Background

From where a marketing plan has been developed? Explain.

In this report, a marketing plan has been developed for Tesla. The company is trying to expand its market in Australia in 2016-2017. The motor company has already introduced energy efficient electric vehicles in the USA and some other countries of Europe. Now the company is planning to enter the market of Australia. The company has planned to invest UD$ 1 billion so that it can achieve the expected sales figure of 20,000 units in the first year of market entry.  

In this report, a background of the organization has been given, which includes mission, vision, products and current marketing objectives of the organization. A situational analysis has been done on the organization. In this section the demography and demand analysis has been done. With the help of SWOT analysis, the current market position of the company can be evaluated. The target market of the company in Australia has been analyzed, and the market positioning of Tesla Motors in Australian market has also been evaluated in this section. In the next section, an analysis has been made on the effective promotional strategies implemented by Tesla to gain sustainable position in the Australian market.  The marketing objective of the organization has also been stated in this section. Finally, the media used for the promotional activity and the budget allocated by the company for the purpose of promotion has been discussed.

In the year of 2003, a group of Engineers established Tesla Motors in Silicon Valley with a goal to prove that electric vehicles could be better than gasoline powered cars (Teslamotors.com, 2016). Martic Eberhard and Marc Tarpenning financed the company until the series a round of funding was proposed. Both of them played a major role in the early development of the organization until Elon Musk involved with the company. It was Musk who led the Series A round of investment. Later he joined the board of directors and became a chairperson of the organization. The objective of the organization was to manufacture electric vehicles, especially premium sports car. In the year of 2006, the first vehicles of Tesla Motor named as Roadster was introduced in an event at the Santa Monica airport (Teslamotors.com, 2016). However, Tesla started to feel the tough market competition and started to look for more financial support and new leadership. That is why in December 2007, Ze’ev Drori who was a successful high-tech entrepreneur became the CEO and president of the organization. Under his leadership nearly 10% of the staff was laid off but the company started to gain popularity and profitability. In spite of this success, Drori did not last more than one year and Musk joined Tesla Motors. Musk helped the organization with investing $70 million of his own money to improve the technical sector of the organization. Between 2008 and 2012 Tesla sold 2,250 Roadster Models and then slowly but steadily the organization gained a handful amount of market to become one of the most popular car brands in the industry (Moritz, 2015). 

Situational Analysis

Mission: Mission of Tesla Motor is to provide a convincing customer experiences and gather regular customer feedback to achieve operating efficiencies, better control over the cost and pricing which will improve Tesla as a brand (Teslamotors.com, 2016).

As De Mooij (2013) stated that, demographically customers are segmented to analyze their distinct needs and behaviors towards a specific product of the company. Tesla motor is mainly focusing on males who are looking for high-end luxury cars or sports car with electric vehicles (Hamel & Breen, 2013).The company Tesla mainly targets three major customer segments for each stage of its product adoption strategy:

• Consumers for a high-end sports car: This is a small niche target market used by the company to introduce new products in the market (Lv et al., 2013).
• Luxury vehicle sedan market: It substantially larger market. However, it is highly competitive consumer segment, which targets for broader-based customer adoption (Mangram, 2012).
• Mainstream vehicle consumer segment: This segment of customers is targeted for mass car production and market penetration (Bergek et al., 2013).

From the figure above, it is clear that the demand of Tesla Motor is quite high among different people from different age group. The primary reason behind this is the cost of fossil fuel. When the gas prices reached to $3.44 per gallon, 90% people started to believe that it is too high to handle. When the price hit $4.00 per gallon, the car owners started to look for alternatives (Hawkins, Gausen & Strømman, 2012). This is the reason that demands of energy efficient vehicles increases and Tesla Motors took the full advantage of this demand.

Another reason that helped the Tesla Motors to increase the demand in the market is the desire to lower carbon footprint. In order to reduce pollution, car owners started to concentrate on vehicles that are pure electric or hybrid. The biggest advantage of this demand is it does not change with the cost of fuel (Hardman, Shiu & Steinberger, 2015). Tesla Motors being an eco friendly vehicle manufacturing company could meet this demand of the customers and could increase its demand in the market. 

