Phase II

Marketing 361, SP02 001-2

March 4, 2020

Team 52
Brae Bachir
Emily Fritz
Eric Hetzel
Eric Lew
Victoria Morgan
Jintao Zhang

Introduction
Tesla is a fully electric automotive car company that is breaking ceilings in its industry. Now that
they have created a well-known corporation, Tesla needs to continue improving their marketing
strategies to keep customers engaged and up to date in their products. The flagship product of
Tesla is their vehicle lineup, the model S,X, and 3. Tesla’s products are unique and innovative,
showing our potential of moving towards a sustainable environment. Sustainability and system
changes have become environmental trends. This report will allow for a better understanding of
Tesla’s marketing strategies and where the company can still improve. Below you will be able to
review the competitive environment overview, Tesla’s SWOTT Analysis, target markets and
target segments, needs and characteristics, and recommendation and conclusion.

Competitive Environment Overview

Tesla provides multiple services ranging from solar roof tiles to external house batteries. Our
main product, however, is the Tesla vehicle lineup (Business Insights Global, 2020). When
considering our major competitors, Business Insights Global along with Mergent were our two
major sources for this information. Using them, we determined our macro competitors will be
other automotive car companies, NAICS code 336111, specifically Nissan and Toyota (Business
insights Global, 2020). From a list of the top 10 electric vehicles worldwide for 2018, Tesla took
3 spots on the list, Model 3 (1), Model S (4), and model X (5). From that same list, Nissan and
Toyota took three and nine respectively which is how we know they are our biggest competitors
(Business Insights Global 2018).

S.W.O.T.T Analysis

Strengths

Vehicles
The strengths of Tesla are that they have the best-selling electrical vehicle, the safest models, and
the awareness of the brand. Tesla has been able to create a strong design and vehicle engineering
capabilities. Where Tesla has received a five-star rating on Model S for the safest manufactured
vehicle in 2013 (Alghalith, 2018). Making it a great benefit for customers to consider when
purchasing and when in use of autopilot.

Innovation
Expanding on Tesla’s strength of innovation expands beyond vehicles into charging outlets,
powerwalls, and clean solar energy. Tesla is able to create new energy efficient products that
keeps the companies performance and sales expectations high. The innovative elements
regarding self-driving, Powertrain engineering, and energy storage help the company to gain and
maintain customers (LUISS, 2019). This helps keep the customers engaged in the company and
wanting more.

Awareness of Brand
With these innovations Tesla is able to develop a greater brand awareness that is represented
through social media. Most of the promotional channels such as YouTube videos and updating
its site regularly to meet their customers’ demands and the general public (Musoner, 2019). As
Tesla continues to grow through social media it helps the consumers notice the company's brand
and objective.
Weaknesses

Production Demand
As a weakness Tesla is not able to keep up with their customers needs does not allow Tesla to
meet the production demand they aspire for. With three Giga factories there is not enough
production of vehicles to satisfy the market demand. As new customers become aware of the
environment more demand is for clean energy efficiency products increases as well as being able
to have the latest models with technology. Where 71% of new car buyers would prefer to have a
vehicle with enabled technology (Mintel patrick ross, 2018). With these new implications desired
by consumers, production lacks in demand.

Defective Batteries
With the new advancements in technology, Tesla has been able implement them into their
vehicles to attract more customers such as battery electric vehicles (BEV). Vehicles are able to
use the power of the battery to avoid having an internal combustion engine. However, the
electrical batteries within the vehicles are viewed as unreliable and have become an
inconvenience for its customers. As it has come to adopt “range anxiety” for consumers. Owners
worry about being stranded by the side of the road with a fully discharged battery (Hettich,
Muller-Stewens, 2014).

Opportunities

Gas Prices
Tesla sees escalating gas prices as an opportunity to promote to consumers that the switch to a
BEV would save them money. Referring to Figure 2 below the average amount spent on
gasoline for an international combustion engine vehicle (ICEV) is $2534 a year. Versus the
amount of $514 a year on BEV charging demonstrates that consumers can save on average
$2000 a year.

Exploring Other Markets

Tesla is taking advantage to expand into different markets that provide more ways to save
energy. Vehicles are not the only way to do so, but creating other products in new markets such
as Solar Roofs, Powerwalls, and Powerpacks allow consumers to expand their utilization of
clean energy sources in new innovative ways.

