Grade at end

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Marketing Plan for Tesla Model S in Global Markets

Submitted for Marketing Management

By

Yumeng Zhang a1680594

Yifan Chu a1673752
Tika Kartika a1694714
Yi Xie a1671747
Lexin Liang a1660193

Faculty of the Professions

The University of Adelaide

November 11, 2015

Executive summary
The purpose of the report is to deliver a complete marketing plan based on a detailed
environmental scan.

A background introduction will be written in the beginning of the marketing plan with the
history of the company and Tesla Model S, followed by defining two of the major issues of
Tesla Motors is facing, the poor financial condition related to the fact that the company will

Comment [A1]: Wasted words not

analysis

be expected to make profit not until 2020, and Tesla is cutting jobs in China due to the fact
that the amount of infrastructures is below the satisfactory level.

The PESTLE and SWOT analysis will describe Teslas internal and external business
environment into details. Tesla electric automobile is a special product with an unique

Comment [A2]: Wasted words

position in the market, that could be a great advantages for the company, however,
opportunities always come with threats. The company is taking a great advantage of the
technology development in new energy industry, however, by offering something completely
new and innovative to the market, it could be risky as well.

The marketing objectives of Tesla Model S will be involved with the companys estimate
sales units and percentage of brand awareness in 10 years time. As according to the market
research, what worth paying attention is the fact that brand awareness of the brand Tesla is
quite low even in North America Market with only around 22%.

A marketing strategy and implementation will be introduced based on the marketing

objective of Tesla Model S, the 4 marketing mix will be used in order to attract customers

Comment [A3]: Wasted words

and satisfy every stage of consumer buying decision process. In the end, a timeline could be
find in the appendix as a framework of the specific time duration for each objective to be
achieved in the marketing strategy implementation.

Comment [A4]: wasted

Table of Contents

Executive summary .................................................................................................................... 2

1. Introduction ............................................................................................................................ 5
2. Marketing Environment Analysis .......................................................................................... 6
2.1 PESTEL Analysis ............................................................................................................ 6
2.1.1 Political force .............................................................................................................. 6
2.1.2 Economic force ........................................................................................................... 6
2.1.3 Socialcultural force ..................................................................................................... 6
2.1.4 Technological force .................................................................................................... 6
2.1.5 Environmental force.................................................................................................... 7
2.1.6 Legislation................................................................................................................... 7
2.1.7 Competitive force........................................................................................................ 7
3. SWOT Analysis ..................................................................................................................... 8
3.1 Strength ............................................................................................................................ 8
3.2 Weakness ......................................................................................................................... 8
3.3 Threat ............................................................................................................................... 8
3.4 Opportunity ...................................................................................................................... 9
4. Marketing Objective ............................................................................................................ 10
4.1 Total sales unit ............................................................................................................... 10
4.2 Brand awareness ............................................................................................................ 10
5. Marketing Strategy............................................................................................................... 11
5.1 marketing segmentation ................................................................................................. 11
5.2 Consumer decision making process ............................................................................... 11
5.3 marketing mix ................................................................................................................ 11
5.3.1 Product ...................................................................................................................... 11
5.3.2 Product related service .............................................................................................. 12
5.3.3 Price .......................................................................................................................... 12
5.3.4 Place .......................................................................................................................... 12
5.3.5 Promotion .................................................................................................................. 12
5.3.6 Partnership ................................................................................................................ 13
6. Marketing Implementation................................................................................................... 14
6.1 Marketing organisation .................................................................................................. 14
6.1.1 Responsibilities of Headquarter ................................................................................ 14

6.1.2 Responsibilities of Regional Marketing Organisation .............................................. 14

6.1.3 Internal Marketing .................................................................................................... 14
6.2 Activities and responsibilities on external marketing .................................................... 15
6.2.1 Responsibilities on customer relationship ................................................................ 15
6.2.2 Responsibilities on external marketing ..................................................................... 15
6.2.3 Timetable of implementation (See in Appendix) ...................................................... 15
Reference ................................................................................................................................. 16
Appendix .................................................................................................................................. 17
Appendix I Teslas Estimated Annual Unit Sales............................................................. 17
Appendix II Teslas Annual Losses .................................................................................. 17
Appendix III Overall brand perception ............................................................................. 18
Appendix IV Familiarity with alternative fuel vehicle models ........................................ 18
Appendix V The application on five steps of conusmer buying process .......................... 19
Appendix VI Timeline of the implementation .................................................................. 20

ok

1. Introduction
Tesla Motors, Inc. is an American automotive and energy storage company, that designs,
manufactures, and sells electric cars, electric vehicle power-train components, and battery
products. The Model S was announced in a press release on June 30, 2008. It officially
launched into the electric vehicle market in July 2012. It is a full-electric vehicle without

