TESLA'S MARKETING APPROACH SHOCKS THE CAR INDUSTRYThe automotive industry tends to be dominated by huge companies with deep pockets, making it difficult for newcomers to enter. It would be nearly impossible for an intrepid startup to find an unclaimed spot, much less sweep industry award shows and grab widespread media attention with one of its first cars. Yet Tesla Motors did exactly that.
The company is only a decade old, but its luxury-aimed, all-electric vehicles, and specifically the much-praised Model S (priced starting at $64,000, considered inexpensive for the luxury-car market), have found an untapped niche in wealthy customers interested in the unique advantages of electric done well, from fuel savings to structural longevity to exceptional speed and performance.
A market-oriented look at Tesla reveals a variety of strategies to build awareness and develop its brand that are both clever and low cost-necessary to compete with the industry giants (Nissan spent $25 million during a one-year period advertising its electric Nissan Leaf). With an in-house marketing team of only seven employees, the company does no traditional magazine or television advertising, instead focusing on developing buzz through industry contacts, social media, and news coverage. It does not sell its cars through dealerships, but directly through its website, and each car is assembled on demand. To allow potential customers to see the car in person, it opens small, nonselling showrooms in popular malls. Even its service centers send a branding message, with their floors painted white to emphasize that electric cars do not leak oil or other messy fluids. Tesla will need all the technological and strategic innovation it can muster to achieve its long-term goal of producing the world's first truly practical electric car for the average consumer.
Discussion Questions
1. What is Tesla's target market?
2. Why did Tesla succeed in breaking into the automotive industry where so many others have failed?
3. How do each of Tesla's individual marketing choices fit into its overall marketing strategy?