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UNIT 6, ASSIGNMENT 1, Integrated Global Marketing Case Study Kelly Monegan MBA6012-Integrated Global Marketing April 3, 2015
UNIT 6, ASSIGNMENT 1, Integrated Global Marketing Case Study Kelly Monegan MBA6012-Integrated Global Marketing April 3, 2015
Kelly Monegan
April 3, 2015
Email: kmonegan@capellauniversity.edu
Professor: Joseph Levesque
Course Project
In 2003 Jeffrey B, Straubel, Elon R, Musk and Marc Tarpenning founded Tesla Motors, a lavish,
environmentally friendly electric car company located in Palo Alto, CA. Tesla Motors also
manufactures electric powertrain components, batteries and charging systems for Daimler-Benz
(Mercedes) and Toyota Motor Co. “Tesla’s engineers first designed a powertrain for a sports car
built around an AC induction motor, patented in 1888 by Nikola Tesla, the inventor who inspired
the company’s name.” (TeslaMotors.com) Since then, Tesla has been recognized as being
experts in creating the highest energy density in their batteries making them the premiere
manufacturer of EV (Electric Vehicle) batteries in the world. They employ over 6,000 people
that are mostly engineers and they have stores that sell directly to owners (customers) cutting out
Target Market
The target market is a higher income group that wants a custom built, luxurious vehicle that has
more value and presence than other electric vehicles on the market such as the Chevy Volt and
The Nissan Leaf. In my opinion, Tesla’s customers don’t mind paying a higher price because
owning a Tesla EV has become a status symbol. Tesla’s market has been educated about and
understands the impacts of pollution and oil consumption. I believe their customers want to leave
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The 4 P’s of Marketing are product, price, place and promotion. (Marshal, G.W., Johnston, M.
W., 2014) Below are examples of each part of the marketing mix analysis.
Product
Tesla makes the Model S and will be manufacturing the Model X sometime this year. The model
S has been ranked as having the highest safety rating in the U.S. It’s equipped with autopilot, has
all-wheel drive and can go from Zero to 60 mph in 3.2 seconds. It has a range of 270 miles.
(Tesla Motors.com) The Model X is a sport utility vehicle, seats seven, offered with multiple
battery and performance options, all-wheel drive and has Falcon Wing Doors that fold up.
Considering I work for an automotive manufacturer, I consider Tesla as “top shelf” compared to
other EV’s on the market. My reason is their product service, quality and features. Also because
they’ve had zero safety recalls and their EV’s traction control is superior because it has a much
Price
Since Tesla custom builds per customer specifications, the price will vary upon options and
battery selection. The base models start at around $70,000 and with premium options can go up
to $125,000. I applaud Tesla for using creative financing with extended amortization to help less
affluent people to afford their cars. Tesla has also worked, using lobbyists to have customers
earn Federal and State tax credits for purchasing their EV’s. Tesla also encourages trade-ins
because they meet the needs of customers that need a lower price point and it generates more
sales.
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Place
Tesla sells their vehicles directly to customers, in stores mostly located in California and from
the Tesla Website. The website enables customers to build and design their EV’s from their own
home. Tesla doesn’t sell their EV’s in existing dealerships. Instead, preferring to market and
educate their customers similar to Apple. The main reason for not using dealerships to sell and
promote the EV’s is the conflict of interest between selling gasoline cars and selling the new
technology of electric cars. “It would be impossible for dealerships to explain the advantages of
Promotion
Tesla uses Social media such as LinkedIn, Facebook and Twitter to promote their company and
EV’s. They don’t use an advertising agency nor do they advertise in newspapers or magazines.
