Market Analysis of Tesla

Question: Discuss about the Market Analysis of Tesla. Answer: Introduction: Tesla is the well known American automaker company which also stores the energy source. It specializes in the production of electric cars, the equipment of battery charging and the components of the powertrain. This organization produces several types of cars such as Tesla Roadster as the first sports car of electric, the luxury electric vehicle of the Model S and many more. According to Asseraf Shoham (2014), the innovative product and unique marketing strategy help to capture the world market easily in the competitive situation. It spreads its business all over the world mainly in United States, Europe, Asia, Canada and Australia successfully. Moreover, the partners of this company are Toyota, Panasonic, Daimler AG and Airbnb which help to foster the growth of Tesla (About Tesla | Tesla Australia, 2017). From the current study, it can be stated that Tesla delivered approximately 50,000 cars in 2015 from which near about 17,000 cars are demanded from Australia. The city New South Wales, Victoria and the Northern Territory of Australia has a high demand for Tesla's car from which it earns a huge amount of profit. The amount of revenue is approximate $4.05 billion in the year 2015 (Tucker, 2017). In this research analysis, the brief analysis has been done on the marketing strategies of Tesla. In order to evaluate the marketing strategies of Tesla, the brief overview of the company and its products, services, target markets and the suppliers of the company have also been discussed. Moreover, the marketing strategies used by Tesla have been stated through the pricing, promotion and distribution strategy. On the other hand, a comparative study has been made with the marketing strategies of the rivals. The SWOT analysis reveals the strengths and weaknesses of this organization. Lastly, the suitable recommendation has been provided on the improvement of marketing mix products of Tesla along with the sustainability aspects. Background of the company: Tesla is a car producer company related to the automotive electronic storage industry. It was established in the year 2003 by the group of engineers of Silicon Valley. The primary motive of the engineers was to prove the fact that the electric cars are better than the cars of gasoline-powered. The mission statement of Tesla is to move forward the transition of worlds transport and energy through the sustainable way. As a result, this organization launches the unique types of cars with the incredible power, zero emissions and instant torque. However, each and every new generation can afford the Teslas car only because of their effective pricing policy (About Tesla | Tesla Australia, 2017). By launching advanced types of cars and technology in the automaker industry, Tesla has been able to create its strong position in the competitive market. It gives the energy sustainable vehicles which are better than the gasoline-powered cars. By sharing the technology and using the auto pilot and Tesla glass advanced technology, it can control the gas emission power of the cars. The Tesla Motors awarded the Global Green of USA product or industrial design for its production of Tesla Roadster which is Lithium-ion battery made and all-electric made. Moreover, they also achieved the Secure and Sustainable World Awards by Green Cross International and Global Green by the USA. In short, Tesla receives the Environmental Leadership Award which signifies that it strictly focuses on the environmental sustainability factor during the production period (Tesla Energy | Tesla Australia, 2017). As per the high demand of Teslas car in Australia, it captures the overall market successfully. Its position in respect of the Australian market is significant as it can accelerate the share price from $30 to $291 in the year 2012. On the other hand, the company forecast the information that in next few years it can be able to increase its profit from $80 million to $100 million (Electric car maker Tesla charges into the Australian market, 2017). Products and services of the company: The main products of Tesla are the Automotive Electric Vehicles (cars) which focuses on the energy consumption factors. The Model S, Model X and Roadster have a high demand in the Australian market. Moreover, beside these models of cars, the associated products of the model cars such as Adapters, Charging, Tires, Tire Covers and Wheels are available on Tesla shop. Apart from this, Tesla launches five unique products which control the gas emission along with maintaining the environmental sustainability such as Autopilot 2.0, Tesla Truck, Ride-sharing service, Model 3 and Home Energy Storage devices (Knight, 2017). On the other hand, Tesla spreads its business over launching the products of phones, smart meters, communication and phone towers, NBN boxes transformers and the overhead high voltage power lines which have a high demand in the Australian market. In this perspective, it can be concluded that the services of this company are excellent and effective. As opined by Park et al., (2014), by selecting and producing the products of electric energy, the organization can ensure to pursue the good and healthy lifestyle of the customers. Tesla always highlights on the customer satisfaction factor for which they change and improve their service quality and concentrates on the healthy and emotional issues (Tesla plates, Tesla Pendants, Tesla