Comment [A5]: not following writing

advice from assignment one

emission of CO2. The huge battery can deliver over 300kW of power and give it an
acceleration of 0-97 km/h in 4.2 seconds (Tesla, 2015). The car model featuring elements
including modern, luxury, eco-friendly, becomes a huge success immediately.

Tesla, like all the other companies at the beginning stage, are facing some criticisms and
issues along with the huge success. The financial performance of Tesla does not exactly meet
as the satisfactory level, and the number shows that the company will not be profitable until
at least 2020. Until the end of the third quarter of 2015, Tesla confirmed that the company is
cutting jobs in China due to limited amount of supercharger and until the end of 2016, there
still are not going to be enough supercharger being built in mainland China.

Comment [A6]: a the issue, see assign

one

2. Marketing Environment Analysis

2.1 PESTEL Analysis

As a new entrants in the electric vehicles (EVs) market, Tesla is facing not only supportive
policies, but also some challenges. The PESTEL analysis can help Tesla to have a better
understanding of marketing environment.
2.1.1 Political force
To deal with climate change, governments around the world have contributed to increase
electric vehicles market share with fiscal incentives, regulations and direct subsidies. For
example, some potential markets of EVs, such as Japan and China, have a one-time bonus for
EVs (Mock & Yang, 2014).
2.1.2 Economic force
Due to the remaining high price of fuel, consumers turn to prefer energy-efficient products.
Moreover, with the development of economic growth, consumers have more purchase power
and more choices. As main growth markets, consumers of North America, EU and Japan
might have more purchase intention to Tesla Model S. However, according to the ICCT
database, the acceptance of EVs has been limited to less than 1% in every major auto market.
2.1.3 Socio-cultural force
Social factors are related to consumer preference, focus on products and environmental
concerns. The increasingly awareness of climate change and environmental issues are
positively related to potential purchase of EVs.
Nonetheless, there are also several worries about the electric vehicles. High cost of new
technology, uncertainty performance of batteries and limited supercharger stations will
negatively affect the acceptance for EVs of consumers.
2.1.4 Technological force
Technology advancement and innovation play vital roles in the development of automotive
industry. Over the last few years, full-electric cars and autopilot are becoming possible with

technology innovation. Nowadays, convenience, safety and energy-efficiency are main

concerns in auto industry.
2.1.5 Environmental force
The pressure of climate change and environmental issues are crucial for car manufactures.
Moreover, social responsibility is an important measurement of a company. Producers are
required to produce more fuel-efficient and eco-friendly products. Nowadays, consumers
concern more about environmental effects of products.
2.1.6 Legislation
Governments set several regulations and standards for carbon emission industries. For
instance, the EU impose regulations on CO2 emissions of passenger vehicles. Some main EV
markets countries, such as the Netherland and Germany, charge an annual vehicle ownership
tax based on CO2 emissions and engine capacity of a vehicle (Transport & Environment,
2013).
2.1.7 Competitive force
Due to the specialty characteristic of Tesla Model S, it has no direct competitors in high-end
full-battery vehicle market. There are several brands of full-battery cars such as Renault Zoe,
Nissan Leaf and Volkswagen eUP in European, but the prices are far lower than Tesla Model
S. Another popular type is Plug-in Hybrid electric vehicle, which also target the high-end
consumers. For example, BMW i3 generated more growth rates than Model S in sales.

Overall, the issues covered in the PESTEL analysis give both opportunities and challenges
for Tesla. The target consumers of Tesla Model S are people who purchased it at $75,000.
About 77% of consumer is upper-middle classes with over $100,000 incomes (Mock & Yang,
2014). The group of consumers is eco-friendly and interested in new technology. The
majority of consumers is male.
As a new entrant in electric vehicle market, the sales of Tesla Model S achieved about 2,2300
in the global market. However, due to negative financial position and relative low market
share in auto industry, Tesla need to gain more competitiveness.