The other way they promote is thru company stores, press releases and news articles. In the Tesla
stores, salesmen are told to “sell like you're selling to a sibling because these are truly Family
Customers. They are joining your club.” (Teslamotors.com) This is an “out of the box” sales
approach. Personally, I dislike the whole salesman /dealership experience. I had the opportunity
to visit a Tesla store in Lyndhurst, Ohio, December of 2014, a month after it opened and I was
truly impressed with how they promote their vehicles compared to other domestic and
Currently Tesla sells in 17 countries and operates a network of over 80 sales, service-plus and
gallery locations in North America, Europe and Asia. Including all sales and service facilities,
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they currently operate 116 locations worldwide. (Tesla, 2014) Most domestic business is located
Tesla’s principal marketing goal is to enable customer input into the product development
process. Generating a greater demand, referrals for vehicles and leads for the sales teams. Tesla
manages its corporate reputation and brand thru social media and rewards customers for
referrals. Tesla executes and promotes its vision thru Regional Brand Partnerships, Civic Leaders
Tesla is in the process of promoting their electric propulsion system as the future of the
transportation industry. The aim is to mass produce the EV’s and develop vehicles that will be
marketed to more segments. Tesla estimates substantial growth in powertrain sales and
development services to other manufacturers. They anticipate further growth with the expansion
of service and charging stations across the U.S. Beginning in February, 2015 Tesla will begin
construction of two charging stations along the New Jersey Turnpike. This is an agreement to
install two charging stations on the Turnpike at no charge to the authority or toll-payers. “Tesla
will pay for the electricity and is making efforts to retrofit solar canopies over some of the
stations so they can produce and distribute electricity,"(Higgs, L., 2015) Tesla is also working
with Lobbyists and Policy makers to pass Bills and Legislation allowing them to sell cars
directly to customers in states that have laws that now prohibit them. Tesla plans to install
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charging stations along turnpikes and major highways. In my opinion, Tesla is doing the right
things. I think people will be willing to wait for their special order EV’s despite Tesla’s delays to
keep up with demand. Because the brand has become the premiere EV manufacturer of the
automotive world. Even if it cost more than the competition for similar specs people will choose
one over the other for the sake of brand recognition and saying they own a Tesla.
Opportunities
Unlike Tesla, GM and Ford don’t have the brand recognition they once had with the new
generation of car buyers. The oldest of the millennials are now in their 30’s and since their
buying power has increased this is a market that needs to be targeted. MTV did a focus group in
Fort Lee, N.J., Cleveland and San Francisco. The reason for the focus group was to gain a better
understanding of what millennials wanted in a vehicle, how many miles they drove and where
they drove. The focus group was in response to a survey that was done in 2014 about the
younger generation having a 75% decrease in driver’s licenses and that most would rather use
public transportation or ride a bike than own a vehicle. (Gardner, G., 2015)
The focus group concluded that “80% of people believe buying and leasing a car should take less
time. 71% think that ratings and comparisons among vehicles were unclear, 87% say the buying
process should be more transparent and 33% say they plan to buy or lease a new vehicle in the
This being said, Tesla has an opportunity to gain this segments market share because they
embrace social media, they’re transparent, they offer a green solution and they have the features
that will attract the millennials. The only drawback is price at the point of sale and trade in
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values. Tesla has recognized this and plans to produce a vehicle by 2017 that will be in the
$30,000 price range. With the $7,500 Federal EV tax incentive, this will be attractive to more
people and this will be a way for them to gain more market share.
A concern I would have would be the value of the vehicle in three years. According to the Tesla
sales representative I spoke to, Tesla guarantees 50% of the value up to three years and 47% of
the value after the 4th year. I think the reason for the low trade in value is the batteries. There’s
also a concern about the charge of a battery in cold weather. I was told that in fifteen degree
weather the battery charge goes from 270 miles down to about 160 miles. Information Resources
Tesla Motors’ Customer Relationship Management (CRM) is done through an Open Source
cloud service called Azure Storage Explorer, which is a Microsoft National Systems Integrator.
The CRM is contracted by a company called Neudesic, headquartered in Irvine, CA. Neudesic
provides Tesla with Business Intelligence Solutions that combines data from various sources and
applications into a “single source” of actionable information. The data helps Tesla to streamline
their business processes and continue their competitive advantage. Tesla uses a CRM contractor
to help support their efforts. I believe this is a good strategy because Neudesic is a state of the art
service/technology company and they can bring new technology as it becomes available. I think
it’s also a good idea to have the experts as part of their team.