Phone Tags, Geopathic stress reducers, Electromagnetic stabilizers, 2017). Target market and suppliers of the company: Like the North America, Tesla targets its business as the first market in Australia for the products of Powerwall residential type battery storage method. The main cities of Australia are recognized as the target market of Tesla which also considered as the growing list of energy partners of Tesla (Vorrath, 2017). Furthermore, Tesla found that Australian market is the key market place for efficient and cheap solar and the storage system. To manufacture and sell their products related to the solar city and solar roofing, the modern and developed cities of Australia are the target market of Tesla. By following the mission statement of Tesla, the Australian market is a suitable market for expanding the automotive industry which mainly concentrates on the generation of sustainable energy power. Moreover, the Home Battery Systems of Tesla Powerwall 2 has a significant demand in the Australian market from which it earns a huge amount profit (Vorrath, 2017). Most of the raw materials namely bauxite, boron steel, copper, rubber, silicon, leather, carbon fiber and many more things gathered from the best mining industries of the world (Sharma, 2016). They supply the raw material to Tesla and Tesla makes it better and useful by implementing the technology. Marketing strategies used by the company: The marketing strategies of Tesla are unique and effective to catch the market demand. The pricing policy, advertisement and promotional event and the distribution method are efficient to give the tough competition to the rivals. Now, the marketing strategies of Tesla have been discussed in the following manner. Pricing: The organizational head of Tesla Motors of Australia set the price of the car by considering the vision of the brand name. It is a well known famous brand of car which produces and launches some unique types of car that have maintained the environmental sustainability system. As a result, it has a significant and modest price. Now, the price of Model S by Tesla is slightly lower in the region of ACT than New South Wales and Victoria. The price is near about $120,000 of the Model S there due to the non-existence of the stamp duty (Leading the charge: Inside Tesla's quest to put Australia on the grid, 2017). Moreover, to attract more and new customers towards them, Tesla offered some discount. The way from Sydney to Melbourne is covered by the Supercharger stations of Tesla. Now, Tesla offered the free charge in this route to all customers in the year 2014. Mostly, it set its price in that way which all the customers can afford it smoothly (Wright Snook, 2017). Specifically, Tesla provides the best quality and advanced technology cars which have a high demand throughout the world. However, it has the problem of range anxiety which creates the adverse effect on the price of the products. Now, it is trying to overcome this issue to maintain its good will in the market. Promotion: Though it is a well known brand of cars and high demand in the world market, it does not concentrate on the investment of paid advertisement process. They do not believe in the marketing of their products through the paid advertisement or sponsorship programmed (Birk, 2015). The main motive of Tesla to doing this is that reinvestment in the production procedure. According to the concept of Tesla, they want to reinvest the money into the production procedure instead of advertising. This marketing strategy will help to gift the advanced and modern technology cars and many more things to the customers. As a result, it naturally makes its advertisement (Leading the charge: Inside Tesla's quest to put Australia on the grid, 2017). Distribution: The distribution process of Tesla also significant and effective which help to run the business successfully. The distribution process and service coverage of Tesla are very much effective. There are approximately 85% of the reservation holders of Model S within the 50 miles from the Service Center of Tesla and 92% within the 100 miles. It signifies the fact that service and distribution are their main priority to please the loyal customers. By merging with the automotive franchise dealers, they distribute and reach their cars towards their customers. The Fisker dealer ties up with the Tesla organization for distributing their products. Moreover, Tesla opens some new store in the main cities and location of Australia to reach the people easily. Comparison of the marketing mix strategies to its competitors: Tesla is one of the famous cars producing company related to electric vehicles which has a direct competition with the Ford Motors, General Motors, Toyota Prius, Honda Civic and Smart Car and many more. The Ford Motors gives the new information to the customers that they will invest the extra amount of $4.5 billion in the production of more electric cars by 2020 (Innovation, 2017). Moreover, the battery powered of Chevrolet Bolt by General Motors is expected to come on the market in 2016 providing the range of 200 miles. On the other hand, it also gives the advantages of clean vehicles along with the targets of the zero emission. Now, the marketing strategy of General Motors is changed to the environmental sustainability factor on the production of electric vehicles (General Motors Corporate Strategy | GM.com, 2017). Apart from this, Ford Motors emphasize on the sales