Tesla Inc. (Tesla Motors)
Tesla Inc. (earlier known as Tesla Motors) founded in 2003, is an American multinational organization located in Palo Alto, California. It specialize in electric vehicles, lithium-ion battery energy storage and solar panel manufacturing. Martin Eberhard and Marc Tarpening created the Tesla Company in 2003. Elon Musk, JB Straubel and Lan Wright are also known as the co-founders of the company. The co-founders Martin Eberhard and Marc Tarpening, named the company after Nikola Tesla (famous physicist and electrical engineer). In 2010, Tesla became listed, it initially listed on NASDAQ via initial public offering (IPO) on. 13 million ordinary shares were issued to the market at a price of USD 17 per share. The initial public offering raised a funding of USD 226 Million.
The company’s motives for international growth
The founders were motivated to create the company, when General Motors recollected and demolished, its electric vehicles type 1 (electric cars) in 2003. Tesla operates several production and assembly plants, particularly, the Giga factory near Reno, Nevada and the primary vehicle manufacturing facility at Tesla Factory in Fremont, California. Tesla Model S was the world’s most popular electric plug-in electric car in 2015 and 2016. The Tesla Model S reached 200,000 unit sales milestone, in international sales during the fourth quadrant of 2017. The company enjoys various types of federal and state subsidy, during 2015, Tesla received an estimated subsidy of USD 30,000 for each vehicle sold. Cumulatively it amounted to USD 4.9 Billion.
The markets targeted
Tesla envision to change the automotive industry by creating many innovative fragments that fit together: the strategy known as “intricate (Complex) coordination”. Its functional strategies (marketing, finance, production, sales and technology) are all extraordinarily different from its competitors.
Tesla’s automotive strategy is to match distinctive technological-product life cycles and initially target wealthy buyers. It then entered into mass markets at lower price points. The technology for the battery and electric drive technology are developed and financed through cash generated from the sale of earlier models.
Tesla mainly manufactures 4 models to target 3 markets. The models are roadster, Model S, X and 3, these are targeted to serve the low priced automobile market, the luxury market and the high volume market. Tesla states that latest technology in any area of business or other professional area, takes a few varieties to optimize, before reaching the mass market, and in this case, it is competing with over 100 years and trillion dollars spent on vehicles that uses natural fuel power.
Tesla international sales passed 250,000 units in September 2017. Tesla made its three hundred thousand vehicle in February 2018. Tesla most selling car is the Model S, with global sales about 200,000 units between June 2012 and December 2017. Model X with about 70,000 units sold between September 2015 and December 2017. Model 3 was produced 1,700 units in 2017. The roadster sold around 2,400 units.
Model S Market
Model S deliveries commenced on 2012. First sale to Europe took place in August 2013 and in China in 2014. Right hand drive model introduced in following international markets UK, Australia, Hong Kong and Japan in 2014. The United States of America is the foremost market for model S with estimated sales of 120,000 unit in 2017. Norway ranked the largest overseas market as of November 2016, due to country’s government’s fullest encouragements for the adoption of Non-natural fossil fuel vehicles (electric cars). For European Market, Tesla reassembles and rollouts the model S from its European distribution center in Tilburg, Nether lands.
Model X Market
Tesla Model X is a full sized sport utility vehicle with a lightweight aluminum body. It is offered in 5,6 and 7 passenger seat configurations. One of the prominent engineering design is the gullwing doors (The vehicle doors open vertically). International sales totaled to 25,000 units in 2016 and 46,500 in 2017. The Unites States of America is the key market with an estimated of 40,000 units in December 2017. As of 2016, September the Model X ranked the top selling plug-in electric car in Norway, previously this was the Model S. Model S was the top selling car four times. Sales during the first quarter of 2018 totaled 8,182 units. In 2018 Juanuary, the Model 3 has remained the top-selling plug-in passenger car in US each month.
Model 3 Market
The Model 3 is the Tesla’s third-generation car. The standard model 3 as estimated by the Environment Protection Agency rated the Model 3 electric range of 220 miles (350km) and the long-range model delivers 310 miles (500km). Tesla reported over 320,000 order reservations for model 3, these orders generated a sales of over USD 14 billion. The unveiling of Model 3 was unique historical milestone in the 100 year history of mass market automobile, as this model made a record sale in a short period of time.
The methods of market entry
The Marketing Mix Model is given below
Different prices targeting different markets
Mass media advertising campaigns
You tube promotional videos
Social Media campaigns
(Facebook, Instagram & Snap chat)
Main stream media advertising
E. Jerome McCarthy created the Marketing mix in 1960. This is a categorization that been used throughout the marketing world. Marketing mix is about putting the correct product and products in the correct place at the correct time and at the correct price. Therefore, it is important to implement this plan; every aspect of the business plan should be studied well. This can be applied to Tesla’s scenario as follows: Tesla uses Low price and high price strategies to enter the market.
Tesla is known for being able to produce creative and innovative products to the electronic automobile market. Tesla’s products are unique and unlike other products in the market. Tesla products have an eloquent look and a design.
Eg: – Model S, Model X , Model 3
Different prices targeting different markets with different models. Roadster was produced in low volume and priced at minimum of one hundred thousand US dollars, targeting a niche market and satisfying that niche market’s needs. Model 3 is produced in high volume and priced at a competitive directing at the mass market. Model S and Model X are produced with premium advanced functions and directed to the rich and wealthy (Luxury market).
As of 2016, Tesla has opened and operated around 260 galleries and retail locations in the United States of America. Tesla also has retail shops in Dubai and South Korea. Tesla opened its first store within a store. This store is located in Grove shopping mall in Los Angeles. The stores serve as a showroom so the consumers can acquire knowledge about the company and its website.
Tesla heavily into promoting via social platforms. In 2017, Tesla had a USD 52 million budget to be used as a Recommendation program (Referral program) and word of mouth to attract buyers. Since customers mainly buy tesla vehicles from the Tesla website (Online Purchases).
Tesla has considered all the 4Ps in the marketing mix to entering the market. Mainly Telsa has used low price strategy (Price penetration) and premium price strategy to enter the market.