With the help of SWOT analysis, the current situation of the company Tesla can be evaluated (Hamel & Breen, 2013).

• The company has a strong brand image and good customer reputation as an electric car producer.
• Tesla has a unique business model and innovative sales network (Mangram, 2012).
• The company uses forward thinking corporate leadership strategy (Carlson, 2013).
• As (van der Kolk et al., 2013) mentioned that, exceptional vehicle design, use of powertrain technology and battery technology provides that company a sustainable position in the automotive market.

• The company Tesla has a high range cost structure due to lack of economic of scale
• The nature of the electric market is still immature (Bohnsack, Pinkse & Kolk, 2014).
• With the increase in market demand, the company is going to face issues related to component supply (Schrage, 2013).
• The company might have to face output-related problems if the consumer demand for electric sedan cars increases significantly.

• A significant advancement in the vehicle battery technology is the major opportunity for the company Tesla.
• As Wiengarten et al. (2013) mentioned, that peoples have presently become more aware of environmental and cost benefits of the electric cars
• The increase in the price of gasoline has attracted more consumers towards electric cars.
• There are various initiatives have been taken by the government of different countries to adopt electric vehicles (Bohnsack, Pinkse & Kolk, 2014).

• Presently the number of direct competitors in the BEV is increasing rapidly. As Lv et al. (2013) mentioned that, there is a significant number of automobile companies are entering the BEV market, which have better technologies and economic capability.
• There are various substitutes have been developed for BEV such as plug-in hybrids, ethanol-fueled vehicles, gasoline powered hybrids.
• A possible breakthrough in the technology for battery-powered engine can demise the advantage of Tesla in the automobile market (Bohnsack, Pinkse & Kolk, 2014).

Tesla Roadster was the first vehicle launched by Tesla Motors with a $109,000 base price. This car was manufactured with a range of up to 250 miles (Mangram, 2012). The main theme of this car depends on the lithiumion-polymer battery pack, which is capable of storing as much as twice the energy than any battery. As a result, the car is capable of having twice the range than older electric vehicles.

Next vehicle released by the organization was Model S with a base price of $57,000 (Teslamotors.com, 2016). Tesla Motor planned to target the luxury sedan market with this model of the organization. The vehicle was capable of carrying seven people after adding an optional third-row of seats. The battery technology used in this car is similar to the Tesla Roadster; however, this battery will have the capability to maintain a range between 160 miles to 300 miles (Fleming, 2013).

Market Demography

Previous target market

            The primary target of Tesla Motors was the upper class business executives and those customers who are for high-end luxury vehicles. This is why their first car Tesla Roadster needed a huge down payment and cost over $100,000 (Mangram, 2012).

Current target market

            Currently the management of Tesla Motors has changed its target market and making cars for middle class families too. Their Model S is priced at 70k which is way more lesser than Model S, that clearly reveals that the organization is trying to target the lower market in order to gain competitive advantage over its rivals (Abdulsater et al., 2014).

            As Rohrs (2013) stated that, the meaning of positioning varies from one person to another. As Kabani (2013) mentioned that, positioning is the attempt of marketers to identify the unique value proposition of a product. With the help of it unique features and capabilities, a product of a company are able to gain its sustainable position relative to its competitive products, in the mind of customers (Bohnsack, Pinkse & Kolk, 2014). Fulfilling the needs and demands of customers can help a company to achieve a sustainable position in consumer’s mind.

            Due to the implementation of BEV technology, the company Tesla is able to develop its image and reputation as an attractive, high-tech, environment-friendly and reliable company (van der Kolk et al., 2013). Most of the consumers who are aware of the environmental impact of gasoline-fueled cars and who have a Competitor’s promotional budget and sales analysis 

The major competitors of the company Tesla are Audi, BMW, Ford, Fisker, and CODA. Sales analysis of the competitors of Tesla is given below in table format:

• Developing demand for electric vehicles in the mind of Australian customers
• Selling 20,000 units of products in the first year of business in Australia
• Development of long-term brand awareness in Australian customers
• Establishing strong bonding with existing customers with the help of social media marketing
• Implementing customer’s input in the product development process

            In order to fulfill these pre-planned business objectives, the management of the organization has thought to invest UD$ 1 billion. In order to sell 20,000 units in the first year of business in Australia, the company has to develop effective advertisement plan. As Kabani (2013) stated that, in previous years Tesla does not spend millions of dollars to develop traditional publications. They let a person talk freely about their electric vehicles, which is the catalyst for a brilliant marketing campaign (Chevalier & Mayzlin, 2012).  Thus, it has been found that the company in previous years depends vastly on word-of-mouth marketing strategy, which is free of cost.

