Strategic Marketing Management

Coursework 1

Evaluation of the Impact of Marketing on Tesla Motors’ Objectives

and Its Position Within Market
Contents
1.Introduction..............................................................................................................................................3
2. Customer segments of Tesla Motors........................................................................................................4
3. Marketing audit.......................................................................................................................................5
PESTEL Analysis........................................................................................................................................5
Porter’s five factors analysis....................................................................................................................7
SWOT Analysis.......................................................................................................................................10
4. Situation analysis...................................................................................................................................12
Evaluation of current marketing strategy with objectives......................................................................12
5. Marketing objectives.............................................................................................................................15
Conclusion.................................................................................................................................................17
References.................................................................................................................................................18
1.Introduction
Business is largely led by a well-defined marketing strategy as it directly influences the sales and
revenue growth. Proper marketing stimulates the interest of the company in the marketplace.
Strategic marketing management infers to the examination of market using the restorative
marketing strategies to improve the products, services and growth of the plan. Such strategy will
work on improving the abilities of the company by competing with the potential territories and
emphasize on picking up the upper hands. We have selected Tesla Motors, a multi-national
company of electronic vehicles, to evaluate the impact of marketing on its objectives, business
and position in the market.

Tesla Motors is an American organization which plans and offers electric vehicles and
stockpiling items. It also offers proficient electric powertrain segments to other makers in the
market. This organization was founded in 2003 with a central station in Palo Alto. Tesla roadster
manufactured by the company was its primary superior game auto which was started for regular
use with an attracting outline in 2012. The company has its own administration focus and deals
with own vehicle system. The Model S car and the Model X utility vehicle are two fully electric
vehicles now created and offered by the company. Model S car was launched in 2012 and up to
2015 it has provided 107,000 new vehicles of this premium model. Model X was launched by the
company in 2015. Up to December, 2015, Tesla worked on 585 supercharger stations in different
regions (Tesla.com, 2019).

This report on strategic marketing management of Tesla will provide insight on the association of
marketing strategies and its impact by determining PESTEL, Porter’s five factors, SWOT
analysis and strategic framework. It will deal with the association required for the marketing
strategy and will provide improvements in the current arrangement.
2. Customer segments of Tesla Motors
Tesla Motors follows a chain of activities including segmentation, targeting and positioning for a
certain customer segment. It develops products to meet the demands of the clients of that
particular segment.

Tesla maintains mono-segment positioning for its customer segment. The company deals with
completely electric vehicles. Other companies deal with fuel vehicles which is harmful for
environment. Tesla offers environment friendly and uniquely designed products. So, its products
are considered to be expensive and the company charges premium prices for these. So, the
wealthy individuals and clients with environmental concern are the target customer segment of
Tesla as average customers find it costly. So, the specific customer segment of the company
brings loyalty being benefit sought. They look for the benefits of status, environmental-friendly
products, long-term cost effectiveness, sustainability and perception of being all of which are
provided by Tesla. The customers are usually from middle and mostly from upper class. These
customers are willing to pay premium price to attain their sought benefits. Affordability is not
much problem for the purchasing behavior of them. Their purchasing behavior is mainly
influenced by trending features including brand value, status, comfort, log-term use,
sustainability and environmental concern (Peter, 2010).

Tesla’s products have unique value proposition to its target customer. Tesla is one of the five best
selling electric vehicles now. Tesla has currently more than 500 supercharger stations with more
than 3000 superchargers. These superchargers offer 170 miles driving range in around 30
minutes. These supercharger stations are located along well-travelled highways which is
obviously a strategic value to their customers. Their electric vehicles hold social value and
environmental value along with core benefits. These values naturally fall upon the upper and
middle-class customers who are their target customers. So, it is obvious enough that Tesla
Motors offer unique and effective feature and value to its target customer segment which
demonstrates their strategic benefit from marketing.
3. Marketing audit
PESTEL Analysis
Tesla Motors has to face and conquer challenges related to the macro-environment. PESTEL
analysis determines the impact of the different elements in macro-environment on the business.
Full-scale condition in the car business of Tesla is overviewed here.

Political

Legal Economical

PESTEL

Environmental Social

Technological

Figure: PESTEL analysis

Source: (Miller, 2012)

Political factors: Political factors for Tesla’s business are related with the carbon outflows of the
products and different items of the organization. The company’s market proliferation and growth
are facilitated by the steadiness in political sectors which supports its full-scale condition. Such
facility and understandings provide opportunity for Tesla to operate universally.

