Marketing Analysis - Tesla

Abstract
This paper provides an in-depth analysis of Tesla, a renowned electric vehicle and clean energy
company, using ten key marketing models. The objective is to gain a holistic understanding of
Tesla's marketing strategies, competitive positioning, and market dynamics. The paper examines
the following models: SWOT analysis, PESTLE analysis, Five Forces analysis, customer
segmentation, customer journey mapping, AIDA model, Ansoff matrix, brand equity model,
McKinsey 7S framework, and value chain analysis.
Each model offers a unique perspective on different aspects of Tesla's marketing strategy,
internal dynamics, external environment, customer behavior, and competitive advantage.
The analysis sheds light on Tesla's strengths, weaknesses, opportunities, and threats, identifies
macro-environmental factors influencing the company's operations, evaluates competitive forces,
explores customer segments and their journey, assesses the effectiveness of communication and
marketing campaigns, investigates growth strategies, examines brand equity, analyzes
organizational structure and culture, and scrutinizes the company's value chain.
By employing these ten marketing models, this paper provides valuable insights into Tesla's
marketing strategy, its competitive positioning in the industry, and the factors contributing to its
success.

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 Marketing Analysis - Tesla

SWOT Analysis of Tesla

Strengths
• Strong brand recognition and reputation
• Innovative products and services
• Strong leadership team
• Experienced workforce
• Strong financial position
• Growing customer base
• Expanding into new markets
Weaknesses
• High production costs
• Limited production capacity
• Short supply of batteries
• Reliance on government subsidies
• Competition from traditional automakers and new entrants
• High customer expectations
Opportunities
• Growing demand for electric vehicles
• Expansion into new markets
• Development of new products and services
• Acquisition of other companies
• Partnerships with other companies
• Government support for electric vehicles
Threats
• Economic downturn
• Changes in government regulations
• Technological advances by competitors
• Rising fuel prices
• Consumer preferences

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 Marketing Analysis - Tesla

• High production costs

Strengths

Weaknesses
• Strong brand recognition and reputation
• Innovative products and services • Limited production capacity
• Strong leadership team • Short supply of batteries
• Experienced workforce • Reliance on government subsidies
• Strong financial position • Competition from traditional
• Growing customer base automakers and new entrants
• Expanding into new markets • High customer expectations

• Economic downturn
Threats
Oppurtunitites

• Growing demand for electric vehicles

• Expansion into new markets • Changes in government
• Development of new products and regulations
services • Technological advances by
• Acquisition of other companies competitors
• Partnerships with other companies • Rising fuel prices
• Government support for electric • Consumer preferences
vehicles

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 Marketing Analysis - Tesla

PESTEL Analysis
Political factors:
• Laws and regulations of the countries in which it operates
• These can have a significant impact on the company's operations, ability to sell its
products, pricing, and research and development activities.
• For example, Tesla has been criticized for its use of cobalt in its batteries, which is a
mineral that is mined in conflict-ridden areas. The company has responded to these
criticisms by working to reduce its use of cobalt and by sourcing it from responsible
mines.
Economic factors:
• Tesla's business is cyclical, meaning that its sales and profits tend to fluctuate with
the economy.
• The company is also exposed to changes in interest rates, which can affect its
borrowing costs.
• Tesla is subject to the risks of inflation, which can erode its profit margins.

Social factors:
• Tesla's products appeal to a growing market of consumers who are concerned about
the environment.
• The company's success has helped to raise awareness of the benefits of electric
vehicles and has helped to create a more sustainable transportation industry.
• Tesla faces challenges from consumers who are concerned about the high cost of its
vehicles and the lack of charging infrastructure.

Technological factors:
• Business is heavily dependent on innovation.
• Leader in the development of electric vehicles and battery technology.
• Competition from other technology companies, such as Apple and Google, which
are also developing electric vehicles.
• Subject to the risk of technological obsolescence, as new technologies could make
its products less competitive.
Environmental factors:
• Committed to sustainability, and its products have a positive impact on the
environment.
• Company's operations also generate some environmental impacts, such as the use of
energy and water in its manufacturing processes.
• Working to reduce its environmental impact, and it has set ambitious goals for
reducing its carbon emissions.
Legal factors:
• Laws and regulations governing product safety, emissions, and labor.
• Risks of lawsuits and history of penalties, which could have a significant impact on
its financial performance.