promotion, advertisement, direct and personal selling of their products along with making the good relations with the public. On the contrary, Tesla does not consider the promotional event as the marketing strategy. Moreover, Fords sets the premium price and market-oriented price for their products which is lower than the price of Tesla. The Chevrolet Bolt by General Motors gives the tough competition to the Model 3 through reaching to the average customers. In this perspective, Toyota focuses on to maintain the low cost of their products along with the use of the traditional mediums for advertisements. Furthermore, they capture the huge dealership networking system throughout the world (Toyota Special Offers, 2017). Though Tesla has faced the tough competition by them, it still maintains its position in the market by applying the strong marketing strategies. SWOT analysis: According to Bull et al., (2016), with the help of SWOT analysis, the associated strengths and weaknesses of an organization can be accounted. The SWOT analysis helps to evaluate the organization in the structured planning way. Moreover, it assesses the opportunities and threats of the business venture along with the strengths and weaknesses (Hollensen, 2015). The SWOT analysis of Tesla has been critically discussed in the following manner. Strengths The unique position of Tesla in the Auto market: Tesla is not only a car selling organization, but also it delivers the cars with new technologies. It offers the electric vehicles and automobiles for the luxury market. Moreover, in the long range, it dominates the market and captures the market over the business of gas-powered cars. Robust amount sales growth: Tesla has been emerging its business rapidly. The increased amount of customers demands ensures the prospective business growth of this organization (Krebs, 2016). Due to an increase in the sales of Model S, Model X and Model 3, the sales figure rose from 27% to 59% approximately. As a result, Tesla provides the lower price of the car such as $35,000 to the customers. This organization is the sole producer of electric cars and the strong suppliers of the manufacturers namely Toyota. Tesla has the strong and efficient technological experts for performing the electric transmissions system and driving train. It can develop the vehicles and produce new types of products. Tesla concentrates on the environmental sustainability factor during the production period. It reinvests their profit to use the new technology during the time of production of cars (Steenkamp, 2017). Weaknesses Burning through the cash flows: Tesla invests a significant amount of cash due to the investment purpose in the research and development section. To get the transformative technology in cars, it spends lots of money on RD which is approximate $200 million in a year. It creates the adverse impacts on the cash flows of Tesla. The pressure of High debt: It has near about $2.5 billion long-term debt in the balance sheet. Due to insufficient cash flows and a smaller amount of cash on the hand, the high debt appeared on the balance sheet. The high debt would result in the delay in capital expenditures and investments which hamper the foster growth of Tesla (Oliveira, 2014). The prices of the products are high than their competitors. The costs of the production are high due to diseconomies of scale (Krebs, 2016). Opportunities The Australian governments support Tesla for their environmentally friendly nature by lowering the duties and tariffs. The improvement in the process of quality control will help to reduce the cost of the production (Liu et al., 2014). By launching the Model 3 at the cheaper rate, it can reach to the average customers easily. Threats The pricing strategy of Tesla is not so much significant in the automotive industry. The new technology combustion engine gives a tough competition to them (Blakeman, 2014). Tesla has faced a severe problem of liquid cash and the budget deficit issue which holds back the growth of the company. Table 1: SWOT analysis of Tesla Source: (As created by author) Conclusion: Based on the above analysis, it can be inferred that Tesla has a strong market demand for the electric vehicles in the automotive industry. The innovative production process, strong brand image, high control during the production of the vehicle and mostly maintain the environmental sustainability factor by controlling the gas emissions make them different from the others. However, the high cost and prices, debt burden and lower level promotional event hold back the prospective growth of this organization. In this perspective, Tesla needs to improve the technological system to reduce the price and cost of their products. The new facilities, presence in the international market and sales operation should be properly advertised so that it can reach to all customers. The RD procedure needs to be continuing for upgrading the technology and products. Thus, by following the above-stated recommendations, Tesla can achieve the foster growth easily. Reference List: Asseraf, Y., Shoham, A. (2014). 3 The impact of strategic orientations on export marketing strategy: new classification and typology.Research Handbook on Export Marketing, 60. Birk, D. (2015). Tesla Motors, Inc. Market Analysis and Definition. Blakeman, R. (2014).Integrated marketing communication: creative strategy from idea to implementation. Rowman Littlefield. Bull, J. 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