Economic factors: Tesla focuses on lowering battery costs to ensure business profits. Products
of Tesla Motor become more alluring and reasonable to the customers by its diminishing power
source costs. This sustainable power source management for the electric vehicle of the company
has become mainstream now (Hooley, 2017).
Social factors: Tesla is considering plans for low carbon ways. Sustainable power source and
increase of ubiquity of life some outside factors Tesla determines. Inclination to these factors
increase market interest for the electric vehicles of Tesla. The company can now also create and
expand markets to render its budgetary execution.

Technological factors: Mechanical change is prominent in automobile arena now. Tesla is also
planning on improving its items maintaining the mechanical change. The company has planned
for its development projects along with the robotization of business process. This factor affects
the company as quick change of the mechanics brings potential oldness of the developments
(Mangram, 2012).

Environmental factors: Tesla Motors has been planning and working on the modification and
improvement of its electric vehicles to overcome the environmental change and increasing
ecological projects.

Legal factors: Tesla Motors have strong scopes to expand its business operations abroad
determining global patent insurance. The organization may modify and improve its electric
vehicles to maintain vitality utilization control. The company may also proceed with direct deals
with some states.

Macro factors Opportunity Threat Key driver for

change
Political 1.Political 1. Political instability Tax, social and other
dependability in the relevant policies and
market for share trade law
2.Expanding
structured business
understandings
Economic 1.Reducing battery 1. Financial Interest rate. Growth
cost soundness problems rate. Inflation rate,
2.Reducing credit rate
sustainable power
source expenditures
Social 1.Sustainable None Changes in demand
 development for low and life-style and
carbon ways income of people
2.Increasing lean for
sustainable power
source
3.Increasing interest
of riches in market
creation
Technological 1.Mechanizal High rate of Obsolescence and
expansion in business technological rate of technological
2.Increasing use of movement change
online portable
frameworks
Environmental 1.Expansion of None Laws and regulation
natural projects for energy
2.Increase of consumption
squander transfer
Legal 1.Managing vitality 1. Control of Laws and regulations
utilization dealership in US regarding
2.Increase of patent employment,
assurance production and
internationally products
Table: PESTEL analysis of Tesla Motor

Porter’s five factors analysis

Porter’s five factor analysis determines the impact of outer factors of firms and its industry. Tesla
Motors intends to maintain its growth through vital measures by addressing the problems
depicted by the factors of this analysis.
 Bargaining power
of buyersBargaining
power of suppliers

Threat of new Competitive Bargaining power

entrants rivalry of suppliers

Threat of
substitutes

Figure: Porter’s five factor analysis

Source: (Pride, 2017)

Competitive rivalry: Few prominent firms operate business in the car market where rivalry is
restricted by various outer factors. Critical organizations like Tesla Motors are improving their
items and developing their process. Competitors get fortified against the company in the market.
Clients also face comparatively low challenges to purchase autos which will indirectly increase
the rivalry.

 Moderate number of firms (weak)

 High impact of existing firms (strong)

Bargaining power of the buyers: The automobile market of Tesla Motors incurs a very low
switching cost. It reduces the probability of the clients to switch and buy from others. This is a
strong factor to determine the market structure and force against the business condition of Tesla
Motors. Substitutes of the products of the company can also be accessed in a very moderate way.

 Low switching cost (strong)

 Access to direct substitute (strong)
 Volume of buys (weak)
Bargaining power of the suppliers: This factor determines the control of supplier to appropriate
and offer the product in the market. Many providers directly execute with the organization. These
providers have special impact on the business condition of Tesla Motors. Moderate quantity of
supply influences the company to carry out a certain point.

 Size of providers (moderate)

 Volume of supply (moderate)

Threat of substitutes: The condition of the industry where Tesla Motors is operating is
influenced much by this external factor. Some substitutes of the business have high level of
ability to meet the demands of the clients. Providers of these substitutes restrict this power of
Tesla.

 Accessibility of substitutes (high)

 Execution of the substitutes (moderate)

Threat of new entrants: Tesla Motors has a high level of brand recognition in its respective
market. Entrants in the market always find it hard to contend with them. Such production incurs
high cost restricting the entrants in the market (Ruiz, 2014).