Supply Competition
As Tesla continues to expand into other markets and having an impact on consumers lives.
Competitors are taking notice and soon many will not only have electrical vehicles, but create
similar products to Tesla. Giving Tesla the advantage to supply the competition of such products.

Threats

Competition
Becoming the pioneer of BEV, Tesla faces an increased amount of competitors who also have
created their version of BEV. With the market of electrical vehicles growing it can not be denied
that the competition is going to take advantage. As mentioned above the competitors are Nissan,
Toyota, and Ford who not only have BEV, but vehicles that are able to alternate between energy
and gasoline (LUISS, 2019). Creating another aspect that Tesla is competing against.

Finances
Recently, Tesla has continued to increase in the stock market and in revenue with tremendous
loss and debt continuing to grow (Yahoo Finance, 2020). This may cause stakeholders to act in a
panic and lose their financial confidence in Tesla.

Trends

Economically Friendly
As target markets continue to evolve and grow to have an interest in the economy, Tesla has
taken notice and created a mission statement that reflects their consumers interest. Being that
Tesla’s mission is to accelerate the world’s transition to sustainable energy (Tesla, 2020).
Demonstrates they want to showcase to consumers they care and understand what the
environment means to them.

Electrical Vehicles
Within recent years electrical vehicles have been able to gain a great amount of publicity
catching the attention of consumers. As 57% of consumer attitudes towards electrical vehicles
are that they are the future and 51% state that society should transition to electrical vehicles as
soon as possible (Mintel, “hybrid & electric cars”, 2019)

Target Markets

(Refer to Figure 1, Page 7)

Geographic Locations
The target markets of Tesla are geographically located in North America, Europe, and Asia.
With over 265 locations worldwide. These locations provide either sales, service plus or service
facilities. Within the geographical locations Tesla is also creating Supercharger. Networking of
up to 120kw fast charging equipment, Tesla has opened 790 Supercharging stations (Marketline,
2017). Allowing Tesla to promote to potential customers that services and chargers are available
in their location. Tesla’s primary target market is the 55% who live in the wealthiest 10% postal
codes in the United States (Hedges, 2019). The secondary and tertiary target markets live in
urban and rural areas, typically in California.

Demographics
Tesla’s demographic are consumers who do consider autonomous vehicles and energy efficient
products. Based on gender we can say both males and females are part of the target markets
ranging from the ages of 30 to 65 years of age. Ensuring that consumers have a profession that
may be a full-time employee position, senior manager, or an executive throughout the top three
target markets.
Psychographics
Across all three target markets the psychographic data establishes that Tesla objective consumers
are those who are living a middle class to upper class lifestyle.

Target Segments
The three target segments in Tesla are the vehicles, the energy storage, and the solar energy
systems. Each of these segments builds off one another in the main goal of becoming more
energy efficient. The primary segment are the vehicles. This includes Model S, Model X, Model
3, and any vehicles coming out in the future. The secondary segment is energy storage. This
includes Powerwall 2. Lastly, the tertiary segment is solar energy systems. This includes the
solar panels, any monitoring devices, and electrical hardware (Dudovskiy, 2018).

Primary Segment
The primary target market for Tesla are their vehicles. Currently, Tesla has sold between
367,000 and 368,000 units in the year 2019 for Tesla’s Model 3 (Wagner, 2020). This is across
all of Tesla's vehicles from the Model 3 to the Model X to the Model S. The age demographic of
users that purchase a Tesla vehicle is anyone above 30 years of age (Dudovskiy, 2018).

Secondary Segment
The secondary target market for Tesla is their energy storage. Energy can be stored in Tesla’s
Powerwall 2. The purpose of the Powerwall 2 is that it becomes the main energy source when
there is an outage. The Tesla Powerwall 2 only comes in one size which is 14 kilowatt-hours
(Marsh, 2020). The age demographic of users that purchase Tesla's energy storage ranges from
25 years old to 65 years old (Dudovskiy, 2018).

Tertiary Segment
The tertiary target market for Tesla is their solar energy systems. Tesla’s solar energy systems
includes solar panels, any monitoring devices, and electrical hardware. The solar panel alone has
315 watts and weighs around 44.5 pounds (Tesla, inc. 2020). The age demographic of users that
purchase Tesla’s solar energy system ranges from 30 years old to 65 years old (Dudovskiy,
2018).