            However, Tesla is planning to enter the market of Australia and tries to sell 20,000 cars in 2016-2017. In order fight with some potential competitors like Audi, BMW, Coda, Ford, the company needs to develop an efficient marketing strategy. There are some common, and the organization has implemented some unique promotional marketing strategy as a part of a bigger campaign activity. It includes a development of traditional marketing with the help of celebrity endorsements, connecting with customers with the help of effective social media marketing, online selling and providing free test drive to attract more customers (Trusov, Bucklin & Pauwels, 2012).

Demand Analysis

Traditional marketing with the help of celebrity endorsements

            The company is thinking to make a contract with celebrities and sports stars such as Hugh Jackman or Shane Worn for five years. Engaging a celebrity with the company advertisement and developing attractive advertising will require more than UD$ 100 million. The company needs to develop a team of experts to develop efficient traditional advertising (Hays, Page & Buhalis, 2013).

Connecting with customers with the help of social media marketing

            As Okazaki and Taylor (2013) stated that, with the increase of internet usage, the effectiveness of social media marketing among customers has increased drastically.  The company needs to develop its account on social media sites like Facebook and Twitter. According to Kabani (2013), with the help of social media sites, a company can send a message to its target customers in a cost effective manner. The company Tesla can develop awareness about using electric cars with the help of these social media marketing campaigns. It will also help the company to develop a strong relationship with its customers.

Online selling of cars

            Online selling is one of the major differentiated selling strategies adopted by the electric car company. It let customers book a car online, without visiting any showroom or dealer. As De Mooij, (2013) stated that, avoiding dealer is both beneficial for organizations and customers. It reduces the price of products, which ultimately give rise to the total revenue gathered by the organization.

Providing free test drive

The company has planned to develop more than 25 company-owned stores in different states of Australia. For this purpose, the company needs to invest more than UD$ 500 million. In all these physical stores, the company has prepared a plan to give a free test drive for all their latest models, so that customers can feel the excitement, comfort, and joy of luxurious electric sports car. As Rohrs (2013) stated that, developing effective customer experience can attract more customers towards a company and increase customer satisfaction.

The car making Tesla has planned to invest UD$ 1 billion in developing an effective advertising strategy. Previously the company does not have any significant advertising campaign. The company will develop both traditional advertising and social media advertising. However, Tesla will rely more on pull advertising strategy. They will depend on media vehicles such as word of mouth promotion, blog forums and social media (Chevalier & Mayzlin, 2012). The company will develop creative web pages to attract more customers towards the company. It has been planned by the organization to develop creative web pages so that customers can learn more about the various offerings of zero emission sports cars.  As Milosheska (2013) stated that, it is rare to see a model of Tesla at the road side. For this purpose, the company is planning to develop 25 physical stores in different cities of Australia. In these stores, the company will provide test drive to their customers, in order to make them familiar with the innovative features of Tesla sports cars. The company will also focus on developing effective social media marketing strategies. The management team of Tesla has decided to update their social media promotions monthly to let the target market know about the new changes and improvements done by the organization.

SWOT Analysis

            The budget allocated by the company Tesla for advertising in Australian market has been given below:

 Conclusion

In this assignment, a business plan has been developed for the company Tesla. The company is planning to expand its business in the market of Australia. The company has allocated UD$ 1 billion to develop effective advertisement strategy. There are various other companies such as Audi, BMW and Ford are able to give high competition to the electric car developer. Previously the company is mainly focused on word-of-mouth advertising. However, in order to sell 20,000 units of a car in the first year of sale, the company will focus on both traditional marketing and social media marketing. An appropriate promotional strategy along with budget allocation plan has been given in this report.

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