3. SWOT Analysis
3.1 Strength
Tesla Model S is launched as a premium electric sedan with exceptional performance,
functionality, and attractive styling. Design with high features performance and technology
making Tesla stand out among other competitor.
Tesla also has a commercial relationship with Panasonic, Daimler, and Toyota. This is very
important for Tesla because it brings mutual benefits to both parties to gain profit and provide
public trust for Tesla brand recognition.
Lastly, Tesla has differentiation in business model compared than incumbent automobile
manufacture. The main business of this company not only selling a car, but also selling a new
technology. Tesla build out the infrastructure involve 534 supercharger station network with
3.204 fast and free supercharges, battery swap station, and service stations worldwide.
3.2 Weakness
It is not denied that Tesla as a new player in industries making a good entering in car market,
especially among other competitive premium electric vehicles. From first delivery of Model
S in June 2012 to December 2014, they are sold almost 57,000 worldwide. While the demand
and request for that car increased gradually, its also increase the cost of production. Tesla
has been struggled with their financial issues and got in debt as well as loss of control about
their financial cost reduction.
3.3 Threat
The demand for alternative fuel vehicle is highly competitive today. As a result, it triggers car
industries to build eco-friendly car. It will give many choices in market. Even though
increasing for alternative fuel vehicle rising in some country, this issues only popular in
typical big cities where people more consider about protecting the environment because many
polutions there. Beside that, it is not only about awareness of people to environmental
sustainability, but also scepticism for the issues of electric car performance. It can be
challenges for Tesla to growth as an electric car manufacture highly dependent form
consumers willingness to adopt electric vehicles.

Formatted: Highlight

3.4 Opportunity
The most visible opportunity for Tesla is increasing of people awareness about alternatives
vehicle as a result of fuel price rising. This will become a good opportunity for Tesla in the
future. The other opportunity is Tesla market segment is segmented and unique because it is
not only selling car but also a new technology. Tesla has created market for luxury alternative
vehicle with long-range price which Model S as a less expensive option.

4. Marketing Objective
4.1 Total sales unit
As the Teslas estimated annual unit sales diagram being showed in the Appendices, it is said
that Tesla is expected to sell more than 370,000 units vehicles by the end of 2020. Comparing
with the data from 2015, the company has no hesitation in saying in 10 years time, which
means by the end of 2025, the number of sales for Tesla model S is expected to be around
740,000 units.
4.2 Brand awareness
As the result showed in Consumer Reports on its 2014 Brand Perception Survey, Tesla
Motors was found to have climbed significantly upwards to now rank above several other
established brands, which jumped from 47 points last year, to fifth position with 88 points.
In the minds of consumers, the start-up company rates higher overall than 15 other major
automotive brands, not least of which include Mercedes-Benz, Volvo, Cadillac and BMW.
However, as the research been done at the end of 2013, only 22% of public knows about
Tesla Model S, the number is a lot more limited in regions outside North America and
Europe.
In 10 years time, the brand awareness of Tesla Model S is expected to exceed Toyota Prius
which is 55% at the moment and reach 60% in the global market.