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 Marketing Analysis - Tesla

Five Forces Analysis

Rivalry among existing firms:
• Strong rivalry from other electric vehicle manufacturers, such as General Motors, Ford,
and Toyota. Which have the resources and experience to compete and all investing
heavily in electric vehicle technology.
Threat of new entrants:
• The threat of new entrants into the electric vehicle market is moderate. The technology
for electric vehicles is becoming more accessible, and there are more startups that are
entering. Tesla has brand name, its manufacturing expertise, and its network of charging
stations as moat.
Threat of substitutes:
• The threat of substitutes in the electric vehicle market is high. There are a number of
alternative transportation options, such as gasoline-powered vehicles, public
transportation, and bicycles. Electric vehicles are becoming increasingly popular due to
their environmental benefits and their lower operating costs.
Bargaining power of buyers:
• The bargaining power of buyers in the electric vehicle market is moderate. Buyers have
a number of choices when it comes to electric vehicles, and they can switch brands if
they are not satisfied with the price or features of a particular vehicle. However, Tesla has
been able to build a strong brand reputation, and its vehicles are often seen as being more
desirable than those of its competitors.
Bargaining power of suppliers:
• The bargaining power of suppliers in the electric vehicle market is low. There are a
limited number of suppliers of key components for electric vehicles, such as batteries and
electric motors. However, Tesla has been able to negotiate favorable terms with its
suppliers, and it has also begun to develop its own manufacturing capabilities.

Power of Buyers

Rivalry among existing firms Power of Suppliers

Low Moderate High

Threat of Substitutes Threat of new entrants

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 Marketing Analysis - Tesla

Customer Segmentation
Demographic Segmentation
• The average Tesla customer profile has a median age of 54 years, mainly male customers, though
there is a smaller target demographic of females that are interested in Tesla cars.
• Largely established families with kids, including younger children or teenagers, and are mostly
professionals, executives, senior managers or hold other high-income positions.
Geographic segmentation
• Tesla cars are popular in North America, Europe and Asia, with vehicle deliveries reaching over
627,000 units in the first three quarters of 2021, representing an increase of more than 16 percent
over sales in the whole of 2020.
• China is a fast-growing geographic segment for Tesla, with sales more than double in 2021
compared to the previous year, and representing a fifth of global sales.
Behavioral Segmentation
• Big consideration is the social status afforded by ownership of an electric car. In addition to the
environmentally friendly perception, Tesla is also seen as a long-term, cost-efficient investment.
Switching cars in a couple of years is not an option.
• With the median age of Tesla buyers being 54 years, this older and financially established Tesla
market demographic can afford to consume luxury brands, not just in their choice of car but in
other product segments too.
Psychographic Segmentation
• The Tesla target market is characterized as early adopters of technology, with a forward-thinking
and image conscious psychological make-up. They are highly driven, with character traits defined
as “Aspirer, Succeeder, Explorer, Reformer, and Environmentally cautious.” This is evident in
their professional success and high earner status.

Type of segmentation Segmentation criteria Tesla target customer segment

Vehicles: Future Energy storage Solar energy systems
Consumer and
Commercial
Geographic Region Asia, Europe, and Asia, Europe, and Asia, Europe, and
America America America
Density Urban and Rural Urban and Rural Urban and Rural
Demographic Age 30+ 25-65 30-65
Gender Most males and some Most males and some Most males and some
females females females
Occupation Employees, senior manager, senior manager,
professionals, manager executives professional employee &
executives
Income levels High Upper and middle and Upper middle and high
high

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 Marketing Analysis - Tesla

Behavioural Degree of loyalty Hard and Softcore loyal Hard and Softcore loyal Hard and Softcore loyal
with some Switchers' with some Switchers' with some Switchers'
Benefits sought environmentally friendly Long-term cost- Long-term cost-
with Long-term cost- effectiveness And effectiveness And
effectiveness environmentally friendly environmentally friendly
Personality Determine and Determine and Determine and ambitious
ambitious ambitious
Income levels High Upper and middle and Upper middle and high
high
User status Non-users, potential Non-users, potential Non-users, potential
users, new users users, new users users, new users
Psycho-graphic Social class Middle class & upper Middle class & upper Middle class & upper
class class class
Lifestyle Environmental friendly, Environmental friendly, Environmental friendly,
Explorer, and aspirer Explorer, and aspirer Explorer, and aspirer

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 Marketing Analysis - Tesla

Customer Journey Mapping

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 Marketing Analysis - Tesla

AIDA Model

• Disruptive approach to the industry and significant media coverage and public interest.
• Elon Musk's high-profile presence and use of Twitter helped generating buzz.
• The sleek and distinctive design of Tesla's vehicles stand out on the road and attract
attention from passers-by.

• Tesla has generated interest by highlighting key features and benefits of its electric
vehicles.
• Sustainability and carbon emissions resonated with environment conscious consumers.
• Continuous software updates and over-the-air upgrades piqued the interest of tech
enthusiasts.

