In this blog we outline 8 Tesla marketing strategies that any company can use to gain a competitive advantage.
Who is Tesla and what are the Tesla marketing strategies?
Firstly some background information. Tesla is an automotive company known for its electric cars, lithium-ion batteries for energy storage and residential solar panels.
The company is named after Nikola Tesla, the electrical engineer and physicist known for his invention of the induction motor, alternating current power transmission and other trailblazing concepts. (Source: Influential Individuals).
Arriving at the right time
Tesla was founded at an interesting time. Just when GM had recalled its electric cars in 2003 and many other car companies were withdrawing their electric car programmes, Elon Musk took an enormous risk and decided to create Tesla, because he wanted electric car adoption to succeed.
The risk was amplified because Elon funded much of Tesla from his own pocket. Elon seized an opportunity because there was suddenly a gap in the market and a chance for a new entrant. As Jason DeMers states in Entrepreneur Europe, timing plays a crucial role in entrepreneurial success. Launching a company at the right time is important.
Offering a complimentary product set
Tesla’s strategy for success is disruptive, as its offerings include other innovative products that fit together to enable an individual to be energy positive, such as solar panels.
Therefore of the Tesla marketing strategies for success, this one, coined by Peter Thiel as ‘complex coordination’. (Source: Masters, Blake; Cauble, Matt (2014-10-07). “Peter Thiel – Lecture 5: Business Strategy and Monopoly Theory”), enables the company to gain additional revenue from the same customer. The more products a customer takes from any company, the more difficult it is to switch.
Owning the value chain
Interestingly, Tesla does not use a typical car dealership distribution model but owns the value chain as it has its own showrooms.
There are four p’s in marketing and one of these is place. Tesla is using the place in which it sells to gain control over its distribution channel and create a stronger brand (customers won’t be distracted by other used car brands on the forecourt). It uses integrated marketing techniques such as email marketing to encourage brand interest and generate leads.
Tesla’s first car was a high end sports car aimed at a niche market. It was targeted at the small number of rich people who can afford a sports car and who are interested in saving the planet and who are probably early adopters of technologies anyway.
As they say small is beautiful and as Eric Reis says in Lean Startup if you start lean, you can see if you can make something work with a small number of people before wasting your time trying to sell something unwanted to a large number of people.
Identify the early adopters
By identifying early adopters, Elon knew that if he could get things right with this segment in the marketing life cycle, he would be able to take that success onto the early majority, ie those who wanted a good electric car at an affordable price.
Focusing on the product -‘p’ in marketing
Unlike all the other car manufacturers who invest heavily in expensive advertising, Tesla invested all available funds into research and development, engineering, manufacturing and design. It focused on the other ‘p’ in marketing – product, rather than the ‘p’ in promotion.
The aim of this was to produce the best possible electric car (Roadster) which customers would recommend to other people (which is a much cheaper way of marketing) and focuses on proof and track record rather than brand perception. What makes Tesla different is that it had a social mission at the heart of its brand. Tesla was able to clearly differentiate itself from BMWs and Audis.
Not only was the Roadster a beautiful car, its performance as an electric vehicle surpassed those which had come before it.
The Tesla Roadster was designed to beat a petrol sports car like a Porsche or Ferrari in a head to head showdown. It can go from 0-60 mph in 1.9 seconds and has a top speed of over 250mph. Then, over and above that fact, it has twice the energy efficiency of a Prius. The Roadster was also the first electric vehicle to achieve a range of 200 miles per charge.
Focus on getting reviews and word-of-mouth
The strategy of focusing on great reviews has paid off because there are now many online groups and community forums which evangelise for Tesla. The people in such groups are inspired by the social mission behind the company and feel they are making a difference to the planet so they don’t just like the brand, they are passionate about it.
A more affordable car for the early majority
After launching the premium Roadstar which was a rather expensive car, Tesla was able to channel the earnings into the development of a more affordable car for a larger market. This was shipped at around half the price of the Roadstar.
The other models are the S, X and 3. According to a Musk blog post, “New technology in any field takes a few versions to optimize before reaching the mass market, and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars.”
To summarise, Tesla has used a typical life cycle strategy seen in technology companies to stand out and gain traction. Its lifestyle product offerings, focus on product marketing and own showrooms strengthen its brand, route to market and social mission. According to Yahoo Finance, analysts are expecting between $14.76 billion and $26.28 billion in revenues in 2018 and profitability by 2020.
Source used for this blog article (Elon Musk: The Life, Lessons and Rules for Success, Influential Individuals)