Needs and Characteristics

Primary - Vehicle
Those consumers are usually over 30-years-old people, both males and females. Although this
group of people could be in any occupation in a company, such as employees, executives, etc.,
but all of them have a great salary, so that affording Tesla’s vehicles’ high price. However, they
all are determined and ambitious. Thus, they need to find some special and different things to
show their power and their success; then, they could arrive at a higher and more important
occupation. Besides, they care about ecology and environment. Therefore, the demand for them,
in vehicles, is an ecological vehicle.
Secondary - Energy Storage
For this part of customers, Tesla focuses on someone who has a greater salary. Customers could
also be both females and males, but their age could be younger or be middle age. Tesla major
target consumers who live in North America, Asia, and Europe. This group of consumers are
very confident and ambitious. That means that they want to show they are different or more
successful than others. These consumers have quite a strong perception of being environmentally
friendly. Hence, they might seek something which is more expensive and environmental stuff to
match their economic strength and status like powerwall or powerpack in their house.

Tertiary - Solar Energy System

Tesla wants to set their target market in North America, Asia, and Europe for their solar energy
system. The customers who will buy it would also be friendly with environmental things. Tesla
does not have target gender such as females or males, and they also do not care where they live
in - city or rural area. Their target customers would be between 30 - 65. What is more, these
customers should have much stronger economic power to pay for the entire solar energy system.
Thus, Tesla would focus on those senior managers, executives, and part of employees. Solar
energy system’s target customers would like and need to show their success and their
characteristics. In addition, these people are willing to attempt new products and new
technologies as well.

Across all three of the target segments; vehicles, energy storage, and solar energy system, they
share the same location on where it is mostly popular, the occupation of the owner, and
psychographic characteristics of the owner. The location where Tesla is most popular is North
America, Asia, and Europe. The occupation of a Tesla varies from an employee to an executive,
and the psychographic characteristics of a Tesla owner are hardcore loyal users, fad users, and
switchers. Hardcore loyal users are known as an thinker or an activist. They are early trend
setters. Fad users like to be on a trend, and switch users have little to no loyalty and would
switch companies based off of price (Dudovskiy, 2018).

Recommendations/Conclusion
Overall, Tesla has three main marketing issues that include: improving marketing strategies, a
need to work expanding market audience and brand awareness, and overcome the perception that
Tesla’s autopilot is unsafe. With this in mind it is important to consider our target markets when
working with these main marketing issues. Recommendations to improve Tesla’s marketing
strategies would be to understand the consumers wants and needs. Create campaigns that capture
Tesla’s aesthetic and configure the strategies to be memorable by consumers. Expanding our
target market will establish our brand awareness. By creating vehicles that fit different lifestyles,
promote those lifestyles to the target markets, and communicate how the brand will have an
impact on their lifestyle. The way we can overcome consumers' perception of autopilot is by
creating videos that will explain what and how to use autopilot. Also taking advantage of social
media such as Instagram and Twitter to demonstrate our autopilot being used correctly by
influencers. Thus we can also ensure that our consumers have a link to Tesla’s web page where
the owner's manual will be displayed. It is important to make sure our products are safe, so that
we can advertise additions such as autopilot, in countries like Germany that are currently not
allowing us to do so (Business Insights: Global, 2018).
Summary
This report provides an analysis that explains Tesla's three marketing issues that are to improve
marketing strategies, create brand awareness, and overcome the misperception of autopilot.
Our team researched some of the strengths and weaknesses the our company is currently facing,
then proceeded to further analyze our areas of opportunity and threats. By focusing on trends in
the industry and our target markets, we were able to come up with come of the wants and needs
of our customers so we could present to you our teams recommendations for each of the issues.

Figure 1:
S.W.O.T.T Analysis

Figure 2:
Internal Combustion Engine Vehicles vs. Battery Electric Vehicles
Figure 3:
Target Markets

Primary Target Secondary Target Tertiary Target

Market Market Market

Vehicles Energy Storage Solar Energy

Systems
 Target Males & Males & Females Males &
Description Females 30+ 25-65 interested Females 30-65
interested in in long-term cost interested in the
ecology and effectiveness environment
environment

Initial (N) 808,430 336,160 336,160

Geographic North America, North America, North America,

Asia, Europe; Asia, Europe; Asia, Europe;
Urban & Rural Urban & Rural Urban & Rural

Employees (Full- Employees, Employees,

Time), Professionals, Professionals,
Occupation Professionals, Senior Manager, Senior Manager,
Senior Manager, Executives Executives
Executives

Final N (True < 808,430 < 336,160 < 336,160

Target Market
Size)

(Dudovskiy, 2018); (Tesla, 2019)

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