Tesla Motor, head office located at Palo
Alto, in the Silicon Valley, was founded in 2003 by Martin Eberhard and Marc
Tarpenning to solve a real problem i.e. dependence on oil. The company led the
first round of investments in 2004 where 3 investors joined in namely Ian
Wright, JB Straubel and Elon Musk (who is the CEO and principal investor in the
company).
The company was named in honor of Nikola
Tesla, the Serbian inventor and engineer who developed the first alternating
current (AC) motor. It is the main anchor of the electric car industry and not
only builds all electric vehicles but also focuses on infinitely scalable and
clean energy generation and storage products.
The company has its manufacturing and
assembling operations at facility located at Fermont, California; Lathrop,
California; and Tilburg, Netherlands. The company has also built a cell and
battery manufacturing facility, Gigafactory 1, outside of Reno, Nevada. As per
the present plans of the company it continues to expand its product line along
with production plan at a rate of 500,000 vehicles a year by 2018.
As one of its strategies to attract
customers in the foreign market, Tesla customizes its cars to meet local needs
and to satisfy the tastes and preferences of its customers. For example, in
response to customer feedback, Tesla made some modifications to its Tesla Model
S in China, including an ‘executive rear seat’ option, which costs $2000 over
the standard model and aims to make the rear seat experience more comfortable (O’Hara 2015).
Excerpts from Tesla 10K:
“Historically, we have been able to generate significant media coverage of our company and our vehicles, and we believe we will continue to do so. To date, for vehicle sales, media coverage and word of mouth have been the primary drivers of our sales leads and have helped us achieve sales without traditional advertising and at relatively low marketing costs.”
Direct Selling:
Tesla sells its cars directly to its consumers through an international network of company-owned stores & galleries. This benefits the company to better control costs of inventory, manage warranty servicing and pricing, maintain and strengthen the Tesla brand through obtaining customer feedback.
Used cars sales program:
The company used car business supports
new car sales by integrating the sale of a new Tesla vehicle with a customer’s
trade-in needs for their existing Tesla and non-Tesla vehicles. These acquired
vehicles are remarketed primarily to general public and also in auction.
Strategic positioning of stores & galleries:
Another strategy employed by Tesla in
the foreign market is deliberately positioning its stores and galleries in high
foot traffic, high visibility retail venues, like malls and shopping streets
that people regularly visit in a relatively open-minded buying mood (Musk
2012). This approach is to, as Musk (2012) states, “reach people before they
make a decision on a new car.”
Super Charging stations:
The company has built their super
charging network throughout North America, Europe, Asia and other markets to
enable convenient & long distance travel. The supercharger network is a
strategic corporate initiative designed to provide fast charging to enable
long-distance travel and remove a barrier to the broader adoption of electric
vehicles caused by the perception of limited vehicle range. The Tesla
Supercharger is an industrial grade, high speed charger designed to recharge a
Tesla vehicle significantly more quickly than other charging options. To
satisfy growing demand, Supercharger stations typically have between six and
twenty Superchargers and are strategically placed along well-travelled routes
to allow Tesla vehicle owners the ability to enjoy long distance travel with
convenient, minimal stops. Additionally, they are also building Superchargers
in an increasing number of city centers to enable urban use. Use of the
Supercharger network is either free or requires a small fee.
Sustainable marketing also referred to
as green marketing is socially and environmentally responsible marketing that
meets the present needs of consumers and business while also preserving or
enhancing the ability of future generations to meet their needs.
There are five sustainable marketing
principles:
Consumer oriented marketing: a
principle of sustainable marketing that holds a company should view &
organize its marketing activities from the consumer’s point of view.
The marketing process strikingly points out the importance to orient one’s business to the customer needs and to create appropriate values. Thus, satisfaction of customers needs by meeting their expectations on performance and quality fortifies a profitable long-term relationship to the customer.
Below figure represents the profit chain
of customer orientation: –
A lot of research focuses on the validation of customer orientation, the links between the relative concepts (i.a. Anderson, Fornell and Lehmann 1994; Appiah-Adu and Singh 1998; Brady and Cronin 2001a; Brockman, Jones and Becherer 2012) and the drivers of customer orientation (i.a.
Strong and Harris 2004). Johnson (1997) translates the underlying core concepts
of marketing into three sequential goals of customer orientation.
First, one needs to acquire information
on the customer needs and establish the extent to which they are currently
served.
Next, these gathered insights must be
spread throughout the organization and transformed into actions, which are subsequently
implemented in a third step in order to satisfy the customer’s needs.
In sum, understanding customers’ needs
is the first and essential step to long-term economic success.
Customer value marketing: a principle of sustainable
marketing that holds a company should put most of its resources into consumer
value building marketing investments.
The customer value refers to current
value of complete profit obtained from these customers through the maintainable
business relation of these customers. The study of this theory is completed as
enterprises continually seek competitive advantage and the related theory
formed and developed on the basis of reference summary. Since 1990s, the
customer value (Customer Value, CV) has become the focal point which the
western marketing scholars and entrepreneurs pay attention to together, and is
regarded as the new origin of competitive advantages.