 High cost of brand development (weak)

 Cost of executing business (weak)

Based on the analysis and discussion, we can depict the impact on profit as below:

Forces Impact on profit

Competition in the market Reduce profit
Bargaining power of buyers Moderate
Bargaining power of suppliers Moderate
Threat of substitutes Moderate
Threat of new entrants Increase profit
Table: Impact of Porter five factors on Tesla Motors
SWOT Analysis
Strength: Tesla Motors focuses on gainful items in the market maintaining the high rate of
advancement. As a fully electric automobile company, it has solid brand image and sustainable
power source management. New three models of the company have come under the spotlight t in
2017 with a notably less expense of $35000 sticker price. Administration is conveyed with these
models for an average of 85,000 of these models.

Weakness: The inventory network of Tesla Motors is constrained by market nearness which
brings shortcomings for the business. For example, Tesla makes high amount of incomes in US
but incurs low nearness in China. This shortcoming constrains the company to expand business
abroad and focus on monetary development. The company has also faced high obligation stack
which is nearly $2.5 billion at the end of March, 2017. The company also incurred $1.4 billion
capital rents at the same time.

Opportunity: Tesla Motors has the scope to expand its tore network globally. It can extend its
deals operation to help the expansion. Such opportunity is followed by monetary development of
different countries. Tesla is launching Gigafactory which will help the company to build batteries
for its automobiles at lowered costs and enhance operations. It will reduce the cost up to 30% of
existing expense (Mangram, 2012).

Threat: Automobile companies always carry on against each other which is always a concern
for the companies in the market. After Tesla, many automobile companies are planning and
working on offering completely electric vehicles. Risk of dealership direction is also a threat to
Tesla. The company now has to incur offering costs as it goes without dealership inclusion.

Strength Weakness
1.Solid brand value and marketing 1.High debt with low benefit
management 2.New development of items and constrained
2.High product differentiation for electric involvement
vehicles 3.Single supply of power packs
3.Sustainable power source
Opportunity Threat
1.Reducing non-renewable energy 1.High level of rivalry
2.Establishing own battery with reduced costs 2.Restricted provider base
3.Expansion of biological community 3.External money swapping level
Table: SWOT analysis of Tesla Motors
4. Situation analysis
Evaluation of current marketing strategy with objectives
Objectives of Tesla: The primary objective of Tesla is to create demand and drive sales up for
the company’s electric vehicles. It intends to establish a sustainable brand awareness and
maintain corporate reputation in the market. Managing existing customer base with loyalty and
referrals is also a prominent objective for Tesla Motors.

Porter has designed four inclusive techniques in order to produce upper hand. These are
differentiation, cost leadership, cost focus and differentiation focus. The organization can
determine it from two alternate views to make a strategic insight.

Figure: Porter’s generic strategies

Source: (Porter, 2012)

Competitive advantage: Tesla Motors is offering completely electric vehicles to the clients
rather than fuel consumption vehicles. It is the main competitive advantage of the company. This
vehicle is a bullet car with no emission which is really an environment friendly.

Competitive scope: Products of Tesla Motors are considered to be environment friendly. So, the
customers are supposed to purchase those with premium price. Focusing on the high-end market,
the company plans to win the market with high volume of sales and low production cost resulting
in lower price of the vehicles.

Current marketing strategy: Tesla Motor’s non-exclusive marketing strategy is Narrow

Differentiation. This strategy provides a competitive edge for the company than others by laying
upper hand. As Tesla always invites innovation to its coordination, it focuses on utilizing interior
inclusive motors. The company improved the uniqueness of its products by maintaining the
differentiation focus. The company believes that early adopters always have high propensity to
buy new items as being wealthy clients. The reduction of production costs and expansion of
brand awareness facilitates the company to apprehend the target clients in the automobile market
(Kumar, 2013).

Internal audit of Tesla: Tesla Motors has a noteworthy interest in innovative work. It also meets
its market interest with sustainable power source management. The company reinforce upper
hand with bolster deals and mark fame. The company has experienced strong and efficient team
with experience of working in similar companies. Location of its operations provides advantage
with sorts of computer engineering. The company holds large production capacity. Here is an
internal audit of Tesla for 2018.