• Showcasing the unique advantages of electric vehicles over traditional gasoline-powered

cars.
• Focus on luxury, design, and superior performance appealed to customers looking for
premium driving experience.
• Brand positioning as forward-thinking, innovative, and environmentally conscious
company.

• Streamlined purchasing process. Customers are offered customization options and

pricing.
• Financing options, including leasing and loan programs.
• Tesla's expanding Supercharger network, along with destination chargers and home
charging solutions,

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 Marketing Analysis - Tesla

Ansoff Matrix
Market Penetration
• Increasing sales of existing models in current markets by expanding production capacity,
improving distribution channels, and enhancing marketing efforts.
• Targeting new customer segments within existing markets, such as appealing to budget-
conscious buyers with more affordable vehicle options.
• Encouraging current Tesla owners to upgrade to newer models by offering trade-in
programs or incentives.
Market Development
• Entering new geographic markets where the demand for electric vehicles is growing or
where infrastructure for electric charging is being developed.
• Adapting its products to meet the specific needs and preferences of different regions,
such as right-hand drive versions for markets with left-hand traffic.
• Partnering with local governments, organizations, or companies to accelerate the
adoption of electric vehicles and establish a presence in new markets.
Product Development
• Introducing new vehicle models or variants to cater to different market segments or
niches.
• Enhancing and expanding its product line by entering new vehicle categories such as
electric trucks, vans, or even motorcycles.
• Innovating and improving existing technologies and features, such as battery efficiency,
autonomous driving capabilities, and vehicle connectivity.
Diversification
• Venturing into renewable energy solutions beyond electric vehicles, such as home energy
storage systems, solar panels, or grid-level energy storage.
• Expanding into mobility services or shared transportation models, such as ride-hailing or
autonomous taxi services.
• Exploring new industries or sectors where Tesla's expertise in electric vehicle technology
can be leveraged, such as energy management, smart cities, or sustainable transportation
infrastructure

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 Marketing Analysis - Tesla

Strategy Description Examples

Selling existing Tesla has been using this strategy to sell its
Market
products to existing Model S and Model X cars in the United
penetration
markets. States and Europe.

Developing new Tesla has been using this strategy to develop

Product
products to sell to the Model 3, a more affordable electric car,
development
existing markets. and the Model Y, a crossover SUV.

Selling existing
Market Tesla has been using this strategy to sell its
products to new
development cars in China and other countries.
markets.

Developing new Tesla has been using this strategy to develop

Diversification products to sell to new solar panels and batteries, which it sells to
markets. both consumers and businesses.

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 Marketing Analysis - Tesla

Brand Equity Model

Brand Awareness:
• Media coverage, social media presence, and word-of-mouth.
• Electric vehicles, such as the Model S, Model 3, Model X, and Model Y, have become
iconic symbols of Tesla's brand and have gained recognition worldwide.
• Tesla's Supercharger network contributed to brand awareness by addressing electric
charging infrastructure.
Brand Loyalty:
• Tesla has cultivated a loyal customer base that exhibits strong brand loyalty, often
referred to as "Tesla fanatics" or "Tesla evangelists."
• Commitment to continuous innovation, software updates, and customer satisfaction
• Engagement in forums, social media groups, and events, sharing experiences and
advocating for the brand.
Perceived Quality:
• Tesla is known for producing high-quality electric vehicles that offer exceptional
performance, advanced features, and luxurious design.
• Focus on cutting-edge technology, like autonomous driving capabilities and over-the-air
software updates.
• Rigorous testing and safety features, contributing to the perception of quality and
reliability.
Brand Associations:
• Commitment to sustainability and reducing carbon emissions aligns with its association
with environmental consciousness and renewable energy solutions.
• Associated with performance and luxury also, acceleration, range, and sleek design.
Other Proprietary Brand Assets:
• The distinctive logo, featuring a stylized "T," which is instantly recognizable.
• The brand name "Tesla" has become synonymous with electric vehicles.
• Tesla's Supercharger network and proprietary software are additional brand assets that
contribute to the overall brand equity.

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 Marketing Analysis - Tesla

McKinsey 7S Framework

Strategy
• Revolutionizing transportation industry with a focus on sustainable energy.
• Emphasizing electric vehicles, renewable energy solutions, and energy storage systems.
• Continuous innovation and expanding product offerings.

Structure
• Flat organizational structure for agility and efficient decision-making.
• Distinct divisions for vehicle manufacturing, energy generation and storage,
software development, and sales/service centers.
• Decentralized structure empowering employees to contribute to goals.

Systems
• Advanced manufacturing processes for vehicle production.
• Efficient supply chain management, quality control, and logistics.
• Digital platforms and software systems for connectivity, over-the-air
updates, and data analysis.