As the economic globalization becomes
the mainstream in nowadays, it is extremely important that the marketing
strategies must be getting stronger when faced with the increasingly intense
market competition. In the process of marketing, customer is the source of
enterprises profits and the key to business success, especially in the era of
the buyer’s market, who owns customers, is equal to having profit. Customer
segmentation enables organizations to design different marketing strategies for
different customers, and applies its superior resources to high value
customers, mines customers’ potential value, and increases customers’
satisfaction, realizes customers’ loyalty.
Innovative marketing: a principle of sustainable
marketing that requires a company to seek real product & marketing
improvements.
Market competition accelerates
technological progress and innovation in all areas to meet customer needs. It
also includes product innovations aimed at increasing customer interest through
innovative marketing tools. From a microeconomic perspective the customer
satisfaction can be understood as a factor of product competitiveness valuation
that can satisfy customer needs.
Economists became interested in the
issue of customer satisfaction in the 1980s, under the influence of the economy
internationalization, globalization and innovations generation. The
possibilities to enhance the company competitiveness through the satisfaction
of customers’ requirements began to be explored. Customer satisfaction with the
product is neither objective nor absolute value. It is important to look for
new opportunities and innovations to help the product to create customer needs
that are considered as satisfactory by a customer
Business environment constantly faces
new challenges that require companies to react promptly as fast as they can.
Innovativeness is evident in all parts of marketing, as well as in marketing
communication. Companies constantly search for tools that seem to be more
effective in the relation with their customers. Appropriately chosen forms of
marketing communication are effective in addressing more customers, getting
their attention, their confidence to buy a product and keeping the customers´
loyalty.
Companies are using more or less
traditional marketing communication tools that are also called “outbound
marketing” and “inbound marketing”. New trends require companies to apply
marketing communication tools which involve the customer in the communication
that enables the instant feedback. Thus, the customer feels to be the
inseparable part of the sales process. This is also the way how to reduce the
communication costs and to achieve better communication and marketing
objectives.
Sense-of-mission marketing: a principle of sustainable
that holds a company should define its mission in broad social terms rather
than narrow product terms.
This concept has led to a new generation
of activist entrepreneurs who are essentially trained business managers with a
sense of social responsibility and passion for a bigger cause.
The most popular example of this would
be of the Dove Campaign. After a research conducted by Unilever which
revealed that only 2% of the 3300 women and girls surveyed across the world
felt that they were beautiful, Unilever decided to redefine the concept of
beauty.
The underlying mission of this campaign
was to discover “Real beauty” and to help women be happy with the way they are.
The advertisement contained confident and bold women of all types instead of
regular models to echo the message of “normal is the new beautiful”.
Societal marketing: a principle of sustainable
marketing that holds a company should make marketing decisions by considering
consumers wants, the company’s requirements, consumers and society’s long-term
interests.
“The well-being of individuals and society can be achieved by the enhancement of positive consequences associated with production and consumption of a product, as well as the limitation and/or reduction of negative consequences associated with production and consumption of a product. The reduction of negative consequences and enhancement of positive consequences should be complementary in the conceptualization of a societal orientation. To this respect, a societal orientation should be concerned with maximizing positive impact of and minimizing negative effects associated with the production and consumption of a product in order to increase the long-run well-being for consumers and society at large.”
Explanation of the case & synthesis
with the theory:
Consumer oriented marketing: Tesla has
consumer-oriented marketing
The company has a traditional marketing
channel of direct selling and promotes primarily through media coverage &
word of mouth. These drivers have helped them reduce their marketing cost along
with spreading a word of trust to boost their sales in the EV market segment.
The company through its owned stores interacts directly with customers keeping
in view of their feedback and focuses on customer satisfaction.
Tesla also maintains low inventory and
and offers customization in accordance with the customer’s needs &
preferences via the internet.
Customer value marketing: Tesla lacks
customer value marketing
Although Tesla focuses on customer
satisfaction but there is an unclear vision through which it operates. The
company is not driven by profitability but from a perspective to eradicate the
usage of fossil fuels. The dependency of customers to charge their vehicles for
long route is still a question of scalability from Tesla’s point of view. The
competition offers hybrid vehicles which is a good alternative to lower the
consumption of fuel and eradicates the dependency on charging vehicles.
Innovative Marketing: Tesla has
innovative marketing
Tesla is continuously inventing and innovating its own bar of standards and has been driven by the green technology. As the consumer needs and preferences are changing they are drawn towards these products, which has resulted in increase in sales volume and expansion opportunities. Tesla however, is also focusing on on providing convenience to its customers along with infinite supply of better technology.
Sense-of-mission marketing: Tesla has
sense-of-mission marketing
Tesla has a broad mission which is to
accelerate the world transition to sustainable energy. Tesla is also making
continuous efforts to make products more accessible and affordable to more and
more people, ultimately accelerating the advent of clean transport and clean
energy production.
Societal Marketing: Tesla has societal
marketing approach
The company through its products and
business offerings keeps society’s long term interest as its primary objective.
The customer needs are changing and so is the evolving technology and it is of
prime importance to increase our dependency on alternate fuels and reduce
dependency on fossil fuels.
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