10

5. Marketing Strategy
5.1 marketing segmentation
In the demographic aspect, the group of relative higher income will be interested in the
luxury sports hatchback.
In geographic aspect, Tesla Model S is more suitable for the people who lives in metropolis
in term of city size, urban instead of rural area, since supercharger stations network for
battery electric vehicle is easy to be built based on the urban well-developed infrastructure.
In psychographic and behavioural aspect, high technology and eco-friendly lovers will be
interested in Model S, because its a unique eco-friendly fast sports sedan with High
technology.
5.2 Consumer decision making process
Tesla Model S could be categorized into specialty products, when customers making buying
decisions for high-value products, they will go through 5 stages of consumer decision making
process step by step and the customers will usually spend longer time before they make the
final purchase. Appendix V indicates how to satisfy customer following the consumer
decision process. Promotion and distribution will be used to help people realize the need and
stimulate consumption. Increasing information channels will help people searching
information. Enhancing competitive advantages of Model S to less the alternative competitors.
The improvement of service during purchase and post-purchase will provide a high-value
experience for customers.
5.3 marketing mix
5.3.1 Product
We are going to develop Model S in terms of technology and related service.
A new version of Model S with more developed technology will be created. In order to
provide a more convenient experience for consumer, also to attract more high-tech lovers.
The main characters are the battery with a shorter charging time, a removable power bank
prepared for divers long journey, and the continually update software. Because the current
issues which make people feel inconvenient to buy Model S are the long charging time (75
minutes fully charging from power 10% to 100%) and short range problems (Tesla, 2015).
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The improved charging time will attract more potential consumers. Power bank and software
can help people estimate the range, find supercharges, and increase car range for longdistance journey.
5.3.2 Product related service
Tesla owns 533 supercharger stations with 3019 superchargers (Tesla, 2015). The small scale
of supercharger network is not enough for the increasing demand of Model S. Especially in
the emerging market like Asia-pacific area, there are only four superchargers in Australia.
Therefore, Tesla should enlarge supercharger network and build more service stations.
5.3.3 Price
In order to keep Teslas position of luxury fully electric sports car, the price should keep the
same premium level.
5.3.4 Place
The current traditional franchise dealership model connected with online order can help Tesla
save money on construction and gain widespread distribution easily, also Teslas position in
auto dealer is better to educate people accept the premium electric car.
Tesla store can use technological decoration to appeal more high-tech lovers. For example,
the imitated test drive, the autopilot function will be displayed on the transparent touch screen.
5.3.5 Promotion
More TV and magazine commercials related to environment conservation will be introduced
and spread, especially in Chinese market. We are trying to rise the reputation of highperformance electric sports car and arose brand awareness. In European and US market, the
advertisement will emphasize more outstanding car performance and new technology to
attract more potential consumers.
Also, the information channel will be increased, like social media and E-WOM, let the carreview bloggers help people understand the idea, story, performance and new technology of
Model S.

12

5.3.6 Partnership
For the charging service relate to the product, besides cooperate with more hotels, restaurants
and shopping centres in global level, Tesla will engage more partnership with governments
and other gas station companies. It is difficult to cooperate with competitor like gas station
companies, but if we can persuade government to encourage fully electric car purchase, it
will help Tesla easy to build the fundamental services.

13

6. Marketing Implementation
6.1 Marketing organisation
To implement the marketing strategy efficiently, it organises the marketing activities by
geographic regions. Tesla has expanded its markets in USA, Canada, Australia, Europe,
China and Japan. They have different conditions on culture, economics and geography.
Organising by regions can provide the specific marketing strategies on different areas.
6.1.1 Responsibilities of Headquarter
The marketing organisation in Teslas headquarter control the global marketing strategies,
improve the brand awareness and keep the brand image and the culture of Tesla. It is
responsible on the global market. Headquarter marketing department assist other departments
and the regional organisations to improve the charging service, such as decide the places of
super chargers and wall connectors. Moreover, a marketing control process is setup to
evaluate the regional marketing implementation.
6.1.2 Responsibilities of Regional Marketing Organisation
Marketing organisations in different areas divide into functional departments, including
marketing research, product development, distribution, sales, advertising and customer
relations. The regional marketing organisations focus on their regional markets. Based on the
different backgrounds of regions, different activities and marketing methods are implemented
to improve the brand awareness. All of them serve for the final objective - increase the sales
of Model S and market share in the regions. Regional department also responsible on the site
selection of charging service and improve the service.
6.1.3 Internal Marketing
To form a good internal marketing, marketing strategies and reports are sent to each
employee. The headquarter keeps good contacts to each regional departments. The regional
managers are also required to talk with each employee to ensure they totally understand their
roles and responsibilities. Training and workshops are necessary to improve the employee's
skills and knowledge. Financial and immaterial rewards are used to encourage the employees.