Marketing Automation – because it dramatically increases the ability to cost effectively close
new customers. Tesla uses “in-app” messaging that gives help in the use of the product, the offer
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for a direct “chat” with a company representative, an email giving recommendation for use of the
Customer Services together with Customer Engagement - drive Up-Sales, Cross-Sales, and
Tesla uses cloud technology to collect Scalability, Adoption and Training marketing information
resources.
• Scalability are problems that can plague new products, campaigns and deplete
resources.
• Adoption is through cloud-based products such as Google and Google Earth. Tesla
has included in every Model S EV the ability to add functionality and make changes
• Training is mostly done using the cloud. The cloud technology reduces training costs
Marketing
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Tesla has built their own ecosystem that challenges traditional sales models by using a direct
distribution system. Their strategy for marketing vehicles and services is entirely different.
Because they promote the “value preposition”, giving them a competitive leverage. Currently,
Tesla is being touted as the new “Apple”. They’ve even hired Apple’s former retail chief to build
out their new distribution model. Tesla’s theory is to turn auto industry strengths into
weaknesses.
An example is that, historically automakers sell luxury cars justified by the quality of their
engineering” This statement is meant to wow customers and make their cars special and
desirable.
Tesla’s marketing focuses on performance through technology. “The Tesla Model S pitch
reframes the auto industry strength as a weakness. Through Tesla’s highly-effective marketing
lens, traditional gas cars are dirty, complex, unreliable, and difficult to maintain.” (Musk, E.,
2014)
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This is reinforced by the design of Tesla’s “white floor” service centers. I like to think Tesla used
Fiat’s “white floors” idea to reinforce that electric cars don’t have oil and other dirty fluids that
leak on the floor. The company I work for, Fiat Chrysler Automobiles, they use white floors to
show that the vehicles don’t leak and it conveys an image of quality.
On June 12, 2014, CEO Elon Musk did a daring marketing move. He decided to open up “his
secrets” by making Tesla’s patents public, paving the way for an open-source electric car. Elon
Musk stated, “Let innovators work without the specter of legal action and see what gets created.”
His reason for open source is because he wants to invite competition. When Tesla first started
out they assumed major auto manufacturers would want to adopt their ideas. Instead they refused
This move was unheard of in the automotive industry where new model launches are tightly held
secrets. I think this was a good marketing move because it challenges the likes of GM and
Toyota to become open. It also goes along with their Open Source CRM analytics that enables
Market Segments
Tesla has targeted three marketing segments, eco-friendly, tech savvy and entry level luxury car
consumers. The eco-friendly segment is reached by offering a fully electric vehicle that’s good
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for the environment, costs less to drive and is an investment into clean energy. The tech savvy
segment is reached because the features, Such as, the electronic vehicle driving range is more
than double the competition and the vehicle comes with many add-on options. The EV maps and
features automatically update so there isn’t an additional cost for upgrades. The entry level
luxury segment reaches professionals in the early stage of their careers looking to buy an entry
level luxury vehicle that is based on new technology and has superior performance. Tesla’s
marketing strategy incorporates Maslow's hierarchy of needs such as: self-actualization, esteem
transcendence needs to motivate customers to purchase their electric vehicles. (McLeod, S A.,
2007) By focusing on needs, the EV’s have been well received and customers are on waiting lists
How marketing fits into the internal and external environments of Tesla Motors
Tesla’s internal environment consists of their mission statement, “To offer a compelling
customer experience while gathering rapid customer feedback and achieving operating
efficiencies, better control of costs of inventory, warranty service, pricing and the development
of the Tesla brand” (www.tesla motors.com) Another factor is Tesla’s leadership style. Elon
Musk, stated that his philosophy is to reward people who come up with daring ideas that work,
and only ‘punish’ them lightly if they fail. This creates an environment where people aren’t
afraid to make, and share mistakes and learning experiences. I think that Tesla’s marketing
strategy works with their internal environment because it engages customers and invites a dialog
of shared ideas, implement ways to improve and create vehicles that they will want to buy.
