Tesla Motors: Case Study

Write a Final Scenario Analysis in a Marketing Report Format

  1. Read this journal article, “The Globalization of Tesla Motors:  a strategic marketing plan analysis” from the Journal of Strategic Marketing and then answer the following question. (pdf of the journal uploaded)
  2. As the marketing manager for Tesla Australia, how will your marketing strategies change to encourage adoption throughout its product lifecycle?

In your analysis, consider Tesla’s current situation in Australia, both internally and externally.  Identify its current marketing strategies. 

  • Discuss how and why the marketing strategies will change throughout its lifecycle.
  • You need to develop strategies that will effectively address the situation presented in the scenario.
  • Your strategies will be outlined in a Marketing Report format and will include the following:
  • situation and SWOT analysis
  • suggested solution
  • marketing strategies
  • There is no unique answer, it is up to you to shape an appropriate, realistic solution substantiated by relevant evidence.
  • Make use of selective, useful academic references and some ABS figures (for example).
  • Word Count 1,100 – 1,200 maximum.
  • Use Harvard Referencing style.

Introduction

Tesla Motors is a global technology company, focused on the design, production and marketing of electric motors and electric vehicle components. Tesla Motors Inc. is the only company that manufactures battery electric vehicle (BEV) that can be used on highways. Since its inception, Tesla has limited its financial performance with the nature of its response towards market opportunities (Mangram 2012, p. 289). The objective of this analysis to determine market strategies for Tesla to strengthen its competitiveness and increase market presence.

Situation Analysis

Electric Vehicles Industry

A broad range of electric vehicles exists today. Gas-electric hybrids, extended range electric vehicles, plug-in hybrids and battery electric vehicles (BEV) are the main types of vehicles in the industry (Krutko, Moon, and Finkle 2013, p. 17). BEV cars differ from the other two categories as they are entirely powered by electric batteries.

BEV Electric Market

Market drivers determine market performance. There are four key market drivers in the battery electric vehicle market. Technology, infrastructure, public policy and economics of the energy industry are the key drivers in the BEV market (Mangram 2012, p. 290).

Advancements in technology account for significant breakthroughs in the BEV market. One of the most important developments is BEV battery. Desirable and attained battery properties include mileage, weight, and availability of battery components.

Public availability of charging stations will undoubtedly support globalization of BEV. With a 300-mileage battery at the disposal of BEV cars, the charging station concept will be soon adopted in the public domain. Globalization of BEV will lead to a surge in electricity demand. The development of smart electric enhances monitoring of electricity demand changes

Public policing about BEV entails regulations and government policies that encourage or undermine growth in BEV.  Policy support includes lowering of taxes and funding of electric vehicle technologies.

Economies of energy is a central factor in the marketing of electric vehicles. Changes in economies of gas and electricity impact each other. Growing stability in electricity prices encourages ownership of BEV.

Tesla Motors

Tesla’s corporate strategy defines its marketing approaches. The company focuses on increasing availability of BEV vehicles to as many consumers as possible. To achieve the latter mentioned strategy, Tesla has successfully appealed to consumers with its quality Roadster Model. Roadster’s massive financial performance, with over 1650 sales is a strong indication of Tesla’s potentials (Mangram 2012, p. 300). Model S and Bluestar BEV cars from Tesla are evidence of the company’s responsiveness to market drivers. Strengths, opportunities, weaknesses, and threats arising from the company’s product development lifecycle are reflected in the SWOT analysis.

Tesla Motors SWOT Analysis

When making marketing decisions or formulating strategies, a SWOT analysis is critical. SWOT analysis tool reflects on the current position of the company by examining its strengths and weaknesses and its future position by examining opportunities and threats.

Strengths

Technological development is the most pronounced strength of Tesla Motors. Tesla emphasizes on developing new technologies to boost product development, hence, promoting demand (Rowland 2017). The company focuses on environmentally defined technology to create and promote new demand. Other strengths of Tesla include a unique business model, brand, and a reputable BEV pioneer (Appendix 1).

Weakness

As a considerably young entity, Tesla’s showing both internal and external environment weakness.  Tesla operates in a developing industry. BEV products are yet to penetrate into the vast vehicle industry.  With a steadily growing demand, Tesla is experiencing supply problems. Other weaknesses include slow growth in economies of scale limited infrastructure.

