Tesla Motors Brand and Marketing Communications

Tesla Motors Brand

Founded in 2003, Tesla Motors is an American automobile manufacturing company. The development of the brand is owed to the efforts of engineers from Silicon Valley. Its headquarters is located in Palo Alto, California. The company developed its first model, Roadster, to set the way for the development of an electric car as an alternative to gasoline propelled cars (Bowden 69). Since this early innovation, Tesla Motors has experienced a problem with the sales of products with zero marketing communication budgets. Upon the adoption of communication strategies for pushing its sales higher through creation the brand awareness, the company has an opportunity of developing brand loyalty among its customers. Tesla Motors is the only company that produces high performance and lucrative fully electric sedans in the US.

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After proving that electric technology was a possible impulsion of vehicles, Tesla Motors progressed to release Model S into the market in 2012 (Tesla Motors par. 12). This model targeted the lucrative sedan market segment, which is also the target market segment for the proposed marketing communication plan. Tesla Motors markets its model S brand as a luxurious, technological, and high performing automobile. The organization also engages in the design and sale of electric power trains to various automakers, including Mercedes Benz and Toyota among others. The objective of this paper is the analysis of Tesla and its marketing communications. It suggests an online communication platform as a possible way of enhancing communication of the organization’s brand in the effort to boost sales.

The market segment for Tesla Motors is mid-sized with highly performing luxurious sedans. The company can succeed in this market segment upon considering that the Model S is purely eclectic and has a high performing eco-friendly engine (Kotler and Keller 38). In this market, the company does not have any close parallel competitor. Indeed, the closest organizations that compete with it in the electric luxury sedan segment include Nissan through Nissan Leaf and Chevy through its product, Chevy Volt (Tesla Motors par. 6). Nevertheless, they both present low threats. They offer lower performance electric cars in comparison with Model S.

Model S particularly fits well in the mid-size luxury automobile market. Forbes magazine researched the sales of different luxurious automobiles. It reported an increase in the sales volume of luxurious vehicles for 5 years. As shown in chart 1 below, this increase was highest in 2012 by about 20 percent compared to 2011 (Tesla Motors par. 5). This finding suggests an increasing demand for luxury vehicles, especially as the economy recovers from the aftermath of the global financial crisis. However, amid the increment in demand, organizations that offer a brand with high performance and efficiency are likely to make more sales because luxury products market segments value product utility and conformance to specifications while making buying decisions (Cheverton 29).

Total Sales of Mid-sized Luxury Sedans in Units in the US
Chart 1: Total Sales of Mid-sized Luxury Sedans in Units in the US

Market definition for luxurious vehicles can perhaps be best accomplished by considering the forecast for the expected sales level. Chart 2 below exemplifies one of such approaches of forecasting purchasing behavior in the US for consumers with household incomes amounting to $100, 000 and above. From the chart, downturns in 2009 and at the beginning of 2010 are evident. Declines are also evident from July to August 2011.

They can be explained by uncertainties that are associated with debt ceiling fears and downgrading of the US credit. Upon considering that data of market dynamics in the lucrative vehicles category is forecasted for 6 months, the trend line implies greater expectations for Model S. The performance of the company has been on the rise since the year 2011 and is expected to maintain the momentum in the foreseeable future.

Affluent Consumer for Electric Cars with over $100,000
Chart 2: Affluent Consumer for Electric Cars with over $100,000

Target Audience

The product market for Tesla products is segmented into five sections as summarized in the table below.

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Market segment Description
The young digerati This segment consists of young people, who love trendy sports car. This segment has low expenses, but with discretionary income and are very much interested in green and affordable cars. This group consists of 17% of Tesla’s market.
The celebrity segment This segment consists of celebrities from different fields such as sports, entertainment, and business. They can purchase customized automobile brands such as Series X. The group forms almost 10% of Tesla’s market.
The general segment This segment consists of other groups who are interested in affordable electric cars. This group consists of more than 60% of the company’s market.

The product lifestyle refers to the underlying activities that clients participate in such as beliefs, interests, and opinions in deciding on which product to accept or reject. For instance, the activities-interest-opinion model notes that the social status and perceptions of a client proactively determine the purchasing habits and personal preferences (Rhim and Lee 179). The targeted population for the Tesla products is middle-class families who fall in the middle-income bracket.

This group is very keen on the sustainability and cost-effectiveness of the automobiles they purchase since their income does not accommodate frugal or conspicuous consumption (Cheverton 27). This group has been proactive in demanding for environmentally-friendly automobiles since there is a general perception among the customers that green products are more efficient and effective in serving their needs. Since the middle-income families are the primary target of the company, the products have been made very affordable. With just $40,000, an individual can buy an electric car from Tesla.