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political, legal, and competitive variables and how they affect sales and marketing. Tesla keeps
current on market trends through social media and they understand the socio-economic patterns
of new technological buyers. Tesla’s external environment has created a transparency that invites
innovation, allowing customers, competitors and political entities to see and understand their
technology. Making it quite obvious that EV’s are a viable solution to reduce our dependence on
oil in politically unstable countries especially since it also reduces our carbon footprint and
“Management churn” has plagued Tesla in 2014 with the resignation of Veronica Wu, former
Global Vice President of China and June Jin, Tesla China’s Vice President for Global Business
and Chief Marketing Officer for the Greater China region. Jin announced her resignation, after
only five months with Tesla. This has been a major blow to Tesla’s plan to grow their market in
more junior role. The resignations, have challenged Tesla to seek better qualified leaders and
With the addition of new management and national policies subsidizing the production and sales
of NEVs (New-Energy Vehicles) in China through 2020, Tesla expects a substantial amount of
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Since Tesla has clearly defined their market segments and marketing strategy, I think this year
will be a success. As for growth in the global market, China has some new opportunities and
Tesla is working with government agencies about creating charging stations that will align with
China’s State Grid plans. China is planning to open a distributed power grid and electric vehicle
charging stations—which were previously state-run—to private investors like Tesla. Also,
China’s State Council is in the process of removing the 10 percent purchase tax on domestic-
made NEVs and Shanghai will begin to issue free license plates for new Tesla vehicles this year
—“a significant incentive, considering that Shanghai license plates cost ($11,959 U.S. dollars) a
piece on average.” (Marro, N., Hengrui, L., Yu, Y., 2015) I think that these incentives will
motivate customers to purchase NEV’s and Tesla will be on track to meet future goals.
Marketing Communications
Tesla Motors’ message is “competency and innovation”. Innovation is the core competency that
brought them through near bankruptcy and from making 400 cars annually to making over 400
cars weekly. Tesla Motors believes that their electric vehicles are the future to a greener planet,
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Analysis of how Tesla integrates its marketing communications tools and promotional
activities.
Tesla uses a unique form of marketing communication tools and they’ve broke the mold by not
Tesla spends ZERO dollars on advertising. CEO Elon Musk’s strategy is this: “Advertising is
earned, not bought. Do something truly cool and the media will beat a path to your door. ”
Tesla’s philosophy is that you earn media attention by making something that is really
Musk’s interviews are all over YouTube. Elon Musk’s interview strategy is successful because
he’s an interesting billionaire that has brilliant ideas and he works on interesting projects.
At Tesla Motors, there isn’t an advertising department, ad team or Chief Marketing Officer
(CMO). Alexis Georgeson, who is a spokeswoman for Tesla, is the closest to a PR person in the
company. She says: “Right now, the stores are our advertising. We’re very confident we can sell
20,000-plus cars a year—without paid advertising. It may be something we’ll do years down the
road. But it’s certainly not something we feel is crucial for sales right now.” (Tesla, 2014)
Since Tesla’s primary form of advertising is their stores, they use location as an advantage.
Instead of having a store positioned next to car dealerships, they’ve put small stores in shopping
centers. They’ve identified their target audience and positioned stores near high end retailers,
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restaurants and businesses. The stores themselves dictate the decisions of where, when, what
Stores are not located along main roads like every other car dealer. Instead, right alongside
brands like Banana Republic, Coach, Nordstrom or Bloomingdales and the showrooms are only
the size of a small shop, often only squeezing in a single vehicle into the space. Many sales have
come from people who had zero interest in buying a car until they saw Tesla’s showroom (They
were probably in the mall to buy a gift or doing what I call “retail therapy”).
