric powertrain components such as lithium-ion battery packs to automakers such as Toyota and Daimler (Alttransport, 2010).
CEO, Elon Musk who is one of the founders of the company has mentioned that he sees Tesla as an independent automaker (Howell, 2014), which therefore plans on offering their electric vehicles for a price that would be affordable to an average customer (Young, 2014).
3.0 A market analysis addressing key contextual, environmental issues and trends affecting industry currently and in the future (predictions)
The idea behind a market analysis is to find out the attraction of a market and to understand the trends and threats as this leads to the strengths and weakness of a company (Gurun, 2014).
According to David A. Aaker he outlined some of the following aspects of a market analysis hence will be presented as stated:
* Market share (currently and in the future)
* Market trends
* Distribution channels
3.1 The market size and its future potential
Market size is the measurement of the total volume of a particular market therefore a market size can be assessed by present sales and future sales if the use of the product were stretched (Gurun, 2014). For Tesla they are the only company that sells electric luxury battery vehicles therefore as the market of Tesla expands it will take share out of the market. Moreover to spend more than $60,000 on a car, globally they are only so many people who could do that. This is a sub-segment of the amount of population globally that will prioritize the electric cars and the company’s brand equity to decide to purchase a tesla (Lowry, 2014).
Globally, around 37 million vehicles are likely to be sold in 2014. Mainly in the U.S. (TSLA's primary market), approximately 15.3 million units were predicted to be sold in 2014. General Motors (NYSE:GM) have about 18% market share in the U.S. (2.7mm units), followed by Ford (NYSE:F) at 15%, Chrysler (FIATY) at 12.8%, Honda (NYSE:HMC) at 10.1%.
Source: Wall Street published research reports.
As stated by the company's Q413 earnings release on February 19, 2014, Tesla expected to deliver 35,000 units in 2014, which could then represent approximately 0.2% of the U.S. market share (Fu, 2014). Lastly, the company Tesla is not easy to peg by basing its sales on lesser grouping (Lowry, 2014).
3.2 Market trends
When a market changes it is a crucial period because it’s often the lead to a new opportunity or threat to a company (Gurun, 2014). Related trends are industry dependent such examples are when there is a change in price sensitivity and the level of emphasis on a service and so forth.
3.2.1 Price sensitivity
According to Tesla, during the first of August they slowly increased their price for many of the options for the Model S by selling their product separately through the features that were packaged together. Including other changes were ‘’Tech Package’’ which used to be $3,750 that was then lowered to $3,500. Therefore Tesla vehicle Obeche Wood Gloss Decore that was before included has turned out to be a $650 option, as a result to the changes it has increased the overall price of the model S.
Tesla may have increased the prices of the features because its aim is to firm the cost of parts and labor installation on their factory (Teslamotors, 2014).
3.2.2 Level of emphasis on a service
* Tesla Service Centers is like any auto shop – they make sure that the surroundings are clean
* Tesla Services are more than a once-a-year check-up.
* Tesla uses cutting-edge software to control Model S vehicle functionality.
* In North America, a one-year (or 12,500-mile) service plan would costs $600. This price covers the customer’s annual inspection and all wear and tear parts, excluding tires. This plan is paid for at the time of your annual (or 12,500-mile) inspection.
Finally their goal is look after the customer’s car in such a way that is different and unique from other businesses therefore the Model S being the first vehicle to get improved and better the longer the customers have it (de Vries, 2014).
3.3 Distribution Channels
Tesla manufacturer is located in the United States however Tesla has a different approach in the way they run their distribution channels. The fact that tesla is a recent new carmaker, they don’t have the chance to actually inform potential customer of their vehicles such as the Model S by positioning in a typical auto dealer locations.
For this reason Tesla positioned their stores and gallery locations in high foot traffic and high visibility venue retails such as malls and other areas where people would regularly visit and shop (Teslamotors, 2014)
Tesla has 31 worl-wide locations, in which are mostly located in the U.S differing from conventional dealerships. In some aspects they seem to be modeling their business going for a look such as the popular Apples stores therefore to obey the local laws which prohibits manufacturers to selling directly to customers. That being said Tesla showrooms are not accepting any orders for cars. However, employees from those showrooms are directing potential buyers to the company’s website where the purchaser could order the vehicle they desire directly from the company, where in this case it is not prohibited by the state laws.
Lastly Tesla predicts that all of its retail showrooms won’t be found being dealerships under the applicable laws. (Anon, 2014)
4.0 A situational analysis assessing Tesla’s competitiveness in its market
4.1 SWOT Analysis
The SWOT analysis is a type of situational analysis that points out Tesla’s key competitiveness in its market from the external environment and strategic abilities of a company that has an impact on strategy development (Johnson et al., 2008).
Moreover, it will be useful in creating strategic options and future courses of action (Thompson and Martin, 2005).
4.2 Strengths
* Tesla Motors has various strengths hence has led it to be ahead of other organization in the same automotive industry. Outsourcing the secondary components will help to maintain and keep low cost and put effort mainly on technological advancement (Welsh, 2009). This will also put a firm research on development department, which will create a great productivity battery system and electric powertrain (Tesla Motors, 2010).
* The company functions by a system known as lean management system hence all employers are tied up to work together in a fairly small and efficient environment such as well-organized offices (welch,2009). Furthermore it will allow the company to take an effective approach to their decision making process.
* Lastly Tesla has gained a large amount of investors from top well-known companies such as Google, and through the successful strategic partnership it built with companies such as Toyota Motors, Panasonic and Daimler (Tesla Motors, 2014) which in both parties brings mutual benefits therefore allowing them to share their expertise in technologies and production processing advancement.
4.3 Weakness
* The company is weak in some aspects such as when the company only sells electric vehicles leading to some people who are sceptical to electric cars hence to solve the issue Tesla needs to build stores globally where people can visit and understand why tesla is a start to a bigger and greater future.
* Another aspect is that tesla has a restricted size, amount, or to an extent manufacturing capacity just having their factory in Fremont, California which may result in failing to meet its rising customer demands in the future, mainly when they are trying to develop and expand their plans to places such as Asia and Europe.
* Lastly Tesla faces a limited operating history where the company is just ten years old which results in the lack of brand recognition henc...