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6.2 Activities and responsibilities on external marketing

6.2.1 Responsibilities on customer relationship
Customer relationship is one of important responsibilities of marketing. The regional
marketing organisations hold the activities to assist the consumer service centre, such as prepurchased driving experience of Model S and post-purchased service. Assessments from
users are useful information to the next marketing strategies and product innovations. The
rewarding survey about Model S user experience are required to learn the regional consumers.
Calls, online questionnaires, or the meeting and dinner for the VIP consumers are the touch
points. Free supercharge, free software upgrade and a low cost of repaired fee are provided a
relative long period at developing stage to attract the consumers. These methods are not only
improved the consumer experience but also a way to increase the consumer lifetime value.
6.2.2 Responsibilities on external marketing
As a new concept car, it is required the time for market response. Marketing research is
necessary to learn the adoption and the attitude of the regional consumers. Marketers use the
advertising and other marketing methods which the potential consumers can be stimulated to
promote Model S. For example, if the regional consumers more consider the performance
rather than the new technology, the advertising will focus on the performance display. If
marketer learn that a low adoption of the new concept, there is a series of activities holding to
break down the traditional concept. In the promotion stage, another important responsibilities
is to conduct the fashion trend and create the brand image. That 'Tesla' and 'Green energy'
become hit words and positive fashion can raise the adoption and increase the exposure.
Celebrity endorsement, the exposure of Model S in the film, cool public advertisement,
cooperation with other green energy companies, the increase of discussion online, etc. are the
method.
6.2.3 Timetable of implementation (See in Appendix)

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Reference
Barmore, C 2013, Tesla Unplugged: Automobile Franchise Laws and the Threat to the
Electric Vehicle Market, Virginia Journal of Law & Technology, Vol.18, No.02, viewed 20
October, 2015.

Mock & Yang 2014, Driving electrification: a global comparison of fiscal incentive policy
for electric vehicles, The International Council on Clean Transportation, viewed at 15th
October 2015,
<http://www.theicct.org/sites/default/files/publications/ICCT_EV-fiscalincentives_20140506.pdf>.

Steele, a & Ramsey, M 2015, Tesla loss widens as spending jumps, The Wall Street Journal
Eastern Edition, Vol 0(0), viewed 18 October, 2015.

Tesla 2015, Model S, Tesla, viewed at 10th October 2015,

<http://www.teslamotors.com/en_AU/models?redirect=no>.

Transport and Environment 2014, Electric vehicles in 2013: a progress report, Transport &
Environment, viewed at 15th October 2015,
<http://www.transportenvironment.org/sites/te/files/publications/Electric%20Vehicles%20in
%202013_full%20report_final_final.pdf>.

Valdes, P 2012, Automobile Magazine names Tesla Model S 'Car of the Year', CNN Wire,
viewed 20 October, 2015.

White, J 2014, Tesla aims to leapfrog rivals.(hands-free driving), The Wall Street Journal
Eastern Edition, Vol. 0(0), viewed 18 October, 2015.

White, J & Langlois S 2012, Tesla cuts revenue outlook, unveils plan to sell more shares.,
The Wall Street Journal Eastern Edition, Vol 0(0), viewed 20 October, 2015.

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Appendix
Appendix I Teslas Estimated Annual Unit Sales.

(Source: Morgan Stanley Research)

Appendix II Teslas Annual Losses

(Source: Seeking Alpha)

17

Appendix III Overall brand perception

(Source: Consumer Reports)

Appendix IV Familiarity with alternative fuel vehicle models

(Source: Navigant research)

18

Appendix V The application on five steps of conusmer buying process

19

Appendix VI Timeline of the implementation

TASK

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Charging service
Super charger
Asia Pacific
Global

+50

+100

533 ----------------------- 900

+150

+200

+280

900------------------------------------------------------------1500

Wall connector
Countries with service

Developed cities 5+

Countries without service

Developing cities 1+
Begin the partnership in all 19 countries

Battery

Shorten charging time by 10%

Sales

370,000 units

740,000 units

Profit

Start to make profit

Brand awareness
North America and Europe

22%---------------------------------------------------------50%

50%-------------------------------------------80%

Global

60%

Assessment 2: Assessment criteria

Criterion

Weight

Recommended course of action

20%

Identification of benefits and trade-offs

30%

Argument justifying your course of action

40%

Clarity of Written Expression and Presentation

10%

Total

100%

1. Clear and useful course of action

2. Trade-offs, benefits clear

14/20
23/30

3. Argument ok

28/40

4. Writing, mostly OK

7/10
TOTAL

72% High Credit

20