Shared Values
• Innovation, sustainability, and technological advancement.
• Urgency, entrepreneurial spirit, and commitment to delivering high-
quality products.
• Accelerating the adoption of sustainable energy.

Skills
• Attracting and retaining top talent in engineering, software development,
battery technology, etc.
• Adaptability, creativity, and mission-driven mindset.
• Focus on expertise relevant to the industry.

Style
• Visionary leadership with bold decision-making.
• CEO Elon Musk's charismatic leadership and hands-on approach.
• Encouraging risk-taking, entrepreneurial thinking, and ambitious goal-setting.

Staff
• Diverse talent across various disciplines (engineering, design, marketing, sales).
• Culture of collaboration, continuous learning, and creative thinking.
• Alignment with mission and values. 14
 Marketing Analysis - Tesla

Value Chain Analysis

Primary Activities:
• Inbound Logistics:
- Efficient sourcing and procurement of raw materials, components, and parts for
vehicle production.
- Collaborations with suppliers to ensure timely delivery, quality, and cost-
effectiveness.
• Operations:
- Advanced manufacturing processes for vehicle assembly, including body shop,
paint shop, and final assembly.
- Emphasis on automation, quality control, and lean manufacturing techniques.
• Outbound Logistics:
- Global distribution and logistics network for delivering finished vehicles to
customers and dealerships.
- Management of transportation, storage, and delivery processes.
• Marketing and Sales:
- Direct sales approach through company-owned stores and online platforms.
- Marketing strategies to create brand awareness, highlight product benefits, and
promote sustainability.
• Service:
- After-sales service and support, including maintenance, repairs, and software
updates.

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 Marketing Analysis - Tesla

- Dedicated service centers and mobile service units for customer convenience.
Secondary Activities:
• Firm Infrastructure:
- Organizational structure, management systems, and corporate culture.
- Emphasis on innovation, risk-taking, and a mission-driven mindset.
• Human Resource Management:
- Attracting and retaining top talent in engineering, software development, and
other relevant fields.
- Focus on employee empowerment, continuous learning, and mission alignment.
• Technology Development:
- Research and development of electric vehicle technology, battery technology, and
energy storage solutions.
- Investment in autonomous driving capabilities and software development.
• Procurement:
- Collaborative supplier relationships to ensure high-quality components and
materials.
- Focus on sustainability and strategic sourcing.

By optimizing the value chain, Tesla has efficiently created competitive advantage.
The main competitive advantages can be summarized as below:
• Vertical Integration: Control over supply chain, quality, and costs.
• Technological Innovation: Staying ahead in electric vehicle technology and
autonomous driving.
• Sustainable Supply Chain: Responsible sourcing and environmental impact
reduction.
• Superior Customer Service: Personalized experiences and seamless customer
journey.
• Supercharger Network: Extensive proprietary charging infrastructure.
• Brand and Reputation: Strong brand equity and positive image.
• Software Integration: Over-the-air updates for continuous improvement.

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 Marketing Analysis - Tesla

Conclusion
The analysis of Tesla using ten marketing models provides valuable insights into the company's
strategy, competitive advantage, and market dynamics. Which are:

• Tesla's strengths lie in innovative technology, strong brand recognition, and commitment to
sustainability.
• Weaknesses include production challenges and reliance on external suppliers.
• Opportunities for Tesla include expanding global markets and forming strategic partnerships.
• Threats include intense competition and changing regulatory landscapes.
• Macro-environmental factors, such as political support, economic factors, societal
preferences, technological advancements, legal regulations, and environmental concerns,
impact Tesla's operations.
• Tesla's competitive advantage is derived from its focus on electric vehicles, strong brand
equity, and continuous technological innovation.
• Customer segmentation reveals a diverse customer base, including early adopters,
environmentally conscious consumers, and technology enthusiasts.
• Effective customer journey mapping enables Tesla to optimize touchpoints and deliver
personalized experiences.
• The AIDA model demonstrates Tesla's success in capturing attention, generating interest,
stimulating desire, and encouraging action.
• Tesla's growth strategies encompass market penetration, product development, market
development, and diversification.
• The brand equity model showcases Tesla's successful brand building through innovation,
sustainability, and charismatic leadership.
• The McKinsey 7S framework highlights Tesla's strategic alignment, flat organizational
structure, culture of innovation, and focus on excellence.
• Tesla's value chain analysis emphasizes streamlined operations, advanced manufacturing
processes, direct sales, and technology investments.
• Tesla's marketing models collectively contribute to its competitive advantage and leadership
in the electric vehicle industry.

In conclusion, we can quite confidently say that Tesla's focus on sustainability, innovation,
customer-centricity, and strategic decision-making has positioned it as a leader in the electric
vehicle market.

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