Brand Positioning

Tesla Motors Inc. creates unique brands that remain rivaled in most parts of the Americas and Europe. Many firms strive to create an organization dealing in such products, but rivalry from other gasoline vehicles normally acts as a setback to progress. Tesla Inc. has a competitive brand name that earns it the goodwill of competitors such as Toyota and Nissan that contract the firm to customize their vehicles into battery-powered vehicles.

Competitive technology makes the company improve its products and services as the investment capital of each New Year keeps increasing. Strengths that place the firm at the top include an established brand name because Tesla provides affordable high-tech products to the target population (Bowden 69). Contrarily, most electric car manufacturing firms prefer selling at extraordinarily high prices to meet the cost of production.

By 2017, Tesla Motor Inc. will provide cars with high value and low costs. It will be easy to acquire a brand new Series X vehicle at less than $40,000 in the next three years (Tesla Motors par. 8). With the current leadership based on liaison, Musk will also ensure that other rival firms find the lithium-ion battery attractive, meaning that the company invests largely in quality marketing that constantly makes it visible to the public.

Brand elements

Tesla’s brand placement strategy has integrated the elements in the AIDA Model to easily convince the customer to purchase its electric cars since they form the tenet of consumer behavior modification (Rhim and Lee 183). This was achieved by designing a relevant advertisement, critical public relations exercise, and continuous sales promotion. The parameter is meant to check goal achievement through integrated 4Ps of marketing such as price, place, product, and promotion to ensure that the targeted customers notice the competitiveness of the electric cars. The company’s name, logo, and design differentiate its brand from its competitors.

To stand out from the competitors, the company uses the Tesla logo to differentiate its electric cars from those of rival companies. The products are also promoted using colorful logos. This has created an impression of brand quality in the minds of the target consumers, hence; help the company to make substantial sales (Rhim and Lee 189). Colorful logos have also made consumers remember about the brand whenever they come across a color portrayed in the Tesla logo.

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IMC

In its marketing initiatives, Tesla Motors has introduced creative strategies to manage customer relationships. These strategies are advertising, sales promotion, personal selling, DM, online marketing, and public relations. These elements are discussed below.

Public relations

Keeping potential clients up to date with information is of important methods of maintaining positive relationships with customers (Rhim and Lee 189). Tesla Motors updates its customers constantly with new features for Model S so that they can update their vehicles using the internet.

These attempts are done for the commitment of financial resources in communication. Although the strategy increases the cost of running Tesla Motors, it is justifiable in the context that “marketers are quick to recognize that the value of the customer asset is the sum of the discounted net contribution margins of the customer over time” (Bowden 72). The claim here is that attempting to build customer relationships comes at a cost, which Tesla Motors has been occurring to sustain customer relationships with its products.

Online marketing

Ensuring that Tesla Motors’ website is up to date with the information on innovative and technological developments that are aimed at making Model S is critical in the development of the brand image of the organization. Potential customers are likely to buy products from a manufacturer whose information on what is available in the house is easily accessible (Rhim and Lee 186). Tesla has committed financial resources in online communication, in the form of social media adverts to guarantee a higher probability of capturing the loyalty of both the existing and potential clients. The company also has a Twitter and Facebook fun pages to keep customers updated on the latest developments in its product line (Tynan and McKechnie 525).

Personal selling

The scope of personal selling consists of a complete communication channel between the customer and the seller through modes such as video conferencing, face-to-face, and internet among others. Personal selling may be active in the business-to-business transaction and business-to-customer. To sell electric cars, Tesla uses the product approach, beneficial approach, and the referral approach (Cheverton 33). The product approach is used to displaying the latest developments in the engine and bodywork of the vehicles. The beneficial approach is used to describe the benefits with the referral approach being testimonies from customers (Bowden 71). The company has personal account managers for each customer to provide customized services.

Sales promotion

Customers not only buy a product but also pay for the brand image. Brand image is a “perception of customers when they see a brand reflected by brand associations in their mind” (Tynan and McKechnie 527). These associations are multidimensional. They contain a myriad of attitudes or dimensions, which are emotionally instigated in relation to customer perceptions on brand quality and the degree to which the brand satisfies customer needs (Bowden 45). In the case of Tesla Motors, brand image is enhanced through series of sales and promotion programs such as free test rides, discounts for the purchase of more than three units, and free service up to 50,000 miles (Tesla Motors par. 7).

Advertising

Advertisement involves increasing awareness, building community, and generating publicity. The advertisement tactics and keywords are designed to create the wanted image and optimize the integration with the target group. Therefore, through timely appeal to emotions and self prejudice, the advertisement plans skew the human mind towards embracing the ‘perceived goodness’ and need to identify with ‘the ideal’ in the advertisement strategy (Tynan and McKechnie 528). Interestingly, these aspects are clearly integrated at Tesla through perfect advertisement plans depicting the brand as the product of the future and very friendly to the pocket. The company carries advertisements through social media, traditional media, and sometimes through display showrooms.