Opportunities

As a leading firm in the young and growing BEV niche, Tesla is faced with several opportunities. Development of BEV electric battery and other components is a major stride. Other opportunities include growing environmental insightfulness in the public, government intervention, and instability in gasoline price. 

Threats

Within the BEV market, the company’s experiencing growing competition. The BEV segment is also facing competition from hybrid vehicles. Other threats include better performance of oil prices and entry of large entities into BEV production and marketing.

Solutions

Increasing competitiveness and market presence are the two primary solutions developed from the analysis of the company’s Pestle, SWOT and 4Ps analysis. Tesla operates in a highly competitive environment. The company has not developed strong competitive advantage to smoother the rivalry. Additionally, the company lacks major market presence. Hence, increasing market presence by adopting strategies discussed below will promote profitability.

Marketing Strategies

Increasing Competitiveness

Gaining higher competitive advantage is attainable through innovation. Tesla is a brand defined by technology and innovation. Through innovation, Tesla can continue leading the pack. Innovation in BEV should address challenges like recharging and mileage. Other points of innovation should improve customer experience. The Australian market is characterized by well-informed, tech-savvy individuals. Hence, innovation in design and engineering will capture this crucial market population.

Increasing Market Presence

Increasing market presence can be achieved by engaging car dealers and increased online presence. Car dealers bear considerable knowledge on product performance. Eliminating this important link in marketing strategies will affect Tesla’s performance. By engaging car dealers, Tesla will increase market contact, hence gaining critical market knowledge. Online presence is a successful business strategy in this era of social networking. The company should go beyond its website and create more customer information platforms.

Reference List

Krutko, P., Moon, J. C. & Finkle, J. A., 2013. Creating the Clean Energy: Analysis of the Electric Vehicle Industry, s.l.: International Economic Development Council.

Mangram, M. E., 2012. The globalization of Tesla Motors: a strategic marketing plan analysis. Journal of Strategic Marketing, 20(IV), pp. 289-312.

Rowland, C., 2017. Tesla Motors, Inc.’s Generic & Intensive Growth Strategies (An Analysis). [Online]. Available at: http://panmore.com/tesla-motors-inc-generic-strategy-intensive-growth-strategies-analysis. [Accessed 10 June 2017].

Appendices

  1. Australian BEV Market Porters’ Five Forces Analysis
FactorAustralian Market
Threat of New Entrants (Moderate effect of forces of new entrants in the Australian market)Vehicle manufacturers like Nissan, Toyota and Holden are planning to introduce electric vehicles in the Australian market Government encouraging entrants Growth in development of necessary infrastructure like power recharging points. Common technology use like BEV battery development is encouraging supplier performance Strong force of aggressiveness among competitors High cost of product development High cost of brand development
Bargaining Power of SuppliersModerately sized suppliers Moderate reliance of Tesla on suppliers
Bargaining Power of CustomersLow switching cost; consumers can easily seek out other alternatives Limited availability of substitute Limited volume of purchases among consumers
Threat of SubstitutionLow switching cost for substitute products like availability of public transport Limited ability of substitute products to meet customer demand Moderate performance of substitute products
Competition (Tesla is experiencing strong forces of competition in the Australian market)A limited number of firms operating in Tesla’s product niche Strong aggressiveness among from competitors Low alternative cost for customers to seek products from other competitors
  1. Tesla’s Pestle Australian Market Analysis
FactorsAustralian Market Scenario
PoliticalGrowth in government incentives Political stability in the market Growth in international trade activities
EconomicInstability of oil energy Reducing cost of renewable energy Economic instability
SocialIncreasing environmental awareness Shift of preference to renewable energy Luxurious lifestyle
TechnologicalHigh growth in technology Increasing preferences in online marketing
LegalSupportive energy consumption regulation Patent protection, encouraging innovation
  1. Tesla’s Product Mix
Product Products offered in the Australian market include vehicles, automobiles and batteriesPlace The company operates through: Official company website Company-owned stores Company owned service centers
Price High pricing of its products due to uniqueness, innovation and product design.Promotion Promotion of products include word of mouth, direct marketing and personal relations.

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