People impressed by the car’s design walk right in and immediately talk to a sales person –
rather than have to specifically drive out to a dealership. The salesmen have been trained to use
communication objectives that focus on buyer readiness stages such as: awareness, knowledge,
Tesla’s public relations and direct marketing consist of using social media and they do this all
without spending any money on direct advertising campaigns. Because CEO, Elon Musk and the
creative minds behind the company know how to generate a social media buzz. They use blogs
and hashtags to direct people to their website and stores. Through social media they design a
The direct marketing is face to face, phone, e-mail, and internet sites like Facebook, LinkedIn or
Twitter. The non-personal marketing is done by the media and special events. Their marketing is
successful because they use credible sources and they collect customer feedback from
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Goals for Measured Advertising Results). The approach involves setting specific, measurable
objectives for a marketing strategy to determine if specific objectives were met. Specifically,
Comprehension - letting the consumer know by educating them about their electronic vehicles
Promotional Strategy
Tesla uses both a Push and Pull strategy. The Push being the personal selling at the stores. The
Pull strategy is using the media to do most of their advertising. The media is making potential
customers aware of Tesla and they spark interest by making people want to know more about the
Another pull strategy is gaining customer engagement in the “build your own vehicle process”.
Tesla’s pull strategy relies more on consumer demand than personal selling for the product to
travel from the manufacturer to the end user. The demand generated by the media, website and
stores "pull" the custom designed vehicles through the channels of distribution.
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Conclusion
Tesla has changed the automobile marketing and buying experience. Throwing away standard
marketing strategies and programs. I can see future case studies being done regarding this
marketing strategy.
I like Tesla’s stores, I like that the car is completely bought online. I think they’re the only auto
manufacturer that allows customers to track the manufacturing process with a smartphone. This
communication method allows customers to have the feeling of ownership all the way through
the manufacturing process and they can have vehicles delivered to anywhere they want. No price
haggling, no multiple visits to get your car, and most importantly, the experience is tailored to
Tesla’s marketing communication is efficient and effective. The publicity and self-promotion
thru the internet appeals to young professionals, environmentalists and tech savvy customers. It’s
hard to believe a company like this doesn’t have a marketing department. Unless they quit
developing new vehicles, charging stations or batteries with a longer range, I can’t see this
References:
Marshall, G. W., & Johnston, M. W. (2015). Marketing Management (2nd ed). New York, NY:
McGraw-Hill.
http://www.teslamotors.com/de_AT/blog/tesla-approach-distributing-and-servicing-cars
http://www.teslamotors.com/about
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http://www.slideshare.net/joseangeldf/darden-school-of-business-tesla-strategic-analysis
Higgs, L., (2015, Februar18) Tesla charging stations to be installed on N.J. Turnpike starting
http://www.nj.com/traffic/index.ssf/2015/02/tesla_charging_stations_to_be_installed_on_nj_turn
pike_starting_next_week.html
Gardner, G., (2015, January 23) MTV study: Millennials want their cars Referenced from:
http://www.usatoday.com/story/money/cars/2015/01/23/mtv-study-millennials-want-their-
cars/22249193/
Bonderud, D., (2015, January 23) Powering the Open-Source Cloud: What Tesla Motors Can
Teach IT. Referenced from: http://midsizeinsider.com/en-us/article/powering-the-open-source-
cloud-what-tes#.VPudMvnF8tE
Musk, E. Referred from: http://www.teslamotors.com/about
Matjeschk, M. (2014, August 21). Silent, Smart, Sustainable: Driving Innovation with Tesla.
http://www.dow.com/news/press-releases/article/?id=6573
Motors (Spoiler: Because we don’t have campaign finance reform) Referenced from:
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http://www.boykotx.org/why-texas-banned-tesla-motors-spoiler-because-we-dont-have-
campaign-finance-reform/
http://www.referenceforbusiness.com/management/Log-Mar/Marketing-
Communication.html#ixzz3VXZSfUVA
http://www.teslarati.com/brilliant-tesla-advertising-strategy-lack-
thereof/#J6rRZZhYvrRs1ZIS.99
http://www.teslamotors.com/about
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