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IMC Analysis

Tesla uses the expanded marketing mix to improve the performance of the company through the creation and successfully implement the marketing strategy to ensure customer loyalty and market expansion. The company’s product multi-branding as a positioning strategy has enabled it to integrate the expanded marketing mix by balancing the elements of intangibility, inseparability, and heterogeneity in the 7Ps of its market mix as a result of improved product visibility for each target segment (Tynan and McKechnie 529).

The company uses a strategic brand equity model to integrate the advertisement approach to its market penetration strategies. To achieve this, the company has segmented and differentiated its market along with consumer-based market segmentation procedures. The strategy was meant to take advantage of the challenge of ‘smallness’ as compared to other giant automobile manufacturers offering similar products (Bowden 72). The company depends on the closed-system approach in the execution of its business strategies. Tesla is packaged as a humble and flexible company offering affordable and sleek electric automobiles at the most friendly prices.

Tesla has cleverly rolled out a traditional-online client interaction strategy as part of its customer relationship management. This element revolves around saving money by offering affordable automobiles to customers. As a result, the company’s customers have better offers due to consistent and attractive discounts for online clients. Tesla has always aspired to provide quality automobile products and services to customers (Rhim and Lee 189).

Tesla has made the automobile shopping experience an easy task with its strategy of all-under-one-roof, from spare parts to financing options. A customer is in a position to literally find all models of the Tesla product within a single location. This saves on time besides allowing a customer to plan for a single shopping activity that covers for all his or her needs (Cheverton 29). To support this mission, Tesla has one of the most attractive reward plans for its loyal customers in the form of shopping points that are redeemable, seasonal discounts, and annual rewards.

Recommendations to overcome the IMC challenges

Strategic and customized marketing plan

Tesla Motors can create a unique brand to remain competitive in the highly stratified Abu Dhabi market. The creation of a unique brand will give Tesla a competitive over competitors such as Toyota, BMW, and Honda. Competitive technology can also be adopted by Tesla to make the company improve its products and services. Strengths that will place the firm at the top of its main competitors include the provision of affordable high-tech products to the target population (Cheverton 54).

Contrarily, most electric car manufacturing firms prefer selling at extraordinarily high prices to meet the cost of production. By 2017, Tesla Motor will provide cars with high value and low costs in Abu Dhabi. It will be easy to acquire a brand new Series X vehicle at less than $40,000 in the next two years. The company should invest largely in quality marketing that constantly makes it visible to the public. The company needs to embrace more traditional media marketing to keep growing, especially when targeting clients (Kotler and Keller 41). To effectively reach such an audience, the marketing communication plan must suggest the best advertisement strategies to cover its wide market area to accommodate divergent views and perceptions of different brands.

Strategic Competitive Intelligence Modeling

One of the most difficult things is to launch an electric car company in an environment in which people mostly trust gasoline operated vehicles. Tesla has a competitive corporate strategy that majors on the deployment of talented, passionate, and innovative employees who share a common vision with the firm. Technology runs most functions in the firm from communication, product design, and overall product development (Kotler and Keller 33).

Unlike companies that target the rich and sophisticated customers, such as BMW, Tesla decided to target the middle class in the new corporate strategy of 2009. Besides, the entire organization settles on product design and price before making the information public (Bowden 72). However, to sustain long-term competitive advantage, Tesla should remodel its current approach to product branding to ensure that targeted customers are served in the shortest time. Currently, it takes more than eight months to get an order delivered. If Tesla can reduce the waiting time by three months, it is will make more sales and expand its market catchment (Bowden 73).

Conclusion

Marketing communication strategies are important in aligning a company towards the target market to achieve optimal sales. The main determinants of a successful marketing communication plan lie in the proper brand alignment and research on segmentation. Tesla has successful IMC since their strategies are skewed towards customer Centricity for the dynamic brand. However, the company needs to improve its product visibility through an integrated and customized marketing communication approach to appeal to all customer segments.

Works Cited

Bowden, John. “The Process of Customer Engagement: A Conceptual Framework.” Journal of Marketing Theory & Practice, 17.1 (2010): 63-74. Print.

Cheverton, Philip. Key Marketing Skills: Strategies, Tools, and Techniques for Marketing Success, London, UK: Kogan Page, 2013. Print.

Kotler, Philip, and Kevin Keller. Marketing Management, New Jersey, NJ: Pearson Prentice Hall, 2012. Print.

Rhim, Hosus, and Chan Lee. “Assessing Potential Threats to Incumbent Brands: New Product Positioning Under Price Competition in a Multi Segmented Markets.” International Journal of Research in Marketing, 22.1 (2010): 159-182. Print.

Tesla Motors. Abu Dhabi Market. 2015. Web.

Tynan, Caroline and Sandra McKechnie. “Experience Marketing: A Review and Reassessment.” Journal of Marketing Management 25.6 (2008): 501-527. Print.

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