Strengths

Internal factors Weight Rating Weight score

Investment in R&D .45 4 1.8
Efficient and 0.3 4 1.2
experienced
management team
Spectacular design 0.1 3 0.3
Strategic benefit of 0.05 3 0.1
location in best
calibers
Capacity of large 0.1 2 0.3
production
Table: Internal audit of strengths of Tesla Motors

Tesla Motors generally uses expensive electric vehicles in comparison to other companies. They
are facing problem of less charging stations and low battery range. Charging process of its
vehicles is also quite slow. It is experiencing less brand recognition than other established brands
in the market.

Weakness

Internal factors Weight Rating Weight score

Comparatively 0.25 3 0.75
expensive electric
vehicles
Less charging 0.2 2 0.4
stations
Low range of battery 0.3 2 0.6
Slow process of 0.3 1 0.3
charging
Less brand 0.05 3 0.15
recognition
Table: Internal audit of weakness of Tesla Motors
5. Marketing objectives
Tesla Motor’s marketing objective is compiles with sustainability and corporate reputation.
Driving the sales up is the most prominent marketing objective of the company. It intends to
make sustainable demand for its electric vehicle and establish a brand recognition. It also plans
to manage existing customer base and client referrals.

Great marketing always starts with great products (Grundy, 2016). Tesla has launched Model S
and Model X, both with great outlooks and high efficiency. Along with the products, in order to
reach the target customers with these, Tesla performs various marketing roles regarding Place,
price, promotion and technology. Their major marketing roles are explained below:

Place: Tesla reaches the target customers directly through company owned stores. The company
has not been still able to provide its products to all the corners of the world. The company is still
trying to expand network of superchargers and stores to ensure its sustainability in the market.

Price: Tesla Motors has always followed premium pricing strategy. Focusing on design and
outlooks, the company invests a high amount in research and development sector. It believes,
high prices will ensure high quality and will bring a premium customer segment. It will help the
company to improve brand recognition and manage existing customers base.

Promotion: Brand image always works in favor of Tesla Motors. This brand is always being
promoted by the website and their strategic locations. Websites and social media are used to
promote Tesla’s brand and products. The company also always enjoys good media coverage for
selling sustainable electric automobiles.

Techniques: Tesla Motors has always tried to complement sustainability with its product mix. It
is incorporating battery packs at low expenses offering high energy density. Tesla is determined
to ensure durability and safety with their products. It creates a unique brand recognition for Tesla
(Tansel, 2016).

Recommendation of SMART marketing objectives for Tesla Motors

1. Focus on the sustainability of products along with the development of generation

abilities. Take attempt for large scale manufacturing and reduce generation time. The
 company finds it quite actionable being a unique provider. It can execute the plan within
short time-bound. Progress of this objective can be easily measured and possible to attain.
So, the company can go for this SMART marketing objective.
2. Our PESTEL analysis demonstrates that Tesla Motors has wide scope to extend its
operations globally. It should enhance marketing forcefulness to gain market share
abroad. It can focus on R&D to enhance the operations. It can develop worldwide car
market with mechanically propelled items notwithstanding prominent competitors. Our
analysis above depicts that this objective for Tesla is quite attainable, realistic and
specific.
Conclusion
Tesla Motors has much abilities and vital qualities to operate fruitfully in the automobile market
and serve the target customer segment. The company is also capturing a venture scope with a
moderate rate of risk. Rivalry in automobile business is significant. Being a premium range
electric vehicle provider, Tesla also gets tackled by low range vehicles providers. The
organization now should go for global expansion enhancing their productivity. Proper
investigation is also required to assess the whether the company is able to improve creation
quickly.
References

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Grundy, T. (2016). Rethinking and reinventing Michael Porter’s five forces model. Strategic
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Kumar, V. (2013). Global marketing research.

Mangram, M. (2012). The globalization of Tesla Motors: a strategic marketing plan analysis.
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Miller, D. (2012). The generic strategy traps. Journal of Business Strategy, 13(1), 37-41.

Peter, J. (2010). Consumer behavior & marketing strategy. Boston: McGraw-Hill Irwin.

Porter, M. (2014). Competitive strategy. [Place of publication not identified]: Free Press.

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Ruiz, K. (2014). The development of marketing objectives and plans. [New York].

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Tesla.com. (2019). Electric Cars, Solar Panels & Clean Energy Storage | Tesla. [online]
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